With only 8 words, Steve Jobs explained the best decision he ever made. This is something most leaders never understand.


Steve Jobs will probably always be best known for being the guy who introduced the world to the iPhone, the most successful product in the history of, well, everything. This has almost single-handedly made Apple the most valuable and profitable company in the world.

It also marked the tipping point for the company, which until then had been a niche computer maker with only a tiny share of the personal computing market. It had a string of moderate successes with the iMac and iPod, but neither would become as successful or culturally significant as the iPhone.

In fact, for the iPhone to become a thing, Apple had to make a very difficult decision about the iPod – which, at the time, was Apple’s most successful product to date. At the time, it was the iPod that drove Apple to record profits. It was the iPod that made the company cool with an audience that had never used a Mac.

Apple’s advertisements with colorful figures wearing its signature white headphones were everywhere. The iPod and the iTunes Store had legitimized and dominated an entire industry – digital music downloads – almost instantly.

The iPod had such notoriety that when Steve Jobs introduced the iPhone to the MacWorld stage in 2007, he described it, in part, as a widescreen iPod with touch controls. It wasn’t really a widescreen iPod, but Jobs was leaning into the idea that people knew what an iPod was and they could imagine what a widescreen version that you could control at to touch.

What Jobs was doing was completely replacing the iPod. With the iPhone, Apple transformed the music player from a product into a feature. If you have an iPhone, you really have no use for an iPod. In almost every way imaginable, the iPhone is better at everything the iPod does well.

I think it’s fair to say that the iPhone effectively destroyed any future the iPod might have had. Of course, you can technically still buy an iPod touch – a true widescreen iPod with touch controls, but I don’t know of anyone who does.

There is no doubt that the iPhone would not have been possible without the iPod. Not only has this increased the awareness of the Apple brand among the masses, but it has also transformed this brand into a status symbol. The iPod was cool.

Still, from a business perspective, the iPhone seems like a terribly risky idea. It was a death sentence for the company’s most popular product at that time. The year the iPhone was introduced, the iPod sold 50 million units. Within a few years, this number was cut in two.

Most companies take the opposite stance, trying to milk their flagships well past their peak. Once they become a cash cow, most companies are terrified of doing anything that will disrupt a good thing.

The problem is, if you’re not willing to look beyond your best product, someone else surely will. “If you don’t cannibalize yourself, someone else will” Jobs famously said. It’s not just a good quote – it’s possibly the smartest achievement he’s ever had, and the reason why the company he founded is now more valuable than any other. Rarely is a company willing to cannibalize its own product to make a new one. It’s the smartest thing Jobs has ever done.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.


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