Apple Innovation Strategy Analysis
How would you describe Apple’s current innovation strategy?
Apple is a company leading the IT industry revolution. Their current innovation strategies are focused on product performance and product system.
Product performance innovation involves making new products, as well as updates and line extensions that add value. For Apple, its customers witness the iteration from Macintosh to iWatch. Their products are always invented ahead of customers’ needs. As Jobs mentioned, "our job is to figure out what they are going to want before they do". In addition to new products being continuously brought out, Apple tries to create new unique features and functionality that captivates customers.
For example, the 3.5 inches touch-screen none-keypad interface iPhone leads the industry revolution. Apple’s products are always notably simpler and easier to use than its industry competitors. Apple has a unique style that other competitors can’t match. Product system innovation is individual products and services that connect or bundle together to create a robust and scalable system. Apple's unique platform IOS connects the entire Apple electronic ends in a new ecosystem. Under the invention of App stores and iCloud, the company connects its products with one another in a unique way. Apple is considered a company of electronic terminals influencing people’s daily lives.
What, if anything, has changed in Apple’s approach to innovation since its launch?
Apple’s leading innovation is not always smooth. During the years of "Non-Jobs" eras, Apple shifted its gears from product to profit model and network innovation, which caused the company huge losses, even near bankruptcy.
In the late 1980s, Apple's new CEO Sculley tried to move Apple into the mainstream by becoming a low-cost producer of computers with mass-market appeal to compete with its giant rival IBM’s low price strategy. This strategy retrograded its original brand perception, which was a customer loyal, premium product. In order to be more competitive, the price instantly dropped under $1,000 compared to the original top-of-the-line $10,000. To reach more customers, Apple decided to align with IBM and create a new PC OS aimed at multimedia applications. However, the plan finally terminated with a huge loss for Apple.
When it comes to innovation, what has Apple done well? What are potential weaknesses?
When it comes to innovation, Apple does a great job in product performance, product system and brand. Beginning from the first generation computer to the current phone and the watch, Apple always follows the rules of “easy to use” and brings out products before their customers’ needs orientate. The company is well known for the huge investment on R&D. Apple also builds up its own ecosystem like App stores and iCloud which bundle all its electrical ends together to a consolidated platform. Fans are crazy for the brand, which builds up the insurmountable legend of fans economic.
Apple also does well in profit model and channel innovations. Keeping the premium price with high margin is what Apple insists on. The company also has online direct sales and licensed retail stores which created a new business model.
Compared with the innovation successes, Apple could still do better on structure enhancement. As it is well known, the company’s "closed door” culture---trust between the employees and employer---should be build up.
How would you evaluate Apple’s strategy for Apple Watch, given Apple’s innovation legacy?
Apple’s watch opened the era of wearable devices. In my perspective, the new Apple Watch is a good business practice and can be considered another step ahead. There is a concern on the cannibalization of current products, but we should remember Jobs’ answer to launching new products: “If you don’t, someone else will”. Starting from now, Apple aims to build up a larger ecosystem to penetrate people’s lives.
There are two risks Apple should keep in mind. First, market followers with lower price and more functions, like Moto and Microsoft, will fight for the market share. Secondly, the extension on the new product line will definitely cost more on R&D.
