The Enlightenment from Apple's Business Model to Hardware Enterprises

The article “How to Reshape the Business Model” published in Harvard Business Review defines the business model as follows: Business model is how to create and deliver customer value and company value system.

Highlander Capital Founder Bob Higgins said about 20 years of experience in his career: Looking back at the development of the company, I think every failure is attributed to technology, and each success is attributed to the business model.

So how did Apple, which has increased its market value from US$6 billion to US$235 billion, increased nearly 40 times in just 7 years, how to innovate and use business models, and what implications did it bring to hardware companies?

Apple Mode: "Combination of Soft and Hard"

The business model consists of four closely related elements: customer value proposition, profit model, key resources, and key processes. The customer value proposition and profit model clearly define customer value and company value, and key resources and key processes describe how to achieve customer value and company value.

Apple's profit path is "soft and hard": one is to sell hardware products to get a one-time high profit, and the other is to sell music and applications to obtain continuous profits from repeated purchases. It can be seen that, compared with electronic companies that rely on the profitability of production and sales of hardware products, Apple is more of a software "music and applications". This is Apple's "key process" Apple Inc encourages innovative corporate systems, corporate culture and day-to-day management On the basis of work, its "key resource" CEO Steve Jobs's wise move, in 2003 Apple introduced pod matching music management platform iTunes, in just 3 years, iPod + iTunes portfolio for Apple's revenue of nearly 10 billion US dollars, almost Accounting for half of the company's total revenue, and later things have proved once again that every time the value of iTunes is estimated to be wrong, the value of iTunes is immeasurable!

So why do consumers accept Apple's "soft and hard combination" model? This is to return to the first element of customer value proposition of the business model. It refers to the irreplaceable value that the provided product or service brings to customers. This is also the key to the success of a business model. For Apple, the core function of the iPhone is a communications and digital terminal, which integrates the functions of mobile phones, cameras, music players and PDAs. This multi-functional combination provides users with a single function beyond the mobile phone or iPod. Apple's APP Store has nearly 200,000 programs, which are also an important part of the customer's value proposition. In addition, Apple has done a great job in user experience. These are the customer value propositions provided by Apple.

Provide irreplaceable value for users; excellent design and over 100,000 music and application support make iPod, iPhone or iPad much more profitable than competitive products; , Those applications are also more valuable, hardware and software complement each other, appreciate each other, Apple's "soft and hard combination" model no one can be against, but also worry about profitability?

Hardware company: "product + service"

A successful business model can and should be learned. For hardware companies, I believe that Apple's business model of “soft-hard integration” can be transformed into a “product + service” model, which is certainly not a simple phase between enterprise products and conventional services. Plus, but to create a sustainable technological platform based on the two, this platform is equivalent to Apple's iTunes.

What the hardware company should first study is the customer value proposition. No matter what the product is, it can be copied, duplicated, and surpassed. Therefore, a single hardware product cannot provide long-lasting irreplaceable value to customers. The technical advantage is only temporary. However, although the hardware industry is a traditional and basic industry, no one dares to assert that it will not fall into a “strange circle” where each failure is attributed to technology and each success is attributed to the business model.

In fact, innovative business models have brought unexpected benefits to hardware companies. E-commerce is the best example. Today, the majority of hardware companies have widely recognized and accepted the e-commerce sales model, but it was unthinkable 10 years ago, and most companies are skeptical and wait-and-see attitude. The facts prove that the first hardware company to eat e-commerce "crab" successfully opened up the Internet market, not only the brand has been greatly promoted, the market has expanded easily to take orders, compared with the traditional sales model, the cost of sales has dropped a lot, it can be said It is more profitable without harm.

Of course, the most basic is the product. Whether it is MP4, mobile phone or computer, the design and quality of Apple products are guaranteed. This is the basis for Apple to attract customers and promote iTunes. The same is true for hardware companies. Complete product categories, comprehensive specifications, excellent quality and perfect after-sales service are the first steps to occupy the market. Only then can the business model be innovated.

In addition to products, hardware customers must have other needs, or companies can take the initiative to "attack" to create certain special needs for customers. This is the entry point for the hardware business innovation business model. For example, a web-based sustainable technology platform, where customers can not only customize products to special specifications, enjoy the benefits of innovative technologies, and even inspire customers to discover new business opportunities. When your company can provide customers with irreplaceable value, so that customers have a sense of dependence, but also worry about profitability?