iPhone's Domination and Competitors' Fall

When I came to UAE in 2004, with Eros Group was part of the Samsung Business Group team. Nokia and few manufacturers dominated the market, controlling 90% of global profits

The mobile phone industry underwent a seismic shift in 2007 when Apple introduced the iPhone.. By 2015, Apple's iPhone alone generated 92% of global profits, leaving former industry leaders struggling to remain profitable. This dramatic transformation raises questions about how Apple achieved such rapid dominance and why established players with significant advantages failed to maintain their positions.

At first glance, the incumbents seemed well-protected. They boasted strong product differentiation, trusted brands, leading operating systems, excellent logistics, protective regulations, substantial R&D budgets, and massive scale. These advantages should have shielded them from disruption. Apple, in contrast, was a relative newcomer with less than 4% market share in desktop operating systems and no presence in mobile phones.

The key to Apple's success lay in its platform strategy. Rather than viewing the iPhone as merely a product, Apple conceived it as a platform connecting app developers and users in a two-sided market. This approach leveraged network effects, where the value of the platform increases as more participants join. By January 2015, Apple's App Store offered 1.4 million apps and had generated $25 billion for developers, creating a thriving ecosystem.

This shift from pipeline to platform business models is reshaping industries across the board. Traditional pipeline businesses create value through a linear series of activities, transforming inputs into more valuable outputs. Platforms, on the other hand, facilitate high-value exchanges between producers and consumers, with information and interactions as their primary assets.