TAMPERE UNIVERSITY OF TECHNOLOGY Institute of Industrial Management TETA-5036 Management of Innovation Case Analysis 1: Apple Computer return date: Sturday 10th Novemeber Students: 206192, Carlos Gomez, carlos. gomezbarbero@tut. fi 206171, Ceyda Elbasioglu, ceyda. elbasioglu@tut. fi 197327, Fabio Parisi, fabio.
parisi@tut. fi 206261, Gina Monjaraz, georgina. mojarazgomez@tut. fi 206622, Merve Eralp, merve.
eralp@tut. fi Table of Contents: INTRODUCTION1 Definition of the problem2 Historical strategy2 New Challenges3 Objectives & criteria for new strategies3 Options & Ideas for new and improved strategies4Alternative 14 Alternative 24 Alternative 35 Implementation plan5 INTRODUCTION Apple computers is one of the global leader in manufacturing consumer electronic devices and software, with a strong focus on design. The story of Apple started many years ago, as the company was established/funded in Cupertino, California on April 1, 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne. The company, incorporated January 3, 1977, was known as "
com/apple-incorporated-research-paper-3403/">Apple Computer, Inc. " for its first 30 years. On January 9, 2007, the company dropped "Computer" from its corporate name.The change followed Apple's announcement of its new iPhone smartphone and Apple TV digital video system and reflects the company's ongoing expansion into the consumer electronics market in addition to its traditional focus on personal computers (Wikipedia). In this analysis, based on the course case, on historical and up-to-today data, on our consumer experience (as influenced by marketing) and as Apple customer we try to figure out what are the most important challenges (we prefer to use the term challenge instead of problem) Apple is going to face in the near and not so, future.There is a brief Reference list that has been used to complete our knowledge and help us defining the problem and some concrete forecast (alternatives) and eventual strategies (solution) to be implemented.
This Reference has proved useful as the case is a little outdated, data present in it are updated to 2004, and we wanted to challenge ourself facing a real situation and unpredictable evolution of it. Definition of the problem Historical strategyWhile in the very begin Apple focused on performance, innovation and design all together, after losing the battle in performance with Microsoft, losing Steve Jobs and finally have him again in, the company decided to drop, at least in part, the focus on performance to strongly concentrate on product design and innovation. The result of this revolution aimed to regain a market share was the creation of devices that, we can say now, changed the life of many people. Such device name is iPod.While initially this sleek Mp3 player was compatible only with Apple computer and software, in the second part of the company revolution it was made compatible with Microsoft (Apple’s archi-rival) PCs and O. S.
(Windows 9. x and further releases) achieving a global leader position despite the quite high price on consumer markets. But in the electronic market the first who arrive never stays alone for a long time, as there competition is played at a very fast pace.Steve Jobs, the main player behind Apple’s game, has been able, so far, to keep the leadership in the market renovating it’s small creature in several different shapes and several different times.
A policy based on not sharing any details on future projects permitted, and very likely will permit again, Apple to keep being innovative. In this definition the word Innovation means being unique even only for just a brief period. A last (so far) and third part of the revolution in/of the company has been based on the integration of Apple hardware with Microsoft (!!! software, starting with the Ms Office suite and ending with Ms Windows XP O. S..
Along with this software integration, another has been moved in the hardware department, meaning that already two generation of Apple computers (Desktop and Laptop) are equipped with Intel processor, another historical rival. It’s quite clear that the actual strategy of Steve Jobs and Apple goes toward a biggest share of the computer markets, although it’s never sure in which way they plan to improve/achieve such a goal.Another key issue in up-to-today Apple strategy is it’s entrance on mobile markets, due to the big importance the telecommunications and their integration with all the other existing electronic devices (VOIP, UMTS, mobile broadband internet etc) has in shaping a so-called digital era/revolution. The first steps in the mobile phone market let us understand once more what the key points in Apple strategy are.
Innovation and Exclusivity go together, a higher-than-the-average price place the new device as a cult and trend object, something everybody want to have, a real status symbol.In few words Apple probably believes that a key concept in Innovation is the creation of a need. Along with the innovation in design, Apple is a pioneer and a leader as well in Environmental issues, another innovative approach that is granting more and more importance among customers of any product and people in general, due to very sensitive issue like Global Warming and home safety. New Challenges The question is whether Apple strategy will continue proving efficiently innovative.
Historically Apple suffered of some kind of a crisis every decade. Another key issue is the strong focus on the development of the iPhone, the first phone from Apple that has to challenge new giant rivals, the size of Nokia, Motorola, Samsung, Sony-Ericsson, leader in mobile phone market and already rivaling Apple on the Mp3 market where they have been playing a follower role, trying to reply and imitate Apple success but also building their market share. This is a very big challenge and Apple is aware of that.Because of the development pf the iPhone and the need of having it ready to be marketed, the releases of the new Apple Mac OS X Leopard has been shifted, for the first time in Apple history, of many months, despite of an official deadline, customers eagerly waiting for the new product and above all Microsoft new O. S. Windows Vista.
Objectives & criteria for new strategies As Steve Job and Apple’s main problem is keeping the leadership position in the market, the quest is for new alternative ideas to keep the actual market share or hopefully improving it.Apple’s strongest strategy has always been focused on producing completely new, unique and user friendly technology devices. Nowadays, form a customer point of view, Apple brand evokes the idea of innovation of design, quality and usage for software and hardware products. Therefore, customer’s expectations are for innovative ideas every time Apple launches a new product to the market. One of the most important criteria is thus meeting customer expectations in order to maintain the market share.For example, new releases of iPod feature always at least little changes such as a new design, new color alternatives or they offer improved software, software/hardware integration with new technologies and/or hardware improvement (i.
e. increased storage space, display size on decreased overall size). In the actual competitive market a key strategy in trying to reach new potential customers is to focus on customer’s needs as buy same quality products at a lower price. If another company provides very similar and cheaper products, customer could shift their attention on them.Historically, whenever Apple launched a new product they increased their market share but they lost it when they went on with the same product.
If their objective is to maintain the pioneering position and market share, they should search for new solutions. Among these new ideas there can be a change in the price strategy(already partially ongoing, see MacBook example), keeping on producing completely new products, modifying sales and market strategy while considering the customer demand and expectation (i. . iPhone is sold only by some Communication Providers and is SIM-locked, its official price has been dropped drastically after only a months etc).
Options & Ideas for new and improved strategies Alternative 1 The company will focus on the development of only few trendy products without implementing major changes in others. This will be something like the redefinition of its core competencies.This may bring the company at same situation as in the history of losing its total market share, and may become the end of the company since it is obvious that the sales would go down because of the lack of technology, remaining high prices that are not affordable for every range of customers. The sales shouldn’t be only based on the popularity of I-pod in today’s market since computers are also having a large part in Apple Company profile. The software needs a continuous innovation since the hackers and open source software is a big challenge that the company must overcome.Steve Jobs is obviously aware of this situation since he is once a hacker.
The solution is just developing new operation systems continuously. Alternative 2 Since the Apple Company has just founded their key strategy of success is innovation. Therefore it is a must for the company to make continuous innovations, developing products and designs to succeed. The key question is with what type of products a high market share can be sustained when looked from the customer and competitor’s side. Since the competition increases continuously, companies have to make innovations.For instance, faster processors, which all people agree it is necessary, shouldn’t be enough for Apple.
Since all competitors are able to produce fast processors Apple must add new features like smaller products, catchy designs, ease of use, higher quality, etc. Integrating several products within a new design is another idea Apple should consider. It is obviously attractive for people to buy just one product that which is an integration of several products features. For instance the new I-phone is the integration of I-pods features with a mobile phone, with mp3 and video player, web services and mobile phone. ).Another idea is integrating the idea of I-pod with TV.
Since the I-pod videos are now capable of playing videos, which can be downloaded from I-Tunes the next step may be selling Digital TV or some devices which people can download and store and watch movies. People demand for products that can work with several devices. For instance, a basic DVD can work with a TV, PC or video game. This idea can also be applied to I-pods. It should be able to integrated TV, Stereo, Car…It is possible right now but can be developed more such as by doing it wireless. Apple can improve it by developing a product which can integrate all the products using WiFi.
This idea can increase the sales of all their products, since people will feel buying one is worthy as they can use it with all the others. The challenge then comes integrating this with Windows that is the most used operating system now. Alternative 3 This is one of the main challenges that Apple Company has to overcome now. Because of the compatibility of I-pods with Windows Operating System it is possible for Microsoft to become a partner.
If the it is considered that, I pod’s sales have a huge increment when it is become compatible with windows devices, since Windows users are the majority among I-pod users.However this alternative seems not to work in reality, since it is impossible for Steve Jobs to sell Apple Company to its main competitor Microsoft when it has the largest market share in the mp3 market that will also cause to loose many of the main customers. . Implementation plan The maximum expression of Apple since it is first founded is the different and revolutionary conception of computers and electronic devices.
Because of that, and trying to preserve Apple and his employees, we strongly recommend the first of the alternative options found and suggested. There is a huge competition in the electronics market which is also very complex.Therefore, having a continuous innovation and differentiating from the rest of competitors, but at the same time, trying to meet the demand and create dependence on apple products, is the best of options for Apple. Nowadays, Apple brags about leading in design and innovation on the market. It is also true that Apple has tried to make products as simple and useful as possible with very high quality and with up-to-date embedded solutions/functions/technologies, integrating each product in a global solution and making them compatible with other solutions from different vendors.We think that keeping investing in innovation for all of it’s products should be the main strategy point for the company.
Achieving new markets (mobile phone markets) can be a very tough strategy is seen from a perspective of enhancing interoperability, integration, services and customer satisfaction (finding the loved brand in each kind of device). The first step is to identify the ideas to develop for new needs to be created or discovered and to find out products that can attract consumers. Expectations from customer are in terms of multifunction products that are also compatible with other products/services and technologies.Consumers are also always looking for lower prices and higher quality, that can be combined with the design and style that distinguishes Apple from others competitors. . Another idea is to use Internet and mobile communications in order to establish a permanent relationship between customers and Apple (some step in these directions are recently moved by a joint venture with Starbuck, where customers can update their playlist and download new music song according to the tunes played at the moment in the cafeteria OTA via WiFi connection, feature available on the new iPod Touch).
Or, for instance the use of iTunes can be expanded to TV or mobile. Additionally several products can be integrated within one to increase its global functionality. As a last option Apple should increase the number of its retail stores or improve store policies (recently they launched a new in-store service called OneToOne, where customerscan book a personnel in the store for a guided tour about the products they are interested in, without the need to queue once they arrive to the shop and with a clerk being already prepared to answer every kind of questions) in order to achieve better performance in the distribution of the products.However, it would also be cheaper and efficient to use current computer or electronic shops putting stands of Apple (trying to mark difference from the rest of the shop).
References Wikipedia – Apple Inc. (accessed in November 2007) [http://en. wikipedia. org/wiki/Apple_Computer] Apple official website (accessed in November 2007) [http://www. apple.
com] Yoffie, D. B. “Apple Computer, 2005” rev. August 4, 2005 Harvard Business School 9-705-469 Chakrabati, A.
– “Course slides” – fall 2007 Management of Innovation - Tampere university of Technology
