主题：谨以此文献给Steve Jobs和AllenKid（一） -- letitbe

标题档一把呵呵。对Jobs同学，自从看了他那篇commencement speech就开始崇拜，到后来了解越多越崇拜：）这篇paper里对Apple的发展战略的理解很多都来自AllenKid的科普文章（同样强烈推荐。当然如果我写的gp不通，基本一定是我理解错误：）。其他的，还要感谢Economist的IT system special report和河里邓侃几位，让我认识到platform的重要性。文章大体分三个部分：1. the role of innovation in Apple; 2. the role of top management in managing innovation; 3. the future of Apple Inc. 我对Consumer Electronics industry和management都是绝对的外行，这一篇paper只是一门管理课程的final project。用词肯定很外行见识也很浅陋，不过自己已经尽力了。贴在这里做个纪念，如果有无聊的牛人打酱油路过，还望不吝赐教：）

Apple Inc., 2008 case analysis

What is innovation? There are many definitions for this word, but deep down the essence is similar: innovation is “the successful exploitation of new ideas” (Francis & Bessant, CR). While innovation is unanimously recognized as indispensable to a company’s competitive advantage and profitability, it’s never an easy task to introduce the right innovation at the right time and place. Being a widely-perceived exemplary innovator in the corporate world, Apple Inc. has been pioneering various innovations ever since its birth more than 30 years ago. Undoubtedly, valuable lessons can be learned by examining Apple’s innovation process and its positive or negative impact on the Apple’s development. The case study “Apple Inc., 2008”, written by David Yoffie and Michael Slind and chronicling Apple’s ups and downs during the past three decades, provides us with such an opportunity.

Reading through the case, one would find that the innovations adopted by Apple do not necessarily fall in a single category. Based on the work by Francis and Bessant (CR), there are generally four types of innovation: innovation to introduce or improve products (P1); innovation to introduce or improve manufacturing process (P2); innovation to define or re-define the market positioning of the firm or products (P3); innovation to define or re-define the dominant market paradigm of the firm (P4). These four categories do not have clear-cut boundaries (i.e., an innovation may have the characteristic elements from more than one categories), and innovations with different nature are often concomitant rather than mutually exclusive. However, using this 4Ps system as the reference framework, we can see more clearly what an innovation aimed to do, and what it actually achieved. From now on, we will examine the case with this 4Ps system as well as other analysis tools in mind.

Apple’s foundation came as a disruptive innovation to the whole computer manufacturing industry. Before then, computers were too complicated for untrained people, and therefore had a limited market mainly of corporate users. Apple’s easy-to-use computers tapped into a different market—personal users. With its user-friendly interface and plug-and-play functionality, Apple effectively monopolized the new market, enjoyed an explosive growth between 1976 and 1980, and quickly became an industry leader.

After IBM entered the PC market in 1981, Apple started to lose its market share significantly. One major reason is Apple’s closed innovation model (Chesbrough, CR). Because only Apple itself can design the software and hardware compatible to its operating system, while the “Wintel” system from IBM is open to innovation from outside, Apple fell behind in the competition of processor speed and software spectrum. Consequently, despite the continuing product innovation efforts and the launch of new product (the Macintosh), from 1981 to 1984, Apple’s share in the PC market dropped from about 16% to around 6%.

During the next several years (1985~1993), Apple sought to offset the loss in PC market share by repositioning itself (positioning innovation). Based its competitive advantages in multimedia and graphic processing capability, Apple successfully occupied the PC market in desktop publishing and education fields. Moreover, although the closed innovation model caused elevated cost in research and development (R&D) and limited innovation speed, it enabled the seamless horizontal and vertical integration of Apple’s products. By offering a “one-stop” desktop solution including hardware, software and peripherals, Apple managed to win customers’ heart and in the same time maintain an enviable 50% gross margin.

Mindful of the fierce competition, Apple strove to make innovations in various directions. It launched the Mac Classic line in 1990 to compete in the low-end market; it introduced its own PDA product “Newton” in order to diversify, but to no avail. Apple also undertook dramatic process innovations: it collaborated with IBM to form joint ventures in order to innovate in operating system and multimedia applications; it also attempted to transplant the Mac OS to run on Intel chips; to drive down costs, it outsourced much of its manufacturing to subcontractors. These process innovations aimed at internal structures, signaling that Apple gradually loosened its closed innovation model.

Under the leadership of Spindler and Amelio between 1993 and 1997, Apple went through a rough phase. The collaboration with IBM fell apart. Innovation attempts in process and position, including licensing other companies to make Mac clones, slashing R&D cost, and repositioning to focus on high-margin market segments, failed to stop Apple’s growth decline.

From 1997, Steve Jobs took over as Apple’s CEO, and since then has introduced a series of innovations that fundamentally changed the company’s development. Many previous innovation efforts were retained, such as outsourcing product manufacturing, transferring from PowerPC chips to Intel microprocessors, launching low-end product (iMac) to compete in different market segments, and stressing the differentiating factors from PC (high quality design, user-friendly UI, security, and superior bundled software). New innovations were also initiated to complement this development strategy. Apple renovated the Mac product design to enhance the interoperability with non-Mac hardware. By contracting independent software vendors (ISVs), most notably Microsoft, to make their hit software for the Mac, Apple was able to put priority on the development of newer operating system. With special software allowing Mac users to operate Windows-based applications, the disadvantage of limited Mac software choice is further alleviated. Apple also made a major innovation in distribution process, by setting up retail stores to take advantage of its product integration and introduce customers into the Mac world.

Notwithstanding all the above innovations, Apple’s PC market share still remained in the 2% to 3% range. It was the iPod-iTune system and the more recent iPhone system that brought about a paradigm shift and revitalized Apple. Intriguingly, in both cases, the products (iPod and iPhone) did not incorporate much disruptive technology innovation. Rather, Apple employed the readily-accessible technology (click wheel for iPods, mutli-touch for iPhones) and components and “made things right”. By stressing the same principle--easy-to-use and sleek design, iPods occupied 70% or more of the U.S. market for portable music players, and the much younger iPhone line also poised to compete for supremacy in the smartphone market. Apple also moved fast to setting up service platforms exclusively for its own products (iTunes Music Store for iPods and iPhone App store for iPhones), which further consolidated its customer base.