Core Competencies of Apple's Product: Innovation and Business Development

This report discusses the innovation and business development of Apple's product, specifically the iPhone. It covers the impact of the iPhone on the smartphone market and technology, the innovation model, drivers of innovation, stages in product innovation, innovation type, product design, barriers to innovation, and SWOT, Porter's Five Forces, and PESTLE analyses.

Running head: Core competencies 1
Innovation and business development
Core competencies of Apple’s product

Core competencies 2
Contents
Introduction......................................................................................................................................3
Identifying Opportunity...................................................................................................................3
Innovation........................................................................................................................................3
Impact of iphone on Smartphone Market........................................................................................4
Impact on iPhone on Smartphone Technology................................................................................4
Innovation Model: iPhone is a Technology Push innovation model- why?....................................4
Drivers of Innovation of iPhone......................................................................................................5
Stages in Product Innovation of iphone...........................................................................................5
Innovation Type of Iphone..............................................................................................................7
Product Design of iPhone................................................................................................................7
Barriers to Innovation of iPhone 1st generation (2007)..................................................................7
Core Competencies of Apple...........................................................................................................8
Swot analysis of iPhone 1st generation (2007)................................................................................9
Porter’s Five Forces iPhone 1st generation (2007)........................................................................10
Pestle Analysis of iphone 1st generation (2007)...........................................................................11
Competitive Analysis.....................................................................................................................12
References......................................................................................................................................14

Core competencies 3

Core competencies 4
Introduction
Innovation is integral process for every company as it helps to bring effective changes in the
organization. The description will be made on mobiles technology and this report will describe
about the innovation of Iphone. Iphone is the product of Apple Company that brings huge
changes in the world by providing effective technology to everyone. The impact of Iphone on
smart phone market and Smartphone technology will be mentioned. The depth information will
be collected such as innovation model, drivers of innovation of Iphone, stages of production and
innovation type of iphone. A core competency is effective approach for the company that help to
distinguish an organization in marketplace. Swot analysis, porter’s five forces and pestle analysis
are approach that help to draw the effective conclusion regarding the chosen product. These will
be made on iphone 1st generation 2007.
Identifying Opportunity
Mobile is an effective innovation that can be utilized to communicate over long distances
without wires. Mobiles were not effective until the launch of Iphone as it provided limited
features to the user such as low quality camera, slower keyboard, lack of Wi-Fi connectivity, less
battery backup and heavy body of the phone. There were some examples of some companies’
product that provided these features to users such as BlackBerry Curve 8300, Nokia N95, Palm
Treo 65, Samsung Black jack, Sony Ericson K800i and Motorola RZR. They were lacking to
provide the feature of effective camera, improper operating system, slow run process and heavy
body of the phone. The best features of this phone in that time was new track pad with
navigation, camera services, 2G net services and availability of phones in different sizes, shapes
and prices.

Core competencies 5
Innovation
There were lack of services in smart phones and the first generation of Iphone was announced on
January 9, 2007. It was announced in the United States on June 29, 2007. The feature of this
phone is quad-band GSM cellular connectivity with GPRS and EDGE support for data transfer.
There are various features in Iphone that makes it stand out. It provided its own operating system
which is a revolutionary multi touch interface. It could be controlled by fingers (Teece, 2010).
The display of phone was gigantic which had 3.5 inch display and had resolutions of 320 x 480
pixels. Internet connectivity with web browser but only for 2G cellular had been provided. Along
with that there are various features in it such as 2-megapixel photo camera, YouTube and Google
Maps applications, Google Search, iPod music / video player with support for iTunes.
Impact of iphone on Smartphone Market
The market of Smartphone was influenced adversely due to innovation of Iphone with lots of
features. It has been found that Apple has made more than $730 billion since 2007 by selling 1.2
billion phones (Wood and Schwab, 2013). Innovation in mobile phone attracts many customers
to switch from smart phone to iphone due to its effective efficiency and latest IOS. The market of
Smartphone was decreased due to innovation of Iphone in the market (Chesbrough, 2010). Flip
phones and phones with split keyboard and screen were standard before launching of Iphone.
However, the market of smart phones were not flopped due to market segmentation because the
price of this new innovation was quiet high which was not possible to afford by middle level
person.

Core competencies 6
Impact on iphone on Smartphone Technology
The Smartphone technology got influenced due to innovation of Iphone with effective
technology. Smartphone required bringingthe change in its technology to compete with Iphone
which bring the concern of huge investment. The very first operating system of Iphone was IOX
which converted into IOS Software. The IOS software was launched by Apple Company in its
Iphone which made it so popular. This software allows working like a computer system, touch
screen applications, faster process, designed to be mobile (Gazdecki, 2016). This new technology
impacted the Smartphone technology as more people switched from smart phones to Iphone. The
technology of Smartphone was fallen and people start to prefer Iphone as it provided number of
features.
Innovation Model: iphone is a Technology Push innovation model- why?
Technology push model is when research in new technology brings the development in new
products. It is not included in market research. It leans to initiate with a company producing an
innovative technology and affecting it to a product. Iphone 1st generation was a technology push
model because Apple did not conduct market research and never looked the strategies were
adopted by its competitors (Dala-Ali, Lloyd and Al-Abed, 2011). There was no external focus
and solely focused on technology push approach. An Apple company was completely relied on
intuitions and perfectionism to bring innovations in the organization. It was done by Apple
Company as argued by Apple’s Senior VPs and he said that “customer do not have idea about
their desires and want, you have to tell them what to buy”. (Wen, 2014). It is the strategy of
Apple Company to produce effective product with latest technology which will force people to
use it. It has been found that Apple Company has not pre-determined process to promote
innovation because at its place, it is about open-mildness, collaboration and opens

Core competencies 7
communication, people are invited at Apple company to share their views, ideas and views to
bring change in the world regarding technology (Sara Carter and Jones-Evans, 2009). Recently
Apple Company has produced new series in Iphone which is Iphone X. It is full of latest feature
which is not adopted by any company in making mobile yet.
Drivers of Innovation of iphone
The drivers of innovation of Iphone are described below:
Technology advances: new technologies often build new industries. Iphone came in the market
with technology advance which benefitted number of customers and changed their life. The
Iphone put the internet in everyone’s pocket.
Changing customers and needs:it is the second driver of innovation of Iphone which refers the
amending characteristics and needs of consumers. Basic needs were met by Smartphone as well
but there is a further challenge to innovation which accomplished by Iphone by determining the
hidden needs of customers (Wang, 2009).
Opportunities: opportunity is the major driver for innovating Iphone with different features
from Smartphone. The technology was old in Smartphone that increase the demand of customers
to bring something new in mobile phones which could be used in research and business.
Intensified completion: it is also the driver of innovation of Iphone because competition has
enhanced in huge manner over recent years as a consequences in the reduction in logistic costs. It
has been analyzed that home markets are being threatened by overseas competition (CWMIFG,
2012).

Core competencies 8
Stages in Product Innovation of iphone
The stages in product innovation of Iphone are considered major eight steps that are defined
below:
Figure 1: Stages in Product Innovation of iphone
Source: (De Massis, Frattini, Pizzurno and Cassia, 2015).
New product strategy:it is the first step that links the NDP process to company objectives and
keep focus for idea development for creating screening criteria.
Idea Generation:it has been found that there was lack of latest technology in the Smartphone
which raised the need of new technology in mobile phones. It is the second step that searched for
product ideas that fulfil the company objectives (Bouncken, Plüschke, Pesch and Kraus, 2016).
Product screening:it is the next step that comprises an initial analysis to decide which ideas are
relevant and value more detailed evaluation. The main objective of this step is to drop the
irrelevant ideas such as already exist technology and application in Smartphone.

Core competencies 9
Concept testing:Concept testing may facilitate to avoid costly mistakes by evaluating the
measure attitudes and intention at the earlier stage of innovation.
Business analysis:it is the step of further evaluation of the ideas as per the quantitative factors
like Return on investment and sales volume. The idea of generating Iphonewas done with this
step (Dasari, White and Pateman, 2011).
Design and development:the design of the product and embedded features were explained were
and produced. In this process, selling prices was estimated on the basis of size of market,
profitability and breakeven point.
Testing:It is the process of sending the product to the specific marketto test the effect of
innovation. The Iphone was sent very first in the market of US which provided great results of
acceptance of it by people.
Commercialization: in this step, product got launched and entered in the market where people
can buy it. Apple adopted the advertising strategies to promote its product to the market and got
succeeded (Berends, Jelinek, Reymen and Stultiëns, 2014).
Innovation Type of Iphone
Iphone is an HYBRID type of innovation which comprises transformational innovation and
incremental innovation. It is because it created the new industry and transforms the way of
living. It is considered as the meaningful change in which business gives customers entirely new
phase of innovation. Apple Company provided the Iphone which was beyond the technology of
Smartphone. It defines the transformation innovation. Along with that it is the kind of
incremental innovation which tends to be improved. Incremental innovation is also found in

Core competencies 10
Iphone because it has provided the feature of smart phones with new updates such as high quality
camera, better operating system and effective interface. Iphone is a hybrid type of innovation
because it keeps the engine running by involving incremental innovation and make new
innovation which comprise full of risk (Terwilliger, 2015).
Product Design of iphone
It has been found that the product design of Iphone is mostly created in United States, especially
in the headquarter place that is California. It is the most important component in the commodity
chain of phones. There are many designers and engineers to make Iphone in Apple Company,
Jonathan Ive is a chief designer and engineer in the company and generate the new innovative
design for making the Iphone. It has been analyzed that the role of social impact is huge on
Iphone due to encouragement of innovation in the mobile phone industry (Freeman and
Woodward, 2009). The market of mobile phone put emphasise on the configuration instead of
focusing ondesign before the release of Iphone. After the growth of Iphone, market realized that
the role of design is huge in making success which can generate huge revenues. Therefore,
market started to give proper attention in designing of the products. Samsung is the major
competitor of Iphone, the phone of Samsung had been criticized due to its dull standardization of
the design. The growth and success of Iphone forced many company to keep focus on design of
products in order to endure in the market (OSU, 2015).

Core competencies 11
Barriers to Innovation of iphone 1st generation (2007)
Apple Inc. has launched the 1st generation of Iphone with the feature of Bluetooth 2.0 and lots of
features. The company had to face many barriers in the time of iphone 1st generation. These
barriers are defined below:
Technology was not enough: however, Iphone has lots of features regarding latest technology
but technology was not enough alone to get success in the 1st generation of Iphone. It was lacked
GPS and there was not hardware keyboard and SD card support system. The price of iphone 1st
generation was quiet high $499 for the 4 GB model and $599 for the 8 GB model (Ritchie,
2018).
User friendly:there were a lot of functions in Iphone which made issue for the consumer to
operate. It has been found that battery backup and updating issue created the trouble for many
users as it took more than 6 hour to get updated. The learning curve of phone was low in
comparison of other Smartphone.
Price of the product:The price of the iphone 1st generation was higher in comparison of smart
phones which was the major barrier in the innovation. It was the first innovation in mobile phone
by Apple which was being done by taking risk (Jonoski, Alfonso, Almoradie, Popescu, Andel
and Vojinovic, 2012). People were not ready to buy this product due to higher rate.
Competitive contempt: there were lot of competitive companies existing in the mobile industry
that had launched their product. People got familiar with them and used in their daily lives. The
Iphone was too expensive in comparison of other competitor’s product.

Core competencies 12
Core Competencies of Apple
The core competencies of Apple are vigorous which is very hard to replicate by any other
companies. The products of Apple provides in the markets which is considered as the more
valuable for the customers in comparison to its prices because of the following causes.
 Apple invests profoundly in research and developments so that its product can be made
different from other’s product.
 The designs of products of Apple are attractive and simple usage attracts people towards
the product of Apple.
 It has made the effective image in the mind of customers as when consumer thinks about
the product of Apple the first thing come in the mind about the innovativeness and
uniqueness of the product.
 The effective structure and the latest technology are adopted by Apple company in
making its product which shows that difficulties for competitors to imitate.
 Apple Inc. is efficient to maintain control over suppliers and costs and managing the
supply chain.

Core competencies 13
Figure 2: Apple’s core competencies
Source: (Sutton, 2011).
A core competency of Apple is considered as the deep proficiency that helps company to deliver
the unique values to the customers. It has great efficiency in designs and development and it can
retain bargaining position and bring down costs.
Swot analysis of iphone 1st generation (2007)
The SWOT analysis of Iphone 1st generation is given below which will comprise strength,
weakness, opportunity and threats.
Strength:the major strength of this product was different from other products as it provided
different features with IOX software which run quick in comparison of other Smartphone.
Innovative technology was being adopted by this product which attracts number of customers.

Core competencies 14
Weakness:The price of iphone 1st generation was quiet high $499 for the 4 GB model and $599
for the 8 GB model which was the weakness of this product because medium class people could
not afford. The operating system of this product was difficult to operate. Lack of storage system
and SD card support system were the weaknesses of this product (Laugesen and Yuan, 2010).
Opportunity:it has been found that Apple got quiet good response from its first innovative
product in mobile industry that provided the opportunity to expand its business all over the world
by adapting the latest technology which could not be imitate. Iphone could bring the more
innovative change in the mobile industry and enhance the competitions.
Threat: there were number of competitors that can challenge the Iphone by imitating the
technology of Apple’s Iphone. Although viruses was the legitimate threat but more than this,
bigger threats could have come in the form of research in Motorola, Palm and Motion in case of
do not materializing in the applications of Iphone (Mickalowski, Mickelson and Keltgen, 2008).
Porter’s Five Forcesiphone 1st generation (2007)
It is an effective framework for analyzing competition of a business and Apple's Five Forces
analysis is shown the vigour of external factors in the environment of industry.
Bargaining power of buyer
The Iphone 1st generation was an important for the buyer as it was costly in comparison of other
products. It was the effective approach which added the customer value. Iphone 1st generation
had been successful in the area of competition as it established a huge customer base. The
bargaining power of buyers was quiet high in the context of first generation of Iphone because
Apple Company was in initial point.

Core competencies 15
Threat of new entrants to the market place
There were many mobiles produced with effective features which replaced by Iphone first
generation. It was difficult for the new entrants to enter the market because they had to develop
the existing technologies before competing. They were needed high capital for investment.
Strong brands name consider important for the company which gave positively impact to Iphone
(Vergara, 2012).
Bargaining power of suppliers
The bargaining power of suppliers was high because there were so many companies of mobile
industry that bought raw material for producing the mobiles. High cost of switching suppliers’
could have a long term positive impact on the business entity which added the entity’s value.
There was a high level of competition among suppliers which had been acted in the reduction of
the prices (Miyashita, 2012).
Threat of substitute products or services
There were number of products available in the market that could replace the Iphone due to its
weaknesses. BlackBerry Curve 8300, Nokia N95, Palm Treo 65, Samsung Black jack, Sony
Ericson K800i and Motorola RZR were the substitute of first generation of Iphone.
Industry competition
Iphone producer was in direct competition with companies such as Samsung, blackberry,
Motorola, palm and motion. All of these companies started to invest in research and development
and marketing to compete with Apple. Thus, the competitive force is string in this industry for
Iphone.

Core competencies 16
PestleAnalysis ofiphone 1st generation(2007)
Political
The change in government policies might bring the new rules in the business that might have
impact the Iphone 1st generation. Stability in the political situation and the government can bring
the huge benefits for the company. It has been found that nationalism and anti Americanism
could cause in the decreased market share of Iphone 1st generation.
Economical
This phone had launched in US market which could have a measurable impact on the US
economy. The launch of new innovation in iphone could bring the huge changes in the sales of
its product. If US dollar got stronger, it would have direct impacted on the exchange rates would
lead Apple to do more expensive business in some other country (Khan, Alam and Alam, 2015).
Social
The use of new technology, application, Bluetooth, new operating system and effective camera
had enhanced the growth of iphone 1st generation. The choice of customer is important in the
selection of the product. The phone was designed with special features to satisfy the customer
demands.
Technological
Iphone 1st generation was full of the latest technology and raised the high competition in the
mobile selling. The feature of this phone is 3.5 inch display which had resolutions of 320 x 480
pixels. Internet connectivity with web browser was available in this phone but only for 2G

Core competencies 17
cellular phone holder. It has OSX operating system which was new innovation in mobile phone
industry that provided a connection with new technology.
Legal
The government of different countries have different laws and legislations that put pressure on
the market of Smartphone. To avoid any violation, Apple needed to follow all laws and
legislations regarding patent for making their effective strategies. There were various laws
regarding calling and texting have been implemented which might have impacted the Iphone.
Environmental
The producer company of first generation of Iphone required improving the importance of
environmental performance in the organization due to heavy reliance of data centres. The
product design of the first generation of Iphone was created by taking consideration of
environmental impact. The first generation of Iphone was given mercury free led display for
environmental safety (Oosterman and Green, 2010).
Competitive Analysis
The competitive analysis is made on two years that is 2007 and 2018 in which the competitors,
their objectives, strength and weaknesses will be mentioned.
The competitors of Apple’s Iphone product in 2007 were blackberry, Nokia, Sony Ericson and
Motorola.
Competitors Objectives Strength Weaknesses Marketing
strategies
Attack or
Avoid

Core competencies 18
Blackberry To enhance the
awareness of
the brand of
Blackberry all
over the globe
and to fulfil the
demand of
them who are
continuously
demanding for
Smartphone.
The strength
of blackberry
was good
image among
corporate
users.
It did not
innovated new
technology
and innovation
in Smartphone.
After releasing
the touch
screen phone
by Apple, it
was in
pressure to
provide touch
screen phone.
To build
awareness
about the
brand in the
youth market
segment.
It
shouldhave
been
attacked
because it
has good
reputation
in the
market.
Nokia To maintain
the quality and
to boost the
logo this is
connecting
people.
It has high
penetration
rate in
various
countries.
It had no
centralized
marketing
strategy
The priority
of it’s to be
the most
preferred
partner to
enterprise and
operators.
It should
be avoided
by Apple
Company.
Motorola To create
shareholder
value by
It had a big
brand name
and offered
High quantity
of defects and
lack of
Advertising
strategies
were adopted
It can be
avoided.

Core competencies 19
constantan to
be the world’s
premier
communication
equipment
products at
reasonable
price.
imposing by Motorola.
Sony Ericson To get rid of
harmful
chemicals
products in the
manufacturing
of consumer
electronics.
Existing
knowledge of
target market
Low efficient
distribution
channels
Using the
advertising
technique to
attract the
number of
customers
It could be
avoided.
The competitors of Apple’s Iphone product in 2018 are Samsung, Google phones, LG and Sony
Experia.
Competito
r
in 2018
Objectives Strength Weakness Marketing
strategy
Avoid
or
attack
Samsung To achieve a
leadership
position in
the electronic
industry
Provide
efficient
services to the
customers and
compete with
Recall issues bring
down the position
of the company
regarding phones
Two pricing
strategy and
uses skimming
price to attain
the upper hand
It
cannot
be
avoided
by

Core competencies 20
Iphone over the
competitors
(Cardoso,
2017).
Apple
Compan
y.
Google
phone
(Nexus)
To enhance
the interest
of customers
towards the
product
Well known
company and
provide the
super quality in
camera and
storage
High prices of the
products
Advertising and
market research
strategy is
adopted by this
company to
enhance its
product in the
market.
It
should
not be
avoided.
LG phone To become
the market
leading
company
with huge
recognition
It is global giant
and extensive
distribution
system
Management of
LG Company
regarding making
phone is not
effective and there
is no cash cow.
It uses glocal
strategy to
market its
product.
It can
be
avoided.
Sony To enhance
their
productivity
and the
product
performance
Existing
knowledge of
target market
Low efficient
distribution
channels
Advertising and
effective
pricing strategy
is adopted by
this company to
promote its
It
should
be
avoided

Core competencies 21
and services mobile phones

Core competencies 22
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Core competencies 23
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Core competencies 24
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Core competencies 25
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Core competencies 26
Appendix
Source: (Molla, 2017).
Source: (Molla, 2017).

Core competencies 27
Source: (Molla, 2017).