Information and Product Loops of Apple Inc - Case Study Example

Introduction The paper focuses on the product development process employed by Apple Inc. to design and develop the innovative product iphone. In this paper, information and product loops would be identified within which Apple Inc. operates, while focusing on the role of the company in managing iphone. It would further identify where and how the design, development and production for iphone take place within Apple. The paper would then identify the ways in which the feasibility of a proposed product were and are evaluated. Further, the total cost involved with the design, development and production of a given product would be identified. Also, the measurements would be discussed which were used, identifying the quality and attractiveness of iphone. It investigates how quality measurements are used within a given organisation to maintain/improve quality or attractiveness of the product. In conclusion, it would investigate how legal requirements or acceptable society norms have affected the product. A product is defined as anything that helps in satisfying the needs of a consumer, whereas a brand provides a distinct identity to a product by creating a name and design for the product. Strong brand names are important in the contemporary market as consumer preferences and perceptions are often influenced by brand names. These brands enjoy higher market share, brand loyalty and profits. Further, a strong brand name helps in creating trust and quality certification among the target audience (Brassington and Pettitt, 2006). The iPhone, a completely different cellular phone brand launched by Apple was a combination of the iPod and smart phone, which could help users to surf the internet. The touch screen sensitivity and the 3.5 inch screen added value and gave new user experience. The consumers were able to make calls, or navigate through the music and send messages or emails by using Wi-Fi (Wingfield and Yuan, 2007). In order to create a successful brand it is important to build the brand through superior quality, positioning the brand appropriately, re-positioning an existing brand, being the first to launch the product in the market, creating long-term perspective and developing well-rounded communications (Jobber, 2009). Apple rightly employed these tactics while launching the innovative iPhone and being the first in the market to launch a high-end touch phone with superior quality. The company while announcing the innovation in the wireless segment also claimed that the user experience from the phone would be far more superior to any of the phones that they have been using in the past. With the success of the iPod, the launch of iPhone was only a step forward to make unparallel competition in the market with music-storing and music playing facilities offered in one system (Bulik and Cuneo, 2007). The product was offered with the full year warranty with optional three-year apple care warranty as well. This gave the users some get some trust with the brands and products. With the special edition that was launched, which was a Beatles edition, celebrated the 40th anniversary of the singer. One of the other strategies was to launch one of the cheaper versions in the year 2008 that had only limited features added with advanced version that could be used by the professionals. Some of the features that was added to the iphone was large disk capacity, lighter in weight, was device, had a long battery life, it was also 4G wireless enabled and had improved camera (Grossman, 2007). Information and product loops With the launch of iPhone in 2007, Apple bought another revolutionary and innovative product in the market, creating a strong brand value for its products. In this paper the theories and concepts related to innovations are being understood and dealt with in accordance to the launch of iPhone. Apple’s performance related to innovation is also being studied and found that the company really created an innovative product, which helped it in generating revenues and brand name, keeping it ahead of its competitors. Apple in fact is an exceptional instance of a firm that has witnessed dramatic turnaround in its revenue in the last few years, due to its policy to create innovative products with universal appeal. The iPod, iPhone and the recently launched iPad are the examples of the innovative products being launched by Apple to create a niche market. Further, studying the revenues of the company in the last few years have also shown that there exist a clear association between the revenue and products being launched by Apple (Sharma et al. 2007). Design, development and production of iphone With the advent of computerisation and technology development, the process for designing, developing and producing an innovative product has also undergone several changes. It has been found mostly the consumer expectations have driven the companies to innovate and create landmark designs for capturing maximum market share, giving companies broader perspective and newer field in the company. Enhancing the value of the services provided to the customer can be provided with the right design of the product and with the complete understanding can help maximise the benefits (Walleigh, 1989). In January 2007, when iPhone was first introduced by Apple, it saw many articles providing favourable image and reputation for the brand and the company. It was predicted that the company may sell around 10 million iPhones throughout the world by 2008, and would capture around 1 per cent of the mobile market worldwide. Although, iPhone had most of the features that were standard to other mobile phones, such as calendaring, voice connectivity, email and address book, it also had various differences as well from the phones commonly found in the market at that time (O’Grady, 2007). The phone used a touchscreen instead of a keypad or physical keyboard, with the use of a virtual keyboard that was software-defined for text and numeric input. It also looked like a high-end model of iPod, and included a music and video player. It had a wide screen of 480X320 size, which provided a larger image output. Further, iPhone was being fully incorporated into the iTunes Store of Apple that would help to download video and audio content. The iPhone also has Safari web brower, which is being adopted from the Apple browser that was being developed for the computers. Further, it was also improved with the use of touch-driven interface that contains features which made it easy for users to browse the web even on a small screen. Thus, Apple created a mobile experience that included the standard browser of the PC, while giving a larger screen and touchscreen experience to the users and packing mobile Internet for a complete package. Thus, through such innovative product designing, Apple created a product which helped operators to increase the adoption of mobile data as well (O’Grady, 2007). Apple’s design process has always been fundamentally different from most of the handset manufacturing companies. They operate as a system company by creating integrated hardware and software solutions for better quality and keeping in mind consumer’s expectations. Apple’s product design is difficult for many companies to copy as they would have to integrate Operating System, online services, user interface and hardware design into a single unit. The instrument is also an example of a smart phone designed as an appliance instead of a device (Sherman, 2002). As compared to earlier products that focused on convergence, iPhone’s differentiating feature was its wide screen, which was around 8.9cm diagonal, 320x480, largest among the standard-sized mobile phones available during that time. In order to create the large screen, the design of the phone in fact removed the dialing keypad from the phone and instead provided a touch screen which could be used for dialing numbers as well as for other input functions. The mobile phone consists of a lower version of the Unix-based OS X operating system used by Apple in most of its products, and had a user interface that is iPhonespecific, which in fact claims to match with the ease of using iPod and Macintosh (O’Grady, 2007). The attempts for making a phone that could be used as a convergent model and convergence devices which could be a PDAs and or any handheld device—was able to use general-purpose computing as the platform strategy. This was first developed by IBM and later adapted for workstations, minicomputers and computers for personal use (Moschella, 1997). Some of the successful platform strategies were able to bring to fore three key attributes. The new platforms could identify a need that is customer market segment and not been met by other platforms and could win adoption through serving by segment which was better than the alternatives which existed in that time (Bresnahan & Greenstein, 1999). Over the period of time, some of the winning platforms were able to shift from some of the vertically integrated strategies (e.g., the IBM S/360) that has a single firm controlled the whole platform, and that to divided technical leadership where the firm was able to control some of the different parts of the platform which was put up (Bresnahan & Greenstein, 1999). And controlling the value provided by the platform requires control of the complements (e.g., through application programming interfaces) that make the platform valuable (West and Dedrick, 2000). Evaluation of the feasibility of iPhone Some of the well known cell phone vendors have been able to adopt changing strategies with regards to the operating systems. At the onset, they were able to have a business model styled after PC market. Most of the vendors that included Motorola and Nokia were able to band together for creating Symbian, which was a shared operating system which they were supposed to use in conjunction. Palm was able to license its operating system to a spin out PalmSource and was adopted by several vendors who included Sony as well as Samsung. While Microsoft focused on licensing the Windows CE operating system to other companies at a faster rate with the success from HP and Dell, and some of the other companies in Asia (West and Dedrick, 2000). Until recently, some of the handset OS strategies adopted by the vendors, has been taken as an ownership. Companies like, Nokia has been able to run their own software layer which is called S60, alongside their Symbian based phones. On the other hand, SonyEricsson is able to run a not suitedlayer which is called UIQ on its Symbian devices. Also, Palm was able to regain its rights for its OS, and is able to make a proprietary change to the same. While, Motorola has a Microsoft as well as Symbian licensee, but has been investing heavily on its own version of Linux. In the early 2007, mobile phone market had appeared to be headed towards situation where the leading the vendors had their own incompatible software. Strategy adopted by Apple has been more proprietary. It was able to adapt its own desktop operating system with an unspecified subset of Mac OS X desktop operating system which could run an iPhone. By this, Apple was able to leverage some of the desktop software which included web browser, TCP/IP and QuickTime media player (Palomäki, 2004). The company claims that this would let the iPhone get a display which is standard HTML and http websites that were created for personal computers. That could be a great advantage as most mobile device browsers were having trouble in displaying these websites that was designed for the PCs. On the other hand, mobile browsers have been able to make substantial progress, the difference between PC web and the mobile web has been ongoing source of confusion for the consumers (Sigurdson, 2001). Although, Apple’s platform strategy has been more accommodating to the consumers than any other vendors in particular. Not like the Palm, Symbian, and Microsoft, Apple has not been allowing any open development for the third party applications for the iPhone and is developing the platform by itself. Design, development and production cost The latest version of iPhone, i.e. iPhone 4, was launched recently that has changed interior design which may help in improving the profitability of the handset, as per a research report by the market-research firm iSuppli. Without modifying the appearance or functionality of the phone, the company undertook various design changes to the product’s interior, according to iSuppli. With the implementation of the new design, the estimated cost for the materials being used for the product could be reduced by around 9 per cent, as compared to the previous model. Further, the iPhone 4 would be sold along with Verizon, and has been designed as per the CDMA network of the carrier and therefore had to be different from the AT&T’s model which was being previously sold. As per iSuppli estimates, the materials bill for the new iPhone would be around US$ 171.35 as compared to US$ 187.51 (Gallagher, 2011). However, this price estimate does not include costs such as royalties, software, payments to manufacturing firms and licensing fees. It is however been estimated that iPhone would become a highest-margin product of Apple and the average selling price would be around US$ 625. Some of the important changes that have been made in the product include modification of the antenna of iPhone 4, along with the main chip set that powers the device. Instead of the previous chip that it used from Infineon Technologies AG in its previous model, the company in the new phone used Qualcomm Inc’s baseband chip set. This new chip set helps iPhone to do away with the graphics processor that it had to get from Broadcom Corp., used in previous models. Furthermore, the Verizon-customised model also has been redesigned to contain antenna array which detaches the antenna for WLAN networks and Bluetooth (Gallagher, 2011). As with the product design of the iPhone, the value of the phone is also in the developing of the various applications for the devise. It has been found that most developers in the EU and the US charge around US$ 100 per hour to develop applications and for contract iOS development. On an average, developers charge between US$ 50 per hour to US$ 250 per hour, depending on the expertise of the developer. Along with the number of iPhone developers, various boutique companies have also come into existence developing mobile apps for iPhone. These companies which specialises in iOS development usually charges flat rates per project and mostly covers the development costs as well. Measurements to identify the quality and attractiveness It would be really wise to use project process type in case of product flow. All the process and sub proves should be well documented so that each department works together and are able to provide the services to the greatest. One of the processes should be to induct, highly skilled labor force who are able to bring experience and provide value addition as and when needed, this becomes an important process. It should be noted that everything should be kept under schedule and should meet the requirement of the people as well as the staff (Chandler, 1990). The process flow analysis should take into consideration that all the micro part is analysed from all the input to the output is examined. The intention of examining all the micro process should be to improve the procedure at each level. In order to improve the processes, it is very essential to measure process flow which would entail time, inventory, capacity, flow rate etc (Chandler, 1990). Quality control exercise should be undertaken at each level, be it user safety or the services provided by the company, each step needs precision with unmatched quality so that the customers are able to value the experience of using the product. Also, with this, following all the safety standards and procedure as per the strictures should be a laid procedure for the firm (Hauser and Clausing, 1988; Townsend, 1990). Developing a new product Manufacturing quality Managing of manufacturing quality is the basic skill that one needs to posses for product development. At a time it has been the “Made in USA” label which stated that a given product was superior to the ones that were being manufactured in other countries. Japan also worked hard for improving the quality and became a leader in quality control, which ultimately made even the U.S. companies to respond to by creating products similar to the ones made by the Japanese companies. Therefore, total quality management or TQM became the buzzword during the 1980s, while the Six Sigma earned relevance during the 1990s. In today’s contemporary manufacturing world, the quality control processes are being managed through statistical process which helps in decreasing the defects to almost zero. These talents are being followed and understood world over, with most Taiwanese and Korean companies competing at the global levels with firms from Japan, US and Europe. With the boom in manufacturing in China, even the Chinese are focusing on maintaining quality management. Other countries such as Brazil, India and Eastern Europe are also focusing on enhancing their manufacturing quality (Palomäki, 2004). Therefore, it can be stated that competing on the platform of quality, that is creating a product which is better than the others, have become very difficult in the modern-day world. In fact, it can be stated that quality could be equated to being a commodity. Further, most of the manufacturing process is being outsourced to manufacturing units in Shanghai and Taipei, which means that these units employ the same quality standards and therefore same products would be manufactured and sold in the market. Thus, although quality management is still integral to a product’s success, in order to remain competitive, companies are focusing towards creating innovative designs to attract the target audience (Palomäki, 2004). Product-Design Quality After focusing on controlling manufacturing quality, it is the turn for looking at product design, also considered as an integral foundation skill. It has been found that Sony and Apple have long customs of creating innovative product designs. Samsung, which has recently started following the footsteps of Sony, has also started with the endeavour to create worldclass product-design skills (West and Dedrick, 2000). Chinese companies also have started to show signs of using innovative designs in the last few years. China in fact has gotten various foreign design consultants in its rolls and has around 600 design schools as well. In fact, a U.S. design-professional company AIGA has also opened a branch in Beijing, while outsource manufacturing companies in China are also starting to provide design services for attracting more business. Just as manufacturing quality even producing-design quality would be an important part of product manufacturing which would help in competing at the global level. However, product design might not be the only thing to be sufficient, with growing competition, it is also important to create interactive designs for the products as well (West and Dedrick, 2000). Interaction-Design Quality Experts believe that the future for product designs are already being drawn, although, it has still not been distributed in an even manner, especially related to interactive designs. However, companies such as Starbucks and Apple has been able to produce interactive designs in an effective manner, other companies are still looking at making progress in this field. In fact, it has been stated that this field of interactive design is just 25 years old and needs to be matured in a big way (Sigurdson, 2001). The field of interaction design has appeared as a new competitive field, in a way for companies to help in differentiating their products from their competitors. In the contemporary world, this competition has also become very powerful, especially in the mobile phone industry. In fact, the success story of Nokia and the failure of Motorola have been attributed partly due to the quality parameters, especially due to interaction design of the product. For instance, the Razr product from Motorola’s stable was a hit in the market due to its slim metal finish, which gives it a distinct product design from the competitors. However, due to its interface, the product has received some flaws. On the other hand, iPhone from Apple has set a new standard in the world of mobile phones, cantering mostly on the power of the interaction design. Apple through its iPhone has been able to produce a quality product through the implementation of a good product design, great packaging, advertising design as well as great manufacturing quality. However, it is the interaction design of the product that has set it apart from other phones in the market. Google with its Android platform has also entered the market and is giving tough competition to its competitors as well. However, it is still need to be seen how its models would impact the market, especially in the field of interaction design (Gallagher, 2011). Service-Design Quality The increasing competition in the area of interaction design has been emerging, some of the subsectors like service design which involves integration of the software, hardware and networks for delivering services has been coming up. With this, in the recent past, we have seen that Apple has become leader in the service design sector, shifting the notion of competition and creating new system of differentiation in comparison to the peers in the market. With this, other consumer-electronics companies have always envied Apple’s success with the iPod. With this it event it was able to differentiate an MP3 player with the changes in the manufacturing quality has been almost impossible. That said, most of the companies in the fray have worked hard to improve quality of the product to match up to the competition (Gallagher, 2011). The New York Times had reported that Samsung was able to hire the one of the members from the iPod interface team, Paul Mercer, for making an interface for its MP3 players, which was named Z5. In the Times, David Pogue opined the result was easiest for navigating because the software was used in iPod. He added that Samsung was able to improve the design of the iPod in a several important method. It was thought that Z5, couldn’t have caused any dip in the iPod’s market share. The increased competition in the organization with regards to quality and service design with high demand by the customers assuming high levels of quality of manufacturing, product-design quality as well as interaction design quality (Gawer and Cusumano, 2008). All of these learning curves were representing the skills and knowledge that could be traversed by both the individuals as well as the organization that employed them. Each of them represented a new field of competition level which could be a new strategy for differentiating themselves. The change in focus for the professional as well as skills has been necessary for becoming more efficient and moving into a new field. Consumer-electronics manufacturers have seen changes which may be representative of the learning and the design which could be difficult to imitate or negotiate with. Most of the successful firms have hardware engineering cultures to differentiate themselves (Gawer and Cusumano, 2008). Most of the quantitative basis used in the Six Sigma method has been relatively comfortable for the engineers basing their productivity and quality. In this case, the product design has been found less comfortable, but are good examples of long enough for the disciples which has been seen as real traction. With that, the models have also resulted in the product design with which the exercises shows tangible results which can be quickly evaluated. On the other hand, Interaction design shows less tangible results and the interface requires considerable time for evaluating. It has been seen that software engineers are often working in the often hardware companies. As a result, interaction-design quality has emerged as a goal for most of the firms. Also a new sub section of the competition has been seen emerging in the service design sector. For innovating in terms of systems of products as well as networks services, also interaction design has been emerging with the hardware companies. The need may be seen on a very rational level and could even fund development efforts but the shift towards service design may represent large cultural shift (Gallagher, 2011). Quality measurements to maintain/improve quality or attractiveness of the product The traditional methods of using mobile phones and PDA’s have seen a shift in idea with the launch of Apple iphone. The smart phone integrates high end capabilities such as touch screen navigation and without problem internet browsing. Thereby, challenging the mobile manufacturers to shift gears by providing advanced and smooth technology to the end-users. Touch Screen: The first of its kind to be launched by Apple, the iPhone touch screen technology is bound to propel a huge adoption in the industry. The iPhone uses the more advanced projected capacitive technology; which allows for a more insight as the finger can run across the surface. In addition, the iPhone is the only device that can handle more than one finger at a time; some features like "two pinch" used to resize graphics on the iPhone would take a while to be copied (Gawer and Cusumano 2008). OS X: Another feature that stands out for Apple iPhone is the adoption of advanced operating system. This allows users to access desktop-class applications and software, including rich HTML email. iPhone also allows users to multi-task; read a web page while downloading the email in the background. Notebook Replacement: Survey results announced by Rubicon Consulting Inc, found that one fourth of Apple iPhone users often carry the iPhone instead of a notebook computer. Wi-fi: The instrument is a Wi-Fi enabled device and can connect to the Internet once in a hotspot. It determines the fastest network it comes across (Wi-Fi or Edge) and connects the users to the Internet. Per the survey results published by Hotwire, respondents said that they were amazed by the speed of the Internet. Most of the respondents could easily send email, get maps, weather forecasts and connect to messengers. Connection to YouTube: iPhone provides wireless connection to YouTube allowing end users to watch the most-viewed streaming videos along with search capabilities. Furthermore, YouTube is likely to fix the full catalog into a format iPhone can recognize. End-users are also allowed to share YouTube links by e-mail. The downloading capability announced by YouTube would add to the bottom line of the service provider. Legal requirements or acceptable society norms It is important to understand the legal landscape in which the development of applications is being operated, which is also essential for launching and maintaining iPhone app successfully. For an iPhone Application developer, the biggest fear is to spend considerable amount of money, time and resources for creating an application which might get rejected or worst might get pulled down from the App Store due to alleged legal violations. Thus, it is essential to initiate and uphold a successful application by cautiously understanding the legal landscape under which the application development takes place. It is therefore, advisable that the developers should be able to understand the common legal pitfalls related to developing iPhone application, not just during the development process, but even before and after the development has been completed and put up on the App Store (Gawer and Cusumano 2008). Through the examination of the Apple’s End User License Agreement, iPhone SDK Agreement and federal copyright and trademark registration, some of the important legal issues around the development of iPhone Application are being considered. These are thereafter could be adopted by the developers for decreasing the liability and increasing the protection for the intellectual property rights of the product. Some of the important legal requirements related to Apple’s iPhone SDK Agreement include the following: •Privacy laws: Developers need to follow all the regulations being imposed by the federal, state as well as international privacy laws with regards to user picture and video capture and data collection. Further, the personal information that is being taken from a user should not be given away without the consent of the user, prohibition of unauthorized use of a name of the user, gaining from such prohibition, recording a user’s voice without the consent of the user. All these would also amount to not adhering to privacy laws. •Copyrights in music and content: Music that the developer would be incorporating in the application should be either licensed to the developer or wholly owned by the developer. The license should be provided through lump-sum payment at one-time which would be final and that the developer would not be required to pay again and again, even if the application becomes very successful. Further, the content that is being used in the application should also be owned by the developer or through the permission of the owner. Also, in case the content that is not music, should be used through licensing and the licensing should have royalty terms clearly stated. •Objectionable content and materials: The applications should not include any offensive, obscene, pornographic or defamatory content and should only have content which the company thinks is not objectionable. •Free and open source software: All appropriate Free and Open Source Software (FOSS) licensing terms should be complied with for developing applications that include FOSS. Conclusion The paper analysed the key trends after the launch of first Apple iPhone in June 2007. It takes into account the platforms and technology introduced by Apple a few year ago and how has that changed the face of mobile industry. It also briefly talked about the launch of 3G iPhone and the latest iPhone 4, and its impact on the telecom sector. The paper understands the change in the mobile industry market after the first iPhone was launched. The paper especially focuses on the concepts and theories that underpin support and guide the development and implementation of innovation. Further, it critically analysed how well Apple performed in these areas. The paper found that Apple through its iPhone created an evolutionary product which became a benchmark not only in the smartphone industry but also in the touchphone segment. References Brassington, F. and Pettitt, S. Principles of Marketing 4th Ed. Financial Times Press, 2006. Bresnahan, T. 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