Many business and marketing gurus have been predicting the failure of Apple for a number of years. Here, I am going to cover what two very well-respected gurus – both of whom I admire – said or have been saying about Apple.  And the two are Al Ries and Clayton Christensen.

In an article in 2007, written in Advertising Age just before the launch of the iPhone, Al Ries was quite definite that the soon-to-launch iPhone would be a ‘major disappointment.’ In fact, in other fora, he was actually quite mocking of the iPhone.

His key reason for predicting the failure of the iPhone was that, unlike the iPad which was a divergence product, the iPhone was a convergence product. If you have read Ries’ books, you would know that he has consistently been arguing that markets tend to diverge, not converge; as a result many convergence products (for example, TV-cum-VCR) have been spectacular failures.

Why did Ries get it so wrong? I think he confused an iPhone with a cell phone.  In reality, the iPhone was a divergence product because it created a new category – that of a smartphone which was very different from a cell phone. Apple didn’t invent the smartphone – however, with the iPhone, it created an interactive user experience that was far superior to what other smartphones were offering. Its large, touch screen user interface and internet browsing feature created a truly divergent product. Also, possibly, Ries missed the imminent trend towards mobile internet devices.

Clayton Christensen has been predicting the demise (or at least a major fall), of Apple since 2006. Christensen is the eminent Harvard professor who propounded the theory of disruptive innovation. Christensen has been predicting the demise of Apple products for long. In 2006, he said that the iPod would fail; in 2007, he said that the iPhone would not succeed; and in 2012, he predicted that the iPad and the iPhone would lose out. His key argument was that Apple’s integrated approach would lose out to the modular approach followed by companies like Google and Samsung (and IBM earlier with the PC).

Business Insider’s Henry Blodgett asked Christensen why he has been wrong about Apple for so many years and why the iPhone hasn’t failed. Excerpts from the interview:

HB: You’ve been vocal for years on Apple having a not particularly desirable business model, because they have a closed system. It has surpassed lots of expectations. Why has the iPhone not failed?

CC: Well, A, they’re smart. B, their marketing was trying to find jobs to be done in people’s minds where there isn’t anything to get the job done. But the basis of that concern for Apple is another theory that we have, as spelled out in “The Innovator’s Solution.” And what it says is, in the early years of an industry’s life, almost always the dominant products are proprietary and interdependent in their architecture.

In the smartphone world, the first one was Nokia – excruciatingly interdependent architecture – then RIM, which was an even more excruciatingly interdependent architecture, and then Apple. And Apple was kind of halfway. Inside of the device, it’s proprietary, but it initiated the modularity in that you could develop apps and stick them in. But then just like IBM identified modularity with the PC, Google gave us Android. And now I think the Android operating system as a platform, modularity, accounts for about 90% of the units, even while Apple makes all of the profit.

So if Apple keeps its strategy of very high prices, their share of that market will diminish. And so ultimately they’ll make a lot of profit on 100 units. And Samsung, if they win, they will be making all of the units in the industry but no profit. Either way you’re screwed, but that’s the theory behind why I said Apple won’t succeed, because in the end modularity always wins.

HB: And what the Apple believers will say is, “You don’t understand. This is like the car market. Apple is BMW. There will always be a market for those of us who like the nice things in life. And Apple brings them to us. And by the way, they’re going to sell 65 million iPhone 6’s in the first quarter, so could you be more wrong?” That’s what they will say.

CC: That’s right. And what Clay will say in response is that you can never predict where the technology will come from, but you can predict with perfect certainty that if Apple is having that extraordinary experience, the people with modularity are striving. You can predict that they are motivated to figure out how to emulate what they are offering, but with modularity. And so ultimately, unless there is no ceiling, at some point Apple hits the ceiling. So their options are hopefully they can come up with another product category or something that is proprietary because they really are good at developing products that are proprietary. Most companies have that insight into closed operating systems once they hit the ceiling, and then they crash.

Clearly, two amongst many experts have got the Apple success story wrong. They may prove to be correct in the end; as of now, it is Apple 1, Ries/Christensen 0.

 
Visual courtesy : https://www.flickr.com/photos/32716504@N03/