How can Apple tell when it has reached the end with iPhones?

Is the iPhone good enough?
[Via asymco]

We don’t want to just make a new phone. We want to make a much better phone.

– Jony Ive, video at iPhone 5 launch event

Disruption theory has taught us that the greatest danger facing a company is making a product better than it needs to be. There are numerous incentives for making products better but few incentives to re-directing improvements away from the prevailing basis of competition.

This danger is more acute for technology companies. Coupling incentives with the speed of improvement in various technologies (aka Moore’s law) means that over-service can come suddenly and more quickly than warnings from the marketplace. A product can tip from under- to over-shooting the market within one product cycle. One year the product is under-performing and trying to catch up to the competition and the next it’s superfluous and commoditized. The dilemma is compounded by the cycle time of development which can span multiple product cycles.

Therefore, how to tell whether a product is over-serving a market is one of the most important and frequently asked questions I get asked. It’s easy to see over-service in the rear view mirror when looking at a multi-year pattern. The trouble is that by the time you see the data, it’s too late. How do you tell you’re on the cusp of good enough, subject to imminent disruption before you get there?


This is a nice discussion of an innovator’s sort of dilemma – at what point does the continuing enhancement that happens with technological products extend beyond the point where the customer cares anymore?

So, Apple introduces a new and improved version of the iPhone. Apparently the iPhone5 and its new improvements are highly prized by buyers, so Apple does not have to worry yet.

And, it has a nice way to know when it has taken the iPhone as far as it can, without totally putting all its eggs in one basket. It keeps selling the n-1 version of the iPhone with the same profit margin as before.

If it improves the iPhone beyond the point that anyone really wants, it will see this because people will continue to buy the n-1 which i now much cheaper. In fact, they will get hints at this even before the introduce a new version.

So, Apple keeps a chain of  data coming in ti inform itself. As it gets closer to producing the best ‘good enough’ phone, it will see sales of the n-1 stay higher than expected. Then it will know it needs to come out with another disrupter as soon as possile.

So perhaps it is holding off on the Apple TV of the future until it knows it really needs it.