Apple’s winning business model keeps winning

Apple’s winning business model keeps winning

“Apple is finally getting serious about pushing into our living rooms,” according to New York Times reporters Kate Benner and Brian X. Chen. Apple’s already in our bedroom, bathroom, subway ride, vacations and, if we’re not diligent, meals with family. Why not the living room? What else is left?

Apple might not be in everyone’s living room, but it’s already in mine. It’s a box that sits next to my cable box that transforms my TV screen into something equivalent to my iPad screen, full of apps such as Public Radio podcasts, movies, TV shows, the HBO channel, etc. (Amazon and Roku are competitors.) Because Netflix streaming has very few of our favored old movies, my husband and I opted for Apple TV as our streaming solution.  I will also use Apple for my music once I take the time to download my CDs onto my computer. (Writing that last sentence I realize I never will – so I’ve now contacted Madison’s Murfie Music to do the job for me.)

“Getting serious,” according to the article, is adding gaming to Apple’s TV platform and turning it into a developers’ software tool. Critics say this move won’t upset the apple cart for the game box market that Sony and Microsoft control. But they said the same thing about the Blackberry “monopoly” when the iPhone first came to market. “Serious cell phone users”—business people using Blackberry for e-mails—would never change, or so the story went.

The lesson is clear: Watch out Microsoft and Sony. Given Apple’s ergonomic expertise I would expect them to reinvent the gaming controller once Apple’s designers get deeper into gaming.

Peter Csathy, chief executive of Manatt Digital Media, a media-consulting firm, captures Apple’s move perfectly in referring in the NYT article to the new Apple TV as a Trojan horse. It will open the door to everything electronic in the home.

Why rely on a refrigerator screen when the TV screen can manage that, your thermostat, and set the time for the dishwasher to start? The Apple TV software development platform, like that for the iPhone, will encourage development of new, useful apps that we’ll access through our TV.

Were I luxury kitchen appliance company SubZero/Wolfe’s product development director, I’d seek out the Apple TV and iPad operating platforms ASAP. Why create a SubZero-specific operating system and fight the challenge of screen size when an Apple-compatible app could get remote-controlled kitchen devices to the market faster with a screen experience that is likely better? Apple has a successful track record of making our “digitized” lives more manageable. My bet’s on Apple to win the home control center battle.

Apple’s move is consistent with its existing business models, which are individually and collectively among the best in the world. Why are they best?

  • All Apple products work well together – creating benefits that further differentiate each product.
  • All products share a common value promise, which enhances the credibility of Apple’s brand. Apple promises, “We’ll simplify your life and eliminate frustrations of electronic gear, while enhancing your capacity to do things.” Each new product (well maybe not the watch….yet) reinforces the promise.
  • Apple’s been smart to partner when partnering added deeper layers of value. Here I am referring to its app store and music partnerships. Look for many more with the new Apple TV.
  • Apple’s business models leverage superb core competencies, calling into question Columbia University Professor Rita McGrath’s argument that core competencies do not last.
  • Apple grooms leaders and exits leaders who do not rise to Apple’s level of aspiration. I for one am a great fan of CEO Tim Cook who is leaving his own mark on Apple.

There’s a lot more Apple could do in the area of corporate social responsibility. I hope Cook will take Apple down that path. He should, if the company wants to attract and retain future talent to continue this remarkable company’s market leadership. A place to start: with Intel no longer sponsoring America’s top high school science fair, The Science Talent Search, Apple should step up and in.

More articles by Kay Plantes

Kay Plantes is an MIT-trained economist, business strategy consultant, columnist and author. Business model innovation, strategic leadership and smart economic policies are her professional passions. She resides in San Diego, California but still considers Madison home. She is the author of Beyond Price.The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of WTN Media, LLC. WTN accepts no legal liability or responsibility for any claims made or opinions expressed herein.