Discuss about the Core competencies of Apple’s product.
Innovation is integral process for every company as it helps to bring effective changes in the organization. The description will be made on mobiles technology and this report will describe about the innovation of Iphone. Iphone is the product of Apple Company that brings huge changes in the world by providing effective technology to everyone. The impact of Iphone on smart phone market and Smartphone technology will be mentioned. The depth information will be collected such as innovation model, drivers of innovation of Iphone, stages of production and innovation type of iphone. A core competency is effective approach for the company that help to distinguish an organization in marketplace. Swot analysis, porter’s five forces and pestle analysis are approach that help to draw the effective conclusion regarding the chosen product. These will be made on iphone 1st generation 2007.
Mobile is an effective innovation that can be utilized to communicate over long distances without wires. Mobiles were not effective until the launch of Iphone as it provided limited features to the user such as low quality camera, slower keyboard, lack of Wi-Fi connectivity, less battery backup and heavy body of the phone. There were some examples of some companies’ product that provided these features to users such as BlackBerry Curve 8300, Nokia N95, Palm Treo 65, Samsung Black jack, Sony Ericson K800i and Motorola RZR. They were lacking to provide the feature of effective camera, improper operating system, slow run process and heavy body of the phone. The best features of this phone in that time was new track pad with navigation, camera services, 2G net services and availability of phones in different sizes, shapes and prices.
There were lack of services in smart phones and the first generation of Iphone was announced on January 9, 2007. It was announced in the United States on June 29, 2007. The feature of this phone is quad-band GSM cellular connectivity with GPRS and EDGE support for data transfer. There are various features in Iphone that makes it stand out. It provided its own operating system which is a revolutionary multi touch interface. It could be controlled by fingers (Teece, 2010). The display of phone was gigantic which had 3.5 inch display and had resolutions of 320 x 480 pixels. Internet connectivity with web browser but only for 2G cellular had been provided. Along with that there are various features in it such as 2-megapixel photo camera, YouTube and Google Maps applications, Google Search, iPod music / video player with support for iTunes.
The market of Smartphone was influenced adversely due to innovation of Iphone with lots of features. It has been found that Apple has made more than $730 billion since 2007 by selling 1.2 billion phones (Wood and Schwab, 2013). Innovation in mobile phone attracts many customers to switch from smart phone to iphone due to its effective efficiency and latest IOS. The market of Smartphone was decreased due to innovation of Iphone in the market (Chesbrough, 2010). Flip phones and phones with split keyboard and screen were standard before launching of Iphone. However, the market of smart phones were not flopped due to market segmentation because the price of this new innovation was quiet high which was not possible to afford by middle level person.
The Smartphone technology got influenced due to innovation of Iphone with effective technology. Smartphone required bringingthe change in its technology to compete with Iphone which bring the concern of huge investment. The very first operating system of Iphone was IOX which converted into IOS Software. The IOS software was launched by Apple Company in its Iphone which made it so popular. This software allows working like a computer system, touch screen applications, faster process, designed to be mobile (Gazdecki, 2016). This new technology impacted the Smartphone technology as more people switched from smart phones to Iphone. The technology of Smartphone was fallen and people start to prefer Iphone as it provided number of features.
Technology push model is when research in new technology brings the development in new products. It is not included in market research. It leans to initiate with a company producing an innovative technology and affecting it to a product. Iphone 1st generation was a technology push model because Apple did not conduct market research and never looked the strategies were adopted by its competitors (Dala-Ali, Lloyd and Al-Abed, 2011). There was no external focus and solely focused on technology push approach. An Apple company was completely relied on intuitions and perfectionism to bring innovations in the organization. It was done by Apple Company as argued by Apple’s Senior VPs and he said that “customer do not have idea about their desires and want, you have to tell them what to buy”. (Wen, 2014). It is the strategy of Apple Company to produce effective product with latest technology which will force people to use it. It has been found that Apple Company has not pre-determined process to promote innovation because at its place, it is about open-mildness, collaboration and opens communication, people are invited at Apple company to share their views, ideas and views to bring change in the world regarding technology (Sara Carter and Jones-Evans, 2009). Recently Apple Company has produced new series in Iphone which is Iphone X. It is full of latest feature which is not adopted by any company in making mobile yet.
The drivers of innovation of Iphone are described below:
Technology advances: new technologies often build new industries. Iphone came in the market with technology advance which benefitted number of customers and changed their life. The Iphone put the internet in everyone’s pocket.
Changing customers and needs:it is the second driver of innovation of Iphone which refers the amending characteristics and needs of consumers. Basic needs were met by Smartphone as well but there is a further challenge to innovation which accomplished by Iphone by determining the hidden needs of customers (Wang, 2009).
Opportunities: opportunity is the major driver for innovating Iphone with different features from Smartphone. The technology was old in Smartphone that increase the demand of customers to bring something new in mobile phones which could be used in research and business.
Intensified completion: it is also the driver of innovation of Iphone because competition has enhanced in huge manner over recent years as a consequences in the reduction in logistic costs. It has been analyzed that home markets are being threatened by overseas competition (CWMIFG, 2012).
The stages in product innovation of Iphone are considered major eight steps that are defined below:
Figure 1: Stages in Product Innovation of iphone
Source: (De Massis, Frattini, Pizzurno and Cassia, 2015).
New product strategy:it is the first step that links the NDP process to company objectives and keep focus for idea development for creating screening criteria.
Idea Generation:it has been found that there was lack of latest technology in the Smartphone which raised the need of new technology in mobile phones. It is the second step that searched for product ideas that fulfil the company objectives (Bouncken, Plüschke, Pesch and Kraus, 2016).
Product screening:it is the next step that comprises an initial analysis to decide which ideas are relevant and value more detailed evaluation. The main objective of this step is to drop the irrelevant ideas such as already exist technology and application in Smartphone.
Concept testing:Concept testing may facilitate to avoid costly mistakes by evaluating the measure attitudes and intention at the earlier stage of innovation.
Business analysis:it is the step of further evaluation of the ideas as per the quantitative factors like Return on investment and sales volume. The idea of generating Iphonewas done with this step (Dasari, White and Pateman, 2011).
Design and development:the design of the product and embedded features were explained were and produced. In this process, selling prices was estimated on the basis of size of market, profitability and breakeven point.
Testing:It is the process of sending the product to the specific marketto test the effect of innovation. The Iphone was sent very first in the market of US which provided great results of acceptance of it by people.
Commercialization: in this step, product got launched and entered in the market where people can buy it. Apple adopted the advertising strategies to promote its product to the market and got succeeded (Berends, Jelinek, Reymen and Stultiëns, 2014).
Iphone is an HYBRID type of innovation which comprises transformational innovation and incremental innovation. It is because it created the new industry and transforms the way of living. It is considered as the meaningful change in which business gives customers entirely new phase of innovation. Apple Company provided the Iphone which was beyond the technology of Smartphone. It defines the transformation innovation. Along with that it is the kind of incremental innovation which tends to be improved. Incremental innovation is also found in Iphone because it has provided the feature of smart phones with new updates such as high quality camera, better operating system and effective interface. Iphone is a hybrid type of innovation because it keeps the engine running by involving incremental innovation and make new innovation which comprise full of risk (Terwilliger, 2015).
It has been found that the product design of Iphone is mostly created in United States, especially in the headquarter place that is California. It is the most important component in the commodity chain of phones. There are many designers and engineers to make Iphone in Apple Company, Jonathan Ive is a chief designer and engineer in the company and generate the new innovative design for making the Iphone. It has been analyzed that the role of social impact is huge on Iphone due to encouragement of innovation in the mobile phone industry (Freeman and Woodward, 2009). The market of mobile phone put emphasise on the configuration instead of focusing ondesign before the release of Iphone. After the growth of Iphone, market realized that the role of design is huge in making success which can generate huge revenues. Therefore, market started to give proper attention in designing of the products. Samsung is the major competitor of Iphone, the phone of Samsung had been criticized due to its dull standardization of the design. The growth and success of Iphone forced many company to keep focus on design of products in order to endure in the market (OSU, 2015).
Apple Inc. has launched the 1st generation of Iphone with the feature of Bluetooth 2.0 and lots of features. The company had to face many barriers in the time of iphone 1st generation. These barriers are defined below:
Technology was not enough: however, Iphone has lots of features regarding latest technology but technology was not enough alone to get success in the 1st generation of Iphone. It was lacked GPS and there was not hardware keyboard and SD card support system. The price of iphone 1st generation was quiet high $499 for the 4 GB model and $599 for the 8 GB model (Ritchie, 2018).
User friendly:there were a lot of functions in Iphone which made issue for the consumer to operate. It has been found that battery backup and updating issue created the trouble for many users as it took more than 6 hour to get updated. The learning curve of phone was low in comparison of other Smartphone.
Price of the product:The price of the iphone 1st generation was higher in comparison of smart phones which was the major barrier in the innovation. It was the first innovation in mobile phone by Apple which was being done by taking risk (Jonoski, Alfonso, Almoradie, Popescu, Andel and Vojinovic, 2012). People were not ready to buy this product due to higher rate.
Competitive contempt: there were lot of competitive companies existing in the mobile industry that had launched their product. People got familiar with them and used in their daily lives. The Iphone was too expensive in comparison of other competitor’s product.
The core competencies of Apple are vigorous which is very hard to replicate by any other companies. The products of Apple provides in the markets which is considered as the more valuable for the customers in comparison to its prices because of the following causes.
Figure 2: Apple’s core competencies
Source: (Sutton, 2011).
A core competency of Apple is considered as the deep proficiency that helps company to deliver the unique values to the customers. It has great efficiency in designs and development and it can retain bargaining position and bring down costs.
The SWOT analysis of Iphone 1st generation is given below which will comprise strength, weakness, opportunity and threats.
Strength:the major strength of this product was different from other products as it provided different features with IOX software which run quick in comparison of other Smartphone. Innovative technology was being adopted by this product which attracts number of customers.
Weakness:The price of iphone 1st generation was quiet high $499 for the 4 GB model and $599 for the 8 GB model which was the weakness of this product because medium class people could not afford. The operating system of this product was difficult to operate. Lack of storage system and SD card support system were the weaknesses of this product (Laugesen and Yuan, 2010).
Opportunity:it has been found that Apple got quiet good response from its first innovative product in mobile industry that provided the opportunity to expand its business all over the world by adapting the latest technology which could not be imitate. Iphone could bring the more innovative change in the mobile industry and enhance the competitions.
Threat: there were number of competitors that can challenge the Iphone by imitating the technology of Apple’s Iphone. Although viruses was the legitimate threat but more than this, bigger threats could have come in the form of research in Motorola, Palm and Motion in case of do not materializing in the applications of Iphone (Mickalowski, Mickelson and Keltgen, 2008).
It is an effective framework for analyzing competition of a business and Apple’s Five Forces analysis is shown the vigour of external factors in the environment of industry.
Bargaining power of buyer
The Iphone 1st generation was an important for the buyer as it was costly in comparison of other products. It was the effective approach which added the customer value. Iphone 1st generation had been successful in the area of competition as it established a huge customer base. The bargaining power of buyers was quiet high in the context of first generation of Iphone because Apple Company was in initial point.
Threat of new entrants to the market place
There were many mobiles produced with effective features which replaced by Iphone first generation. It was difficult for the new entrants to enter the market because they had to develop the existing technologies before competing. They were needed high capital for investment. Strong brands name consider important for the company which gave positively impact to Iphone (Vergara, 2012).
Bargaining power of suppliers
The bargaining power of suppliers was high because there were so many companies of mobile industry that bought raw material for producing the mobiles. High cost of switching suppliers’ could have a long term positive impact on the business entity which added the entity’s value. There was a high level of competition among suppliers which had been acted in the reduction of the prices (Miyashita, 2012).
Threat of substitute products or services
There were number of products available in the market that could replace the Iphone due to its weaknesses. BlackBerry Curve 8300, Nokia N95, Palm Treo 65, Samsung Black jack, Sony Ericson K800i and Motorola RZR were the substitute of first generation of Iphone.
Industry competition
Iphone producer was in direct competition with companies such as Samsung, blackberry, Motorola, palm and motion. All of these companies started to invest in research and development and marketing to compete with Apple. Thus, the competitive force is string in this industry for Iphone.
Political
The change in government policies might bring the new rules in the business that might have impact the Iphone 1st generation. Stability in the political situation and the government can bring the huge benefits for the company. It has been found that nationalism and anti Americanism could cause in the decreased market share of Iphone 1st generation.
Economical
This phone had launched in US market which could have a measurable impact on the US economy. The launch of new innovation in iphone could bring the huge changes in the sales of its product. If US dollar got stronger, it would have direct impacted on the exchange rates would lead Apple to do more expensive business in some other country (Khan, Alam and Alam, 2015).
Social
The use of new technology, application, Bluetooth, new operating system and effective camera had enhanced the growth of iphone 1st generation. The choice of customer is important in the selection of the product. The phone was designed with special features to satisfy the customer demands.
Technological
Iphone 1st generation was full of the latest technology and raised the high competition in the mobile selling. The feature of this phone is 3.5 inch display which had resolutions of 320 x 480 pixels. Internet connectivity with web browser was available in this phone but only for 2G cellular phone holder. It has OSX operating system which was new innovation in mobile phone industry that provided a connection with new technology.
Legal
The government of different countries have different laws and legislations that put pressure on the market of Smartphone. To avoid any violation, Apple needed to follow all laws and legislations regarding patent for making their effective strategies. There were various laws regarding calling and texting have been implemented which might have impacted the Iphone.
Environmental
The producer company of first generation of Iphone required improving the importance of environmental performance in the organization due to heavy reliance of data centres. The product design of the first generation of Iphone was created by taking consideration of environmental impact. The first generation of Iphone was given mercury free led display for environmental safety (Oosterman and Green, 2010).
The competitive analysis is made on two years that is 2007 and 2018 in which the competitors, their objectives, strength and weaknesses will be mentioned.
The competitors of Apple’s Iphone product in 2007 were blackberry, Nokia, Sony Ericson and Motorola.
|
Competitors |
Objectives |
Strength |
Weaknesses |
Marketing strategies |
Attack or Avoid |
|
Blackberry |
To enhance the awareness of the brand of Blackberry all over the globe and to fulfil the demand of them who are continuously demanding for Smartphone. |
The strength of blackberry was good image among corporate users. |
It did not innovated new technology and innovation in Smartphone. After releasing the touch screen phone by Apple, it was in pressure to provide touch screen phone. |
To build awareness about the brand in the youth market segment. |
It shouldhave been attacked because it has good reputation in the market. |
|
Nokia |
To maintain the quality and to boost the logo this is connecting people. |
It has high penetration rate in various countries. |
It had no centralized marketing strategy |
The priority of it’s to be the most preferred partner to enterprise and operators. |
It should be avoided by Apple Company. |
|
Motorola |
To create shareholder value by constantan to be the world’s premier communication equipment |
It had a big brand name and offered products at reasonable price. |
High quantity of defects and lack of imposing |
Advertising strategies were adopted by Motorola. |
It can be avoided. |
|
Sony Ericson |
To get rid of harmful chemicals products in the manufacturing of consumer electronics. |
Existing knowledge of target market |
Low efficient distribution channels |
Using the advertising technique to attract the number of customers |
It could be avoided. |
The competitors of Apple’s Iphone product in 2018 are Samsung, Google phones, LG and Sony Experia.
|
Competitor in 2018 |
Objectives |
Strength |
Weakness |
Marketing strategy |
Avoid or attack |
|
Samsung |
To achieve a leadership position in the electronic industry |
Provide efficient services to the customers and compete with Iphone |
Recall issues bring down the position of the company regarding phones |
Two pricing strategy and uses skimming price to attain the upper hand over the competitors (Cardoso, 2017). |
It cannot be avoided by Apple Company. |
|
Google phone (Nexus) |
To enhance the interest of customers towards the product |
Well known company and provide the super quality in camera and storage |
High prices of the products |
Advertising and market research strategy is adopted by this company to enhance its product in the market. |
It should not be avoided. |
|
LG phone |
To become the market leading company with huge recognition |
It is global giant and extensive distribution system |
Management of LG Company regarding making phone is not effective and there is no cash cow. |
It uses glocal strategy to market its product. |
It can be avoided. |
|
Sony |
To enhance their productivity and the product performance and services |
Existing knowledge of target market |
Low efficient distribution channels |
Advertising and effective pricing strategy is adopted by this company to promote its mobile phones |
It should be avoided |
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