Innovation at Apple
Steve Jobs nurtured a culture in the company that was compelled of secrecy, which inspired the employees to think differently and develop these products. (Kate, 2011) Innovation is one of the most important factors throughout the company as most of the products are designed to beat substitutes and stand out next to others. Apple has been ranked as the most innovative company for four straight years since 2005, which suggests that It will not fade anytime soon. (AY-Rubble, 2010) The company tries to maintain Innovation In all Its processes and Incorporate it around the marketing mix.
The main focus is around the product as it is what the consumer is after and leads to satisfaction, which may also result in loyalty. The Pricing of the product, the promotion behind it and its placement are also infused with innovation in order to capture a good image for the consumer. Apple’s products have not always been great successes, but its product line evolution tells its story. The company uses upright innovative strategies In order to create new Innovations. Its management Is very process orientated and highly structured; It Is very customer driven and grasps nonuser needs.
Apple has always addressed innovation in different forms, which has added to the success factor. The different forms and issues of innovation that apple undergo are, introducing and building new products or services that are cool, user friendly and satisfy consumer needs. With the creation if the Pod, apple have used the technology S-curve. They change the way Industries operate such as the music Industry via Tunes and create strategic pricing In order to Increase Income as the company has a strong focus on R;D.
All of this was conducted under Job’s innovative leadership and being an outsider, which has led the company to where it is standing now. Due to apple’s immense contribution to the Industry and being a pioneer, a lot of spillovers have occurred as other companies benefit from apple’s knowledge and creations. Company’s innovative strategy comprises of the development of new and exciting products as well as its innovative and advanced business models. Due to its game- changing innovative products, apple has managed to be pioneers and first movers into new business areas.
As these products pushed apple to be pioneers in different industries, they were not the first ones to do any particular thing and could be seen as a follower prior to the release of these products. Apple isn’t the first company to invent the computer, the mobile phone or even the pod as there where MPH players prior to its invention. (Worst, 2012) They managed to develop and produce these things extremely better than the other companies, especially the ones that were pioneers and first movers prior to these products.
As a follower in the beginning, Apple had the advantage of learning from mistakes of other companies and to see how they did things. This helped apple design their products, which they decided to focus upon what the consumers really wanted; they accelerated the path to breakthrough ideas. Apple’s creation of all its innovative and stylish products helped drive and push the company to the top of its industry. Even though it was the products that propelled apple to the top, product innovation was not the only innovative side of apple.
Innovation was infused into apple’s innovative business models in which apple found and delivered new ways to create and capture value. (Goldstein, 2009) Apple crosses industry boundaries and deals in different areas of it. The company doesn’t only deal with hardware but with software, logistics and entertainment as well. Mastering all these areas have helped apple integrate its systematic innovation, which has added to its value proposition. Apple’s core products such as the pod or phone would not have been as appealing and as successful if it wasn’t for the link with tunes and the App store.
The App store offers different ways to make the Phone, Pad or Pod better with its applications. With the creation of Tunes, Apple pioneered in a new business space and put out a new business model for downloading music. This business model was as innovative as the software and it was powerful enough to show that people would pay for music if the price is right and the interface is simple. (Anderson, 2011) Functioning as an intermediary between the music label and the consumer, Apple has created an innovative strategy for purchasing music.
Since the hardware devices are linked to the software, the razor-razorblades model can be used to describe this strategy but in the reverse direction as the APS and the add-ones including music from Tunes all cost money and consumers purchase them from their devices. Hess, 2010) The S-Curve is used to measure the adopters of a specific innovation. The curve is shaped as an S as it models the rate of the adoption. The adoption of the innovation usually starts slowly and as knowledge of the innovation increases, and then the rate of the adoption follows and increases as well.
Eventually the adoption of the innovation levels off as most of the members of the social system adopt the innovation. (Mueller, 2008) Apple’s Pod is a good example of the S-Curve Strategy. The graph below demonstrates Pod sales from the first quarter of 2002 until the second The S curve also determines the pricing strategy used by the firm as it wants to maximize profits in the beginning (bottom of the curve) and to have value pricing and minimized unit profit at the top of the curve in order to maximize market share.
As seen in the graph, since Pods appeared on the market in 2002, sales have steadily increased; a couple of factors influence the yearly increase of sales. Some of these factors are, new and more developed models of ‘Pods, whenever there are sales such as holidays and promotions and when Apple decide to tag the product with cheaper rises. Examining the graph, one can see that from the second quarter of 2007, the adoption rate of the innovation starts to slow down and become steadier.
The big jumps in the graph indicate the holiday seasons, which inevitably skews the S Curve. (Anderson, 2011) In 2009, it is evident that the adopters that contribute to the sales are in need of an upgrade and not Just to purchase for first time usage, which leads to a new innovation. Eventually, with continuous groups of consumers adopting the new technology, the market share will reach its capacity. Thinking internationally, Apple is still in the early adopter phase as countries such as India and China are Just starting to buy Pod’s and smartness powered by sis. Stamps, 2009) The S-Curve strategy also helps companies determine the point of diminishing returns, which results in them knowing when to look into new technology alternatives and alterations. Even though this strategy helps plan the development of new technology, it still has limitations. The model cannot determine how big the gains from the new technologies will be, it also does not imply on when to invest in new technologies and eradicate the current one. (AY-Rubber, 2010) The size and structure of the S curve varies in reality between different technologies and the model is Just an overview of the observed technology routes.
The biggest uncertainty within this strategy is the size of the total market; for smartness it was bigger than expected. Apple’s use of the ‘S’ Curve is also evident in the fact that an Pod is 2002 is about the same price of one in 2011, Just that in 2011 it had at least four times the storage and capacity and is probably more profitable for the company than the one sold in 2002. (Anderson, 011) This shows that apple uses value pricing as they move through the market. Rival companies such as Google identified this as a weakness in Apple’s business model.