Innovation and Entrepreneurship at Apple - Case Study Example

iPod to iPad: Innovation and Entrepreneurship at Apple Contents Introduction 3 Discussion 4 iPhone more than just a product innovation 4 Challenges of sustaining this in the future 5 Apple’s ecosystem in comparison to Google’s ecosystem 6 Apple’s pricing strategy  7 Conclusion 8 References 10 Introduction Apple Inc. was formerly known as the Apple Computer Inc. is one of the multinational corporations that produces consumer electronics, computer software’s, iPods, mobile phones, laptops, personal computers, other digital commercial equipments and is a huge distributor of the media content. It was started way back in 1976 by Steve jobs and Steve Wozniak and they incorporated the company in 1977 in Cupertino, California. For more than two decades Apple computer has been dominating the market of personal computers including the Macintosh, Power Mac lines and Apple II. The company has grown in a huge way from the time it has been started and has covered a huge market globally in all the countries. In 2001 Apple launched the iPod music player and also supported it by launching the iTunes music store in 2003 which gave a huge benefit to the company and made it to become a global leader in the consumer electronic market. Apple is known for the iOS range of smart phones, t6ablets, and iPhones and media players and followed it with iPod Touch and then launched the iPad. By 2012, Apple has become the largest publicly traded corporation in the global market by market capitalization and incurred revenue of $156 billion. The market cap for Apple is much higher than combined market of Google and Microsoft. The company got a lot of growth from the previous year as in 2011 the revenue was US$127.8 billion. The report is related to the study of Apple’s innovation strategy that it continuously had in its process like the way it developed the iPad from iPod to gain market position and also attract more customers thus increasing its sales volume and also profit margin. Discussion iPhone more than just a product innovation The innovative products which the company launches in the market are of various varieties like computer hardware’s, software’s, various services and other facilities through internet platforms. The main business strategy of Apple is to develop unique electronic goods with unique design and also unique features that are there in every product. Apple has always launched the best quality product with unique features and they are highly user friendly and have innovative industrial design. Apple’s big belief is to focus a lot on the research and development part in the company so that it keeps launching new innovative products of high quality in the global market which can extend the limits of what the customer expects to get from the particular product category. The launch of iPhone in the global market is not just an innovation for the company but it did create a lot of impact in the company’s business. The company’s biggest strength being the innovative products that the company launches with good quality and unique features, iPhone was launched in the market in completion with the other Smartphone’s that were there in the market. The fist iPhone was launched in 2007 but the company followed its principle of continuous development and came up with iPhone 3G and launched it in a year time in 2008 (Chesbrough and Appleyard, 2007, pp. 112-113). The company got a huge growth in its sales by the launch of the iPhone 3G as the sales in 2007 of iPhone 2G got sales of $123 million but in 2008 the iphone 3G got sales of 1.8 billion. Apple Inc. got huge hike in its sales more than what they expected as by end of 2011 the sales revenue soared to $47 billion with a huge sales volume of 146 million iPhones in the global market. By the end of 2011 the total sales from iPod, the iPad and also the iPhone in together accounted to a sale of over $80 billion by value, which is 75% of the total revenue generated for Apple. This launch of iPhone by Apple was not just a case of making an innovation for the company instead it was a huge step towards capturing a huge market around the world (Schilling and Phelps, 2007, pp.1113-1117). The launch of iPhone helped the company in a huge way to increase its revenue and also build a good market image in the customers mind across the globe competition with the other Smartphone maker’s. iPhone provided customers unique features and also great design with quality which attract customers and make them prefer to buy iPhone rather than other Smartphone’s. Challenges of sustaining this in the future The biggest challenge that Apple is going to face in sustaining this huge revenue generation in future is from the competitors present in the global market. The prices of iPod, iPad and iPhones are much higher than other competitor’s products as a result of which customers are able to get more opportunities and thus they are able to shift to other companies rather than sticking to Apple. This does affects the company to hold on to the existing customers and because of this most of the customers do shift their preference and look to buy other Smartphone’s available in the market. Apple is left out only with the customers who have a lot of brand loyalty and prefer Apple more than others. Along with this Apple also faces a huge challenge from the growing popularity of other streaming networks that are been offered by Pandora, Spotify, Netflix and Amazon. These are able to disturb the huge hardware market share that Apple had (Venkatraman and Lee, 2004, pp. 876-885). For Apple Inc. another challenge from the continuous innovation and launching new innovative products from time to time in the market as the new innovative products des cannibalize the existing products in the market and the company before even getting profit for a particular product it loses its market share with respect to that product. This does hampers Apple’s market share in a huge way. When Steve Jobs was the leader and CEO of the company the company was highly influenced by him for innovations and for extensively market the products showcasing its unique feature which creates a lot of value to the customers but with Steve Jobs retiring and Tim Cook taking over as the CEO it is very difficult for the company to have the continuous growth in the same way as the company had with Steve Jobs as the CEO. Apple Inc. faced a lot of challenges in adapting to the changes and also gets influenced to work hard for the innovations and market the products in a good way to have a good competitive edge over other competitors. Apple’s ecosystem in comparison to Google’s ecosystem In the mobile industry ecosystem refers to the combination of services, devices, suppliers, producers, contents and consumers. The overall integration of all these factors is the ecosystem in mobile industry. The ecosystem for both Apple and that of Google are completely different. Apple follows a closed ecosystem where it maintains high level of security in keeping its process, software, uniqueness as a top secret from the customers and also the suppliers. On the other hand Google has an open ecosystem for manufacturers, app developers and also for the customers. Both the ecosystems have a lot of differences, the major four differences that the company ecosystems have are been seen. Apple’s ecosystem is tightly controlled and has a huge control over its process. The devices and the software are integrated properly and the secret behind its integration along with the sole distributor of iOS is Apple. Apple restricts the customer from making any changes or customizing the Apple products, for example iPod and iPad can run only songs and music which are in the iTunes format or are been downloaded from iTunes store. This allows the company to prevent its products from many malwares to protect the customers from pornography or any other form of virus that can affect the iOS in a huge way and lead to a crash of the system. For the customers to download the apps in case of Apple they need to pay extra amount and the apps are not available for free. On the other hand Google’s android is very open to all and customers find it easy to customize the products as they want. Google provides app’s to the customers through its Google Play store from where the customers can download apps for free or even by paying some amount. Android also provides a profit to the customers as they are able to download and update the software’s from any site wherever the particular software is available. The benefit that Apple has is that is has highly skilled employees who build apps, games and upgrade the software’s from time to time and update them in the Appstore. Customers get less option in the apple Appstore but customers feel much secured from these apps as they are free from all types of malwares. On the other hand customers get huge variety of apps from the Google Play store but they are not free from malwares as a result of which the customers don’t find the apps to be secured. Apple also has a closed source code which keeps the company to keep the source as a secret. On the other hand the source code of Google is very open and the apps can be developed by others also. This gives a lot of benefit to the company as many manufacturers can develop the apps and software’s and also takes help- from Google. Apple’s pricing strategy  Apple looks to position its products in the market by creating a differentiation with the other existing products with its unique product features and designs. It does keep the price of the products high compare to other products in the same category. Apple always has a vision to launch premium products and also charge premium price from the customers for its products. The cheapest product launched by Apple is in the mid range. These products are designed in such a way that they give a lot of value much more than its price to the customers. The company looks to price its products at a range which is very much high than other Smartphone’s valuable in the market because of the high quality and best design that the company provides in each and every product to the customers (Huston and Sakkab, 2006, pp. 234-237). Apple had this pricing strategy to create a niche in the market and create its own place in the market so that customers find these products attractive and also the products which help them in building better status in the society. But the company has faced a lot of loss and there is a huge slump in its profit margin because of the upcoming new Smartphone’s at cheaper rates and they also provide good service and quality to the customers. Conclusion Looking at this study it can be seen that for Apple the innovations and coming up with latest products in continuous manner is very important. The company gives a lot of importance to its research and development and also keeps its technology and process as a top secret so that it is not revealed in the outside markets. This allows the company to have their own huge manufacturing and developing process enabling it to create a niche in the market with unique apps, products. The company brings out new products with latest technology and also of best designs in a continuous manner which does affect the company also apart from benefit it. This affects the company as it cannibalizes the earlier products even before the product reaches its maturity level in the life cycle it becomes obsolete. The company faces many challenges in sustaining this continuous innovation and development in the products. Apple has a closed ecosystem on the other hand Google has a open ecosystem which allows Google to attract more customers as customers are able to customize the products and also get huge variety of apps without any problem for free. This creates a lot of challenges to Apple products apart from the premium price of the Apple products also affects the company a lot with the increasing high competition in the global Smartphone market. References Chesbrough, H and Appleyard, M. 2007. Open Innovation and Strategy. California Management Review. Vol. 50(1). pp. 57-76. Huston, L and Sakkab, N. 2006. P&Gs New Innovation Model. Harvard Business School. Vol. 84(3). pp. 234-237. Schilling, M and Phelps, C. 2007. Interfirm Collaboration Networks: The Impact of Large-Scale. Network Structure on Firm Innovation. Management Science. Vol. 53(7). pp. 1113-1117. Venkatraman, N and Lee, C. 2004. Preferential Linkage and Network Evolution: A Conceptual Model and Empirical Test in the U.S. Video Game Sector. ACAD MANAGE J. Vol. 47(6). pp. 876-885. Read More