Is Apple Finished Disrupting Markets?

by Tim Bajarin   |   February 4th, 2013

bulb-disruptionOne 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 OS market so dramatically that it forced Microsoft to follow their lead quickly in order to stay relevant. Now GUIs are the norm on all PCs.

18 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 big publishing’s big iron solutions. Today, personal publishing at the desktop or on the Web has its roots in Apple’s disruptive Desktop Publishing blitz.

In late 2000, Apple upended the music market with the introduction of the iPod and its radical and 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 1990’s, 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 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 smartphone, they reinvented it in ways that completely disrupted the carrier’s way of managing and controlling their own programs and added the element of a truly intelligent OS and apps to the smartphone landscape. The iPhone has literally redefined what a smartphone is and has dramatically disrupted the entire world of telecommunications around the world.

In 2010 Apple introduced the iPad. They did not invent the tablet. They reinvented it 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, 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 it 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 the Android crowd.

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 last 7 months and I have heard some even suggest that Apple has peaked and it’s downhill from here on in.

However, if you study Apple’s history, especially since Steve Jobs returned to the company in 1997, Apple’s 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 7 years. This suggests that Apple is not driven by time clocks or stock price when it comes to innovation. Rather, they take their time and think things through. They focus on the fusion of the hardware, software, and service ecosystem aspect of new and innovative products, before they bring them to market.

There is a key reason for this attention to detail. Apple has an internal mantra that when they introduce 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 their competition. If not, they won’t touch it. That is why they did not just deliver a new MP3 Player, but rather an entire hardware, software and solution approach when the iPod was launched in 2000. The same goes for the iPhone and the iPad. In both cases, from time of launch to time competitors come even close to catching up, Apple always has 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 they will disrupt will be the TV market and while we don’t know exactly what they are doing, given their track record I am 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 then two years to catch up with them 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 popping up in cars even in the mid price range. Imagine if Apple and one or two major car-makers get together to write the next chapter of intelligently connected automobiles that marry dedicated applications, an eco system of services and always connected automobiles and what its potential impact could be on the future of road travel.

Another industry Apple could disrupt is the watch industry. Many people are watching closely the Pebble Smart Watch that is 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 smartphone with a watch but it mainly brings smart phone alerts and calling info to the watch’s face. While I really like the Pebble smart watch idea, what I really want is Dick Tracy’s watch and I am 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 Fadel, has created the Nest thermostat that is connected to the Internet and is smart enough to watch your heating and air conditioning habits and adjust them automatically. You can control your thermostat over the Internet too. This suggests to me that the concept of the smart home was in the works when Fadel 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 to disrupt in the near future.

Controlling the Smart Screen

In each of the examples I state above, 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, but if so, think of it as mainly a giant iPad in that it could have the same guts and intelligence of that which is in an iPad. However, if I was 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 their giant iPad or any other TV via a smart box and that the real disruptive products comes in the way they marry the iPhone and iPad into the next generation TV viewing experience.

All smart cars will have screens in them too. Imagine if a dedicated iPad is embedded in a car that doubles as the cars map as well as the vehicle for a whole host of auto-dedicated apps. As for the smart watch, what if Apple could create an iPhone or iPad that is 2 inches square and could be worn on our wrists. While it may have some touch screen features, the real way you would interact with it is via Siri ala Dick Tracy. As for the smart home, imagine iPads integrated into appliances, the kitchen or even bathroom mirrors that turn them into highly intelligent devices within the home as well as being the center of a whole homes automation system.

If any one thinks Apple has stopped innovating then I have a bridge in NYC that I would 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 they will not take this and use it to disrupt other markets is short sighted. It might take time, but Apple is more than capable of continuing to innovate and drive markets in new directions.

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.
  • Defendor

    Apple will continue to innovate of course.

    But I don’t believe any company can produce disruption at will. Disruption is an intersection of Timing, Vision, Art, Science and even Luck.

    I like the idea of wrist-phone-computer, but I don’t know if it can really be disruptive. My gut says no. It seems like one of those cases where it can’t be made small enough to not be clunky/silly, while being large enough to actually be useful (including reasonable battery life).

    Living room is one area where Apple does seem behind and for me they are likely to stay behind. With Phones/Tablets, Apples closed nature doesn’t bother me, but when it comes to the living room and Video Media, Apple is not the solution I am looking for.

    Right now I use a HTPC powered by Windows. It plays every media file type in existence, and it records OTA TV with a Tuner for free PVR duty.

    I recognize that HTPC is a niche activity, but just about everyone I know has a variety of media files in multiple formats and they look to living room playback Via TV/Blu Ray players with media capability, Xbox/PS3 playback after conversion, or digital media boxes like WDTV. Streaming is also part of the solution, but “Apple TV” is limited to that as the only solution, not always the best solution to just playing a file when someone drops by. No one I know has an Apple TV, but all the other solutions are represented among people I know.

    I think Apple will only be a bit player in the living room behind Consoles and eventually Sub $100 Android boxes that will do it all, play it all. While the $99 living room, do-it-all Android box continues to quickly evolve, the Apple TV hobby continues to languish.

    Yes, Google TV is still a mess, but we already have $99 Google TV boxes and $99 Android Console Ouya that will play all media files as well (with Plex/XBMC), streamed and local, play games, run applications.

    IMO Apple is simply too closed in the living room, to gain mass traction.

    • benbajarin

      I agree that willful disruption is difficult. However, I believe the opportunity to do so abounds. Largely from improvement innovations more than new categories. I’m going to do a column for Friday or before on what the barriers to a companies growth is and I’ll point out that growth depends on finding new land to grab or creating new land to grab.

      The analog to digital shift is still happening and during that time it will continue to present many opportunities to disrupt from those who believe technology still has a long way to go and many problems still to solve.

    • Rich

      “The wrist-phone-computer seems like one of those cases where it can’t be made small enough to not be clunky/silly, while being large enough to actually be useful (including reasonable battery life).”

      That’s how I see it, too.

    • http://twitter.com/bradpdx Brad Price

      @NTInfidel:disqus, your post actually points out exactly where some disruption can and may well occur.

      Most ordinary people, the multitudes who have money to spend on their lives, loves and homes, have absolutely no idea what HTPC or WDTV is. They don’t care. They know that they have some BluRay player, but never go past just sticking in a disc and hitting “play”. They have no idea what the different file types are or why they exist, and will never use a command line in their lives. They don’t want to know, and they shouldn’t need to know.

      AppleTV may be limited by design, but it is hardly languishing when one looks at the sales data. A real disruption in the TV/living space would almost by definition eliminate file type and source distinctions and allow people to simply watch what is interesting to them with no need for tangible intermediation. No folders, no files, no extensions – that stuff will disappear to the user, in accordance with countless other technical advancements.

      It’s easy to forget that technically inclined people are a very small minority of the population, and are no smarter than the rest. As a recovering engineer myself, that’s something always to keep in mind.

      • Defendor

        Apple TV doesn’t eliminate file type distinctions. It eliminates your ability to play files. That hardly seems like an improvement.

        As far as numbers, there have been ~10 million Apple TVs sold, many the older 720p version.

        There have been close to 80 million PS3s and close to another 80 Million Xboxes that are full media/gaming centers for the living room.

        It is hard to see how the the Apple TV is disrupting the living room either in numbers or in capabilities.

  • FalKirk

    First, disruptions are normally few and far between. Most companies have ONE major disruption – the one that made them a business superpower – and then they live on that disruption for the rest of their corporate lives. Serial disruption is not only uncommon, it’s almost unheard of.

    I will say that disruptions seem to come closer together now. Perhaps that is because tech moves faster than other industries. Or perhaps its the age we live in. Don’t know.

    Second, Apple and Steve Jobs were more than amazing in the number of disruptions that they have initiated. I’m going to be overly generous in order to make a point. 1) Apple II, 2) Mac; 3) Pixar; 4) iMac (questionable), 5) MacBook (questionable); 6) iPod; 7) iPhone; and 8) iPad.

    If you’re very generous, Apple and Steve Jobs combined for 8 disruptions in some 40 odd years of existence. That’s a remarkable one disruption every four or five years. When Steve Jobs returned to Apple in 1998 – and remember he was desperate to save the company – it took him 3 years to create the iPod. You don’t turn on disruption like a spigot. And five years is an incredibly short amount of time between disruptions. Apple is currently being punished because they – remarkably – created a major disruption in 2007 and a second major disruption in 2010. Now people expect them to disrupt the market every year when what we really should expect is a 5 or 10 year hiatus from disruption as the company consolidates its gains.

    Is Apple finished disrupting markets? How do I know? Perhaps Steve Jobs was the reason for all the disruptions. That’s certainly a reasonable supposition.

    What’s unreasonable is to make pronouncements that Apple is done disrupting markets. It’s as stupid as saying that the Baltimore Raven’s haven’t won a Super Bowl since 2013 and therefore their franchise is doomed.

    • Defendor

      I would stick with Apple and so exclude Pixar, and exclude the iMac/Macbook as they haven’t disrupted the market, or inspired clones. My own questionable minor addition would be the Macbook Air specifically, as it has inspired a new niche of copycat Ultrabooks.

      5 disruptions most agree with, at Apple is still a lot, but it also increase the length between disruptions..

      1977 Apple II
      (+7 years)
      1984 Mac
      (+17 years – Jobs absent for 12 years)
      2001 iPod
      (+6 years)
      2007 iPhone
      (+3 years)
      2010 iPad

      If you look at the Disruption Gap while Jobs was away, you can see why some think Apple will lose it’s edge without him, though the company today is much different than the 1980′s Apple. Innovation is in their DNA now. But I still don’t expect disruptions. But Even without disruption, Apple isn’t going downhill from here.

      • FalKirk

        I never thought of the MacBook Air as a disruption, but you might well be right. Everyone who makes notebooks is now trying to make an “Ultrabook” which is modeled on the MacBook Air.

        Personally, I’d say there were five disruptions: Apple II, Mac, iPod, iPhone and iPad. Most great companies re-invent the world just once. Apple has done it five times…so far.

  • steve_wildstrom

    The car market is ripe–even anxious–for disruption but I doubt that Apple will be the one to do it. They haven’t shown up yet at this party, and they are way behind those who have, including Microsoft and. believe it or not, BlackBerry (via the position QNX had achieved as part of Harman International.)

    The auto market is a bit like another the Apple hopes to disrupt, television, in that you need the cooperation of the incumbent players to get in the game. You can’t get access to car systems without the cooperation of the auto makers and unlike the markets have succeeded in, this one is highly regulated.

    If Apple is really interested in the auto market, they have to make a move immediately.

    • http://twitter.com/silvioherasmep Silvio Herasme

      “Apple’s Automotive Invasion Continues as Honda Embraces Siri”. http://www.wired.com/autopia/2013/01/honda-siri/

    • capnbob67

      In the proper sense of the word, the auto industry is not really regulated. Regulated industries are things like Pharma and Financial Services subject to specific national and international regulations beyond the all-industry ones. Automotive isn’t very concentrated either and is highly competitive – much better to break into than video content or telecoms.

      All it takes is Apple to put something disruptive in one or 2 car brands and others will tumble. Most of the software out there is from horrible to barely functional and pretty glitchy. (see Sync).
      The disruption will be in changing the game for what the in-car experience is rather than just an Apple UI on a standard phone/nav/audio system. It could be the extension of the pocket computer to the car along with your content, with a permanently networked experience and a (good) Siri interface. If I really knew what the disruption was, I would do it. Audi is starting to do this with Google (in car hotspot, google maps overlay to the Nav system – all for a price) but it is just minor added value to the base standalone system.

      There is still plenty of room to disrupt the plethora of meh ICE systems in pretty much every car brand.

      • steve_wildstrom

        Cars are, in fact, very heavily regulated, in the U.S. by the National Highway Traffic Safety Administration and the Environmental Protection Agency as well as states.

        There is a tremendous amount going on with electronics in cars and it goes well beyond information and entertainment, though the most interesting stuff is a couple years away from the market. Apple is so far a relatively minor player.

        • capnbob67

          Steve, by that definition, every industry is regulated. Almost every product and service in 1st world nations have health and safety regulations applied to them. Barbie’s, watches, phones, garden hoses, cars. It does not put them in the class of “regulated” industries. There is nothing special about auto industry regulation that would limit Apple’s ability to enter the market. The only special thing about the auto industry is that in the US none of the players can go bankrupt and in the UK, none of them can remain independently solvent.

          Regulated industries is a term that actually means something. It refers to those industries that have a significantly higher burden of regulation on their operations and performance than general industries. This does NOT include automotive. Regulated industries typically have tight controls on how they do business in a way that car makers will never feel. Most utilities have their pricing controlled, their investments vetted and their facilities constantly monitored. Pharma companies must wade through FDA trials, patent protection, pricing controls. Financial services firms spend a large part of their effort on compliance with national and global regulation that controls their use of assets, operating model, business processes, licenses their sales channels, etc. Compared to this, crash testing and factory safety is a drop in the ocean.

          • steve_wildstrom

            I think we differ on the definition of a regulated industry. But my basic point is not that Apple couldn’t get into the auto market in a big way but that they may choose not to. Apple very much likes to be in charge in everything they do and one of the great accomplishments of the iPhone is the degree of control they wrested from the carriers.They would never achieve that kind of control in autos (unless they decided to make cars themselves), in part because of the tight link between the car makers and the government on compliance. They’ll do little deals, like licensing Siri, but I can;t see Apple getting into the big projects now getting underway, such as converting the multiple proprietary data buses now in use in cars to a unified IP network.

  • tmay

    I’m a bit more forgiving of what people term “disruption”. I just saw one a couple of days ago, and I was reminded of yet another yesterday.

    Netflix disrupted internet media by funding a said one hundred million dollars for a single 13 episode series, “House of Cards” that is by all accounts gaining rave reviews and viewers. Whether Netflix can pull that off again is unknown, but what is known, is that hereafter, the bar has been set for high production value.

    The disruption that I was reminded of yesterday was that Apple created the paradigm for future Super Bowl advertising in its “1984″ commercial for the Macintosh. Thereafter, the Super Bowl became the premiere event for a corporation’s advertising, and anecdotal evidence is that many viewers watch the SuperBowl for the ads.

    A third that I will throw in is Samsung leveraging its size to use sales and marketing at unprecedented levels to disrupt the smartphone marketplace, and with quite some success.

    Similarly, Apple and Samsung have been driving the supply chain and manufacturing technology, a disruption to competitors that cannot yet compete on volume, and it some cases, gaining exclusive use of cutting edge technology.

    As for Apple, we can only speculate that a great deal of innovation is not seeing the light of day, and may never, but I would be hard pressed to imagine any other company with the assets to disrupt yet again when the opportunity arises.

    • http://twitter.com/M_Gauche James King

      House of Cards is the business, so is Booth at the End. I hope that is where TV is going.

  • http://twitter.com/M_Gauche James King

    I think there isn’t much low-hanging fruit left when it comes to disruption. In the end, at least when it comes to the computing world, most disruptions are limited by form factor and I’m not sure there are many places Apple or anyone else can go without making a quantum leap.

    Hell, I’m still waiting for a vector GUI.

    • FalKirk

      “I think there isn’t much low-hanging fruit left when it comes to disruption.” – James King

      If potential disruption were easy to predict, then it would never happen at all because the incumbents would usurp the opportunity. Most people wondered why Apple would even bother to make a phone since smart phones were, at the time, viewed as being pretty capable. (Hard to believe, right? And when the iPad was introduced, few thought that there was room for a category between the notebook and the phone and if they did think there was room, they thought that space was occupied by netbooks.

      “A disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology.”

      We can never really say that there is no room for disruption because disruption, by its very nature, occurs exactly where we think it cannot.

      • http://twitter.com/M_Gauche James King

        “We can never really say that there is no room for disruption because
        disruption, by its very nature, occurs exactly where we think it cannot.” – FalKirk

        This wasn’t my assertion. The bottom line is that there are only so many ways computing technology can be packaged. Even Apple’s disruptions were derivative.

        The reality is that we are reaching the limit of our current technology and there is no new technology coming to maturation that hints at a major leap forward or even a repackaging of technology that would cause a major leap in the state-of-the-art. The next major improvements will have to come in software but such developments come slowly due to the need to maintain legacy compatibility, particularly when it comes to user behavior.

        I enjoy new technology, especially when it changes the landscape of computing. But I think even the people in the labs paid to be 10 years ahead of the market know that the next big thing is not right around the corner. The most we can hope for in the short-term is innovation of the every day variety. That isn’t a bad thing. There is a ton of room for improvement in our current technology.

  • Rich

    “Most likely the next market Apple will disrupt will be the TV market.”

    I don’t see how Apple can do that without the cooperation of the content creators and distributors, and (as it’s been pointed out) those people not only have no reason to help Apple, they have apparently strong reasons not to.

  • http://pulse.yahoo.com/_ROSNCEUH6GSBXAWCKQZK2XQAFY Wikileaks is Democracy

    This writing, “Apple has an internal mantra that when they introduce a new category of product that has the potential of shaking up or disrupting a market.” is not a sentence.

    Also, to use “disrupt” is to speak in the language of an analyst which you clearly are, that is, one who evaluates the effects from the outside, but it’s less useful to apply it to Apple’s methodology which is not disruption; It’s improvement or innovation but not as sexy as “disrupt.”

  • http://www.facebook.com/profile.php?id=100000148375802 Steve Chavez

    Yup. You can all rest now. Every market can look to open source software to fill all of their needs regarding interface design and how people can interact with things in their daily lives. Touch screen technology has been there for years. So Apple didn’t invent it and things would work the same today as if they would if Apple never existed. Apple clearly just steals things. They provide nothing to the user. They suck. They clearly take advantage of us… and they abuse us. We should hate them and everything they release since they want to make a profit. They’re greedy. Unlike their competitors who give us things for free and ask for nothing in return. We need them to die soon so that we can progress in the ways that we are destined to. A company that distracts us from our predestined direction are horrible things that need to be eliminated as soon as possible.

  • http://www.facebook.com/profile.php?id=100000148375802 Steve Chavez

    Disruption is an ugly word. You don’t disrupt a market unless you take something away from the nerds. There’s a group who wants something for nothing… and there’s a group who wants to have control over what is theirs. It’s not something that will always match. I believe that there is an opportunity in terms of what people actually want in terms of content. It wouldn’t surprise me if people were more interested in reality shows than more expensive types of entertainment. If that’s the case, how do content providers have any kind of leverage against mom and pop video shops who leverage their assets into becoming a studio themselves? If you need to diversify your business, and you can be a distributor for the masses, why wouldn’t you invest in creating your own content? Furthermore, why wouldn’t you work to license your content to your competitors once you get something that can get some momentum in the marketplace? Enemies can be friends if they can become your distributors for a hefty fee…

  • dorkus_maximus

    It is kind of silly of anyone to think that Apple could shake up industry after industry on some sort of regular time frame. There’s no Moore’s Law to innovation. If Apple’s recent stock price decline is because “experts” had already factored in Apple’s next big “disruption”, then that’s a very scary thought for small investors trying to secure a comfortable retirement.

  • jfutral

    It should be hard not to recognize the ongoing disruptions of many industries because of Apple, iPhone/iPad, and more specifically Apps. I can start my car, adjust my thermostat, or check my security system from my phone, to name a few things that apps are doing to disrupt their associated industries.

    Joe