Apple in general, and CEO Tim Cook specifically, have been skewered in the past couple of years because the Mac, iPhone, and iPad maker has not disrupted any traditional market with new products.
That’s not true. The critics are shortsighted. Apple has already disrupted a traditional market under the very noses of critics who disparage the company’s seeming inability to innovate on a schedule.
I know what you’re thinking. ‘Kate, what traditional market?‘
Retail stores. Wait. That can’t be right. Apple’s retail stores are successful, yes, but they’re just stores, and the $20-billion or so they brought in last year remains modest compared to the likes of Walmart, Target, et al.
True, but it’s the retail stores which are being disrupted by Apple. No, not Apple’s own retail stores. Online shopping is being disrupted by Apple’s online app stores. The iTunes App Store. The Mac App Store. Both are representative of Apple’s notoriously insidious, ongoing disruption of a traditional market.
Think of it this way. Apple’s retail stores launched to much criticism in 2001. 13 years later Apple has hundreds of stores which generate high profits on high margin products. Analyst Horace Dediu calls them ‘analog dollars‘ and they add up to about $20-billion in the last year. Customers go to Apple’s store for many reasons– shopping, service, support– but most of the revenue earned comes from hardware.
On the other hand, both iTunes App Store and Mac App Store are digital storefronts for software, home to online shopping, instant app gratification, quick and simple app purchases. Apple just announced that App Store revenue, ‘digital pennies,’ generated $10-billion in revenue for 2013.
Think of what that means.
The brick and mortar Apple Stores are in a few dozen countries, number in the mere hundreds, and generated a very profitable $20-billion in ‘analog dollars‘ revenue last year.
Meanwhile, Apple’s online app stores are in 155 countries, contain over one million apps (500,000 native iPad apps), generated over 3-billion app downloads in December 2013 alone, and brought in $10-billion in ‘digital pennies’ revenue last year.
How can that not be considered a monstrous market disruption of epic proportions?
Can you name one of Apple’s competitors that has anywhere near that much market clout? In fact, is there a competitor which even bothers to announce such numbers, including revenue, profit, and unit sales, the way Apple does? No. Why not? They would be too embarrassed. In a few short years Apple has completely disrupted a traditional market and is that market’s unqualified but obvious leader.
True market disruption comes in many forms. The most recent Apple disruption has been hiding in plain sight.