Apple looks beyond the Smartphone

As iPhone 11 looms, Apple looks beyond the Smartphone Essay 2020

 Name of the author- Patrick McGee

Title of the article- As iPhone 11 looms, Apple looks beyond the Smartphone

URL of the article- https://www.ft.com/content/789b745c-d096-11e9-99a4-b5ded7a7fe3f

 

Introduction

The Smartphone industry has seen a change in the scene over the last two years. The flagship devices have become more and more polished and premium as customer demands unique design and convenient features.

The mobile industry changed hugely since the launch of the iPhone in the year 2007.

This product completely changed the industry as it featured many features that were revolutionary at that time.

It had introduced the touch screen interface that did not require any physical button to interact with the phone.

It also had better connectivity to the internet. It used apple’s own developed OS and it included several useful applications like calculator, photos, notes, contacts, notes, and clock.

It had dedicated applications for Google maps and YouTube. The industry witnessed massive changes since then as Google introduced Android and several manufacturers introduced smart phones powered by that operating system.

The new and useful features of smart phones soon became integral to the lifestyle of people around the world.

Numerous hardware innovations like high-resolution camera lenses, high capacity batteries, and powerful processors offered more functionality to the users.

Apple had huge success with its iPhones but it faced high competition from android powered smart phones from manufacturers like Samsung, Motorola, HTC, LG and later Chinese manufacturers like Huawei, Oppo, Vivo, One Plus and Xiaomi started providing high competition with their smart phones.

This study is based on a review of a journal on the product launch of Apple that contains business strategies of the company and strategic positioning in the market.

Company description

Apple is an American company that is based in Cupertino, California. It develops smart phones, consumer electronics products, and software along with offering online services to the users. The company was founded in the year 1977.

It designed and developed personal computers that had several innovative features like an interactive graphical user interface (Pisano, 2015, p.378).

The company achieved massive success and hired skilled engineers and employees. Apple had its own unique marketing strategy and its computers had attracted averages users.

It was the first to develop and sell computers that contained a colored screen. This company faced stiff competition from IBM and its sales decreased after 1990 when it focused on its new products that were not successful in the market.

It developed sound systems, video consoles, audio players and digital cameras. These products did not achieve expected success as there was a lack of proper forecasting.

The emergence of Windows operating systems provided users with more functionality and the performance of Apple went worse in the market. It engaged in a lawsuit against Microsoft as it used a graphical user interface that is similar to apple’s own Apple Lisa (Khan et al. 2015, p.958).

This case continued for years and was finally dismissed. Apple went through several product launches that failed in the market.

The company changed its CEO and there were massive layoffs and cost-cutting to restore its financial balance. It acquired NeXT which had Steve Jobs as its CEO.

Jobs’ inclusion proved to be vital for the company as he restructured the product line and introduced new computers and products that achieved massive success.

Apple partnered with Microsoft and offered Microsoft Office services in Macintosh OS.

This proved to be successful and the business performance of Apple grew in the next few years. The acquisition of NeXT was effective as Steve Jobs was back into the company and made vital changes to the product line.

Apple launched the iPod that became immensely popular among users (Zanchettin and Mukherjee, 2017, p.34). The entry of this company into the Smartphone business changed the fortune and it achieved massive success around the world.

Presently it has over 500 retail stores in over 20 countries and it has large revenue both as a technology and a Smartphone company. The brand loyalty that it has is unrivaled and it provides many online services that give massive commercial success.

Summary of the article

The Smartphone launch event of Apple comes closer and the industry expert in providing their opinion around it. Apple launched iPhone X two years ago that came with a price tag of over $ 1000.

It was expected that the product would flop as it was too costly. It did well in the market and achieved revenue that was never achieved by the company in spite of a decrease in unit sales (Straker and Wrigley, 2016, p.231).

In the past few years, it can be seen that Apple is lagging behind rivals when it comes to innovation in hardware sections.

The smart phones are priced high but it does not have the capability in hardware that Android smart phones of Samsung or Huawei have.

The charging speed, connectivity, and battery capacity is lesser than some flagship phones despite being more costly. Apple has seen some decrease in the sales of its smart phones as people are looking for more value for their money.

Ahead of their product launch in 2019, it is expected that it will launch three new smart phones along with a smart watch and new updates in its streaming services and TV hardware (Brockmann et al. 2015, p.1278).

The smart phones are expected to have a new generation Apple A13 bionic processor and two of them are expected to have a triple camera setup on the rear. This feature is present on many other smart phones and was made famous by Huawei (Den Hartigh et al. 2016, p.7).

This product can have dual-sim support and improved battery capacity. Industry experts are giving their opinion that the products of Apple do not have that cutting edge that it used to have previously.

The capability of the camera, battery and price to performance ratio is better in some other android devices.

One aspect in which Apple thrives is its overall ecosystem.

It has a customer base that is larger than any other because of its years-long support for software and customer service. Apple’s business strategy is unique as it focuses on building a large and sustainable user base.

It has several online services like iCloud, iTunes, Siri and its iOS operating system (Hoberg and Phillips, 2016, p.1439).

It has launched online streaming services. The number of users of these services is large and it is the source of a major share of the revenue.

The privacy in its devices is another aspect that provides users assurance and separates it from competitors.

The swiftness and overall user experience it provides are a reason for many customers prefer it.

The lack of innovation in hardware has declined the sales in recent years but the company is not much concerned over it. It has several other services that are a source of revenue (Yoo, 2019, p.356).

The pricing of new iPhones can be crucial as it is expected that three models can cover different price brackets.

The iPhones of the previous two years were costly and the number of units sold decreased due to this.

The company made this up as it gained a large profit with its products and maintained its revenue.  It is a strategy of the company to achieve a large profit and this trend is expected to continue.                          

Theoretical analysis

Apple has an effective business model that is based on a unique design, innovation, effective marketing strategy and pricing, and functional supply chain management. The company has established itself in the technological scene around the globe (Teece et al. 2016, 26). There is a huge demand for its products and the company has established itself as an elite brand. Its products are widely popular among users around every country. It has established itself as a global technological leader.

Brand strength-

The brand strength of this company is immense and it has used an effective strategy to make this possible. The products of Apple are interrelated and users are encouraged to purchase other products while using one product of Apple.

It has built an ecosystem where customers are loyal to this brand. It is a global brand that is preferred by celebrities, businessmen and other elite class people. It has great visibility in the marketplace with an effective marketing strategy (Lescop and Lescop, 2016, p.13).

The iPhones, iPods, and iPads all operate on the same operating system and have similar functionalities. Consumers prefer to stick to this brand and this is a major aspect of the successful journey of this company.

Product innovation-

This Company has a long history of developing innovative products and presenting them to users in a useful way.

Its computers were widely successful due to the presence of an interactive graphical user interface. It used innovative designs in its computers and also changed the music industry with the launch of the iPod (Pisano, 2015, p.49).

The Smartphone developed by Apple introduced many features that were hardly imaginable at the time. Its products run on the same platform and have similar software.

This has developed a large user base across the world. The complementary nature of its products and its support services provides Apple a competitive advantage over its rivals.

Supply chain-

Apple has a strong network of suppliers, business partners, and developers and this has enabled the company to achieve massive success in its business.

It has its own operating system, develops its own chipsets and has control over the manufacturing process for its hardware (Rothaermel, 2017, p.459).

It maintains high-security standards for its software and has total control over its retail stores.

It provides streaming and musical services to the users with a vast amount of content. The integrated nature of its supply chain gives it an advantage over other companies.

Pricing strategy-

This Company uses a premium pricing strategy for all of its products and services.

It has maintained this over the years across all of its products. It offers high quality and functionality and sets premium prices for it. It creates a perception of added value that no other brand offers as much quality as its products (Miller and Maxwell, 2016, p.385).

This pricing strategy has created a perception among the customers and the company has established itself as a premium brand. The relative higher cost of products creates a perception of having higher value. The profit margin is also higher for Apple in its products.

This has set a benchmark in the industry and created exclusivity about its products.

Product design-

It has its unique approach in product differentiation and develops products that is distinct in the market.

The products of Apple are premium and have unique features and high quality. The features and design philosophy has created a benchmark in the industry (Zott and Amit, 2015, p.395).

The design of its products is followed by several other manufacturers.

Major findings

It can be seen that Apple has historically been a company that aims to innovate and provide a unique experience to the users.

The key policy of this company is to present its products in an innovative way and making a connection between its wide product ranges.

The company started its journey by developing computers that had useful features and had an appeal to the general users (Thompson et al. 2015, p.74).

It has made computers simple and functional with the introduction of its graphical user interface.

This company achieved immense success since the start of this century. It launched the iMac, iPod, and iPad that changed the technological scenario.

The Smartphone and its operating system is popular among million users. The company has a unique design philosophy that has truly made waves into the industry. The designs of its smart phones and tablets are followed by many other brands.

The online services like iCloud, iTunes, its own voice assistant Siri and web browser are used many users (Kavadias et al. 2016, p.95).

The entire ecosystem is interrelated and customers achieve high satisfaction while using its products.

The brand image of Apple is strong and it has a loyal customer base. These along with its pricing strategy have helped the company achieve huge success around the globe.

Conclusion

It can be concluded that effective business strategy is crucial for businesses and Apple has used unique strategies to establish itself as a global technological leader.

The pricing and differentiation strategy provides high profit to the company and creates a different perception among the users.

The company has established a functional supply chain network that includes independent developers, suppliers and business partners. It has a huge customer base but in recent years the company has experienced reduced sales in terms of volume.

It must focus on matching other rival companies in terms of hardware innovation in order to maintain its position as an industry leader.

 

References

Kavadias, S., Ladas, K. and Loch, C., 2016. The transformative business model. Harvard business review94(10), pp.91-98.

Miller, T. and Maxwell, R., 2016. Apple. In Global Media Giants (pp. 383-396). Routledge.

Zott, C. and Amit, R., 2015. Business model innovation: Toward a process perspective. The Oxford handbook of creativity, innovation, and entrepreneurship395.

Thompson, A., Strickland, A.J. and Gamble, J., 2015. Crafting and executing strategy: Concepts and readings. McGraw-Hill Education.

Pisano, G.P., 2015. You need an innovation strategy. Harvard Business Review93(6), pp.44-54.

Lescop, D. and Lescop, E., 2016. The Apple Twist. DigiWorld Economic Journal, (102), p.13.

Marshall, D., McCarthy, L., McGrath, P. and Harrigan, F., 2016. What’s your strategy for supply chain disclosure?. MIT Sloan Management Review57(2), pp.37-45.

Rothaermel, F.T., 2017. Strategic management. New York, NY: McGraw-Hill Education.

Teece, D., Peteraf, M. and Leih, S., 2016. Dynamic capabilities and organizational agility: Risk, uncertainty, and strategy in the innovation economy. California Management Review58(4), pp.13-35.

Khan, U.A., Alam, M.N. and Alam, S., 2015. A critical analysis of internal and external environment of Apple Inc. International Journal of Economics, Commerce and Management3(6), pp.955-961.

Den Hartigh, E., Ortt, J.R., Van de Kaa, G. and Stolwijk, C.C., 2016. Platform control during battles for market dominance: The case of Apple versus IBM in the early personal computer industry. Technovation48, pp.4-12.

Hoberg, G. and Phillips, G., 2016. Text-based network industries and endogenous product differentiation. Journal of Political Economy124(5), pp.1423-1465.

Yoo, C.S., 2019. Intellectual property and the economics of product differentiation. In Research Handbook on the Economics of Intellectual Property Law. Edward Elgar Publishing.

Zanchettin, P. and Mukherjee, A., 2017. Vertical integration and product differentiation. International Journal of Industrial Organization55, pp.25-57.

Brockmann, T., Stieglitz, S. and Cvetkovic, A., 2015, March. Prevalent Business Models for the Apple App Store. In Wirtschaftsinformatik (pp. 1206-1221).

Straker, K. and Wrigley, C., 2016. 11. The role of emotion, experience and meaning: the comparative case of Apple and Samsung. International perspectives on business innovation and disruption in design, p.231.

 

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