Innovation at Apple

1. Innovation at Apple By Ildiko Hazak May 12, 2014

2. Agenda • Company Background and History • Apple’s Current Products • Design Thinking • Innovation • From the iPod to the iPad • Apple’s New Product Strategy • Challenges • Opportunities

3. Company Background • Apple Inc. designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players, and sells a variety of related software, services, networking solutions, and third-party digital content and applications • It sells its products worldwide through its retail stores and online stores • Apple Inc. is a multinational corporation Apple's headquarters in Cupertino, CA

4. Company History • Apple was founded by Steve Jobs, Steve Wozniak, Ronald Wayne in 1976 • In 1976, Steve Wozniak and Steve Jobs released the Apple I computer. The founders incorporated the company in 1977 • Apple went public on December 12, 1980 at $22.00 per share • Apple introduced the Macintosh in 1984, a year later Steve Jobs resigns • In 1997 Jobs returned as CEO • In 1998 iMac debuted • In 2001 the iPod was introduced • In 2003 iTunes Store was introduced • In 2007 the iPhone was released • In 2008 MacBook Air was released • In 2010 iPad was introduced • In 2013 Mac Pro was released

5. Apple’s Current Products • Apple’s products and services include the iPhone smart phone, iPad tablet computer, iPod portable media players, and Macintosh computer line • Apple Inc. also has a portfolio of consumer and professional software applications, the iOS and OS X operating systems, iCloud and a variety of accessory, service and support offerings • Apple also sells and delivers digital content and applications through the iTunes Store

6. “Think different” - Apple Advertising Slogan, 1997-2002

7. Design Thinking • Since 1976, Apple has been considered a leading designer and integrator of computer hardware and software • Apple stores had some of the highest revenues per square foot in the retail sector and its (App) store for the iPhone had achieved one billion downloads only nine months after launch (in 2007) • Apple’s success came from a deep commitment to understanding how people used computing devices • There was consistency in the way the company worked, the “Apple Way”

8. Design Thinking Continued • In the mid-1970s, when Apple entered the scene, computer equipment was typically housed within company headquarters and used only by specialists • Personal computers as a tool for individual work was unimaginable • To Steve Jobs and the original Apple developers, however, the goal was to design a computer that both supported and fostered individual work • Apple’s products were intended to be useful to people, for that to happen, the level of complexity needed to be reduced dramatically • Apple products were conceived of as being highly interactive • Worrying about the smallest detail has helped realize co-founder Steve Jobs’ design sensibility: that simplicity is the ultimate sophistication • The appearance of Apple products is the result of painstaking attention to detail

9. Innovation • At Apple, innovation, product development, and execution have been deeply intertwined with the firm’s history and co-founder Steve Jobs’ pivotal influence • Apple has been notoriously tight-lipped about both its strategy and operations—an approach that has turned into marketing magic and high expectations among its followers • Apple has a clear platform strategy: The OSX operating system, is used in all of Apple’s computers as well as in the iPhone • A platform strategy offers big advantages and benefits to a company, its suppliers, and its customers

10. Innovation Continued • Since the start, Apple insisted on integrating customer’s experience into its design and development processes • Beautiful product designs • Simplicity is the ultimate sophistication • Bold Business Experimentation: Apple Stores • Against Conventional Wisdom • Constant Learning and Adaptation

11. From the iPod to the iPad • In 2001 Apple sales had fallen from $8 billion to $5.4 billion. • Apple considered several areas for expansion, but it chose music and the iPod • Apple developed all three components for the iPod in house, the music store, the player and the software on the computer • First iPod was launched in October 2001 • In April 2003, the iTunes Music Store opened • The first iPhone was launched in 2007, Apple had sold over 500 million phones since launch • In 2010, Apple introduced the iPad

12. iPhone Sales

13. Key Success Factors of iPad • Thinner – design • Faster – processor • Sleeker – style • Lighter – in weight • Longer/stable – battery life • Greater – storage capacity • Better features – higher screen resolution, better camera As of December 28, 2013, Apple had sold over 195 million iPads.

14. iPhones and iPads Sold

15. Apple’s New Product Strategy • “Apple is closer than it’s ever been to entering into a new product category” - CEO Tim Cook • The latest reports suggest that Apple is preparing to release a health-focused smartwatch, which may be able to perform such functions as measuring a wearers' heart rate and blood pressure • Mobile payments — another area that Apple could potentially be considering as a new product category • In the past, Cook has said that mobile payments intrigued Apple and that there was further potential there for the Touch ID fingerprint scanner that's built into the iPhone 5S • Reports have also said that Apple is at work on an enhanced set-top box, something more capable than its current Apple TV • Apple will begin showing the future of its desktop and mobile operating systems in June

16. 2014 New Product Roadmap

17. Challenges • Appearance & User interface • The dilemma Apple faces today is that design and user experience competency is wide spread. Apple’s appearance and user interface differentiation is not nearly as big as it was • Integration • Integration plays a larger role in new category products. It is easier to develop Android after you’ve seen iPhone because the basic choices are defined • Advanced capabilities • Since the MacBook Air and iPad, it seems that thin, light and battery life dominate their design thinking. Plus, they’re playing catch-up more often; sometimes not so well • Consumer farsight • Steve Jobs was uniquely talented plus he had the caché of returning founder and power as Apple’s CEO. The real question is can Cook and others perform as effectively as a group to replace what one man uniquely drove?

18. Opportunities • Growth of tablet and smartphone markets • Advertisement: The recent launch of the iRadio does lay the foundation for a solid Apple ad exchange. Advertisers will be able to use Apple's user data and purchase patterns to lay out ads on iPhones, iPads and MacBooks • Expand Services Further: Apple can add newer version of subscription or ad-supported video streaming content like Hulu and Netflix, which will lead to more revenues • Newer and Existing Products: Apple can generate more revenue from emerging markets for iPhone and iPad products

19. References "AAPL Company report, financial results, key ratios, income statement - MSN Money." Stock quotes, investing & personal finance, news - MSN Money. N.p., n.d. Web. 20 Mar. 2014. "AAPL Profile | Apple Inc. Stock - Yahoo! Finance." Yahoo Finance - Business Finance, Stock Market, Quotes, News. N.p., n.d. Web. 20 Mar. 2014. "Apple Inc. - Frequently Asked Questions." Apple Inc. - Overview. N.p., n.d. Web. 20 Mar. 2014. Bellis, Mary. "The History of Apple Computers." About.com Inventors. N.p., n.d. Web. 20 Mar. 2014. Faruk, Ishfaque. "Apple: A SWOT Analysis." The Motley Fool. N.p., 14 June 2013. Web. 12 May 2014. Kastrenakes, Jacob. "Tim Cook says Apple is 'closer than it's ever been' to new product category." The Verge. N.p., n.d. Web. 12 May 2014. Lafleur, James. "Apple from the iPod to the iPad A Case Study in Corporate Strategy Second Edition 2012 Second Edition 2012 The iPhone James Lafleur Academia.edu." N.p., Web. 11 May 2014. Meyer, Christopher. "Apple’s 2014 New Product Strategy." Working Wider — Collaborative Strategies for Leading Outside the Box. N.p., 16 June 2013. Web. 11 May 2014. Richardson, Jeff. "Apple 2014 fiscal first quarter -- the iPhone and iPad angle." iPhone J.D. N.p., 28 Jan. 2014. Web. 12 May 2014. Rogowsky, Mark. "Without Much Fanfare, Apple Has Sold Its 500 Millionth iPhone." Forbes. N.p., 25 Mar. 2014. Web. 12 May 2014. Thomke, Stefan H., and Barbara Feinberg. "Design Thinking and Innovation at Apple." Harvard Business School Case 609-066, January 2009. (Revised May 2012.)

20. Questions • What is the main challenge for Apple? • Innovation • Advanced Capabilities • Consistency • Which statement is not true for innovation at Apple? • Simplicity is the ultimate sophistication • Constant Learning and Adaptation • Apple has no clear platform strategy • Which statement would not support Apple’s design thinking process ? • Apple’s success came from a commitment to understanding how people used computing devices • Apple products were conceived of as being not highly interactive • The appearance of Apple products is the result of painstaking attention to detail