3 product development lessons from Apple’s AirPods

StatsPanda recently released data showing that the full year 2020 revenue from one of Apple’s products – Airpods – dwarfs those of several top tech companies including Twitter, Spotify, Shopify, Uber, and Adobe. Apple brought in over $23 billion only from the sale of Airpods, to top Adobe’s total 2020 revenue at $12.87 billion, double Uber’s $11.14 billion, more than two times Spotify‘s $9.55 billion, and more than six times Twitter’s $3.72 billion.

You will think this is fairly impressive until you go back and read through it again, to realize that we are talking about revenue from a single product. This figure does not capture revenue from sales of iPhone, Mac, or any of Apple’s services. It is just a single – but now a prime – product that was introduced in late 2016. Of course, you may have read other expert analysis that talks about how this figure is more than some countries’ annual budget, but that is not the concern here.

Reflecting on it, I thought there are a couple of lessons startup founders could take from Apple.

First, the AirPods were introduced into the market at a time Apple was already seeing a drop in the sales of its iPhones and other products. The diminishing global demand for smartphones, and Apple’s decision to stop disclosing unit sales for iOS devices and Macs in its financial reports, gave even more concerns that the financial situation could be really serious. The space was getting competitive and Apple had the rest of the smartphone companies as its competitors.

The lesson for founders here is that when you experience a drop in sales or competition gets tougher, it could be time to inject a new product. The smartphone space was getting saturated and unique as Apple’s offerings were, competitors seemed to be offering equally sleek designs, but lower than Apple’s premium pricing. It would have seemed at this time that just injecting a new iPhone model could not solve the problem. Apple did its research and came up with this tiny product that is now bringing in so much revenue to the company.

Second lesson. When Airpods was introduced in late 2016, people thought the innovation a bit ridiculous. Some worried that they would fall off the ears and easily get misplaced. It became the center of some really tough jokes. Maybe some lily-livered entrepreneur in a similar situation would have withdrawn the product from the market, but Apple did not. They have sure made improvements and additional features to the product since it was innovated, but at the core, the value remains. With it, one does not have to have wires tied all around him to use a hearing.

The last thing to note in Apple’s strategy is that services still make a significant of Apple’s income. The iCloud subscriptions, Apple Music, the App Store, and others are those little services that will continue to bring in revenue for Apple. The fact that you cannot use any of Apple’s products without the services means that as long as the products are out in the market, Apple will continue to make revenue from its services. Even when the sale of iPhones was experiencing a decline, the revenue from services remained.

Never joke with your services. It is an excellent idea to have products and solutions, but where possible and as soon as you can, get a continuous maintenance service that you can give to the market. Tie your services to your products, so that even if you fail to make new sales, you will have revenue from servicing customers who already have your products. If all your income can only be traced to your products, then you are setting yourself up for continuous work. In most businesses, there will be times of declined sales, and if declining sales heavily cut into your revenue, making it hard to stay operational, then you do not have a sustainable model yet. It is a little of both – services and products.