CASE STUDY #1 How Airpods helped Apple’s wearables division become the third largest within the company
The return on investment delivered by Apple has fallen considerably. Explain why.
Over the years, Apple has been one of the most successful companies in delivering high-quality products and services. However, there are already existing and emerging brands which have similar innovations like Apple, which has been offering products at lower or affordable prices. This greatly affects the sales of Apple products and the company’s ROI. In recent years, many would have noticed that Apple has just been upgrading their existing products which are the iphones, ipad, macbook and apple watch. In addition, Apple has been continuously struggling in maintaining the quality of its products considering that customers have been experiencing defective iPhones, Ipads, and laptops for repair.
Also, during the time when Apple began releasing computers, their future has become bleak. Eventually with operating systems, Microsoft has become the de facto dominant standard and Apple’s market share has plummeted. This was because of Apple’s only control over its systems against Microsoft’s licensing its operating systems to all PC manufacturers. Apple’s failure to give access to its operating systems as their approach for their computers to PC manufacturers, was their downside as being one of the top brand innovators. It was only when Steve Jobs returned as Chief Executive and he decided to focus on their few products that Apple was able to generate cash very quickly.
Why has the Airpod been so successful?
The AirPod is one of the disruptive innovations made by Apple which demonstrates great skill in market vision. AirPods draw the attention of customers, especially millennials where comfort and more advanced and incredible technology are of greater importance. Them being portable and wireless brings uniqueness compared to usual earphones existing in the market. It has also become a status symbol for many people and earned a reputation as a high-quality product.
One of the more interesting aspects of the AirPods’ development is one of the oldest. In 2009, Apple, eight years after subjecting consumers to its first (rightly maligned) earbuds, finally revealed a much-needed overhaul of its wired headphones, EarPods. Looking to combat the poor fit and sound bleed, the company worked with Stanford University in the US to capture data on ear dimensions. After the EarPods launch, Apple continued to map ears, building a larger data set to create a new, more accurate model that eventually led to the creation of the AirPod Pros, first in simulation then in physical prototype.
However, despite booming sales and longevity concerns, it could be argued that the best-use case for AirPods is yet to become apparent. With Apple Watch sales now overtaking those of the entire Swiss watch industry, Apple now clearly dominates two of the biggest wearable markets: smartwatches and headphones. And it's widely reported that Apple is working on not one but two sets of augmented reality glasses. It doesn't take much foresight to see the position Apple is manoeuvring itself into here: the delivery of its rapidly expanding services channels through wearables.
“Different parts of the body have different real estate: our wrist, our ears, our eyes. Those are valuable pieces of real estate for a company like Apple to put a product on,” Cybart says. “So you can't look just at AirPods, it's the connection to other products that's key. We're going to see Apple come up with something for the eyes, and that trifecta in which you're addressing each part of the body - that's powerful. And it has implications that could go on for 10 years or or more.”
Apple’s fortunes have ebbed and flowed over the past 40 years. The past few have seen growth; in your assessment will the next few years see decline?
It is hard to predict the result of the future operations of Apple. For over 40 years, Apple has maintained its reputation and strong financial position in the technology industry. However, the decline in the economy might force customers to choose cheaper smartphones and the emergence of other competitors continuously poses a threat to Apple’s position in the industry. Nevertheless, Apple bounced back through the development of wearable gadgets such as Apple watches and Airpods. Apple’s ability to look into the future, study consumer behaviour and imagine products that would bring positive impact or their skill in market vision have become one of their main assets that helped them in their innovation efforts. This also implies that Apple’s unique innovation has been a great asset in maintaining the company’s stability.
Every business encounters market threats and business challenges. Apple has been sustaining in the market very well over the past years. It is thought to challenge or decline Apple's market but from the last few years, many companies are giving high competition to Apple. On one hand, Apple is a renowned globally iconic brand but the potential weaknesses may turn into a reason for market position decline. The reasons for future declines would be:
The high price of products.
Limitation in the advertisement.
Non-competency area entrance.
Incompatibility with other technologies.
Tracking allegations.
Unethical business practices etc.
Discuss whether Apple has shunned open innovation and adopted a very closed innovation model.
Apple has adopted a very closed innovation model. It can be justified (1st) by how Apple adopted stricter management in its supply chain and restricting a wide selection of suppliers to a few. They have focused more on frequent inspections, greater time spent on inspections and in managing cost and product quality. They also have been keeping information and do not disclose the details of their development processes because they want to maintain their competitive edge over rivals up until their newest products. (2nd) by how Apple opted against the Microsoft licensed its operating system to all PC manufacturing, and decided to stay in control of its system. Because of this the Microsfot dominate the market during that time and their operating system became the dominant standard, causing the downfall of Apple which its operating system is available only in Apple PC.
Yes, it is arguable whether Apple has embraced a very closed innovation paradigm or avoided open innovation. There have been numerous occasions and cases throughout the years where the company's extreme obsession with secrecy and control was apparent toward its suppliers, employees, labourers, etc. Apple goes to great measures to keep even the most minor aspects of its newest products a secret. The fact that the Foxconn factory that makes the iPhones looks more like a fortress than a facility is a very contentious illustration that backs up my claim. Each time, employees must swipe their security cards, and both their vehicles and personal belongings are inspected.
There have also been instances where executives and staff members were fired for disclosing information or trade secrets. Due to this obsession, the company also imposes a confidentiality agreement on all of its suppliers and requires suppliers to create custom-designed components in order to keep them out of the mainstream. Any leak results in harsh consequences and legal actions being taken. This demonstrates that Apple takes a more conservative approach to innovation.
Samsung seems to be nibbling away at Apple’s market share. Has Apple mismanaged its outsourcing?
Outsourcing has been part of every company’s strategy over the years and has been the partner of organizations in achieving their goals and objectives. Utilizing outsourcing has lesser expenses compared to hiring in-house employees, and access to a large pool of experts. However, this strategy also has disadvantages in the long run. I think that Apple has mismanaged the use of outsourcing in developing their products despite their efforts in protecting access to information. Samsung as one of its suppliers of processors became one of its competitors today and has always posed threats by engaging in copying as it learned from Apple whilst giving the customers more affordable and cheaper prices compared to Apple products.
How might Apple be able to capture value from the rise of Apple as a lifestyle brand?
Apple has been known for developing stylish, simple, and innovative tech products that represent a lifestyle brand. Nevertheless, it is vital for the company to discover and explore different industries. It is a good sign that Apple has been expanding its product lines by launching iTv and developing wearable technology. This helps the company capture growth and success.
In order to capture value Apple should focus on the following aspects of company's business model:
Diversification – With the diversification Apple can minimise the risk associated with new products. Apple should also focus on products other than the iPhone such as iTV. Diversifiedportfolio will also help to recognize as a lifestyle brand
Pricing strategy – In order to increase customers Apple should revise its pricing strategy, ashigh pricing was one the main factors of reducing sales and revenues and market share. Apple should focus the competitor’s strategies in order to make effect pricing strategy
Good will – Apple should re-launch its products as lifestyle brand products. To gain customers' trust on Apple products, company should also focus on strategies related to employer customer relationships.
Discuss how, on the one hand, Apple seems to be very good at disruptive innovation, yet it is also accused of copying others.
Apple is very good at disruptive innovation. However, it can be seen that Apple still imitates other products because I believe it is part of their strategies. Learning more about competitors can be a great way to develop more efficient and effective products. Considering that there is a rapid change in technologies, companies can learn from their competitor’s mistakes and can even transform better products compared to existing ones. Several Apple product features have been accused of copied. However, there is no doubt that Apple's disruptive innovations have transformed the technological, communication, and entertainment industries.
How do you solve the Apple stores problem?
To overcome the problem of Apple's defective products, the corporation needs to engage more professionals to cater and to respond to the requests of customers. Delivering high-quality products consistently is crucial to reducing the backlog for repairs and preserving the reputation of the company. In addition, Apple has raised the prices of their smartphones in recent years, and there is still a long line at the Apple store to purchase their products. One solution was for Apple to first develop an online assistance service that would assist users in determining what is wrong with their electronic devices before visiting an Apple store. And, because opening more stores would increase costs, the company should instead focus on developing a licensing system that would allow small and skilled professionals to repair Apple's user devices. Also, forming partnership or alliance with existing gadget stores or tech shops so that the long queues for repairs or troubleshooting can be done at these stores.
