scorecardThe number one key to Apple's success? It was second.
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The number one key to Apple's success? It was second.

The number one key to Apple's success? It was second.
Stock Market2 min read

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Apple is the world's largest, most profitable company.

In its most recent quarter, the company sold more than 61 million iPhones after selling a staggering 74.5 million iPhones in the quarter before that (during peak Holiday shopping season).

And while its most successful product, the iPhone, changed the way companies and consumers thought about the power and potential of cellphones, the company had one massive advantage when launching the product: it wasn't first.

On this week's Masters in Business podcast, NYU marketing professor Scott Galloway explains to Bloomberg's Barry Ritholtz that what Apple has enjoyed is what he calls "second-mover advantage."

In short, the idea that while conventional wisdom might say the first company to nail an idea gets to enjoy the spoils, it usually isn't the first but second company that gets an idea right that really enjoys that idea's success.

"If you talk about return to stakeholders," Galloway tells Ritholtz, "it's not the first mover, it's the second. The true innovator - the guy, the gal that goes first - usually doesn't serve shareholders that well. It's the person that comes in second."

Galloway continues: "Apple has been second at most stuff. They're not a true innovator in the definition of the word. They weren't the first into object-oriented computing (the mouse), they weren't the first mp3 player, they weren't the first mobile phone. But they look at something, they improve upon it, they weigh it, and they come in and make it more user friendly."

In the case of smartphones, take the fates of Apple and BlackBerry. BlackBerry was the dominant smartphone company in the mid-2000s, but since Apple has come along it has completely dominated the smartphone market, overthrown BlackBerry as the biggest player, and continued to squelch upstart competition from the likes of Samsung.

A quick look at the stock prices of BlackBerry and Apple since 2004 tells you everything you need to know. Apple is up more than 4,400% over the period, BlackBerry is down 85%.

Apple BlackBerry

Google Finance

For anybody who is interested in technology, retail, and how someone who teaches the next-generation of marketing executives and interacts with many of the world's largest, most powerful companies thinks about the world, this week's Masters in Business show is a must-listen.

Among other topics Galloway and Ritholtz touch on are how Galloway thinks Facebook will be the most valuable company in the world in 5 years, how Facebook pulled a "bait-and-switch" on corporations, why Apple's appeal is really about sex, and why the wearables market is totally dead.

Listen to the whole show here »

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