Our core philosophy is to never fear cannibalization. If we don't do it, someone else will. We know that iPhone has cannibalized some of our iPod business. That doesn't worry us. We know that iPad will cannibalize some Macs. But that’s not a concern. On iPad in particular, we have the mother of all opportunities because the Windows market is much, much larger than the Mac market. It is clear that it is already cannibalizing some. I still believe the tablet market will be larger than the PC market at some point. You can see by the growth in tablets and pressure on PCs that those lines are beginning to converge.
Each team begins to work on separate parts of the product. Piece by piece, the app goes from being owned by an entire company to being the responsibility of siloed teams. While this allows for the company to solve for the behavior of its existing audience, and these changes serve the company functionally as it scales, they ultimately lead to an environment that’s less innovative.