Apple isn’t a hardware or software company – it’s an ecosystem company

“There seems to be an ongoing debate among pundits on whether Apple is a hardware or a software company,” Eric Jackson writes for Forbes.

“Apple critics like to portray it as a hardware company and how its competitive advantage is built on shaky ground, as there will always be a new gadget that a competitor develops which could be more desirable than what Apple’s currently got,” Jackson writes. “As the years have rolled on however, it’s clear that Apple’s competitive advantage isn’t built on its hardware or its software. Apple’s greatest competitive advantage is its ecosystem.”

“While it’s certainly true that Apple needs to continue to build exceptional products, the bearish argument overlooks Apple’s primary source of competitive advantage these days: its ecosystem,” Jackson writes. “Apple has been able to maintain consistent profitability in an industry where almost everyone else is unprofitable. I think it’s more to do with the Apple ecosystem than anything else… While the critics might call it a walled garden approach, Apple looks at it as adding so much massive value to its users that there’s no reason to use any other products.”

Read more in the full article here.

MacDailyNews Take: We concur, obviously:

“Apple controls the whole widget for a reason. Apple’s not a hardware or a software company. They are both. It’s the total experience that Apple offers — hardware and software, both designed to complement each other — that is without peer.” – MacDailyNews Take, June 5, 2012


    1. Apple is following the trend that the auto industry had a century ago.

      People bought a car and then added all sorts of 3rd party accessories from windshield wipers to rear view mirrors, heaters and later turn signals (still optional after WWII as I recall).

      Smart, well-heeled consumers want a finished highly honed and smooth operating experience that just does what they want to do with minimal effort.

      Apple does it.

  1. This is EXACTLY why Apple is in the position that they are in today. You don’t buy an Apple product per say, you get an experience. You get a seamless fusion of hardware and software that no other company has managed to replicate yet. Apple does it all. Apple’s competitors just do some of it. There is a reason why we call it Fragmandroid: It isn’t seamless! Thanks Apple, for giving to world a gift of flawless computing.

  2. Apple just made it easier to program in Swift closing off an exit door to other OS platforms outside of their ecosystem. Apps were built for Apple first in C and later ported elsewhere. If the easy programing in Swift is used then that, “Oh well lets make a Android, Windows, …” has ended.

    1. How many apps would never have made it to Android it they did not first start with iOS then port to Android and elsewhere? Really, what was made for Android first?

  3. While Apple continues to build out its infrastructure, Samsung, others, are stuck with a steaming pile of Android. The stench will only get worse.

  4. Once again, MDN, you clarified the situation well before the pundits had a clue. I imagine that you could go much further back in time and find similar MDN Takes.

    It never ceases to amaze me how poorly the majority of the media personalities understand Apple Fans. When you get past the true fanatics (a small subset), you will find a group of generally well-informed people who like Apple’s products and services because those products and services are designed to meet our needs and respect our privacy as consumers. Apple does not want to wall us in. More importantly, Apple does not need to wall us in. We choose to use Apple products because Apple designs those products with the consumer in mind. If more companies used that approach, then the world would be far more pleasant.

  5. Or an experience company. They have created an ecosystem, but that is just one of their means for making their devices excel at doing things you want to do in the best way possible.

    Hardware, software, interfaces, services, stores, media, third party support, deep supply chain contracts, etc., are all just pieces of the puzzle for making the devices work well. Some of these things are front facing (ecosystem) some are not (parts, underlying OS, etc) but Apple adopts whatever aspects will contribute to the whole.

  6. I have been and continue to enjoy using just about every hardware product Apple has on offer. Apple gives away its software but we all know there is no free lunch and the cost of those free software is covered with the sales of hardware and iTunes/iCloud services. That is why many consider Apple a hardware company.

    I do believe the infusion of new blood such as that achieved by acquiring Beats will advance Apple’s services but the success of iPhone means all other device/software/service continue to be less than 50% of revenue so Apple will remain flagged as a hardware company from the market’s perspective. But there is another critical reason for labeling Apple:

    BUT Please do not expect the Wall St to care about the truth. Their job is to fleece the market and confusing the masses is critical part of the game they unleash on us all.

  7. I agree but I like to think it’s Apple’s superset of vertical integration that is their main advantage. Vertical integration includes all the ecosystem stuff but also folds in doing their own chips, doing hardware (design and engineering) and software together, having their data centers and always striving to do more of the same… basically owning and controlling everything important to their survival and making it all work together. You could not have this great and all-encompasing ecosystem without starting with the vertical integration that SJ always insisted was the way to go despite criticism that the Microsoft-Intel hegemony was more successful by spurning vertical integration. Now everyone is trying to copy yet another Apple feature: vertical integration. The only problem is (1) they won’t be able to invest enough to do it and remain profitable, (2) it took decades to get where Apple is now and there is not time in today’s hyper-paced technology world do catch up to zooming Apple and (3) No one else has the executive talent needed to conceptualize and accomplish this ambitious a business plan.

  8. Not strictly true as Apple had a similar place when it had no ecosystem which is a relatively recent addition. People bought macs because of the superior software and because it’s build quality was superior too. The ecosystem has just been added to the mix that not only expands that but makes each of the other two parts all the better. They all feed off each other.

  9. This is pretty old actually. I remember in the early 90s getting into the middle of an argument between two co-workers about what Apple was (one hardware, the other software), and I said it was a computer systems company.

    More so, I didn’t understand the need to come up with a conclusion as to whether it was one or the other. Were they arguing about which label they were going to affix to their logo?

    After iLife came out, a similar argument came up, and it seemed like Apple was a computer and media systems company, followed by computer/media systems and content delivery company; which eventually made its way to being simply called an “ecosystem” company.

    Ok, whatever… there’s still no point in this labeling exercise.

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