How Apple Changed its Business explained with Business Model CanvasEstimated Reading Time: just 3 min

The Business Model Canvas (BMC) is the structure of a business plan on one single page.

The Canvas is popular with entrepreneurs and intrapreneurs for business model innovation.

Fundamentally it delivers three things:

  • Focus: since it is more concise than a traditional business plan
  • Flexibility: sitting on a single page itis a lot easier to tweak than a business plan
  • Transparency: it makes a much easier to understand a business model

This business model design template is based on:

  • Customer Segments
  • Value Propositions
  • Channels
  • Customer Relationships
  • Key Activities
  • Key Resources
  • Key Partners
  • Revenue Streams
  • Cost Structure
  • Social & Environmental

An interesting case study of a successful Business Model Canvas application is Apple.

Apple is a company based in Cupertino, CA and it is one of the most famous technology companies in the world scoring in 2017:

  • 229 billion $ Revenues
  • 61 billion $ Operating income
  • 48 billion $ Net income

The initial concept of the company was created by Steve Jobs, Steve Wozniak, and Ronald Wayne in April 1976 to develop and sell Wozniak’s Apple I personal computer.

The company encountered a great success during its first 15 years of life and then a decline that lasted until the late 90s.

This“dark age” was caused by some issues with creating products that were able to meet the needs of the market.

The situation changed with the return of Steve Jobs who was able to lead the company to create products that changed the world by exploiting the potentialities of the internet and, at the same time, changed the business model of Apple making it one of the most profitable companies in the world.

The business model of Apple until 2000 is described by the Business Model Canvas in the image below.

As reported in Customer Segments block, Apple targeted a vast market that was segmented based on the use made of the company’s devices.

This was the cause of the decline period Apple experienced between 1991 and 1997.

In fact, the segmentation and the building of Buyer Personas was very expensive and time-consuming in an age when data wasn’t easy to get since the internet wasn’t what it is today.

Therefore, it was easy to fail in meeting consumers’ needs.

In this situation, Apple introduced iPod in 2001 and iPhone in 2007.

The most important idea was to shorten the distance with the Customer Segments by introducing two additional Channels.

This was made in 2003 with the creation of the iTunes Store to:

  • Deliver a new Value Proposition: Music Experience
  • Increase Revenues by selling Music
  • Move to Customer Segments that configured in a Mass Market

The last point was reached by leaving the customization of the iPod to the Customers exploiting internet potential that allows everyone to download each song on its computer and then to upload it in its iPod.

Before iPod, physical supports for music required a segmentation of the market to forecast the demand while with iTunes Store this was handed to the Record Companies.

A step further was made with App Store that exploited the same principles of iTunes and perfectioned them. In fact, Apple handed the Customer Segmentations risks to the App Developers.

This huge change in the Commercial Strategy had, of course, an impact on the Operational and Financial Strategies and Content Agreements with Key Partners such as Record Companies and App Developers became a central matter for Apple.

Last but not least, every single decision has an impact on the environment in which a company operates.

In this case, Music Digitalization brought a massive improvement related to the CO2 impact of the Music Industry caused by a drop in physical supports production such as MCs, CDs and LPs. This has been a great Environmental Benefit related to the new Business Strategy.

Digitalization is a trendy topic nowadays but, for a bright side, there is always a dark one.

In fact, in terms of Social Cost, digitalizing implies a downsize in the Industry Employment that needs to be analyzed very carefully to understand:

  • What will happen to people with skills related to the old Physical Industry
  • If it is possible to compensate for Digitalization with other jobs

For what concerns Apple, the switch has been from jobs related to the production and distribution of physical supports to ones mostly focused on legal agreements and software developments that are probably better rewarded but involves overall fewer people.

Nicola Zaffonato Administrator

Business Strategy | Product Marketing | Executive Master eCommerce Management | Business Innovation Master | MSc

I am driven by my personal growth and of people/contexts that surround me.

I followed a professional path in Valentino Fashion Group and Luxottica during which, thanks to the ability to understand different businesses and interests, I was able to succeed in Operations, Merchandising and Retail.

These organizations have exploited my ability to mediate and translate needs/constraints into practice, assigning me to Project Management roles.

Luxottica relied on my ability to analyze, to anticipate things and to imagine/implement solutions by appointing me in Supply Chain Management department and assigning me to the Product Management of IoT solutions for Anti-counterfeiting and Retail digitalization.

During this professional path, I also developed my leadership by managing teams to build Processes, Organizations, Systems and Governance Tools.

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