UTM

University of Technology Malaysia Faculty of Management and Human Resource Development

OPERATION AND TECHNOLOGY MANAGEMENT

MHM 2673
Group Assignment:

Apple Inc. in 2010

Prepared for:

Associate Professor Dr. Amran Rasli

Prepared by:
Wong Yean Chong Tee Chai Huat 790814-01-5105 750606-01-5083 MH081551 MH081556

I 2010

Table of Contents
Part 1 2 3 4 5 6 Content Introduction What, historically, have been Apples competitive and comparative advantages? Analyze the PC industry. Are the dynamics favorable or problematic for Apple? How sustainable is Apples competitive position in MP3 players? How do you assess Apples competitive position in smartphones? What are the prospects of iPad? Discuss Apples overall technology maneuvering strategy. Conclusion References Page 1 1 4 7 9 13 16 18 18

Operation and Technology Management-MHM2673 Group Assignment-Wong & Tee Apple Inc. in 2010

Brief Introduction Apple started in 1st April 1976 as a computer company by Steve Jobs and Steve Wozniak. Apple was best known for its Macintosh personal computers in the 1980s and 1990s. Despite a strong brand, rapid growth, and high profits in the late1980s, Apple almost went bankrupt in 1996. Then Jobs went to work, transforming Apple Computer into Apple Inc. with innovative non-PC products starting in the early 2000s. In the last decade, however, Apple has expanded into a very intricate company that specializes in much more than just computers. In 2001, Apple broke the barrier wi th the iPod, eventually becoming the dominant market leader in music players. As well, Apple joined the phone industry in 2007 with the iPhone, which has also been widely successful. Apple is a consumer goods company, and therefore evaluating its value requires understanding its products and consumers. This can be very difficult because Apple competes with many different companies throughout the different industries it takes part in. A good description from Wikipedia describes Apple: "For reasons varying from its philosophy of comprehensive aesthetic design to its distinctive advertising campaigns, Apple has established a unique reputation in the consumer electronics industry." One of the most unique things about Apple is that it has a very strong customer base. This is extremely important in understanding Apple! 1. What, historically, have been Apples competitive and comparative advantages?

Quality and Innovative Products Jobss mission was to bring an easy-to-use computer to market, which led to the Apple II in April 1978. It sparked a computing revolution that drove the PC industry to $1 billion in annual sales in less than three years. Apple quickly become the industry leader, selling more than 100,000 Apple IIs by the end of 1980. Even as at todate, the company is still applying the concept to produce the products with quality thus to control the customer loyalty. We can easily found dozen of Apple customer who owned iPod, iPhone and iPad, and also the regular customer for iTunes and App Store. Capable Management Team The key man-Jobs has a very strong characteristic which can influence the entire company to follow and speak the same language. As long as the decision or strategic make by him will be accept and support by the whole team. The iconic of Jobs equal as Apple, iPod, iPhone, iPad and iMac is irreplaceable until today. Under the management of Jobs, the company able to moved quickly in order to revamp the weakness area, i.e. in 1997, Apple announced than Microsoft would invest $150 million in Apple and make a 5 years commitment to develop core products, such as Microsoft Office, for the Mac. Jobs also abruptly halted the Macintosh licensing program which is less popular in the market.

Operation and Technology Management-MHM2673 Group Assignment-Wong & Tee Apple Inc. in 2010

Apple Products Design Apples designs are well and elegant. There is no better word for it. Sony and Toshiba can come close at times, but, on average, Apple has the best-designed hardware from an aesthetics point of view of any other competitors. It is amazing that, after several years, no one has been able to design a better hard-drive-based MP3 player that Apple did with the iPod. Even Toshibas design, which used many of the same components. Apple doesnt live very much by the version-three rule. In the PC industry, there is this rule that some of the branded vendors take three tries to get something right. Apple often gets it in one try. The first iteration might not be perfect, but it is often so close to the ideal that the difference is insignificant. The latest Apple worlds greenest lineup of notebooks that were energy efficient and used recyclable materials which expected once again making a great hype to the market. Apple Digital Hub Strategy and All Apple Ecosystem Concept Jobs believed that the Macintosh had a real advantage for consumers who were becoming entrenched in a digital lifestyle, using digital cameras, portable music players, and digital camcorders, not to mention mobile phones. The Mac could be the preferred hub to control, integrate and add value to these devices. Jobs viewed Apples control of both hardware and software, one of the very few remaining in the PC industry, as a unique strength. The digital hub initiated by the debut of the iPod in 2001, followed by the iPhone 2007, then the iPad in 2010. Apple good in building the ecosystem with it products, i.e: the iPod accessory market that ranged from fashionable cases to docking station. For every $3 dollars spent on an iPod, according to one analyst, consumers spent another $1 on iPod addon products. Apple, through a program that licensed its Made for iPod logo, earned an estimated 5% of the retail price of such items. Thanks to the branding strategy, Apple is great benefited from it. In addition to its iTunes, completely the Apples vision of an entertainment hub. Nowadays, consumers are not only buying the iPod, but the entire Apples products. The key factor behind the iPhone sensation was the extension of the iPhones ecosystem-Apple App Store, which has more than 185,000 applications (free and charged) has absolutely make this smart phone ahead other even the leader in smartphone-Nokia. The all Apple concepts also reflected in the Jobss dealing model with the suppliers, i.e in November 2005, Apple agreed to pay $500 million up-front to Intel and Micron to secure a substantial portion of their memory output. Similar deals were made with Hynix, Samsung, and Toshiba. Apple subsequently became one of the largest purchasers of flash memory in the world, and indirect Apple has the control over the supply market. Same thing in 2009, Jobs bought Lala.com, a music streaming service.

Operation and Technology Management-MHM2673 Group Assignment-Wong & Tee Apple Inc. in 2010

iTunes & Digital Asset Management iTunes is one of the most strategic elements of the Apple pie. Apple, we believe, has fundamentally understood that it is not the one who owns the content who wins in the future, but he who holds the keys to the content. Which is why Apple has become not just a software company, but also a digital asset management company. Apple announced at their event on September 9th 2009 that they have the credit card account information of more then 100 million consumers through iTunes. Making them one of the biggest digital retailers, if not retailers in general, in the world. Good consumer psychology would tell us that once a consumer trusts a brand enough to set up an account and give credit card information on the assumption of future purchases (you have to give a credit card to even set up an iTunes account), the consumer will consider that retail outlet first in making purchases. Does that mean Apple will sell clothes some day? Doubtful, but it does mean that as they continually enhance the devices that consumers own, those consumer will continue to shop in Apple's store. Amazon has had much the same success with this very thing, although Amazon's success has mostly come with physical goods where Apple's is mostly with digital goods. Apple Marketing Apple really stands out in marketing. The company simply seems to understand what will get people excited about its products, and then it executes on that vision. The company philosophy is not mainly talking about features or technology, but about how the computer or tool will make your life better. Apple also has not been afraid of in-your-face campaigns. The company has run campaigns that have shown Intel-based laptops catching fire and getting flattened by steamrollers. Contrast this with IBM, which has backed away from connecting Dell's "Dude" to the dropped laptop in its new campaign for fear of upsetting Dell, even though Dell abandoned "the Dude" some time ago. Simply look at where Apple puts its logo on its products. On the laptops, the logo is right side up when the screen is open. Many vendors don't understand the power of walking into an office and seeing a large number of logos advertising their products to everyone in the office and everyone else who comes into it. The logo even lights up on most Apple laptops. Apple understood that the logo is not for the person who bought the computer but for the person who is in the market for one. It is good advertising placement -- not a throw-away design element. Apple multi-million dollar marketing campaigns such as the successful Think Different ads and catchy slogans The ultimate all-in-one design, It just works, Apple promoted itself as the hip alternative to other computer brands. Apple ads were placed in popular and fashion magazines as well, venturing out from general computer publications.

Operation and Technology Management-MHM2673 Group Assignment-Wong & Tee Apple Inc. in 2010

2.

Analyze the PC industry. Are the dynamics favorable or problematic for Apple? Brandings Previously, computer brand was an important factor that influence consumer to buy a computer, however, it is not longer a significant consideration point in today. Previous computer big name, i.e: IBM, HP and Apple representing a certain degree of quality and their very own software or operation system, however, by early of 1990, the new standard known as Wintel (Windows OS combined with an Intel processor) dominated the industry, make them have to compete with the emerge success brand, i.e. Acer, Lenova and thousand of no name clone manufacturers who can built PCs around standing building blocks from Microsoft and Intel, thus to focus on mass market by offering at lower price. In simple, now everyone can build computer, manufacturer and buyer can easy find the part in the market, from the casting to the chipset, everything is available and compatible to suit the particular need of the consumer. Although, Apple still standing firm as a choice of quality PC, however, Jobs and the team know clearly, their branding computer is mainly attracting the existing Apple user, it is hard for them to solicitor or swift new user from other brand, with left than 5% of market share, we can conclude the era of Macintosh is getting tiny and people will less relate Apple as a computer brand but a mobile and entertainment manufacturer. Manufacturing Cost and Computer Price Prices for key components (CPUs, memory, and hard disk drives) dropped by average annual rate of 30% which led to the average profit margin of the PC manufacturers fell below 5%. Despite the PC demand volume is constantly growth, however the average selling prices declined by a compound annual rate of 8% per year between 1999 and 2005. These have make the market player to cut spending on research and development. For example, in 2000 the industry leader-Dell only devoted 1% of the revenue to R&D so to increase the real revenue. The trend of price and cost falling benefited the other local manufacturer who can produce computer at lower cost and distribute in the local market, i.e. in China and India, Lenova from China was starting the business momentum from the China local market. The selling price and manufacturing cost of Apples machines is still high compared to the entire market trend, thus it is rather hard for the company to compete with the other main player now. Apple is only able to focus on the limited market potential (i.e: SOHO buyer, individual buyer who enjoy stylish and quality), instead of the mass market, and this have limited it expansion in the PC industry. This achievement is not match with Jobss style, which he wants big and control the market always, thus we believe, this is one of the factor that might lead him to change radically or leave from the PC market, who knows? Unless, Jobs is willing to enjoy a small piece of cake, like the Bang & Olufsen, exclusively for the targeted buyer and enjoy the existing achievement.

Operation and Technology Management-MHM2673 Group Assignment-Wong & Tee Apple Inc. in 2010

PC > Laptop > Netbook Thanks to the well development in the technology, nowadays, a laptop can perform all the traditional PC functions without any lack or slow in processing. The overall lower cost in the components also make the laptops price close to a PC, which was previously a laptop is more expensive than a PC. The mature technology of WI-FI and Bluetooth allow laptop to connect wireless to most of the devices, i.e printer, speaker and modem, which make laptop more acceptable by the consumer, despite the traditional advantage, i.e: portability and convenience. Furthermore, the recent netbook once again challenge the position of PC market. Where, now PC are mostly use by corporate client. Looking at the above brief discussion on the computer transformation, where is Apple? Apple was a leader in PC era, when the release of Apple II in 1980, then the company was totally unable to compete with other PC manufacturers, even it subsequent iMac although the sales help Apple posted $309 million of profit. Not to further mentioned it laptop market. Although the company has successfully invented the iPad, and received quite a good comment and response from the market and user, however, how well can this keypad less notebook or giant iPod or enlarge iPhone or portable e-books can sustain in the market, we reserve the comment. As iPad is expected to be another gold mine and proud product of Apple, Jobs move to take more control over the components. He bought P.A. Semi to run on its own branded chip, the A4 for all the iPad. Also, iPads Apple style of operation has create the controversy with the Kindle and other e-book publishers, will the iPad be a netbook killer and drive new consumer behavior as optimistic as Jobs ambitions, or the another way round, netbook the killer for Apples PC manufacturing? Overall Market Demand The world demand on PC, laptop and netbook is expected to be constantly increase due to the generally recovery of economic crisis and emerging of developed country, i.e. Vietnam, Indonesia, Cebu and etc. However, we believe that, the price of computer will further reduce and manufacture who can produce to the market need, i.e. lower price, fast operating system, small and service will conquer the market. Conclusion to the above discussion, our view on Apple position in the PC industry is getting smaller, in fact, the present PC business in Apple is only a normal department that contributed roughly 30% of the company total sale volume, it no longer the major business segment since 2006. As per the company name, Apple Inc. maybe Apple shall move diversifies to other IT area, which may create a better market position, like its iPod and iPhone. The latest development in the PC industry will not be a problem to Apple, as the company core focus is not at this area, however, the latest development could be a great opportunity for Apple, if Jobs would like to gain back the market position by introducing the mass accepted PC and laptop. Analysis via Porter Five Forces Porter's five forces is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. Porter's five forces include - three forces from 'horizontal' competition: threat of substitute products, the threat of established rivals, and the threat of new entrants; and

Operation and Technology Management-MHM2673 Group Assignment-Wong & Tee Apple Inc. in 2010

two forces from 'vertical' competition: the bargaining power of suppliers and the bargaining power of customers.

The threat of the entry of new competitors Profitable markets that yield high returns will attract new firms. This results in many new entrants, which eventually will decrease profitability for all firms in the industry. This is obviously in PC industry, conspicuously in the developing countries, ie: China and India, whereby plenty of local PC manufacturers entry to the market to earn a piece of cake. The intensity of competitive rivalry For most industries, the intensity of competitive rivalry is the major determinant of the competitiveness of the industry. The PC market is severely competitive, neither Apple nor HP will have to counter in the market. The threat of substitute products or services The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives. There nothing rigid and long lasting in the technology product life cycle, this is exactly true for PC market. Whereby the product life span is getting shorter, normally is average 3 months. Apple like other players in the market, their PC products is required upgrade very frequent. The bargaining power of customers The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer's sensitivity to price changes. Under the PC market, consumer has the absolutely power to select, purchase and compare their ideal products,

Operation and Technology Management-MHM2673 Group Assignment-Wong & Tee Apple Inc. in 2010

thus, the strong side is on customers, manufacturers have to adopt to the consumers need and expectations. The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm, when there are few substitutes. This is the area which is sided to the market players. Whereby, there are more suppliers exist in the industry, which allow Apple and other competitors to have a better bargaining power against the suppliers thus to select the best offer then follow by benefited the overall production cost and maximize the return. 3. How sustainable is Apples competitive position in MP3 players? Apples MP3 players known as iPod and subsequently the premier version known as iPod touch. The iPod was initially one of many portable digital music players based on the MP3 standard. The stylish and sleek design coupled with simple user interface and large storage make this device a iconic product in Apple history after the Macintosh. iPod debut in 2001, and soon set Apple on the explosive growth path till today. Apple Technology Strategy

Apple is using the Technology Flank Attack strategic to attack other competitors. Whereby, Apple surprised the industry by introduced the iPod which is significantly different from what the competitor is expecting to have to counter. Apple executed the four dimensions of the techspace which are comprised of technology structure, capability, flow and time to conquer the market and stand it ultimate competitive advantage. Below is the details elaboration of the technology. iPod Capacity and Functions Besides the above mentioned, when release of the first iPod, its storage capacity is up to 1,000 songs which is far advance than other MP3 player in the market which with average an hour music storage. After the launching in 2001, the next 5 years, Apple constantly delivered new innovative design after another, which keep the market demand consistent strong. Another breakthrough design by Apple in the iPod evolution was the iPod Touch which has been release in 2007. The Touch was the first iPod that had built-in WiFi, a 3.5 inch screen, and multi-touch graphical

Operation and Technology Management-MHM2673 Group Assignment-Wong & Tee Apple Inc. in 2010

interface, where make the iPod is not only a MP3, but a handheld game device, which is really cool yet another remarkable iconic product in Apple! iPod Manufacturing Cost and Profit With the maturity in the manufacturing technique and technology knowledge, Apple has able to gain higher profit margin on each iPod sold, i.e. around 40% in 2007. Apple recognizing the importance of flash memory as the main component for iPod, thus Apple set out to insure they got the best prices, in November 2005, the company agreed to pay $500 million upfront to Intel and Micron to secure a substantial portion of their memory output, similar deals were made with Samsung, Hynix and Toshiba. As Apple owned about 40-50% of the MP3 market in the world and also being the world largest flash memory purchaser, this granted Apple the negotiation power to buy material at lower cost so to reduce the overall manufacturing cost and increase the profit margin. iPod Development, Design and Marketing The developing and marketing of iPod was more open than Apple previous strategy, i.e. Macintosh. The iPod could sync with Windows as well as a Mac, which has further explore the product to mass market. The various design and model make iPod available in all price segments which feed the different market segments, this is also different from Apples normal strategy. The stylish and advance design creates hype in the market, conspicuously to youngsters. Not to further mention of its 2007s icon product-iPod Touch, which subsequently become the basic of iPhone, another diamond product of Apple. iPod Ecosystem As Apple traditional way of business, Apple successfully developed an ecosystem with the iPod accessory market that ranged from fashionable cases to docking stations. For every $3 dollars spent on an iPod, according to one analyst, consumers spent another $1 on iPod add-on products. Apple, through a program that licensed its Made for iPod logo, earned an estimated 5% of the retail price of such items. Again, the Apple ecosystem created the domino effect to the entire Apples products. A brilliant ideas from Apple team and it is really a strong competitive advantage owned by Apple and it is hard to be duplicate or copy by its rivals. We do believe, the impact of ecosystem will be greater than the monopoly concept, which have created anti trust law suit to Microsoft. iTunes Store Effect Further from the ecosystem, in 2003 Apple introduced the iTunes desktop software, which synchronized iPods with computer which dramatically differentiated Apples iPod with the other MP3 players in the market. iTunes also completed Apples vision of an entertainment hub. Songs downloaded from iTunes only cost $0.99 per song, downloaded songs could be played on the users computer, burned onto a CD, or transferred to an iPod. The launch of the iTunes store had a galvanic impact on iPod sales. iPod sales hot up to 733,000 units and exploded thereafter compare to an average of 113,000 units per previous quarter since iPod was released. Although the iTunes store doesnt making much revenue to Apple, but it was Jobs intention to create a razor-and-blade business.

Operation and Technology Management-MHM2673 Group Assignment-Wong & Tee Apple Inc. in 2010

Concluded the above discussion, we would say that Apple had successfully conquered and controlled the MP3 player market. Despite the controversy with the music provider, other online music stores, internet radio sites and other MP3 manufacturers, Apple will still standing outpace in this business segment. As the product developed has greatly accepted by the market. The sales will derive automatically, the penetration is too wide and deeply, iPod merely another name of MP3. Needed to be address, besides facing competition from outside, in fact, iPod, conspicuously iPod Touch is facing competition from Apples another key product, iPhone, however, based on the market comments, iPod will still have the demand based on the following:

Lightweight Though the difference of mass is just of some grams but still iPod Touch beats iPhone because its more lightweight and easy to handle. More Slim -The iPhone has a 12mm thickness while the iPod Touch is only 8mm thick. Our hands will definitely feel the difference. No Unlock Required This is the biggest reason why buyers preferred iPod Touch over the iPhone. iPod Touch does not come locked with any service provider and can be used easily out of the box while on the other hand everyone knows that the iPhone comes exclusively for AT&T users. Better Screen Though both of the gadgets come with a cool scratch-less screen, the thing that makes iPod Touch better is its better video resolution and response time. $100 Cheaper than iPhone iPod Touch comes with a price of which is $100 cheaper the iPhone. There is 99.9% probability that buyers will have a phone already. Then waste extra $100?

$299 than

iPod Touch

iPhone

why

4.

How do you assess Apples competitive position in Smartphones?

A smartphone is a mobile phone that offers more advanced computing ability and connectivity than a contemporary basic feature phone. Smartphones and feature phones may be thought of as handheld computers integrated within a mobile telephone, but while most feature phones are able to run applications based on platforms such as Java ME, a smartphone allows the user to install and run more advanced applications based on a specific platform. Smartphones run complete operating system software providing a platform for application developers. The dramatic rise in smartphone use has meant that people are looking to access the same content and services, both inside and outside working hours. Smartphones increasely functioned such as handheld computers, allowing email, visit websites, and manage online lives.

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Growth in demand for advanced mobile devices boasting powerful processors, abundant memory, larger screens, and open operating systems has outpaced the rest of the mobile phone market for several years.

Share of 2010 Q2 smartphone sales to end users by operating system.

According to Frost & Sullivan, prosumers around the world purchased around 15 million advanced smartphones in 2008. The world of smartphone market is expected to reach 217 million in advanced smartphones shipped in 2015.

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Refer to the aforementioned figures, the apples competitive position in smartphones can be accessed through following: Market Share In year 2009, the ranking of smartphone manufacturers were led by Nokia (Symbian OS), Research in Motion (RIM), Apple (Mac OS X) and Windows (Microsoft). Android was a small player with 4% market share in year 2009. Nokia, was the market leader in smartphone with its Symbian OS held 47% worldwide smartphone sales. However, Nokias smartphone market share had slipped dramatically to 41% in first quarter of 2010. RIM held 20% of market share which its RIMs Blackberry smartphones delivered one of the best email experiences and was a popular choice among corporate consumers. Blckberrys of RIM were offered through approximately 550 carriers in 175 countries. The market share of RIM also fell to 18% in first quarter of 2010. Apple has maintained its 14% of market share in smartphone by their strategy of controlling both hardware and software in year 2009 and first quarter of 2010. However, the Apple had been ranked the 4th position is the smartphone market in 2010. The main reason is that the Mac OS X is the sole proprietary operating system of Apple and only used in Apple smartphones. Apple has invented the Macintosh hub to control, integrate, and to entrench the consumers into a digital lifestyle by using digital cameras, portable music players, digital camcorders and mobile phones in a smartphone. Apples digital hub strategy was initiated by the debut of the iPod digital media player in 2001, the iTunes music and other digital media service in 2003, the trendsetting iPhone in 2007, and the iPad in 2010. These product lines set Apple on a path toward a full-fledged digital convergence company. Android, was an open platform that allowed mobile operator and handsets makers to use the software for free with few restrictions. In year 2010, there were more than 50 Android-based smartphone models in the market and had increased its market share to 17%. Competent CEO - Steve Jobs Steve Jobs was absent from the company during 19851997 and returned only when Apple acquired his other company, NeXT Computer. That firm provided the basis for another hit Apple product released in 2001, the Mac OS X operating system. But Jobs created the design culture and hired or supervised the people (such as Jonathan Ive, chief designer of the iMac, the iPod, and the iPhone) most responsible for the companys current success and historical legacy. ii. i.

Apple CEO Steve Jobs did it with iTunes and the iPod. And now he's doing it with smartphones with the iPhone and the iPhone App Store. Never in the history of capitalism has one man reinvented two completely different businesses: the music business and the phone business. The Apple iPhone created a new class of phone. Apple invented the market and every other mobile device maker is

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chasing Apple. Jobs is working on the next smartphone game changer. He is Apple's not so secret weapon in the intensely competitive smartphone market.

Marketing Strategy The company simply seems to understand what will get people excited about its products, and then it executes on that vision. Apples smartphone dont mainly talking about features or technology, but about how the computer will make your life better. Simply look at where Apple puts its logo on its products. On the laptops, the logo is right side up when the screen is open. Many vendors don't understand the power of walking into an office and seeing a large number of logos advertising their products to everyone in the office and everyone else who comes into it. The logo even lights up on most Apple laptops. Apple understood that the logo is not for the person who bought the computer but for the person who is in the market for one. It is good advertising placement -- not a throw-away design element. Profitability Apple managed to increase its gross margins from 21% in year 1997 to 40% in year 2009 if compared to other PC manufacturers like Dell and Hewlett-Packard whose gross margins were 18% and 24% respectively in year 2009. Apple also managed to reduce its R&D / Sales ratio from 12% in 1997 to 3% in 2009. At the same time, according to the Wall Street Journal, Apple and RIM accounted for the roughly 5% of the total unit value of the cellphone industry but about 60% of total operating profits in 2009. v. iPhones Maneuvering Strategic iv.

iii.

Competitors Technology Envelopment Offensive Apple attacks the competitors in phone and computer industry through technology envelopment offensive strategy. It involves the strategy to attack the targeted competitors like Nokia and Blackberry in Smartphones, and Dell and HP in computer industry. Apple has done this strategy in two ways. Firstly, Apple introduced a range of products like iPhone, iPod, that are similar to the target product. At the same time, Apple has in the process of modifying the Macs Computer that to compete with Dell and HP. Each product has liberated some market share from the targeted competitors product. Finally, Apple introduced a new product like iPad that further expand the market niches that surround and encroach on the targeted competitors market.

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5.

What are the prospects of iPad?

The iPad is a tablet computer designed and developed by Apple. It is particularly marketed as a platform for audio and visual media such as books, periodicals, movies, music, and games, as well as web content. At about 700 grams (25 ounces), its size and weight are between those of most contemporary smartphones and laptop computers. Apple released the iPad in April 2010, and sold 3 million of the devices in 80 days. The iPad runs the same operating system as the earlier iPod Touch and iPhone, albeit a slightly older version. It can run its own applications as well as ones developed for the iPhone. Without modification, it will only run programs approved by Apple and distributed via its online store. Like iPhone and iPod Touch, the iPad is controlled by a multitouch display a break from most previous tablet computers, which used a pressure-triggered stylus. The iPad uses a Wi-Fi data connection to browse the Internet, load and stream media, and install software. Some models also have a 3G wireless data connection. The device is managed and synced by iTunes on a personal computer via USB cable. The iPad will prevail in the future for a number of reasons: First Mover: A Bunch of Advantages Apple's ability to deliver great products is unparalleled in consumer technology. With a giant market lead, Apple might be uncatchable. As we already know, Apple reinvented the tablet market--that is, the iPad is much more than an ereader that competes with Kindle and brought touch technology to mobile devices. i.

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Steve Jobs also wanted iPad would be a netbook killer and drive new consumer behaviour. First mover advantage is more than just consumer mindset and market share, there's a supply chain advantage, too. Apple buys a ton of Flash and touch technology on a scale that will make it hard for tablet makers to compete with the iPad on price. RIM, Dell and Hewlett-Packard have the best chance of igniting a price war with the iPad. RIM may eventually charge as little as $299 for the PlayBook. HP would make a Wintel-based tablet, while Dell planned to ship an Android-based tablet. Apple could dramatically cut the price of older iPads when it announces a new model, a similar tactic Apple has taken with the iPhone. iPad is extremely easy to use (more on that later usability) and requires little intervention from the users. Installing and removing apps is a breeze. Apple has leveraged the familiar iTunes platform to deliver/enhance the iPad experience. By positioning the iPad as a consumer device, Apple could target a wider market. This is in stark contrast to the earlier devices, which were designed for geeks and thus targeted to a niche audience. Finally, by positioning iPad as a media consumption device, Apple could further lower the expectations. Producing media is a lot more intensive and demanding, in terms of processing power, battery consumption, etc

User friendly Software iPad is a kind of software, services and deal-making that will lead to the iPad prevailing over competitors. When the iPad came out, all iPhone apps could run on it. Native iPad apps soon followed. Apple introduces business documents in all their glory on the Documents to Go app, watch movies over the Netflix app, and play addictive games such as Angry Birds with all on a big, colorful touchscreen.

ii.

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Like the iPhone, with which it shares a development environment (iPhone SDK, or software development kit, version 3.2 onwards), the iPad only runs its own software, software downloaded from Apple's App Store, and software written by developers who have paid for a developer's license on registered devices. The iPad runs almost all third-party iPhone applications, displaying them at iPhone size or enlarging them to fill the iPad's screen. Developers may also create or modify apps to take advantage of the iPad's features. Application developers use iPhone SDK for developing applications for iPad. The iPad has been shipping with a customized iPadonly version of iPhone OS, dubbed v3.2. On September 1, it was announced the iPad will get iOS 4.2 by November 2010. The iPad also has the potential to serve up magazines and newspapers and become the standard device for publishers. According to the Wall Street Journal, Apple would create powerful alliances with publishers such as Time Inc., Conde Nast, News Corp, and Hearst Corp., to sell newspaper and magazine subscription for the iPad, The iPad comes with several applications, including Safari, Mail, Photos, Video, YouTube, iPod, iTunes, App Store, iBooks, Maps, Notes, Calendar, Contacts, and Spotlight Search. Several are improved versions of applications developed for the iPhone. The iPad syncs with iTunes on a Mac or Windows PC. Apple ported its iWork suite from the Mac to the iPad, and sells pared down versions of Pages, Numbers, and Keynote apps in the App Store. Although the iPad is not designed to replace a mobile phone, a user can use a wired headset or the built-in speaker and microphone and place phone calls over Wi-Fi or 3G using a VoIP application. The iPad has lots of third party applications available for it; as of September 1, 2010 there were 25000 iPad specific apps on the AppStore. Other manufacturers should understand the need for a robust set of software and services to drive the device in the market. Otherwise, their software would be unable to compete with Apples iPad software and to attract the users. 6. Discuss Apples overall technology maneuvering strategy Apples overall technology maneuvering strategy is stated as below:

ii. Customers- Technology Encirclement Offensive For customer, Apple attacks the competitors by surrounding the customers with interlocking technologies such as using the iPod, iTune, iPhone and iPad. This strategy will further encircle the customers via the technology flow methods and using the competitors non-compatible technology. The customers are anchored to the iPhone and so the expectations were set accordingly. iPad is clearly a superior device as compared to the iPhone and thus received rave reviews from consumers. The MacBook Air are introduced

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in year 2010 to compete with the competitors who will introduce the new design of netbook.

MacBook Air

ipod

iPad

Customers

iTune iPhone

C o m p e ti t o r s

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Conclusion Apple is set apart from its competition by its combination of hardware and software, by the content gate-keeper strategy embodied in iTunes, and by their successful retail strategy. While there are many other reasons in the company's history for their success in recent years, these are the dominant themes of their astounding

Operation and Technology Management-MHM2673 Group Assignment-Wong & Tee Apple Inc. in 2010

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success. Companies looking to compete with Apple need to know that it is not impossible, however they will need to pick their battles wisely, innovate on their differentiation, focus heavily on being the best solution in the market for the problems they are trying to solve.

References 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. http://www.pcadvisor.co.uk/news/index.cfm?newsId=3200338 http://www.technewsworld.com/story/33061.html?wlc=1286792232 http://www.scribd.com/doc/2176129/iPhone-Business-Plan http://en.wikipedia.org/wiki/Smartphone http://www.pda-247.com/wordpress/2010/01/a-decade-of-pdas-and-smartphones2006-2008/ http://www.pcadvisor.co.uk/news/index.cfm?newsId=3200338 http://www.telecomtrends.net/PRESS%20RELEASE%20Smartphones.pdf http://www.nma.co.uk/opinion/industry-opinion/prospects-for-the-ipad-bring-newcomplexity-for-mobile-marketers/3012554.article Porter ME. 1980. Competitive Strategy: Techniques for Analyzing Industries And Competitors. New York: Free Press DAveni R. 1994. Hypercompetition: Managing the Dynamics of Strategic Maneuvering. New York: Free Press Hill CWL. 1988. Differentiation Versus Low Cost Or Differentiation And Low Cost: A Contingency Framework. Academy Of Management Review 13(3): 401-412