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Innovation at Apple

By Ildiko Hazak
May 12, 2014
Agenda

• Company Background and History


• Apple’s Current Products
• Design Thinking
• Innovation
• From the iPod to the iPad
• Apple’s New Product Strategy
• Challenges
• Opportunities
Company Background

• Apple Inc. designs, manufactures, and


markets mobile communication and media
devices, personal computers, and portable
digital music players, and sells a variety of
related software, services, networking
solutions, and third-party digital content and
applications
• It sells its products worldwide through its
retail stores and online stores
• Apple Inc. is a multinational corporation Apple's headquarters in Cupertino, CA
Company History
• Apple was founded by Steve Jobs, Steve Wozniak, Ronald Wayne in 1976
• In 1976, Steve Wozniak and Steve Jobs released the Apple I computer. The
founders incorporated the company in 1977
• Apple went public on December 12, 1980 at $22.00 per share
• Apple introduced the Macintosh in 1984, a year later Steve Jobs resigns
• In 1997 Jobs returned as CEO
• In 1998 iMac debuted
• In 2001 the iPod was introduced
• In 2003 iTunes Store was introduced
• In 2007 the iPhone was released
• In 2008 MacBook Air was released
• In 2010 iPad was introduced
• In 2013 Mac Pro was released
Apple’s Current Products

• Apple’s products and services include


the iPhone smart phone, iPad tablet
computer, iPod portable media players,
and Macintosh computer line
• Apple Inc. also has a portfolio of
consumer and professional software
applications, the iOS and OS X operating
systems, iCloud and a variety of
accessory, service and support offerings
• Apple also sells and delivers digital
content and applications through the
iTunes Store
“Think different”
- Apple Advertising Slogan, 1997-2002
Design Thinking
• Since 1976, Apple has been considered a leading
designer and integrator of computer hardware
and software
• Apple stores had some of the highest revenues
per square foot in the retail sector and its (App)
store for the iPhone had achieved one billion
downloads only nine months after launch (in
2007)
• Apple’s success came from a deep commitment
to understanding how people used computing
devices
• There was consistency in the way the company
worked, the “Apple Way”
Design Thinking Continued
• In the mid-1970s, when Apple entered the scene, computer equipment was
typically housed within company headquarters and used only by specialists
• Personal computers as a tool for individual work was unimaginable
• To Steve Jobs and the original Apple developers, however, the goal was to
design a computer that both supported and fostered individual work
• Apple’s products were intended to be useful to people, for that to happen,
the level of complexity needed to be reduced dramatically
• Apple products were conceived of as being highly interactive
• Worrying about the smallest detail has helped realize co-founder Steve Jobs’
design sensibility: that simplicity is the ultimate sophistication
• The appearance of Apple products is the result of painstaking attention to
detail
Innovation

• At Apple, innovation, product development, and


execution have been deeply intertwined with the firm’s
history and co-founder Steve Jobs’ pivotal influence
• Apple has been notoriously tight-lipped about both its
strategy and operations—an approach that has turned
into marketing magic and high expectations among its
followers
• Apple has a clear platform strategy: The OSX operating
system, is used in all of Apple’s computers as well as in
the iPhone
• A platform strategy offers big advantages and benefits
to a company, its suppliers, and its customers
Innovation Continued

• Since the start, Apple insisted on integrating


customer’s experience into its design and
development processes
• Beautiful product designs
• Simplicity is the ultimate sophistication
• Bold Business Experimentation: Apple Stores
• Against Conventional Wisdom
• Constant Learning and Adaptation
From the iPod to the iPad

• In 2001 Apple sales had fallen from $8 billion to $5.4 billion.


• Apple considered several areas for expansion, but it chose
music and the iPod
• Apple developed all three components for the iPod in
house, the music store, the player and the software on the
computer
• First iPod was launched in October 2001
• In April 2003, the iTunes Music Store opened
• The first iPhone was launched in 2007, Apple had sold over
500 million phones since launch
• In 2010, Apple introduced the iPad
iPhone Sales
Key Success Factors of iPad

• Thinner – design
• Faster – processor
• Sleeker – style
• Lighter – in weight
• Longer/stable – battery life
• Greater – storage capacity
• Better features – higher screen resolution,
better camera
As of December 28, 2013, Apple had sold
over 195 million iPads.
iPhones and iPads Sold
Apple’s New Product Strategy

• “Apple is closer than it’s ever been to entering into a new product
category” - CEO Tim Cook

• The latest reports suggest that Apple is preparing to release a health-


focused smartwatch, which may be able to perform such functions as
measuring a wearers' heart rate and blood pressure

• Mobile payments — another area that Apple could potentially be


considering as a new product category

• In the past, Cook has said that mobile payments intrigued Apple and
that there was further potential there for the Touch ID fingerprint
scanner that's built into the iPhone 5S

• Reports have also said that Apple is at work on an enhanced set-top box,
something more capable than its current Apple TV

• Apple will begin showing the future of its desktop and mobile operating
systems in June
2014 New Product Roadmap
Challenges

• Appearance & User interface


• The dilemma Apple faces today is that design and user experience
competency is wide spread. Apple’s appearance and user interface
differentiation is not nearly as big as it was
• Integration
• Integration plays a larger role in new category products. It is easier to
develop Android after you’ve seen iPhone because the basic choices are
defined
• Advanced capabilities
• Since the MacBook Air and iPad, it seems that thin, light and battery life
dominate their design thinking. Plus, they’re playing catch-up more often;
sometimes not so well
• Consumer farsight
• Steve Jobs was uniquely talented plus he had the caché of returning founder
and power as Apple’s CEO. The real question is can Cook and others
perform as effectively as a group to replace what one man uniquely drove?
Opportunities

• Growth of tablet and smartphone markets


• Advertisement: The recent launch of the iRadio does lay the
foundation for a solid Apple ad exchange. Advertisers will be
able to use Apple's user data and purchase patterns to lay out
ads on iPhones, iPads and MacBooks
• Expand Services Further: Apple can add newer version of
subscription or ad-supported video streaming content like Hulu
and Netflix, which will lead to more revenues
• Newer and Existing Products: Apple can generate more
revenue from emerging markets for iPhone and iPad products
References
"AAPL Company report, financial results, key ratios, income statement - MSN Money."
Stock quotes, investing & personal finance, news - MSN Money. N.p., n.d. Web. 20 Mar. 2014.
"AAPL Profile | Apple Inc. Stock - Yahoo! Finance." Yahoo Finance - Business Finance,
Stock Market, Quotes, News. N.p., n.d. Web. 20 Mar. 2014.
"Apple Inc. - Frequently Asked Questions." Apple Inc. - Overview. N.p., n.d. Web.
20 Mar. 2014.
Bellis, Mary. "The History of Apple Computers." About.com Inventors. N.p., n.d. Web.
20 Mar. 2014.
Faruk, Ishfaque. "Apple: A SWOT Analysis." The Motley Fool. N.p., 14 June 2013. Web. 12
May 2014.
Kastrenakes, Jacob. "Tim Cook says Apple is 'closer than it's ever been' to new product
category." The Verge. N.p., n.d. Web. 12 May 2014.
Lafleur, James. "Apple from the iPod to the iPad A Case Study in Corporate Strategy
Second Edition 2012 Second Edition 2012 The iPhone James Lafleur Academia.edu." N.p.,
Web. 11 May 2014.
Meyer, Christopher. "Apple’s 2014 New Product Strategy." Working Wider — Collaborative
Strategies for Leading Outside the Box. N.p., 16 June 2013. Web. 11 May 2014.
Richardson, Jeff. "Apple 2014 fiscal first quarter -- the iPhone and iPad angle." iPhone J.D.
N.p., 28 Jan. 2014. Web. 12 May 2014.
Rogowsky, Mark. "Without Much Fanfare, Apple Has Sold Its 500 Millionth iPhone."
Forbes. N.p., 25 Mar. 2014. Web. 12 May 2014.
Thomke, Stefan H., and Barbara Feinberg. "Design Thinking and Innovation at Apple."
Harvard Business School Case 609-066, January 2009. (Revised May 2012.)
Questions
1. What is the main challenge for Apple?
a. Innovation
b. Advanced Capabilities
c. Consistency
2. Which statement is not true for innovation at Apple?
a. Simplicity is the ultimate sophistication
b. Constant Learning and Adaptation
c. Apple has no clear platform strategy
3. Which statement would not support Apple’s design thinking process ?
a. Apple’s success came from a commitment to understanding how people used computing devices
b. Apple products were conceived of as being not highly interactive
c. The appearance of Apple products is the result of painstaking attention to detail