Market Share: Lessons from Steve Jobs

November 7th, 2009 by

By Pat Hinds

I read an interesting article recently on the CNN website called, The Decade of Steve; the article is about Steve Jobs from Apple being named the CEO of the decade in Fortune magazine. The article provided some very interesting insights into the successes of Steve Jobs over the last 10 years. I took a few points from the article that I feel reflect his commitment and focus on market share that I would like to share:

Article – The “decade” of Steve actually began in 1997, when he returned to Apple after having been ousted a dozen years earlier. That was a year of triage, of a humbling investment from Microsoft of paring Apple’s product line to a bare minimum of four computers.

Comment – This is a clear indication that having multiple product lines that under perform is detrimental to the success of a company. It is important that companies have the courage to walk away from lines of business that don’t make sense and focus on products that can make them money. This concept is magnified in the “New Normal” economic environment in reference to shrinking markets and increased competition.

Article – The success of the pricey iMac, coupled with drastic cost cutting, allowed Jobs to build a cash cushion.

Comment – There is a model built by the Boston Consulting Group called the BCG Matrix that speaks to the importance of a company having a product that is considered a “cash cow”. Cash cows are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business.

Article – “We’re the only company that owns the whole widget — the hardware, the software, and the operating system. We can take full responsibility for the user experience. We can do things that the other guy can’t do.”

Comment – I call this process the “fingerprinting” as it is important that companies not only focus on their product but take the time to understand the market, customer, and individuals they service. Steve jobs understood the consumer digital experience and built products to complement his core product to maximize the customer experience.

With 275 retail stores in nine countries, a 73% share of the U.S. MP3 player market, and the undisputed leadership position in innovation when it comes to mobile phones, Apple and its CEO are no one’s idea of underdogs anymore.

Comment – Good products distribution is the key to success; not only are Apple products in every major electronic retailer but Steve Jobs also invested in his own distribution. Companies cannot achieve a market share leadership position without multi-line distribution.

For those paying attention after Jobs’ return, the CEO was telegraphing Apple’s trajectory. “I would rather compete with Sony (SNE) than compete in another product category with Microsoft,” he told Time in early 2002.

Comment – Steve Jobs is a master of understanding market opportunity. According to the Product Matrix Model entering a new market with a new product you are faced with significant risk; as a result you need to make sure that it is a large addressable market and you understand your product advantage.,-h.-igor

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