Apple Inc is an American multinational company that is engaged in designing, developing and selling consumer electronics, personal computers and computer software. It is best known for its products such as iTunes, iPad, iPhone, iPod and iMac. Unlike most industry, the technological industry is significantly characterized by innovation and research. In 2012, Apple was ranked amongst the world’s most innovative companies (Taylor, Wagner & Zablit 2013). The Cyclic Innovation Model (CIM) can be used to explain how Apple Inc managed to achieve this global recognition. The principle of CIM states that innovation as a circular interaction between different departments in a company. This is made possible through exchange of ideas and information. According to Berkhout (2000), this dynamic network environment allows technical-oriented science cycles to connect with differentiated service cycle, and social-oriented sciences cycle to connect with integrated engineering cycle. This interaction can be seen in Figure 1 below.
Figure 1: Cyclic Innovation Model (Berkhout 2000)
Technological innovation and development takes central stage in Apple Inc. The company carries out technological research through technical-oriented scientific explorations. This means that they are continuously engaged in product development research, aimed at improving existing products or creating new ones. Technical oriented science, also known as hard science, mainly deals with qualitative models that explain properties and predictability of physical systems. By outsourcing researchers and technicians from universities, Apple Inc is able to identify the relevant technological changes when developing their products. Integrated engineering cycle is driven by new scientific insight and functional requirements relating to hardware or software development. Outsourcing skilled technicians ensures that the integrated engineering process at Apple Inc is more efficient and successful. Integrated engineering is not only limited to their hardware, but also non-tangible products such as Safari and iTunes. To make product development a success, Apple Inc has removed all barriers between hard science and integrated engineering cycles.
Apple Inc is also actively involved in market intelligence. Through social-oriented scientific exploration, Apple Inc is able to identify how changes in the market influence their product development. The company has employed scientists from behavioral and social sciences disciplines to provide new insights and solutions much faster and with reduced economic risk. Market intelligence through a scientific approach allows the company to assess shiftss in demand resulting from changes in societal emotions and needs, trade regulations and conditions. Soft sciences use quantitative models to determine socio-economic impacts on Apple Inc products and services. Through social science, the company is able to produce differentiated products and services that meet the demands and needs of the market.
It is therefore clear how soft and hard sciences have been integrated into Apple Inc product development and innovation process. The company has brought together markets, natural science, engineering and behavioral science to ensure relevance of their products and services. It is important to note that entrepreneurship plays a central role in the innovation process. With the commitment from Apple Inc’s management towards innovation, the company has been able to produce newer products and services. This has been made possible by the company’s commitment and investment on scientific exploration and product development. As a result, the company has continued to grow steadily and retained its competitive advantage as world leaders in technological innovation.
Since its launch in 2001, iPod recorded increase in sales each year until 2009 when it sold fewer units compared to 2008 (Trott 2008). Since then, it has continuously faced competition from other consumer electronic products and mobile phones, including Apple Inc very own, iPhone. The product faces significant competitions especially from smartphones, which have integrated all features that were unique to the product, and have become gadgets that are more superior. Through technological innovations, phones have evolved from a basic communication device, to a web browser, camera, voice recorder and media player. Since smartphones have integrated all these capabilities among many others, consumers have preferred them to iPods, which are only dedicated media playback devices. As a result, iPods are slowly becoming outdated technologies.
Conversely, the fact that it is cheaper and fully dedicated to media playback, the product can take full advantage of its uniqueness to remain a competitive product in the market. Furthermore, it is much smaller and lighter than its substitute products. The use of iPods during physical exercise has become a tradition and as a result, the product cannot be completely substituted by other products. For many years, the product, as a secondary sport gadget, has become an envy of other substitute products, and the trend is expected to remain constant.
However, Apple should introduce certain improvements on their product to make it more admirable. Firstly, the product should be installed with a much bigger hard drive. Even though iPods have a bigger internal memory compared to phones, Apple should still aim at increasing the memory capacity of the product. The latest 5th Generation iPod Touch has an internal memory capacity of 64 jigabytes (Apple n.d.). The public is becoming more and more interested in songs, television programs and movies. A much bigger hard drive would give it a higher competitive advantage over its substitute goods because users would have access more storage capacity. Secondly, the product should be modified to target game lovers. The cellular features of smartphones make them less desirable as a gaming device because of interruption from incoming calls and shorts massage services. This gives the iPod an upper advantage over its most fierce substitute product. iPod users would be able to play games as they listen to their favorite music.
Due to the stiff competition from smartphones,
Apple Inc introduced iPhones to the market to compete with other products such
as LG Optimus, Sony Xperia, Samsung, Nokia and HTTC. This hand-held device
incorporated both cellular and media playback capabilities among other
features. Apple Inc’s impressive sales have been attributed to brand loyalty by
its lifestyle consumers. According to BBC (2013), iPhone sold 31.9 million
units in 2012 and gained a market share of 14.2%. To ensure that the newly
introduced product remains a dominant force in the market, Apple should focus
on technological innovation and establish strategic alliances to increase
sales. Hesseldahl and Holmes (2006) argue that one of the reasons why iPod has
continued to record high sales is because of Apple’s contract with Nike. The
company should aim at dong the same with the iPhone. Furthermore, the company
should enter into partnership with software developers such as Microsoft. Latest
smartphones that are being released to the market are using advanced operating
systems (OS) such as Windows Phone and Android. Currently, the iPhone is only
limited to Apple’s OS, iOS. Even though such a move ensures brand loyalty, restricting
consumers to iOS reduces the annual sales of the product. Apple should also
focus on establishing partnerships with mobile application developers. Developing
applications that are unique to iPhone will attract more consumers to purchase
Apple n.d., iPod touch, Apple, viewed 18 September 2013, http://www.apple.com/ipod-touch/features/
BBC 2013, Smartphones outsell basic feature handsets, BBC viewed 18 September 2013, http://www.bbc.co.uk/news/business-23707341
Berkhout, A J 2000, The dynamic role of knowledge in innovation: an integrated framework of cyclic networks for the assessment of technological change and sustainable growth, Delft, Delft University Press.
Hesseldahl, A & Holmes, S 2006, Apple and Nike, Running Mates, Businessweek, viewed on viewed 18 September 2013, http://www.businessweek.com/stories/2006-05-23/apple-and-nike-running-mates
Taylor, A, Wagner, K & Zablit, H 2013, The Most Innovative Companies 2012: The State of the Art in Leading Industries, BCG Percpective, viewed 18 September 2013, https://www.bcgperspectives.com/content/articles/growth_innovation_the_most_innovative_companies_2012/?redirectUrl=%2fcontent%2farticles%2fgrowth_innovation_the_most_innovative_companies_2012%2f%3fchapter%3d2&login=true#chapter2
Trott, P 2008, Innovation management and new product development, Harlow, England, Financial Times/Prentice Hall.