“Size is the enemy of growth. It is one of the unwritten laws of business, a matter of simple percentages. After all, when a company has $1 billion in yearly sales, an extra $1 billion doubles its size. Add $1 billion in new business to a $10 billion-a-year company, and it amounts to just 10 percent growth. The size-growth tradeoff seems inevitable, an inescapable force like gravity,” Steve Lohr reports for The New York Times. “Try telling that to Apple, the corporate giant that two weeks ago reported a 71 percent jump in quarterly sales. Apple generates revenue at the rate of $100 billion a year.”
“The software and services that work on Apple’s hit products are accelerating its extraordinary expansion,” Lohr reports. “Apple provides the underlying technology and marketplace: iTunes software and the iTunes Store for managing, downloading and buying music and media; iPhone and iPad software for creating applications; and the App Store for sampling and buying them.”
Lohr reports, “The more people buy iPhones and iPads, the more software developers and media companies want to write applications for them, as various as games and digital magazines. And consumers are more likely to buy iPhones and iPads when more entertainment and information applications are available on them. The combination of hardware, software and services is what corporate executives, economists and analysts call a platform. Successful technology platforms sustain and reinforce growth. And this self-reinforcing cycle is known as a network effect. It helps the platform owner and raises a barrier to competitors.”
Read more in the full article here.
