Current Conditions and Future Destinations: Apple Inc., Essay Example

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Essay

Under the visionary strategic leadership of former CEO Steve Jobs, Apple Inc. typified the Blue Ocean Strategy through the development of innovative products and effective approaches to marketing. It has often been said that Apple does not necessarily invent the best technologies, but instead excels at positioning their products in such a way as to first create, and then satisfy, their own ecosystem of customers. Two of their most well-know products, the iPhone and the iPad, opened up a Blue Ocean for Apple, prompting competitors to follow suit by pushing out similar products intended to turn Apple’s Blue Ocean to Red. With the death of Steve Jobs, Apple’s leadership must either seek to create a new Blue Ocean for the company or find effective ways to compete with companies like Samsung in the Red Ocean that are now crowded with tablets and smartphones.

The problems facing Apple today are simply the results of their own successes. By creating their own Blue Ocean for products such as the iPad and iPhone, Apple’s competition has largely been successful by simply copying many of Apple’s approaches to design and marketing. Apple did not invent the tablet computer, for example, but their approach to the design and marketing of the iPad has convinced millions of customers that they simply cannot live without an iPad. As Samsung’s Galaxy series of tablets and smartphones attract more and more customers, Apple’s formerly blue Blue Ocean is beginning to turn red; how Apple responds to these challenges will determine their future success.

The story of Apple’s iPhone is a perfect example of Blue Ocean strategy. If the purpose of such a strategy is to break from market boundaries, Apple did exactly that. By following the Six Paths Framework, Apple developed an approach to design and marketing the iPhone that revolutionized the cell phone industry. The first step, assessing alternative industries, influenced the design and technological content of the iPhone. In the 1990s, Apple had developed a personal digital assistant device called Newton, a product that was eventually shelved after underperforming commercially. Jobs recognized the value of PDAs, and chose to incorporate the technology into the new iPhone. Further additions included the inclusion of an mp3 player, based on Apple’s own iPod successes. Other applications, such as email, were also utilized in the iPhone.

Recognizing that there were many consumers using the Blackberry, Apple took the strategic groups within industries approach to developing a UI that was modeled on the Blackberry’s best features. Apple has long excelled at creating their own “ecosystem,” within which their customers use Apple products across several platforms, moving their iTunes library, for example, from their Macintosh computers to their iPods. By making it easy and intuitive for their customers to use their Apple devices in tandem with each other, Apple further lengthens their chain of buyers. Complementary offerings found in the iPhone have included many of the favorite features found in their iPod device, making it even easier for customers to step up from the iPod to the iPhone.

If there is any one thing that has made Apple products popular, it is their approach to differentiation. Apple’s design teams place significant emphasis on the “cool factor” of their products; from the outward appearance of products like the iPa and the iPhone to the fluid, intuitive software and applications, Apple’s devices stand apart from those of their competitors.  Finally, apple looks across time as they develop their products, recognizing that users who first purchase an iPod to listen to their iTunes library will someday be potential buyers of iPhones, iPods, and other Apple devices. By developing their own technological ecosystem, Apple has done all they can to assure that their customers remain loyal for years to come.

The challenge facing Apple today is that they are in danger of being crowded out of their own Blue Ocean. While there is no question that the iPhone and iPad were revolutionary products in terms of how they were received by customers, and how the influenced their competitors to develop similar products, the fact remains that in an era where technology is evolving at a rapid pace, the iPad and iPhone are already yesterday’s news. If Apple wishes to continue sailing in their own Blue Ocean, they need to develop similarly innovative products on a regular basis, a task that seems quite daunting, if not entirely impossible. Barring the presentation of any such revolutionary devices in the near future, Apple will likely have to find ways to compete effectively in the red Ocean they helped to create.

The recent launch of the iPhone 5 has demonstrated that there are still millions of loyal Apple customers who will purchase new Apple devices as quickly as they are rolled out. One of the factors driving this loyalty is the aforementioned ecosystem Apple has developed; customers who purchase the new iPhone will be able to easily and quickly integrate it with the Apple devices they already own. Where Apple might fall short, however, is in capturing new customers with the iPhone 5. Consumers who are interested in a new smartphone, but who are not already invested in Apple’s ecosystem, may be less inclined to select the iPhone 5 over a phone offered by Samsung, Nokia, or one of the dozens of other technology manufacturers.  Barring any complete surprises, Apple’s near-future business plans will likely be built on making incremental changes to existing products, and relying on the strength of their loyal customer base to continue driving sales.

There is one rumored product on the horizon that may have a significant impact on the portable computing and communication industry: the iPad Mini. While no official announcement has been made, there have been strong rumors over the last year that Apple is preparing to launch a smaller version of its enormously popular iPad. If the rumors prove to be true, it will mark a significant divergence from Apple’s current approach to the table market it created. Steve jobs famously asserted that a screen size of approximately 7” was too small to adequately display tablet-centric apps, insisting that the 10” form factor of the iPad was the best possible size. It is, of course, difficult to know with certainly how strongly jobs actually felt about this assertion, or whether he was simply speaking as a marketing guru who was trying to convince the public that the design Apple already had was the best possible option.

In the years since Jobs expounded on the virtues of a 10” s screen, the tablet market has changed drastically. While the iPad still dominates the table market, Amazon has seen great success with the launching of their 7” Kindle Fire, a less-expensive tablet that has fewer options and capabilities than does the iPad, but has nonetheless sold in the millions. Following Amazon’s lead, Google recently launched its own 7” tablet, the Nexus 7. As was the case with the Kindle Fire, the Nexus 7 was enthusiastically received by consumers, selling in the millions in the few months since it was launched. It seems likely that Apple recognizes the need for them to develop their own smaller tablet to compete with these products, or risk losing a significant amount of market share to the competition.

Some of the factors Apple must consider in selling an iPad Mini are what capabilities to include in the device, and what price point to hit in order to ensure the mini sells well. A further consideration is that a 7” iPad will not only compete with the Kindle Fire and the Nexus 7, but will also compete with the original iPad. If it is priced too low, the profit margin o the mini will be too low to meet the typical margins to which Apple is accustomed; too high and it will be rejected by many consumers who will opt for a competing product. An iPad Mini will have to be positioned so that it seems more attractive than the completion, but still does not cannibalize sales of Apple’s own products.

It seems apparent that in the short term, at least, apple will be competing in the Red Ocean of smartphones and tablets it helped to create. This does not mean that Apple is in danger, of course; it is well-positioned to continue making healthy profits from its industry-leading products. In the long term, however, Apple faces a problem: by defining itself as a company that creates its own Blue Oceans, the company risks losing its appeal as a unique company if it relies for too long on sailing in the Red Ocean.

References

http://www.blueoceanstrategy.com/abo/Blue_Ocean_Strategy_Glossary_Lookup.php?Term=six-paths-framework

http://www.immr.org/downloads/Is-the-iPhone-Assistant-Apple’s-Next-Blue-Ocean-Dr-Phil-Hendrix-immr-20111004.pdf

http://simplifiedstrategicplanning.blogspot.com/2011/02/strategic-vision-at-apple-will-it.html

http://www.twiiga.com/2011/02/pcs-and-ipad-how-did-apple-address-the-competitive-landscape-%E2%80%93-part-iv/

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