[Evolution] Taking Apple to the masses Hrush Dec 29, 2008

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Steve Jobs returned to Apple, the company he founded, in 1998 and found the company in a mess–a sprawling and undifferentiated product line, a clone licensing program that was cannibalising market share instead of growing it, a lawsuit against Microsoft and a confused workforce.

Since the launch of the blockbuster iMac, Jobs has achieved staggering successes with all of Apple’s major product launches:

• Streamlined desktop and laptop product lines
• iPod, iTunes, iTunes Store
• iPhone

Under Jobs, Apple has executed a very clear-cut strategy for entering a market and then growing market share steadily over time.

Click here for a full size version of the graphic.

As the graphic shows, Apple tends to launch a product aimed at the high-end of a market. They then slowly introduce models and variants that continually lower price points until they offer competitive prices for everything but the lowest end of the market. The graphic clearly shows how this strategy played out for two major pillars of Apple’s revenue–the iPod and personal computers.

Now imagine how the same strategy will play out for the third pillar of Apple’s revenue–the iPhone. The iPhone is currently priced for the mid-to-high end of the market, but it currently comes in only one model with two variants. We believe the company will roll out lower end models over the next few years and start competing more aggressively in the low-to-mid end of the market.

Imagine when Apple begins to start selling iPhone Nanos and iPhone Minis at half or less of what the current iPhone costs–like the iPod, the iPhone is set to become the must-have accessory of the next decade.

With over $25 billion in cash reserves and the strongest product line in its history, Apple appears extremely well positioned to continue to innovate and launch newer products aimed at delivering Apple to the masses.