How Apple Continues Its Hegemony With Little Innovation

On 12 September 2018, Apple introduced three new iPhones at their biggest annual presentation event at Apple headquarters in California, USA. Critics claim that the new models are lacking innovation, which was supported by the extensive focus on the new processing chip during the presentation, instead of new, ground-breaking features of the devices. At the same time, the prices of the new iPhones are starting higher than last year ($750, $1000 and $1100 this year versus $700, $800 and $1000 last year). This seems to fit into Apple’s long-term strategy of ‘bigger, faster and pricier’; the proclaimed revenue increase of 20% is not surprising, given the increase in the average selling price of iPhones with – yes, exactly – 20%.

So how come Apple is still performing so well in the mobile devices market, and will there come an end to the hegemony of the iPhones any time soon?

The outstanding performance of Apple is mostly due to its focus on customer experience and the platform it offers third parties to deliver digital content to its users. Although the current innovation of the iPhones themselves seems to falter slightly, the customer experience is still an outstanding feature of the Apple devices, with a beautiful and clean interface, as well as extremely fast processors. At the same time, the platform is still very valuable and popular and Apple is betting more and more on the subscription business model of different services such as Netflix and HBO, where every subscription yields a 30% cut in the first year and 15% in the subsequent years.

Lastly, the most potential for Apple in the future is the abundance of data on their customers; they developed a digital ecosystem, where partners and even competitors could provide their own services, but whose data is still gathered and accessible by Apple itself. In this way, iPhones can ultimately help solve users’ life event needs, without the constant pressure of having to innovate the product itself.

So in my opinion, Apple is in no danger of losing market share just yet; however, they do have to monitor the innovations of their competitors and make sure they are always one step ahead.

References:

1. https://www.nytimes.com/2018/09/12/technology/apple-event-live-iphone-watch-ios12.html?action=click&contentCollection=technology&region=rank&module=package&version=highlights&contentPlacement=1&pgtype=sectionfront
2. https://www.nu.nl/reviews/5459636/eerste-indruk-opvolgers-van-iphone-x-niet-heel-spannend.html?redirect=1
3. https://nos.nl/artikel/2250112-apples-nieuwe-peperdure-telefoons-bevatten-weinig-veranderingen.html
4. Weill, P., & Woerner, S. L. (2015). Thriving in an increasingly digital ecosystem. MIT Sloan Management Review, 56(4), 27.
5. Weill, P., & Woerner, S. L. (2015). Optimizing your digital business model. MIT Sloan Management Review, 43(1), 123-131.