Apple's quarterly results announced today noted one mildly grey spot amongst the (again) record figures – sales of iPod dropped by 7%.
It's not surprising really. As more and more people move to smartphones (and iPhones in particular) the need for dedicated music players becomes less compelling. Personally I haven't used an MP3 player for at least three years now. I doubt that Apple is that worried – iPhone brought in $10.1bn with an average sale price of $625 per device. How much does an iPod ship for?
Cannibalisation of existing product revenue streams is nothing particularly new – but it's really hard for an organisation to actually do. Spotting when cash cows in your product line are turning into dogs is a fine art – and one that traditional software vendors are struggling with. Big fat licence revenue versus slim (but recurring) subscriptions – it's a hard decision to make, but one that companies will have to do if they don't want to get completely overtaken by new entrants in the Cloud world. Often large established firms also suffer where internal competition means that new product or service lines of business are not only fighting their external competitors, but also their internal groups as well.
There are some famed examples of where companies have failed to do this – Xerox is the one that springs to mind with all of the incredible innovation that took place in the late 60s and early 70s at their Palo Alto Research Centre that the photocopier company didn't act on because it wasn't seen as something that would enhance their core business. The main beneficiaries of the PARC work – ironically, Apple. Compare the fortunes of the two companies today…
mmitII 