Innovation Activity on Mobile Communication Sector - Case Study Example

Innovation activity on Mobile communication sector Theoretical perspective of innovation Innovation is something which is new and useful in some sense. It can be market driven so as to promise a change which is positive. According to (McKeown, 2008) innovation is defined as the “new stuff that is made useful”. A lot of factors come together to make this a reality. It is of course a risk business but a risk worth taking. The companies grow and dissolve by taking such a risk. There is no single parameter which can be said as the driving force behind it. It’s a change, a change which is meant to be positive. Usually people share the ideas at work to come up with something new. Academia does this by putting resources in terms of study. This study may or may not be targeted to generate the funds. In contrast the Industry tries to come up with innovative ideas and products by looking at the consumer. This is a phenomenon which can be impulse or an incremental one. Usually the impulse nature arises as a result of a research and development which may lead to something new by invention or discovery, and later turns out to be a success in the masses. The second one is the gradual process, which mostly is an outcome of the improvement of a process with the passage of time. This improvement may become widely acceptable and become a standard for the peers. As described above that innovation are any changes that can affect one or more terms of one or more vectors of characteristics that can be service, technical or competence. This can come into existence by various phenomenons like evolution, deviation, appearance, disappearance, formatting, association or dissociation. These changes can be programmed intentionally, as a product of research and development, or they can be design or emerge as innovative activity or these changes can be the result of the natural learning mechanisms (Gallouj, 2002). The knowledge extraction from these natural learning processes can be influenced by the environment that affects the production of innovation. There are basically four factors that can influence the knowledge capturing capabilities within the environmental capital are (Daum, 2003): 1. Structural Capital 2. Human Capital 3. Partner Capital 4. Customer Capital During the process of innovation, the interaction between these factors will collaborate and exchange the ideas while aggravating one to each others. Innovation will be highly influenced by sticking to the knowledge that has been attained from the customer interaction or technology usage. This knowledge is very much important and related to all of the downstream activities, so in other words it can be said that the innovation is very much related to the stickiness and proper transfer and translation of this knowledge (Stoneman, 1995). The two ends of any product are the manufacturer and the consumer. In Hippel (1988) the clarification between the innovations led by the two poles is given. Any innovation which originates from the manufacturer end is called as manufacturer driven. This is the usual model and has been in practice for a long time; however there is another form of innovation process that started happening when the solution to the consumer problem is not met by the available ones in the market. In such a case the consumer comes up with an innovative idea or product which the solution according to its needs. Such a product may get popular and can start generating the revenue too. Linear model of innovation The linear model of innovation is the most commonly used one. The model constitute of the three phase of which are as following 1. Invention 2. Innovation 3. Diffusion In the linear model the whole process start with the outcome of an R&D. The costly R&D which results in a product at the end is then looked for the way it should be introduced to the people. The creative new marketable idea of the invention can make it acceptable with the people. Once a good and valid method is agreed upon then the final stage of diffusion or in other words marketing starts (Rogers, 2003). This is the final process in which the product actually goes into the hands of the end user. These three processes happen sequentially. In terms of required resources, inventions usually are the outcome of some kind of expensive R&D, which require some amount of resources and funds. This Invention is made usable by the innovation, which requires higher amount of resources and funds. Last is the diffusion process, which uses the innovative ideas to bring this to the masses. This last part requires the most amount of resources and funds (Rogers, 2003). It is usually seen that the user innovators, the users that came up with some solution to a problem become an entrepreneur to start selling their product. By product here we mean both the physical invention and an Intellectual property for which the individual or a group of people hold the rights of. If we look at a diffusion graph, which is a plot between time and the growth of the product, then we can clearly see that the whole process start with a very slow growth at the start, but at the mid of the process the growth is exponential with respect to the time. It goes like this for a short duration after which it stabilizes itself. This means that no amount of the resources can increase the growth again. After some time, the growth may start to be negative and eventually may cross the threshold where the profit becomes less than the cost. This is the point where the production is usually stopped. The Dissemination of the Innovation Not all the times the innovation is disseminated using the standard approach of marketing and selling. Indeed this is desirable to gain the benefits out of it, but there are certain other ways in which the innovation can be made public. In such cases the benefit does not come directly to the innovator, but in terms of the benefit to the society. As an example these days the software can be released in the “open source” community so as to further refine the product such that it can be made useful for the people. A very good example of such a scenario is Linux, an operating system for the computers. This was released as an open source and has now becoming so famous that it is forecasted to cross its OEM rivals in the coming years. The Mobile Industry The mobile industry is booming and it is forecasted that by 2015 the number of mobile terminals will be greater than the fixed line (ITU-T, 2007). This is indeed a lucrative business for the companies targeting this very technology. The technology itself is nearly few decades old, but the actual boom started after the initiation of the data services on the mobile platforms. The computing industry has already started seeing the mobile computing to be the next biggest thing after the introduction of the IBM PC in 1980’s. Mobile industry already exists in the world but now it is gaining more attention because of the technology innovation. The processing power of a today’s handheld device is far more than the super computers of the 1960’s. This is increasing further and has resulted in the possibility of the introduction of new enabling services. In many European countries, there is uptake of medium broadband GPRS-based services which has reached a market penetration rate of 70% to 80% (Mailand, Bauer & Westerveld, 2002). The mobile data technology which started from the simple messages grew so high that video transmissions to the mobile unit are now considered something usual today. The mobile industry is converging. The technologies are coming at lighting speeds. We are no more talking about the decades for the life of a technology; the life has been limited to less than a decade even. Organizations are forced to constantly come up with the innovative products so as to make them withstand the change. Modern day mobile communication industry can be viewed as the merger between the radio and the computers. The boom in the computing is affecting the mobiles at the very pace. The cell phone that’s the hot cake today will be no more in the shelves in the next 6 months. The companies are left with very tight deadlines. In mobile industry, every day there are new developments occurring therefore the traditional innovative models such as the famous Linear Innovative model or the Pipeline model are not perfect in this situation. These models do not describe anymore that how the innovation occur in the present competitive and emerging environment. There are other innovative models like the Cyclic Innovation Model (CIM) that looks at the innovation as boundary crossing process (Guus, Patrick, 2006). Cyclic Innovation Model presents the process of innovation as ‘cycles of change’. This cycle connects the science with business as well as technology with the markets (Guus, Patrick, 2006). Market Analysis for Mobile Communication Market The mobile market is greatly affected and driven by the technology players. The main players starting from the top are the standardization organizations, mobile operators, equipment manufacturers and finally the end users (Stoneman, 1995). Mobile sector as well as public sector should support the innovation and the research and development. These sectors plays vital role in the usage of information and communication technologies (ICT) and also in the knowledge that has been captured from using the ICT. This knowledge is so much important because innovative products or services can be developed from the ideas that are achieved from this knowledge. A crucial component that can affect the innovation is obtaining and using information through exchange about technology innovation through ICT usage (Tahir, Sam, 2010). The innovation in mobile sector caused by the combination of technological and market development. In this innovation there is a great impact of the cyclic interaction of the explicit scientific and implicit practical knowledge (Sabat, Hemant, 2002). The phenomenon of technology development for the growth of economies can be manifested through knowledge. It will be obvious by the existence of technological spillover and externalities that are possibly trouncing the threat of retreating return (Griliches, 1998). This industry is prone to the rapid changes in the technology. The operator comes in the market with the promise of better speed and bundled services, every time, so as to sell the products more into the masses. The market right now is moving towards the global convergence of the mobile technologies (Wirtz, 2001). The pre 4th generation of the mobiles has started to roll out in the market with new and improved features. The data download speed of Megabits/sec is being promised. The 4G is expected to roll out by 2015. This is giving a margin of only a few years for the next technology to take over. Thus the innovative ways to sell the products are the targets of the companies at the time (Mailand et all, 2002). IPhone an Example Case IPhone the flag carrier mobile phone by Apple Inc was first introduced in 2007. Just after its release it became so popular that all the other mobile phone developers were forced to come up with the products similar IPhone. IPhone is touch screen mobile phone. The features added to it are 2Mega pixel camera, accelerometer for sensing the orientation of the device, WiFi for connection to the home broadband, and up to 16 Giga Bytes of memory. IPhone is not considered to be a mobile phone but a sensation of the time. The concept of the technology is not only the delivery of the handsets to the end user, but the provision the support along with a huge new concept of enabling softwares which are exclusive to this very platform. This provision definitely has resulted in a new market and revenue generation mechanism. As an example, think of zooming into a picture at mobile using the natural gestures of figure, rather than punching some buttons on the phone. Consider a huge list of the apps specific to a certain daily task of life. Organizing the daily activities started to look like an enjoyment rather than a liability. The second generation of the IPhone came in 2009 with the introduction of the IPhone 3G. This phone offered better speeds, better image and video quality and thus again became the success. It was released simultaneously in US, Canada and European countries. Currently the IPhone 3GS is the latest in the market. What’s so special about IPhone? At the first sight the Ergonomics are brilliant. The body is metallic and gives a feel of sleek and slim power full machine at hand. The speed of the operating system is quite fast. The user can actually open the desired application with very few clicks. This is where apple actually introduces the concept of the apps, which are available to the user on the front page all the time and can be scrolled by using the thumb. A good thing about the apps is that these are being developed by the third parties. Each major software player on the computing market is targeting for the IPhone. The IPhone has indeed become a first priority of the mobile platforms. The companies like Tom-Tom and skype are targeting IPhone as a possible platform where they can easily reach the end user; thus defining another form of innovation. One of the reasons for targeting this is that not only that the IPhone was able to actually define the new standards in the mobile industry, but also it has been successful in becoming a status symbol among people. Although it was a closed system where the developers are confined to a certain set of functionalities to exploit, but still the number of applications available are tremendous. The concept of ITunes, a portal which was made by Apple for the IPod at the start, has now been a good place to buy the music for the IPhone users. The hardware capabilities of the device, like camera speaker are actually not the selling point here rather it is the add-ons and the support guaranteed by apple which is making this a success. Even though the problems are there with the Bluetooth on the IPhone but still the popularity has not gone down. This can be observed by looking at the number of people who searched for the word IPhone on the google.com for this specific key word. Figure 1: The search trend on Google for the word “IPhone” The Figure 1 shows the trend of the searching the word “IPhone” over the years. It can be seen that on the average it is going on the higher side. The top graph actually shows that how many time the word “IPhone” is searched. While the graph at the bottom represents that how many times it appeared in the news. After the first roll over in 2007 where a spike can be seen, the graph on the average has started increasing. The other peaks represent the launch of the IPhone 3G and IPhone 3GS. Clearly this all shows that it’s a market winner and still rising high. The possible new innovations in the mobile industry Location based services It is said that the location based services will get popular in the near future. In this concept the mobile handset will be sent the information or a service, based on its geographical position. As an example if someone is interested in seeing a movie which is released only for a certain location in a certain city then the system will first authenticate its position either through the GPS or through any other localization technique, and then will send the information in such a way that the user at that place at that time is allowed to view the information. For all others this transmission will remain encrypted and is useless. A number of new innovation services can be established on this thus making this as a new possibility of generating the revenue other than selling the handsets. Payment through mobiles The next biggest thing is considered in the e-commerce is the payment through the mobile handset. The basic concept is that the payment at any point of sale using the mobile phones. There are a number of ways in which this can be made a possibility. Some information carried in the mobile will be used as authentication method for the release of the payment to the merchant from the user account from the bank. Skype enabled phones The market has seen a tremendous amount of increase in the voip calls on the cell phone. Specifically the bundled package of Skype over the cell phone actually has resulted in a major success for the company 3 mobile in UK. With the introduction of the free Skype to Skype call and free internet services, it has won a major share of the mobile market. By looking at the trend it is evident that this innovative idea of Selling skype bundled with the mobile handset indeed proved as a good idea. So Skype must be something which should be there. Touch screen Among all the features that come with the handset, one is the clear winner and has actually made itself a criterion of buying a cell phone. This feature is its touch screen capability. The early touch screen devices came with the stylus which technologically was not very much different than the ones in use, but with the improvements the users have found this to be a more easy way of interacting with their mobile, thus making it a personal thing. As an example instead of having large buttons, the touch screen can be transformed into buttons of the choice. It is safe to say that this is the technology that will remain for a while. Physical keyboard, making its way back In the times where every smart phone is turning to the touch screens, there was an urge where a large number of the consumers wanted to go back to the actual keypad. They wish to keep all eth features with were not comfortable with the virtual keyboard. A number of makers have started coming back to the physical buttons. Multitasking Today, mobile handset are not a mobile phone anymore, rather these are mobile computer which are carrying a phone with in it. A lot of concepts which were developed on the PC are waiting to be transformed to the mobile. One of the innovation or break through in the PC was the Windows environment which allowed the Multitasking. Multitasking means that the user is allowed to do more than one job simultaneously on the PC. This is what the mobile phone awaits; introducing a software which can promise this will be a high boom Typing SMS through your voice The SMS evolved in the 2nd generation of the mobile systems, when people were wondering that who would actually want to pay to send such short messages. But today a huge traffic is generated on the mobile network by these SMS. It is likely that the SMS will prevail and will remain there. The applications like voice type which have matured to quite an extent on the PC can be a selling innovation for the upcoming devices. Imagine a person dictating a SMS instead of typing it. This is of immense use especially when driving. Writing on the go Writing something on the go might feel like a socially not acceptable idea at the start, but the next step of dictating SMS could be actually dictating the whole essay or an article to your device. The mobile in such a case has actually becoming the personal assistant of yours. Conclusion Innovation is an on going risk process in the companies’ lives that can help them to grow or to dissolve. Most of the companies use the linear model of innovation that involve invention, innovation and diffusion. Research and development plays a very vital role in this sequential model. As the technology evolving, mobile industry is also growing very fast although this is just few decades old business. Day by day new and innovative services are being introduced in the mobile sector. In order to endure the change in this competitive business work, mobile companies are coming with more innovative products and services to cope the attention of the customers. Mobile devices are no longer acting as just wireless telephones but now they are functioning like PCs, note books, radio, camera, Palm handhelds, entertainment devices etc. There is rapid and massive change in the technology therefore mobile industry has to meet the target of customer satisfaction with multipurpose packages. This industry is now moving towards the global convergence of the mobile technologies. Technologies that are very hot today they become obsolete in the coming six months, therefore now companies target the innovative ways to sell the products and this is the only way of persistent success in this competitive mobile industry. These ways not only involve coming up with new features but also need software development that can support these innovative features. An innovative mobile product was launched by Apple in 2007 i.e. IPhone. This launch forced the whole mobile industry to come up with more novel products that can takeover the obsolete technologies and products. IPhone is one of its unique kinds of mobile device that not only has an appealing and exclusive look but also has very innovative and exceptional features. It’s a sleek and slim metallic body with the touch screen. It is very easy to use. You just need a click and now the world in your hands. It has 3G technology with large memory, Mega pixels camera, a daily organizer, WIFI, accelerometer for sensing the orientation of the device, radio, media player etc, in simple words it got everything what a mobile user can expect to have. IPhone release defines new standards for the mobile industry and now companies are trying to develop products with services like IPhone. Recommendation There are several different models of innovation other than the linear model so a model that can fit in the present competitive environment should be used. These models should be based on the knowledge that comes from the usage of the already present Information and Communication Technologies. This knowledge from the ICT usage should be critically evaluate so that it can not affect the ideas that will later on develop the innovative services and products As the mobile industry is greatly affected and driven by the technology actors therefore all of the actors from industry masters to the end users should participate in the innovation phenomenon. There must be a proper linkage between the technology development and the industry so that the explicit scientific and implicit practical knowledge can come up with more innovative products and services. There is need for the research and development in the mobile industry so that the end user can get all kinds of services and standards in a single product which is easy to use and easy to purchase. Such innovative products should be launched in the market so that users from all communities can take advantages from these new technologies. There is need for the integration of the international as well as the local innovation activities so that the knowledge that has been gathered locally should have global impact and more innovative products can be developed. This integration is required because always there are issues of lacking of knowledge shared, networking and failure to internalize the spillover effect of knowledge and skill creation. If these problems can overcome then many new and innovative ideas can come up to develop new services and products. The knowledge and information gathered from the customers and from technology usage should be captured and managed so that it can be transform from ideas to innovation. References 1. 2. Zvi Griliches, 1998, R&D and Productivity: The Econometric Evidence, the University of Chicago Press, Chicago and London. 3. Md. Nor Hayati Tahir & M. Fazli Mohd Sam, (2010), Innovation activities in the Malaysian public sector: factors promoting the by product of ICT usage 4. Stoneman, P., 1995, Handbook of the Economics of Innovation and Technological Change, Blackwell Oxford UK & Cambridge USA 5. Faiz Gallouj, 2002, Innovation in the Service Economy: The New Wealth of Nations Edward Elgar Cheltenham, UK. Northampton, MA, USA. 6. Juergen H. Daum, 2003, Intangible Assets and Value Creation, Wiley, England. 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