Apple and the iPhone
Featuring Steve Jobs
When Apple launched the iPhone in 2007, the iPod was its best-selling product and a symbol of its comeback from near-collapse. It was not a business in trouble; it was a business at its peak. And Apple knew the iPhone would gut it. Steve Jobs reportedly told his team that if anyone was going to cannibalize them, it should be them. iPod sales peaked shortly after and declined for years, while the App Store and a services business that didn't yet exist grew into tens of billions.
The hardest moment to walk away from a product is when it's still winning, which is precisely what makes waiting so dangerous. This case puts founders in the seat where the obvious move and the comfortable move point in opposite directions. It sharpens the call on when to disrupt yourself before a rival does it for you, and it stops short of telling you how Apple knew the timing was right.
Frequently asked questions
What is the Apple and the iPhone cannibalization case about?
It is about Apple launching the iPhone in 2007 even though it knew the new device would gut the iPod, which was then its best-selling product and the symbol of its comeback. Steve Jobs reportedly told his team that if anyone was going to cannibalize them, it should be them. iPod sales peaked shortly after and declined for years, while the App Store and a new services business grew into tens of billions.
When did Apple launch the iPhone and what happened to the iPod?
Apple launched the iPhone in 2007, while the iPod was still its best-selling product. iPod sales peaked shortly after the iPhone's arrival and then declined for years. In its place, the App Store and a services business that had not existed grew into tens of billions of dollars.
Why did Apple cannibalize the iPod with the iPhone?
Apple chose to cannibalize the iPod because it believed someone would eventually disrupt that business, and it was better to do it themselves than let a rival do it. Walking away from a product at its peak is the hardest moment to act, which is exactly what makes waiting dangerous. The bet opened up far larger App Store and services revenue.
What can founders learn from Apple cannibalizing the iPod?
The lesson is to be willing to disrupt your own winning product before a competitor does, because the comfortable move and the right move often point in opposite directions when a product is still on top. Timing that self-disruption is the hard part. CaseBook turns this into a move you apply to your own company, with an AI coach that reads your answer.