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Cannibalization is a huge opportunity for Apple says Cook

Diangson Louie January 25, 2013 · 2 min read

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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.

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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.”

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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.

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Diangson Louie

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This article was written by Louie Diangson, Managing Editor of YugaTech. You can follow him at @John_Louie.

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30 Comments

Valentin · 13 years ago

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jipoy · 13 years ago

“Apple welcomes cannibalization as long as it is happening in its own products.”

If a cheaper iPad mini will cannibalize the sales of the much expensive iPad then this statement doesn’t make sense at all.

Justin · 13 years ago

“I see cannibalization as a huge opportunity for us,” – Tim Cook

He obviously said this to hide the fact that he’s scared shi+less of the competition and to what’s happening to his company.

Iyan Sommerset · 13 years ago

The problem with hinging your success on products gimmicks is that you either eventually run out of gimmicks, or the public runs out of interest in your gimmicks.

This is why they’re now playing the size game, when a few years back they were so adamant on a single size for their phone & tablet. That held them back for a while and now they’re only playing catch-up.

I think they forgot to apply what made their iPod business really successful – a size for every occasion.

AvidReader · 13 years ago

But the problem is Apple isn’t making anything new. Just minitiurizing currently available products. iPad Mini and iPhone Mini are what theyve been working on according to rumors in circulation.

Then there’s also a rumor of an Apple TV? Might we be going in the direction of LG,Samsung, and Sony?

vince · 13 years ago

cannibalization is similar to planned obsolescence

you make a laptop. other people make laptops. consumers start to buy other bands of laptops. you then bring out a tablet. some people who would have bought mac laptops instead buy ipads. if that number is smaller than the number of people who would have bought other brands of laptops then you still win.

you know that your product will become obsolete when compared to those from others so jump the gun, unahan mo na by making a new product 2 steps ahead

sweetscrazy · 13 years ago

I think Apple is unwittingly setting its own destruction by betting too much on tablets. After people shift from macs and PCs to iPads, they’ll realize iPads are limited and will shift to Android. Now I know why Steve Jobs was so angry at Google.

Buster · 13 years ago

I think the same thing happening to
samsung…so many products but still managed to raise their markets share.

Buster · 13 years ago

I think the same thing happening to samsung…so many products but still managed to raise their markets share.

lolwut · 13 years ago

Yes, you’re right that same could be said about Samsung. It’s just that Samsung caters to every social status in the market ranging from high-end to the budget-centric. This, plus a good marketing plan makes them utilize cannibalization to their advantage. Whereas Apple on the other hand only caters to the high-end consumers where money is not an issue and status is all that matters leaving them with less customers who are willing to pay their price tag.

Zo · 13 years ago

in no way am I an Apple fan,but there’s that saying that goes “…the rich keep getting rich and poor keep getting poorer”

And the audience that Apple caters to are those that do shell out big bucks for such devices.

They ARE suffering reduced market share but if those they cater to keep dishing out big bucks for their products, then I believe they’re safe.. for NOW. I dont know how long they’d be able to keep this up though, because Samsung, HTC, LG, Sony, etc are pumping out high end devices like hotcakes and are quickly gaining traction.

Kwento Mo sa Pagong · 13 years ago

Apple didn’t admit the fact that they are now suffering like what happen to Nokia.

a.c. · 13 years ago

lolwut. please review the definition of cannibalization. it does not in anyway concern buying the competition. DUH. but still you have a point this will be their downfall because they are too confident about their products.

lolwut · 13 years ago

Sorry. I was just adding a hint of my personal opinion about the subject lol

lolwut · 13 years ago

Tim Cook must be delusional to have said all these things to their investors. Competition is at it’s peak for them and they seem to be overconfident with their products. More and more people are getting practical. Apple’s main market is the USA, outside US their market share continues to decline. No innovation and being a patent troll get’s them no where as evident by their falling stock prices. And yes, cannibalism makes consumers compare their products and at some point makes those same consumers consider a competitor product and may end up buying the competition. This may benefit them for now but in the long run it will be their downfall.