When Apple Changed the Way Software Was Sold

In 2007, when Apple launched the first iPhone, the company initially did not plan to allow developers to create native third-party apps. Instead, Apple suggested that developers build web applications for the iPhone. However, developers strongly pushed for a better solution. Apple eventually changed its approach and introduced the App Store on July 10, 2008, with around 500 applications.

The App Store created a new way for developers to reach customers. Instead of selling software through traditional stores or distributing it separately, developers could place their apps on one digital platform, while Apple handled distribution and payment. At launch, developers received 70% of app sales and Apple kept 30%. This was more than a new technology—it was a new business model. Apple connected developers and customers through a digital marketplace and created a new ecosystem around the iPhone. It shows why choosing the right business model can be just as important as having a good product.

What Is a Business Model?

A business model explains how a company creates value for customers, delivers that value, and generates revenue. It describes who the customers are, what the company offers them, how the product or service reaches them, and how the business earns money.

A business can follow an established approach or challenge traditional practices. Therefore, business models can broadly be divided into standard business models and disruptive business models.

Standard Business Model

A standard business model follows an established and proven way of operating a business. It does not necessarily mean that the business lacks innovation. Instead, the basic way of creating and earning value is already familiar within the industry.

Standard models are common in retail, manufacturing, restaurants, banking, and many traditional service businesses.

1. Retail Business Model – Walmart

Walmart is an example of a traditional retail business model. It purchases products from suppliers and sells them to consumers through its stores and online channels.

The company creates value through product variety, competitive pricing, convenient locations, and an efficient supply chain.

How it earns money:
Walmart earns revenue by selling products to customers at prices higher than its costs.

Why it is effective:
The model is simple and well understood. Walmart’s large scale and efficient supply chain help it compete on price.

2. Franchise Business Model – McDonald’s

McDonald’s is one of the best-known examples of a franchise business model. Many restaurants are operated by franchisees who use the McDonald’s brand, systems, products, and operating standards.

How it earns money:
McDonald’s generates revenue through franchise fees, royalties, rent, and sales from company-operated restaurants.

Why it is effective:
The company can expand its brand into different markets without directly owning and operating every restaurant.

3. Manufacturing Business Model – Toyota

Toyota represents a traditional manufacturing model. The company produces automobiles and sells them through dealerships and other distribution channels.

How it earns money:
Toyota generates revenue primarily through the sale of vehicles and related products and services.

Why it is effective:
Efficient production, quality management, strong branding, and an established distribution network support the model.

Disruptive Business Model

A disruptive business model changes the traditional way of creating, delivering, or capturing value. It often uses technology, new distribution methods, alternative pricing, or new customer experiences to challenge established businesses.

Disruption does not simply mean “using new technology.” The important point is that the business changes how value is delivered to customers.

1. Platform Business Model – Uber

Traditional taxi businesses generally connect customers and drivers through taxi companies, dispatch systems, or physical taxi stands. Uber introduced a digital platform that connects passengers and drivers through a mobile application.

How it earns money:
Uber earns revenue by taking a portion of the payment associated with rides and through other services.

Why it is disruptive:
It changed how customers request transportation and how independent drivers can provide transportation services.

2. Marketplace Business Model – Airbnb

Traditional hotels own or operate accommodation properties. Airbnb created a platform where individuals can offer rooms, apartments, and houses to travelers.

How it earns money:
Airbnb generates revenue through service fees associated with bookings.

Why it is disruptive:
It created an alternative way for travelers to find accommodation without depending entirely on traditional hotels.

3. Freemium Business Model – Spotify

Spotify uses a freemium approach. Users can access a free version supported by advertising, while premium customers pay for additional features.

How it earns money:
Spotify generates revenue from advertising and paid subscriptions.

Why it is effective:
Customers can try the service without paying first. Successful free users can later become paying subscribers.

4. Digital Platform Business Model – Apple App Store

The Apple App Store is another important example of a disruptive business model. Before digital app marketplaces became common, software was often sold through physical stores, websites, or direct distribution.

Apple created a centralized digital marketplace connecting developers with iPhone and iPod touch users. When the App Store launched in 2008, it had more than 500 apps, and Apple took a 30% share of paid app revenue while developers received 70%.

Why it was disruptive:
The App Store changed software distribution and helped create an ecosystem in which independent developers could build businesses around mobile applications. Apple itself later described the App Store as an ecosystem that transformed how people access and pay for software and services.

What Makes a Business Model Effective?

Whether a company uses a standard or disruptive model, an effective business model should have several key characteristics.

1. Clear Customer Value

The business must solve a problem or satisfy a genuine customer need. Airbnb provides travelers with alternative accommodation options, while McDonald’s provides convenient and standardized food.

2. Sustainable Revenue

A business needs a reliable way to generate enough revenue to cover its costs and support future growth. Spotify combines advertising revenue with subscription revenue.

3. Cost Efficiency

An effective business model should use resources efficiently. Walmart’s large-scale purchasing and supply-chain operations support its low-price strategy.

4. Scalability

The model should allow the business to grow without increasing costs at the same rate. Digital platforms such as Airbnb can expand by adding more hosts and customers rather than building a hotel in every location.

5. Adaptability

Customer preferences, technology, and competition constantly change. Businesses must be able to adjust their models. Apple expanded the iPhone beyond a hardware product by building an app ecosystem around it.

6. Competitive Advantage

A business model should provide something that makes the company difficult or costly for competitors to copy. Apple’s combination of hardware, software, services, and its developer ecosystem creates an integrated customer experience.

Why Choosing the Right Business Model Matters

A good product can attract customers, but a good business model helps a company sustain and grow that success.

The Apple App Store is a strong example. Apple did not simply sell another product; it created a platform connecting millions of customers and developers. The App Store launched with about 500 apps and eventually developed into a major software ecosystem.

Similarly, businesses such as McDonald’s demonstrate how a well-designed standard model can support large-scale expansion, while companies such as Uber and Airbnb demonstrate how alternative models can change customer behavior and reshape industries.

Conclusion

An effective business model is the foundation of a sustainable business. Standard business models provide stability by relying on proven approaches, while disruptive business models create opportunities by changing how value is created, delivered, or captured.

Neither approach is automatically better. The right choice depends on the company’s customers, industry, resources, competition, and goals.

The most successful businesses are often those that understand when to follow a proven model, when to innovate, and when to completely rethink the way business is done. In a rapidly changing economy, the ability to adapt a business model can become one of a company’s strongest competitive advantages.