Ability to Partner as Competitive Advantage

When it comes to services, Apple is in a better position to partner than any other tech company. It's difficult for Facebook or Google to closely partner with other service providers because other providers steal user attention and hurt ad sales. Horizontal service companies trying to be on all devices depend on the user's choice of their services over other services. 

A vertically integrated player like Apple doesn't care if its services dominate. Apple wants its services to be attractive and promote ecosystem stickiness, but Apple doesn't need its services to dominate to drive profits. That's because Apple's profitability is driven not by services, but by a three part mix of hardware, OS, and ecosystem. No single element of this mix dominates, and Apple can have a great ecosystem with in-house services/apps like contacts, calendar, notes, maps, and iWork, and third party services/apps provided by IBM, Microsoft, Twitter, Google, Facebook, and thousands of independent developers.

If you don't need your services to dominate or even be profitable to prosper, then you're free to partner with any service company you want. And that's what Apple does, partnering with IBM for enterprise software, Microsoft for its Office suite, and even Google for maps. These kinds of partnerships are difficult if you have a horizontal business model and you need your services to dominate to drive subscriptions or ad sales (e.g., Google search, Facebook, Evernote, etc.).

In a 2007, D5 interview Steve Jobs said he admired Microsoft's ability to partner with other companies. Apple now seems to address this issue by partnering as convenient on services while still owning the key hardware, manufacturing, and OS technologies and IP. See post titled Why Apple "Outsources" Applications and Services.

The author owns stock shares of Apple.

Defaults, New Performance Attributes, and Competing to be Unique

Using Defaults to Compete with Incumbents

I wanted to write a quick post on how Apple seems to use integrated device defaults, and the notion of defaults in general, to enter existing markets. Apple acquires Beats and then creates Apple Music and an accompanying streaming service to compete with incumbents like Spotify. Similarly, Apple develops and rolls out Apple Maps, makes it the integrated default, and effectively competes with incumbents like Google Maps (even though Apple Maps started out as an inferior service).

Clayton Christensen recommends entrants avoid entering existing markets to compete with incumbents because incumbents respond vigorously. When you're an integrated competitor controlling the service defaults on your devices, that advice may not apply. See Concepts page and discussion of Clayton Christensen.

Using New Performance Attributes to Compete with Incumbents

It seems like Apple is also using the concept of defaults to effectively enter the AI, search, and machine learning business. Apple is telling consumers that it's default approach with Siri, Spotlight Search, Proactive, and Intelligence is privacy first, data collection second. And Apple is contrasting its privacy/security priorities with the data first approach of Google and Facebook.

Apple is emphasizing a different default or performance attribute -- privacy/security -- to gain customers who value the privacy/security attribute more than the machine learning attribute. Apple is getting its foot in the AI, search, and machine learning business by prioritizing privacy/security and by not targeting users with ads (unlike competitors), offering consumers a private, ad-free environment that still provides high quality AI, search, and machine learning. Apple will improve its AI and machine learning capabilities over time, just as it's done with Apple Maps.

Using a new performance attribute (privacy/security) to enter an existing market (search, AI, and machine learning) is a form of new market disruption. See Concepts page and discussion of Clayton Christensen. And Apple's approach is asymmetric to what Google and Facebook can do because Google and Facebook must gather data and target ads to generate advertising profits. Apple generates all or most of its profits from hardware sales, not ads. So Apple is well-positioned to pursue a unique, differentiated approach to AI, search, and machine learning -- a more balanced approach that factors in privacy/security concerns. Ad-driven competitors are going to have difficulty matching this type of offering. 

Competing to be Unique

Michael Porter defines strategy as competing to be unique through a trade-off based set of unique activities with great fit. He also counsels companies to avoid benchmarking -- and competing to be "the best" at specific benchmark attributes -- because it leads to homogenous, undifferentiated products and price-based competition. See Concepts page and discussion of Michael Porter. 

Apple's approach seems consistent with Porter's notion of strategy: the company is forgoing some data collection to create a private, ad-free user experience, believing it can still create a high quality AI/search offering. Apple isn't competing to be the best at AI or search or machine learning. Apple is competing to offer a unique product/service -- based on an attractive combination of trade-offs -- that solves jobs-to-be-done for a meaningful segment of the populationSee post titled Acquisitions, Rivalry, and Strategic Trade-Offs.

Going a little further, Apple isn't selling the best AI, search, or machine learning -- it's selling a great, unique user experience with all the trade-offs that entails. Good trade-offs are the essence of good, tasteful product design, and Apple excels at design.

By pursuing a unique approach to privacy/security and AI/machine learning, Apple also reduces rivalry with Android OEM's. Apple and Android OEM's can sell differentiated, non-homogenous products, which helps avoid zero sum, price-based competition. Some will prefer Apple's approach and some will prefer Google's, and that's fine.

With complex products and services there is no one right way to solve a problem or address a job-to-be-done. Different consumers will prioritize different functions or features, meaning there's more than one way to make trade-offs and design a commercially successful product. This especially applies to large markets like the one for mobile devices and services. When the "market pie" is large, each pie slice is big enough for a viable, profitable business, meaning each industry player can design for its particular slice without engaging in a high rivalry, "speeds and feeds" spec battle. Apple has consistently followed this approach, refusing to engage in product/service benchmarking based on tech specs or specific product attributes.

Apple is also on the right side of a global trend -- both people and governments (especially in developed European countries) want user privacy/security factored into mobile devices and services. Apple seems to be skating to where the puck is going to be, betting that people and governments are going to want mobile devices to be private and secure, especially as these devices proliferate and are used for payments, unlocking doors, health records, identity verification, and so on. It reminds me of a quote from Franz Kafka that my father had on his office wall:

"In a fight between you and the world, bet on the world."

The author owns stock shares of Apple.

Why Apple "Outsources" Applications and Services

I believe Apple's business model is based on hardware profits, rather than profits from apps and services, because expensive hardware creation and the accompanying creation of Apple's OS and iOS are uniquely suited to the resources and capabilities of a large, well-funded company. 

Unlike hardware, the creation of apps and services doesn't normally require large capital outlays. And the best apps don't come from just one company or person -- they come from thousands of highly creative developers working alone or for small developer companies. Rather than compete against a large mass of highly creative developers -- by hypothetically trying to sell profitable, proprietary apps -- Apple instead offers its own apps/services at breakeven and allows developers to capture the profits from apps and services (with the possible exception of Beats Music, which Apple just purchased). This approach allows Apple to embrace and benefit from the creative efforts of thousands of developers -- creative efforts which Apple could not match in-house. It also allows Apple to embrace large, best-in-class service providers like Facebook, Twitter, and Google (to the mutual benefit of the service providers and Apple). When Apple feels it needs more control over an important service to enhance integration, ease of use, and the end user's experience, it takes steps to make the service proprietary (e.g., Apple Maps and Beats Music).

This may ultimately be the problem with Xiaomi's business model -- by relying on profitable apps and services rather than profitable hardware, Xiaomi makes the development of proprietary in-house apps/services the priority, when this kind of work should logically be outsourced to thousands of creative developers. Rather than embracing independent developers so that it can offer end users creative, best-in-class apps and services, Xiaomi puts itself in direct competition with developers.

The author owns stock shares of Apple. 

Business Models That Facilitate the Creation of New Products

A company with a business model that incentivizes and facilitates the creation of well-designed new products can avoid disruption indefinitely. Integrated Versus Modular Business Models

Apple's business model is based on hardware profits. To grow these profits -- and survive -- Apple has to create innovative new products. To create innovative new products, Apple makes sure it controls the key technologies and integrates the key functions of design, engineering, and manufacturing. As a vertically integrated company, Apple can create almost any piece of computing hardware it wants, creating new product categories, moving upmarket with sustaining improvements, or moving downmarket with simpler, more affordable versions of existing products. Companies that do this can avoid low end or new market disruption indefinitely -- they just keep creating new stuff, squarely addressing different jobs that need done.

Modular companies that assemble standardized components have to rely on component manufacturers to innovate. When a standardized component becomes good enough, additional improvements to the component won't drive additional sales for the company that uses it. HP and Dell's PC businesses have struggled, at least in part, because Windows 7 and existing Intel chips are good enough for many people. And because they aren't vertically integrated, HP and Dell lack the design, engineering, and manufacturing resources and processes needed to create attractive new computing devices. They're basically stuck in the low to middle end of the PC and tablet markets, selling standardized, modular devices based on different chipsets and different versions of Windows, Android, and Chrome OS.

Another drawback with modular assemblers like Dell, HP, Lenovo, Samsung, and others is that their reliance on standardized, modular components often leads to bad design. Because they're putting together modular components, their design options are limited -- they have to operate within the parameters of the standard components they're assembling. And if you're a modular assembler competing with other modular assemblers, you have to at least match your competitors' technical specifications. So to compete, modular manufacturers end up abandoning good design principles, often using components that overserve the job that needs done or putting too many features into the final assembled product. This ultimately results in: (1) poorly designed, undifferentiated products and price-based competition; (2) little to no meaningful new product innovation (just immaterial improvements to things like screen resolution or "speeds and feeds"); and (3) the kind of industry-wide overserving that developed in the Wintel PC market.

And that's exactly the kind of market that's ripe for disruption by an integrated competitor. An integrated company isn't stuck with standardized components and cut-throat, modular style competition, so it can design products based on the job that needs done and avoid overserving. The outcome is frequently a simple, beautiful product that happens to be more affordable than many overserving, modular alternatives (e.g., Apple designing the simpler iPad as an alternative to laptop PC's).

The Importance of Business Model Incentives and Resource Scarcity

Google and Facebook have ad-based profit models. With the acquisition of Nest, Google may be shifting toward a hardware-based profit model (as noted by Horace Dediu at asymco.com). To duplicate Apple's ability to efficiently create new hardware products, Google will probably have to vertically integrate thousands of design, engineering, and manufacturing activities. And that's not going to be easy. See post titled "Acquisitions, Rivalry, and Strategic Trade-Offs."

Some people see an ad-based profit model (Google or Facebook), or a business model based on tremendous scale and operational effectiveness (Amazon), and think the relevant company is a safe, monopoly-type business with predictable, growing earnings. But as Horace Dediu at asymco.com has noted, ad-based models may lose traction as Internet usage starts growing less in developed economies, which have higher personal incomes, and starts growing more in developing economies, which have lower personal incomes.

Additionally, when a company's business model doesn't really depend on the periodic creation of new products, it's not going to be as good at developing them. A company focused on collecting user data and churning out profitable ads, such as Google or Facebook, or trying to efficiently grow retail sales volume, such as Amazon, isn't really focused on creating entirely new product categories -- these companies are focused on improving the efficiency and performance of the dominant, profitable business models they've already established, whether it involves data collection, ad targeting, or operational effectiveness.

Clayton Christensen has noted that disruptive new products are generally developed in a context where resources are scarce. Most startup companies with a disruptive idea have scarce resources, so they have to be impatient for profit. That's because they need early profits to fund ongoing product sales and development. Early profits also test whether the product is truly disruptive, appealing to new and low end markets. Without resource scarcity, and the need for early profits, a company can keep wasting time, talent, and money on a product that lacks the market appeal to sustain itself. See Concepts page and discussion of Clayton Christensen.

You can see Google and Amazon doing this, at least to a degree, with: the subsidized/break-even Kindle Fire; the break-even Nexus products; Google's lackadaisical approach to the Motorola acquisition and to Motorola's hardware; and the high end Google Pixel (which doesn't even qualify as a low end or new market disruption). Because Google has a dominant, highly profitable ad business, while Amazon has a dominant, profitable retail business, neither company has to deal with resource scarcity. As a result, both companies are willing and able to continue subsidizing break-even hardware. Analysts looking at Google justify this by saying that Google uses subsidized hardware to collect data for its profitable ad business. Analysts looking at Amazon justify it by comparing the Kindle Fire to a storefront (which may arguably be true, although Amazon's customers already have an optional Amazon app storefront on most tablets and smartphones). The bottom line is that neither Amazon nor Google is strongly motivated to focus on disruptive new hardware that performs a specific job well, because their business models don't depend on profitable hardware sales.

Apple shares at least some of this motivation problem, since past product successes have provided it with abundant resources, especially cash. Apple doesn't have to deal with resource scarcity, so it must be vigilant in saying "no" to unfocused product ideas that don't squarely address jobs that need done; unfocused products waste time, talent, and money that could be productively used elsewhere. The big difference between Apple and companies like Google and Amazon, however, is that Apple depends on profitable new hardware to survive. Hardware isn't a side-game, so despite its resources Apple is still strongly motivated to design any new device around a job that needs done, which increases the odds of market success, prevents overserving, and often results in more affordable products that appeal to new and low end markets.

Maybe that's what Steve Jobs meant when he counseled others to "stay hungry, stay foolish" -- namely, to avoid complacency, and to keep creating well-designed products that squarely address important jobs. A good business model facilitates and incentivizes this effort.

The author owns stock shares of Apple.

Acquisitions, Rivalry, and Strategic Trade-Offs

There have been a lot of acquisitions lately. Facebook is acquiring WhatsApp for $19 billion, and WhatsApp apparently received a multibillion dollar competitive offer from Google. Google is acquiring Nest for $3.2 billion.  In 2012 Facebook acquired Instagram for $1 billion and Google acquired Motorola for $12.5 billion; Google is now selling Motorola to Lenovo for $2.9 billion.  In 2010 Amazon acquired Diapers.com for $540 million, and in 2009 Amazon acquired Zappos for over $900 million.

The Facebook/WhatsApp acquisition seems motivated by Facebook's desire to: (1) grow its user base and market share; (2) eliminate WhatsApp as a potential rival and as a buying opportunity for competitors like Google; and (3) possibly experiment with WhatsApp's paid subscription business model. In one of his recent Critical Path podcasts (Critical Path #112), Horace Dediu at asymco.com noted that Facebook and Google may both be experimenting with different business models, trying to move away from reliance on ad revenues. This motivation may be behind Google's recent acquisition of Nest. Similar to the WhatsApp acquisition, many of Amazon's acquisitions appear motivated by the desire to grow market share and eliminate potential rivals.

So the question is, do these acquisitions make good business sense, at least based on the strategic writings of Clayton Christensen and Michael Porter? See Concepts page for discussion of Clayton Christensen and Michael Porter and list of sources.

What is Strategy?

Porter defines a strategy as a unique set of activities that fit well together, making it hard for competitors to duplicate. Duplication becomes more difficult as the number of activities increase -- matching one activity is obviously easier than matching several. See Concepts page for discussion of Michael Porter and list of Michael Porter sources.

Southwest Airlines, for example, tailors its activities around delivering low cost, quick turnaround, on-time flights to budget-conscious consumers, so it doesn't serve meals on planes, doesn't take advance seat reservations (thereby permitting quicker boarding), and tries to fly in and out of more cost-competitive secondary airports (such as Midway in Chicago). Southwest's activities are carefully chosen based on the target audience (the budget-conscious traveler), and these activities are all designed to fit well together and complement each other. As a result competitors have not been able to effectively match Southwest's strategy.

Southwest competitors that try to offer low cost flights while also offering premium, full service flights typically fail because they haven't crafted a unique set of activities aimed at one target audience. When a competing airline targets the high end traveler and the budget traveler, it ends up splitting the difference in terms of activities and fit. Porter calls these companies "straddlers." A straddler tries to address more than one target market at a time, often through inconsistent activities that don't fit well together. Companies like this are unwilling to make the trade-offs needed to create a tailored set of activities that squarely address the needs of a specific target market; straddlers often try to address the entire market, leading to a haphazard, unintegrated set of activities, poor fit, and no real strategy. For these reasons it's easier for new entrants to compete with a straddler than with a company that has a unique, hard to duplicate strategy comprised of many well-integrated activities.

So an airline straddler targeting budget travelers and high end business travelers might give up reserved seating, going for quicker boarding and faster turnarounds, but be unwilling to give up service to primary airports like Chicago O'Hare. The problem is that this kind of middling product/service often appeals to neither the budget traveler nor the high end traveler. And straddlers generally lack the focused execution of a company that's made meaningful trade-offs based on its target market and the activities it's crafted around that target market.

Porter's point is that a company needs to try and move toward a unique strategy, with carefully chosen, integrated activities that fit well together. And a unique strategy generally targets a specific market segment rather than trying to be all things to all people -- untargeted strategies usually result in poorly chosen activities and poor fit. This point dovetails with the following quote from Steve Jobs, from October, 2008:

"There are some customers we choose not to serve. We don’t know how to make a $500 computer that’s not a piece of junk, and our DNA will not let us ship that. But we can continue to deliver greater and greater value to those customers that we choose to serve. And there’s a lot of them. We’ve seen great success by focusing on certain segments of the market and not trying to be everything to everybody. So I think you can expect us to stick with that winning strategy and continue to try to add more and more value to those products in those customer bases we choose to serve."

Porter believes companies should compete to be unique rather than competing to be the best.  Competing to be the best generally leads to product one-upsmanship and head-to-head comparisons (often based on technical specifications), which ultimately leads to homogenous products and price-based competition (all of which hurts industry profitability). If companies in an industry instead compete to be unique, then more than one company can prosper and destructive rivalry can be avoided. And a unique, hard to duplicate strategy is the best protection against price-based competition.

Lastly, Porter believes organic growth is best achieved by deepening and strengthening a unique strategy over time. Acquisitions that strengthen a successful, unique strategy make sense. Acquisitions for the sake of market share growth do not, and often lead to unfocused straddling.

Porter's concepts of activity and fit are very similar to Christensen's idea of avoiding disruption (i.e., building a strong competitive barrier) by integrating to do a job perfectly. See post titled "Avoiding Disruption by Integrating Around a Job-to-be-Done." Apple has integrated around the job of technology that's always available and that anyone can use, and is always striving to do this job more perfectly. Southwest has integrated around the job of providing cheap, reliable air travel to budget-conscious consumers. IKEA has integrated around the idea of providing cheap, easy to assemble furniture to budget-conscious consumers. All these jobs are accomplished through carefully chosen, integrated activities that fit well together.

So when you see an acquisition, or you see a company trying to grow rapidly, a relevant question is whether the company is trying to integrate activities to more perfectly accomplish a job that needs done.

Integrating Around a Job that Needs Done and Shifts in the Basis of Competition

Christensen says that over time the basis of competition for a product or service tends to shift from making functionality and reliability "good enough," to making convenience, accessibility, ease of use, customization, and affordability good enough. See Concepts page and discussion of Clayton Christensen. This shift may occur quite rapidly for companies without a unique, integrated strategy designed around a job that needs done. Companies without a unique strategy can quickly find themselves forced to: (1) compete on price; and (2) make expensive acquisitions to eliminate rivals, expand market share, and hopefully achieve sustainable network effects.

Incumbent companies with a unique, integrated strategy that squarely addresses a job that needs done may be able to avoid the final shift to low end, price-based competition. That's because it's very hard for new entrants to duplicate (let alone surpass) the tightly integrated activities of a well-entrenched incumbent with a unique strategy. New entrants may also be unwilling to make the trade-offs needed to pursue a unique strategy that targets a specific market segment (e.g., Apple giving up the low end market, Southwest giving up first class business flyers, and IKEA giving up consumers who don't want to assemble their own furniture). A new entrant's unwillingness to make strategic trade-offs gives focused, integrated incumbents a competitive advantage/barrier.

When you don't have a unique, trade-off based strategy, you're effectively forced to compete based on market share, network effects, operational effectiveness, and price. And when a company competes for the entire market, and doesn't have an integrated set of activities that's hard to duplicate, every industry competitor looks like a threat. Price and operational effectiveness can be competitively matched over time (Porter notes that cost efficiency and economy of scale benefits go to zero past a certain point), so your only competitive defense ends up being a dominant market share and network effects. The pursuit of market share and network effects leads to expensive acquisitions, new and often unrelated product/service lines, and new business models, all designed to grow revenues and eliminate competitive threats. In this scenario, a company's revenues may grow dramatically while its profits stay small. That's because a company with rapidly growing revenues or a "dominant" market share, but no unique strategy, lacks pricing power and can still lose sales to: (1) other large, price-based competitors with roughly equivalent scale and operational effectiveness; and (2) more focused, specialized competitors that are tightly integrated around the perfect solution to a job that needs done.

Large companies with dominant market share -- but no unique set of activities integrated around a job that needs done -- can be "unbundled" by one or more focused competitors with a unique set of well-integrated activities that squarely address a job that needs done (usually for a specific market segment, such as the budget-conscious Southwest traveler). Consumers in the target market segment will prefer the unbundled product that perfectly addresses the job they need done (often in a more affordable way). And as Christensen notes, focused companies that are integrated around the perfect solution to a job that needs done can avoid low end or new market disruption. See post titled "Avoiding Disruption by Integrating Around a Job-to-be-Done." 

Acquisition Fever

Google's unique strategy is effectively the algorithm for Google search, which has led to a successful advertising-based profit model. Google may now be moving away from this unique strategy, trying to match Apple's hardware-based profit model. To the extent Google tried to do this with Motorola, it clearly failed, selling Motorola to Lenovo at a substantial loss. Google appears to be making a second effort with Nest. The difficulty here is that Google has to duplicate (and probably surpass) the activities and fit of well-entrenched incumbents in order to succeed. If Google pursues a business model based on profitable computing hardware, it will have to match thousands of well-integrated activities already in place at hardware companies like Apple and Samsung. And as the number of activities increases, the likelihood of successful duplication decreases. The hardware business is also capital intensive, meaning that mistakes in this area are costly.

A hardware-based profit model also presents Google with a straddling problem. On one hand Google probably wants to use its hardware to collect user data, permitting better ad targeting on behalf of Google's advertising customers. On the other hand Google probably wants to preserve user privacy and minimize ads to enhance the hardware purchaser's experience, thereby boosting profitable hardware sales. If Google tries to sell ads at the same time it sells profitable hardware, it will be forced to serve two target markets at once (advertisers and hardware purchasers), resulting in compromised activity choices and poor fit across activities.

Facebook also depends on an ad-based revenue model, but it lacks Google's unique search algorithm. Facebook's acquisitions of WhatsApp and Instagram seem motivated by the quest for market share, network effects, and the elimination of potential rivals (including rival purchases by competitors like Google and Yahoo). These acquisitions don't seem to enhance or deepen a unique set of hard to match activities. Customers already have multiple messaging alternatives to WhatsApp, including Line, WeChat, iMessage, and traditional SMS services. And it's easy to switch among free messaging services -- users just give the service their contact information and then tap the correct app icon. Photo app alternatives to Instagram are also abundant.

To the extent Facebook is trying to move away from an ad-based model toward a subscription model (like the one used by WhatsApp), it has the same straddling problem as Google. On one hand Facebook wants to collect data and target ads for its advertising customers, which degrades user privacy and the user experience. On the other hand it wants to experiment with and possibly use subscriptions. Subscriptions enhance user privacy and the user experience but may antagonize Facebook's advertising customers.

And lastly, Amazon's acquisitions and rapid revenue growth seem driven by a quest for market domination and the elimination of potential rivals, hence the deals with Zappos and Diapers.com. Amazon is extremely cost efficient, and operates at tremendous scale, but as Porter notes the benefits of scale and operational effectiveness go to zero past a certain point. Operational effectiveness, massive scale, and the apparent pursuit of monopoly power don't constitute a unique strategy, and it's hard to discern what Amazon's unique set of well-integrated activities is. There don't seem to be any trade-offs based on a target market and the integrated activities needed to do a perfect job for this market. That's probably because Amazon is pursuing the entire retail market. The problem is that e-commerce has few barriers to entry, and Amazon still has a number of very large competitors, including: Wal-Mart, Sam's Club, Costco, Target, eBay, and Alibaba. All these companies offer a high quality e-commerce experience. Amazon's online experience may be a little better in certain cases, but this just comes down to operational effectiveness, and competitors typically catch up in this area. Amazon must also deal with more focused, integrated retail competitors who are trying to perfectly address a job that needs done for a specific target market.

Amazon's large competitors, as well as more focused, integrated competitors, limit Amazon's pricing power. Amazon can continue growing top-line revenues through acquisitions and new product/service lines, but bottom-line profit growth may be another matter.

Organic Growth and the Right Kind of Acquisition

So what kind of growth, and what kind of acquisition, makes sense? Blending the views of Porter and Christensen, a company should strive for organic growth by deepening integration and fit across carefully chosen activities, resulting in a more perfect solution to a job that needs done. Apple, for example, is focused on integrated activities to perfectly accomplish the job of always available technology that anyone can use. So good acquisitions enhance an integrated, perfect solution to this job. Apple's acquisitions of FingerWorks (multitouch control), AuthenTec (fingerprint security), and Embark (public transit mapping), all enhance product integration and make the technology easier to use. Good talent "acquisitions" for Apple might be people who can help it create and fashion new, integrated devices that are always available and easy to use. Every time Apple creates a new device that integrates into its existing device ecosystem, it strengthens the benefits of its unique, integrated strategy.

And when a market saturates, what should a company with a unique, robust strategy do? Porter says it should try and implement its strategy on a global basis. See Concepts page for discussion of Michael Porter and list of Michael Porter sources. Looking again at Apple, that's exactly what it's doing: (1) expanding into China, Brazil, and other large population areas with the necessary broadband infrastructure; (2) avoiding the low end and price-based competition; and (3) continuing to make technology that's always available and that anyone can use.

The author owns stock shares of Apple.