Product cannibalization may seem like a bad thing for some, but to Apple’s CEO, Tim Cook, it is something that should be seen as a huge opportunity rather than a disadvantage.
To give you a quick refresher, cannibalization refers to a reduction in sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer. “I see cannibalization as a huge opportunity for us,” said Cook during Apple’s first-quarter earnings report. “Our core philosophy is to never fear cannibalization. If we don’t do it, someone else will.”
He further explained that Apple is aware of the cannibalization happening in its own products. “We know that iPhone has cannibalized some of our iPod business. That doesn’t worry us. We know that iPad will cannibalize some Macs. But that’s not a concern. On iPad in particular, we have the mother of all opportunities because the Windows market is much, much larger than the Mac market. It is clear that it is already cannibalizing some. I still believe the tablet market will be larger than the PC market at some point. You can see by the growth in tablets and pressure on PCs that those lines are beginning to converge.”
In a nutshell, Apple welcomes cannibalization as long as it is happening in its own products. If it creates more demand for Apple products, then it shouldn’t be a cause for concern.