Has Apple Finished Disrupting Markets?

To think that Apple won't use its experience to disrupt other markets is shortsighted. It might take time, but Apple is more than capable of continuing to innovate and drive markets in new directions

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People walk in front of the Fifth Avenue Apple Store in New York City on Jan. 14, 2013

One of the things Apple has demonstrated over its lifetime is that it has become the great disruptor. When the Mac came on the scene in 1984 and introduced computer users to the graphical user interface, it shook up the text-based DOS market so dramatically that it forced Microsoft to follow Apple’s lead quickly in order to stay relevant. Now graphical user interfaces are the norm on all PCs.

Eighteen months later, Apple pushed the Mac as a disruptor to the publishing market with the introduction of desktop publishing. Marrying the Mac, a desktop laser printer and Aldus’ PageMaker software, Apple championed a desktop-publishing solution that completely changed the publishing world by letting people create content on demand and publish it without the help of the publishing industry’s big-iron solutions. Today, personal publishing on the desktop or on the Web has its roots in Apple’s disruptive desktop-publishing blitz.

In the early 2000s, Apple upended the music market with the introduction of the iPod and an easy way to access, buy and play music on the go. While pirating music was the real disruptor to the music industry back in the late 1990s, only the tech literate went online to get MP3 files. While early MP3 players came out to make digital-music playback more portable, it took Apple with the iPod and iTunes to really disrupt the digital-music market and bring it to the masses.

Then in 2007, Apple disrupted the cell-phone market with the iPhone. While Apple did not invent the smart phone, the company reinvented it in ways that completely disrupted the wireless carriers’ way of controlling their own programs and added the element of a truly intelligent operating system and apps to the smart-phone landscape. The iPhone has literally redefined what a smart phone is and has dramatically disrupted the entire telecommunications world.

In 2010, Apple introduced the iPad. The company did not invent the tablet. It reinvented the tablet and in the process reinvented the personal computer. Now the iPad has become a major disruptive force in changing the dynamics and fortunes of the traditional PC industry. Thanks to the iPad and tablets overall, traditional PC and laptop sales were off around 10% in 2012. Our estimate is that PC and notebook sales will be off at least 10% in 2013 and could see an even steeper drop as tablets gain more ground in business and consumer markets. A more interesting projection is that for the first time, tablets will outsell notebook computers worldwide in 2013.

The disruptive nature of the iPad was not predicted by anyone except perhaps Steve Jobs, who clearly understood the impact the iPad would have on the market. To all PC makers’ chagrin, they too did not see tablets coming and were not prepared to make the transition from a high-volume PC business to the next big personal-computing device for the masses. Although they are trying to play catch-up with Apple and Samsung, the Wintel crowd is behind in tablets, and I am not sure they will ever really gain ground against Apple and Android.

Has Apple Peaked?

While Apple continues to deliver record sales and record profits, the financial community seems to think that Apple is done innovating and disrupting markets. Their demands for outlandish quarterly profits have sunk Apple’s stock over the past seven months. I have heard some even suggest that Apple has peaked and that it’s downhill from here on in.

However, if you study Apple’s history, especially since Steve Jobs returned to the company in 1997, its actual cycle of creating innovative and disruptive products is around three to four years, on average. In the case of the time span from the iPod to the iPhone, it was actually seven years. This suggests that Apple is not driven by clocks or stock price when it comes to innovation. Rather, the company takes its time to think things through. It focuses on the fusion of the hardware, software and service ecosystem of new and innovative products before bringing them to market.

There is a key reason for this attention to detail. Apple has an internal mantra that when it introduces a new category of product that has the potential of shaking up or disrupting a market, it must be done so that Apple will have a two-year lead at the very least over the competition. If not, Apple won’t touch it. That is why the company didn’t just deliver a new MP3 player, but rather an entire hardware, software and service approach with the iPod. The same goes for the iPhone and the iPad. In both cases, from the time of launch to the time competitors come even close to catching up, Apple had at least a two-year lead.

What’s Left to Disrupt?

So, is Apple done disrupting markets? Don’t bet on it. Most likely the next market it will disrupt will be the TV market. And while we don’t know exactly what Apple’s doing, given its track record, I’m pretty sure that this product will have a dramatic and disruptive nature on the television industry when it does come out. If done in dramatic fashion, competitors may need more than two years to catch up with Apple this time.

Another industry Apple could disrupt is the auto industry. Although cars are getting smarter, they have a lot of room for innovation around embedded screens that are now popping up in cars even in the midrange price categories. Imagine if Apple and one or two major carmakers got together to write the next chapter of intelligently connected automobiles that marry dedicated applications, an ecosystem of services and constant Internet connections. Think what the impact could be on the future of road travel.

Yet another industry Apple could disrupt is the watch industry. Many people are closely watching the Pebble smart watch that’s just now shipping to see if its connection to iPhones and Android phones takes off. This particular product is an interesting first step in marrying the smart phone with a watch, but it mainly relays smart-phone alerts and calling info to the watch’s screen. While I really like the Pebble smart-watch idea, what I really want is Dick Tracy’s watch — and I’m betting that Apple is the company that will eventually give this to us.

Could our homes get smarter too? Of course they can. It is not a coincidence that former head of hardware at Apple, Tony Fadell, has created the Nest thermostat that is connected to the Internet and is smart enough to watch your heating and air-conditioning habits, adjusting them automatically. This suggests to me that the concept of the smart home was in the works when Fadell was with Apple and that Apple has been working on this internally for some time. I am convinced that Apple will be the company that eventually disrupts the home-automation apple cart, so to speak, and makes it another prime market that gets disrupted in the near future.

Controlling the Smart Screen

In each of the examples I stated, you may have noticed that a “screen” is involved. Screens are mostly necessary for managing, viewing and even controlling content. In the case of Apple TV, there is a possibility of Apple actually doing a physical TV set, but if so, think of it as mainly a giant iPad in that it could have the same guts and intelligence found in an iPad. However, if I were a betting man, I would bet that the heart of Apple’s true TV product lies in the way the iPhone and iPad interacts with the giant iPad or any other TV via a smart box, and that the real disruptive products comes in the way Apple marries the iPhone and iPad into the next generation TV-viewing experience.

All smart cars will have screens in them too. Imagine a dedicated iPad embedded in a car that doubles as the car’s map as well as the vessel for a whole host of automobile-dedicated apps. As for the smart watch, what if Apple could create an iPhone or iPad that’s a 2-in. (5 cm) square, which could be worn on our wrists. While it may have some touchscreen features, the real way you would interact with it is via Siri, à la Dick Tracy. As for the smart home, imagine iPads integrated into appliances, in the kitchen or even in bathroom mirrors as well as being the center of a whole home’s automation system.

If anyone thinks Apple has stopped innovating, then I have a bridge I’d like to sell them. Apple is a very smart company run by some very futuristic thinkers that have a toy box of integrated products and services to work with. To think that the company won’t use its experience to disrupt other markets is shortsighted. It might take time, but Apple is more than capable of continuing to innovate and drive markets in new directions.

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Bajarin is the president of Creative Strategies Inc., a technology-industry-analysis and market-intelligence firm in Silicon Valley. He contributes to Big Picture, an opinion column that appears every Monday on TIME Tech

29 comments
MaxPerez
MaxPerez

What is the game?  

Hi Tim, sorry but today was that I read your article. 

What is the game? Some time ago I've been watching this and I wonder what is the goal? Someone has to have some kind of interest and benefit to all this, and I'm sure that money is the main. What are the ethical and legal implications of this game? I see this as a flaw in the system.

revisitors
revisitors

@seandonahoe You can never tell what will happen next and what other moves that the Apple company will undertake.

rob19478
rob19478

I just read the opening paragraph and already found some wrong information, apple did not invent the graphic user interface, Xerox did and at the time many companies released their own like Amstrad gem desktop

CluedIn
CluedIn

Dummy, it's this simple: no company this driven by its founder (Disney, Ford, Sony, HP, Cisco) has ever prospered after said founder died. Apple will go down the same road these companies did, and recovery will be anything from a couple of decades (Disney) to never (Ford). It has nothing to do with mythic cycles, the phases of the moon, or any other nonsensical metrics the stockpickers and business "analysts" use.

CecilioDecolongon
CecilioDecolongon

The key is Apple's subtlety which this article doesn't have.

ronjiedotcom
ronjiedotcom

Just some random thoughts: No mention of stuff (or lack of Apple stuff) from 1986~1997. There was the Newton and there was that phone with a touchscreen thing. And well, there was also the Pippin. Didn't disrupt markets as much though. I'd like to think the original iMac also changed the PC market landscape. How many translucent PC housings/cases did we get after the iMac (and iBook and the Power Mac then) was introduced? How many have since dropped floppy drives and has since used USB ports? How many companies are now selling all-in-one PCs? How many companies are now thinking more seriously about industrial design for their PC products? And also... how many are now using WebKit-based browsers?

athleteaesthete
athleteaesthete

@TIME @Techland not if they're going to be launching a watch! Watch sales have been dropping while cell phone #s increase.

JayGeraghty
JayGeraghty

@TIME @Techland all eyes on cash pile. Try disrupting that #dividend

boringfileclerk
boringfileclerk

@TIME @Techland It did about 8 years ago. Apple's so old news. Microsoft is the new Apple.

Charlesereed
Charlesereed

“@TIME: Has Apple finished disrupting markets? | http://t.co/eZqy7v7f (via @Techland)” apple needs to regain the passion for perfection.

LarryElin
LarryElin

@NickPulis1 Really good article, thanks Nick. Disruption!

coffeetime69
coffeetime69

I think that Apple would be a natural fit for the field of personal robotics.  They know hardware - specifically hardened (as in portable devices that can take lots of abuse), small and power-efficient.  They know power management, including charging.  They know software - operating system and application.  They know speech recognition and synthesis.  They know cameras.  They know wireless communications.  And they know manufacturing.

The day of personal robots is coming.  House work, yard work, cooking and cleanup, elderly hygiene, companionship, and probably a zillion other uses that we haven't thought of yet.

smjhunt
smjhunt

I don't think its the end of innovation  at Apple by a long shot however I do think it's the end of the potentially disrupted industries being blindsided and that includes Apple's competitors.  The success of the iPod was inextricably tied to getting the music industry to unbundle their songs and sell them at the click of a button for a fixed price over Apple's iTunes store. Before iTunes, these companies wouldn't even allow their artists to appear on the same album or in public together.  I'm sure that in the aftermath, every one of them regretted handing over all this control (and thus money) to Apple and are probably still regretting it.  The wireless carriers did fight back: they started selling Android phones because unlike Apple, Google only indirectly takes money away from the wireless carriers. They still get to control how Android works on their phones unlike with iOS.  The result is that Android based phones are now the number one seller, not iPhones. Furthermore, the features have been quickly copied so there is no huge technology gap as there was when the iPhone was introduced.Apple thought they could stop some of them by suing for patent violations.  Unfortunately, they didn't understand that lawsuits, like government imposed penalties are just considered the cost of doing business in the 21st century by these mega corporations. They really have no long term impact them, only on smaller start-ups who can't afford the litigation costs.

 The movie and cable industry watched this unfold and it is thus highly unlikely they will fall for this the way the music industry did.  Same goes for the automotive industry.  They will be prepared this time and fight back.

Apple's competitors also saw what happened when Apple branched out from phones to tablets.. They are no longer going to be blindsided either if they want to stay in business. 

In short,  Apple will continue to be able to introduce innovative products and make a profit on them but have a much harder time getting the sort of windfall profits they got from the iPhone and iPad, hence the decline of their stock.



GaryDauphin
GaryDauphin

"Has Apple Finished Disrupting Markets?"  Stupid headline!  How will we know until the day the company closes its doors....

lamho338
lamho338

"However, if you study Apple’s history, especially since Steve Jobs returned to the company in 1997....."

Steve Jobs is not returning. And that is the problem.

As the 1st part of your article correctly identified: Apple didn't invent these "disruptive" technology, they invented how these products should be used. There laid the problem with the future of Apple.

Technology invention is easy. Put bunch of smart people together, they will invent some technologies.

Art invention is not. You are either born with it or you are not. Steve is unique that way. Not only he is creative, he is also a crazy artist who can picture a crazy products from crazy ideas.

It took a Steve Jobs to turn a pointing device by Xerox into a mouse we know today. We haven't seen anyone in Apple or in the industry that has this forward thinking yet can deliver the right product.

Apple today may have ton of "futuristic thinkers" (just like most of us in the tech industry). But to think of the right futuristic products is by no way easy.

stefn
stefn

The small computer thing is in total disruption: Who is going to make money five years from now, when hardware is $100 and software $1? Next big thing? A really big thing. An Apple iPlug vehicle. 

TheoCampbell
TheoCampbell

I agree with this article, If Apple is done then so is everyone else. At this point Apple is the only company with the financial resources to invest in the "Next" big thing. Apple has taken risks in the past some fruitful some not. We all know Apple has a gazillion dollars in the bank, so it can easily acquire any smaller company that might have a "Better" idea or product. Yeah i would Bet on Apple, at lest until Apple's bank account gets low.

Melli
Melli

Lets hope apples future doesn´t depend on its automobile-related apps and maps services. This field is dominated by Nokia already and the release of Apple´s map service last fall shows just how far behind they are. My money is on ´really easy to use´ smart tv´s...

MaxPerez
MaxPerez

@nsbeerThis is so important? From a short term make money is? But, and ethics, morals and laws? We can see this behavior as a race or competition where on one hand there are winners and losers, and other fans who identify with groups like teams to feel something belonging gaps they have in their lives. In the long run this is simply not sustainable and falls under its own weight and power, as the aim is not to do something to make a better world but profit.

GaryDauphin
GaryDauphin

@Melli Steve Jobs proclaimed he had "broken to code to building the really easy to use, Smart TV."  Unfortunately, he made that statement to his biographer two years ago.  If he had truly broken the code, I think we would see a product by now.

Granted, there is a chance that he broke the code on the concept, and Apple is simply waiting for the technology to catch up the ideas, but I would not bet the farm on that.