In the second quarter of 2020, Apple was the number three smartphone vendor in the world, at 13.5% of the global smart phone market, slightly above the first quarter. Today, Apple is a follower, not a leader in that market. The company follows a strategy of anticipating customer's needs and wants and producing high-quality products to satisfy them. It stays close to customers and provides useful, fun products and services for customers.
Apple's Smartphone Strategy
Steve Jobs' Apple produced the Macintosh computer in 1984 for normal people's use, not experts. Later, Apple ousted Jobs and developed the Newton in 1993, an outstanding PDA ahead of its time. I have two functioning Newtons, which could have heralded the iPad years earlier if continued.
On Jobs return to Apple, he cut many irrelevant products, focused Apple, and started the renascence of Apple with the iPod in 2001. And in one of the most important product introductions ever, Steve Jobs launched the iPhone at Macworld on January 9, 2007.
Then came the iPad in 2010, and perhaps the greatest addition to health devices' market, the Apple Watch in 2014. Meanwhile, Apple continues to introduce laptops, desktop computers, and is working on a self driving car.
To be sure, earlier Apple was a leader in the smartphone market. So effective was the early days of the iPhone, Blackberry (former Research in Motion) failed to recognize the iPhone's potency and later Blackberry went bankrupt after dominating the smartphone business market.
Where are we today? Apple is a follower in the smartphone market, a strategy it seems to have embraced. This approach appears to be working. Although its making huge gains with its services, the smartwatch, and other products, the iPhone will be a centerpiece of its business for sometime. So, what must it do to stay competitive in the highly competitive smartphone market?
Differentiate in Smartphone Market
- Stay close to customers and don't follow Samsung or other leaders. Apple must anticipate customers' needs and wants and provide products to satisfy them. Following Samsung or other smartphone leaders mean Apple would be using their assumptions and market intelligence, which may or may not be good in the long-term. Strategy is about choices: what to do and what not to do. Apple must choose the markets it will enter and the markets it will exist, always taking the long view.
- Provide superior customer service, but put employees ahead of customers. Train employees, empower them, avoid bureaucracy, treat them well and fairly. Adopt Southwest and FedEx' approach: Employees first, customers second, shareholders third. When we treat employees well, employees will provide exemplary service to customers. It's all about customers!
- Stay within core competencies and focus the company's resources in those areas of competencies. Is the adventure into the driverless car market a distraction? Prior to Steve Jobs' return in 1997, Apple diversified in many areas and almost went bankrupt. Steve refocused the businesses to few products in its areas of competency. With so much cash at its disposal, it might tempt Apple to wander away from its competencies. Money must never lead decisions! Money is the funding source for decisions, nothing more. This is a crucial consideration for companies like Apple, with a cash glut. Apple must not diversify because it “can” and distract attention from its competencies. It must diversify because it “should.”
The smartphone has become a commodity and creating a niche market will be difficult. Pursuing a product differentiation strategy is the only feasible approach to remain competitive. Having a faster iPhone that takes better photos won't be enough. Apple must transform the iPhone to perform functions we can't imagine today, otherwise, a commoditized iPhone will become a lower margin, declining market share product with other smartphones.