How a Digital Ecosystem Builds Value and Improves Business Growth.
A business ecosystem is a network of actors who do not necessarily have the same profile.
On the other hand, they share the same market and potentially have common interests.
As soon as they combine their strengths (financial, human, creative, material, technological, etc.), they can invent new products or services, which they could not have developed on their own.
And thus can bring more value to end customers.
The rise and success of companies like Netflix, Uber, Instagram, Google, IBM, Amazon, Apple… have shed light on innovation ecosystems and the uses of collaborative tools.
Now, I want to dive into a case study here on Apple.
And this is very important, and I can’t buttress it enough. And because in 2018, Apple reached the $1 trillion mark.
It was a remarkable feat because they were the first US company to hit that mark.
However, while that is interesting, consider the climb from 2000 a ten-year journey that brought them to the $1 trillion marks.
Apple didn’t start here. This wasn’t the story from the get-go.
How Apple Began…
So let’s go back to the beginning.
So the year was 1997. Apple was struggling.
Their market share was 4.3%, way behind, IBM, HP, gateway, and the rest of them.
Then Steve Jobs came back to Apple and began what I will call the laying of the foundation of the kind of Apple ecosystem we know today.
In other words, what they are enjoying right now is a result of the foundation which Steve Job laid to drive the kind of revenue growth that Apple enjoys.
In 1998, Steve Jobs came back, they launched the iMac, which sold 800,000 units in three months and a price point of $1,299.
Apple was way behind in terms of market share, to get back market share is a very difficult strategy that will push them not just in the PC market. But outside of that to make them the number one preferred choice when it comes to branding, in terms of product designs, and very creative work.
Then in 2001, they launched the iPod, which disrupted the music industry. 400 million new units were sold worldwide, it was a huge one as well, the building block of the ecosystem.
It was free, and it had its 100 million active users all contributing to the foundation of creating more engagement, driving retention, and increasing the customer lifetime value for Apple.
And in 2007, the iPhone came out, it disrupted the smartphone industry. Back at that time, Blackberry was the reigning champ.
While blackberry was more positioned as a product. Apple positioned their products within an ecosystem, this made it very hard to ignore.
It was almost nearly impossible to leave an Apple product for another company because the ecosystem was very strong. And if so 2.2 billion units of iPhone have been sold to date, over 2.2 billion is a remarkable success.
In 2008, the App Store came on the scene. There was the developer side as well as the consumer side.
Apple has over 20 million developer accounts with 2.2 million apps and over 180 billion app downloads.
Which is quite amazing. The iPad was launched in 2010 at a price point of $499, disrupting the tablet industry.
About 316 million units were sold worldwide.
Did you see Apple’s revenue climbing as a result of the ecosystem that began to increase from iMac back in 2000?
And the iPod in 2001. And the iPhone in 2007, Apple began to experience a hockey stick effect, which is revenue will begin to go up.
And that is a result of the building block of the ecosystem within their business.
Not only that, all of this is possible because Apple has made over 100 acquisitions of companies, new technologies in new markets as well as partners. And the beauty of an ecosystem is that it gives you a mind shift.
Apple and Samsung are competitors.
In an ecosystem, you might have to make partners of people that can help you offer maximum value to your customers. And this is a very interesting aspect of an ecosystem.
So your competition could also be a partner with you. So Apple has partners such as Singapore’s Accenture, at&t, horizon, Samsung, and the rest of them.
Meaning, which will also bring us to showing what Apple’s ecosystem looks like.
You need to bring in so many products that the customer can’t ever resist. And this is powerful.
Apple’s market Valley,
They are at 2 trillion. And as of 2020, Apple had revenue of $4.5 billion, a remarkable retention rate of 80%.
In other words, if Apple acquired 100 customers, they assured us to have 80% of those customers stay with them. And that’s just super good for any business, customer base $1.65 billion, and customer lifetime value of $2,040 in the tax amount. This can be achieved with an ecosystem.
Now what makes a great ecosystem,
Disruptive product or disruptive technology in a new market with strategic partnerships, so if you’re thinking of creating an ecosystem, you might want to consider new markets that your customers are already engaging in.