Apple’s dwindling sales show importance of self-cannibalization

April 27, 2016 // By Howard Yu
The tech world is witnessing a turning point. Apple saw the first decline in its sales and profits in 13 years, triggering a selloff in the financial market that wiped out $43 billion of the company’s market value.

Such is the rough-and-tumble play of the high-tech world.

As recent as in Q1 2016, 68% of the company revenue came from the iPhone, while the iPad and Mac each commanded merely 9%. Apple is first and foremost a mobile phone provider, which in turn highlights the danger of overreliance on a single product for growth.  

Under Steve Jobs, Apple had a track record of cannibalizing its own products. In 2005, when the demand for the iPod Mini remained huge, the Nano was launched, effectively destroying the revenue stream of an existing product. And while iPod sales were still going through the roof, Jobs launched the iPhone which combined iPod, cell phone, and Internet access into a single device. Three years after the iPhone's launch, iPad made its debut and raised the prospect of cutting into Mac desktop computer sales. So resolute was Apple's determination in trading a highly profitable business for an unknown future that Jobs reportedly said "If you don't cannibalize yourself, someone else will." 

That mantra has apparently disappeared.