Innovation Audit: Apple Inc.

This report conducts an innovation audit of Apple Inc., focusing on its smartphone business. It begins with an overview of Apple and the competitive mobile phone industry, highlighting the challenges posed by falling economic conditions and the rise of budget-friendly competitors. The report then delves into a historical analysis of Apple's iPhone evolution, comparing it to competitors like Samsung. A key focus is on the application of the diffusion of innovation theory to Apple's strategies, examining its past successes and suggesting potential future innovations, such as improved wireless charging and a revolutionary new iPhone design. The conclusion summarizes the importance of innovation in the global smartphone market and emphasizes the need for Apple to continue adapting to maintain its competitive edge.

Innovation Audit
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Table of contents
Introduction......................................................................................................................................3
Company/Industry Overview...........................................................................................................3
Historical Analysis...........................................................................................................................5
Future Innovation Potential.............................................................................................................7
Conclusion.......................................................................................................................................9
Reference List and Bibliography...................................................................................................10
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Introduction
Technology has in recent years grown immensely by leaps and bounds and this has crept into the
business organisations as well. The most important sectors that have seen the use of technology
include the electronics industry among which, the smartphone sector has truly benefitted from its
rise. The current assessment tries to make an evaluation of the impact of technology on
innovation in the various products of Apple. The study deeply elaborates the details of the
company and looks to search the various innovative use of technology in their phones to deliver
top quality products. The intricate view inside the innovative features that made Apple’s
products a factor of envy for other organisations is clearly identified. Innovation in a company is
as important as the need of a new product in the market. The future innovation potential of Apple
is also a factor that is discussed in the study.
Company/Industry Overview
Apple is one of the leading innovators in mobile phone technology and is considered the
benchmark for aspiring smartphone makers. Its headquarters is situated in Cupertino, California
and they are renowned for producing computers, computer software, selling consumer electronic
and also providing services online. Apple hosts a variety of products such as iPhones, iPod, iPad,
Macbooks, Airpods and Apple watch. The operating used in these latest technologies are iOS
and macOS that also compromises of iTunes, and other creative and productivity suites. For
Apple lovers, iTunes Store, Apple Music, iOS App, iCloud and Mac App are available online to
get better services regarding multimedia aspects.
Apple has its stores all over the world and being a digital distributor is also a retail store. In the
recent years, the company has been producing innovative and technically superior iPhones.
There are 478 retail stores of Apple across 17 countries. The revenue in 2015 was US$215.639
billion and the operating income was US$60.024 billion. The net income of the company was
US$45.687 billion. Total assets was US$321.686 billion and total equity was US$128.249
billion. The number of employees are 115,000. The financial muscle of Apple each year is
mainly due to their product and services. However, in 2016, they did suffer diminishing profits
and it is a result of the cutthroat competition that has risen for the use of technology and
innovation.
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Coming to the mobile phone industry that is currently present across the globe, it is but evident
that the falling economic conditions combined with the influx of local market players has made
the industry competent. The mobile industry before the launch of the first iPhone was dominated
by Nokia and its multimedia phones. Zmud and Apple (2014) opined that since technology is an
ever evolving process, the smartphone industry is such erratic in nature regarding market
products and competition that it requires a product completely innovative to actually stir the
market. Apple came into the fray with a simple yet well-functioning mobile device that sufficed
the multimedia experience immensely.
Terwiesch and Ulrich (2009) opined that competition in the market for competitive products is
immense due to the various options available for the consumer. This makes working in a mobile
phone industry extremely difficult due to the ever changing demands of customers and the rapid
growth of technology. The growing dependency of people on mobile phones has made it
extremely vital for companies to keep innovating and producing mobile devices that go hand in
hand with the technological changes. The current trend as per Rigby and Zook (2012), is the
flooding of various domestic brands and the impact of Chinese brands that provide impeccable
build and ergonomics in a phone along with amazing features. However, this is still not the issue
that this industry is facing.
The current trend that has come up in recent years is the buying preference of customers across
the globe. The demand for lowered priced products along with best features is the trend started
by domestic and Chinese market policies. Their products cost cheap and provide best of the
world services. This has played an integral part in changing customer perception. We all know
that pricing is an important parameter that helps in judging the overall impact of the products and
their sale. The influx of cheaper products not only impacts the sales figures, it also disrupts the
market demands. As per Liao et al. (2011), various political, legal and economic conditions have
an impact on the final pricing factors of a product. In the context of a homogeneous product such
as a mobile phone, the rate of risk that is involved makes sales of new phones in the market
extremely difficult.
The global recession has created a trend where people are relying more n budget-friendly
smartphones. Apple being a niche producer of goods and services, does face situation where
pricing values need to be adjusted by them to actually compete in the market. This trend has
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given rise to situations where Apple has faced tough competition from market rivals such as
Samsung, LG, Sony and Motorola. The new and advanced products that the rivals brings out
each year is a cause of concern for Apple. Competing for marketing share can be influenced by
the innovation process and developing certain services that help in boosting the brand image of
the company. In the case of Apple, the receding of profit margins can be used as an example that
goes to explain the various risks of challenging new market players that are present in the
operations of Apple.
Innovation and research and development are the two ways in which Apple has of late identified
its strengths, weaknesses, opportunities. The pattern for Apple in it product launch suggests to
the fact that competitive measures along with clear cut idea about the business needs is important
for them to be so successful. The use of new patents and design features allow them to majorly
target and define the market rules as per their products. This is evident by the massive revenue
streams that they generated. Design and ergonomics of a product designed by smartphone
companies is taken seriously and any infringement among the use of patents and services can
lead to criminally court lawsuits as well. It is a fact that Samsung has been the only company to
use technology and development as an active part of their business and undertook the role of
major competition with their Galaxy range of phones.
Historical Analysis
Including Power Mac, Apple II and Macintosh Apple personal computers were produced for
more than three decades. Rigby and Zook (2012) commented that in the year 1990, it had to face
many ups and downs in the marketing sector. In 1985, Jobs was evicted from the company NeXT
which was later brought up by Apple in the year 1996. Further becoming CEO of the same
permanently he tried to put new and latest technologies in the products. The products which were
launched had simple designs and in 1998 original iMac was promoted.
The first iPhone 2G was announced on 9th January 2007 but was later released on 29th June 2007.
Radnor and Noke (2012) opined that it was a first generation iPhone launched by Apple and also
the 1st smart phone with a simple yet effective design. The screen was 3.50 inch and touchscreen
display. The resolution of the iPhone is 320pixels by 480pixels. It has 128MB of RAM and
412MHz power battery. The internal memory of this iPhone was 4GB and wasn’t expandable. It
has 2 megapixel primary camera available in the phone. Wi-fi and Bluetooth connectivity is
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available in the phone including a barometer, proximity sensor, compass magnetometer, ambient
light sensor, and accelerometer. It was a quad-band GSM phone with EDGE where one could
transfer data and GPRS support systems. This was a game changer during that time when Nokia
was the market leader in multimedia phones. The radical nature of touchscreen phones along
with a dynamic capability of multimedia performanve and interconnectivity allowed iPhone to be
a benchark in deciding all the quality of mobile phones. It was back then, that innovation was
sought after in a product and it showed great results. Launching their second iPhone 3G on June
9th 2008, did not have software updates and resembled to the one with the 1st generation iPhone,
since OS 3.1.3 was used. In 2011 the Apple retail stores treated iPhones as obsoletes and the
service provider as vintage. Therefore, obsoletes eventually stopped repairing and supplying for
vintage increased in demand.
Apple uses latest operating systems in their smartphones which has increased the growth of the
consumers. The progress of original iPhone to iPhone 7 Plus has been a tremendous change. The
latest technology network that are installed in the phone are either GSM, CDMA, HSPA, EVDO
or LTE. It is dust and water resistant which is up to one meter for not more than 30minutes.
When it comes to memory there is vast difference from the 1st generation iPhone. The capacity of
the phone memory of iPhone 7 Plus is 256 GB and 3GB RAM. The primary camera is 12
megapixel with phase detection autofocus and 2x optical zoom. This is an extreme change in
case of the memory, camera and the operating system. Though it has the same features when it
comes to the sensors only the fingerprint and gyro are added. One does not need to install audio
or video editor as it is pre-installed in the phone. Deschamps and Nelson (2014) suggested that
technology innovation does improve the overall quality of the phone and makes it competitive in
the market of launch.
One factor that Apple is tremendously impeccable at is the delivery of timely updates and a lag-
free user experience. It is their strong point that allow their users all the timely updates instantly
when they are launched. This factor is missing in Andriod run phones. A major differentiating
factor is the timely updates of the software and operating system. ) argued that the early
innovation of bringing touchscreen to people allowed the company to experiment with
multimedia applications and give the users a seamless performing phone.
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According to Adams et al. (2016), Samsung one of the leading technology company is
immensely making development in the area of mobile phones. Samsung Galaxy S7 Edge was
launched in the month of February 2016. The operating system used in this phone is Android
v6.0 Marshmallow and is upgraded to Nougat which makes excellent than any other phones. It
has 4GB RAM which little higher than iPhone 7 Plus. It also has expandable micros SD up to
256 GB. The size of the phone is same as iPhone 7 Plus 5.5 inch. Both the phones have latest
technology installed which makes the phone a unique. But there is little difference among these
both that the consumers attract towards iPhone 7 Plus. It is because of the processor iOS 10
which gives the user a wonderful experience. Therefore, makes the phone run smoothly. There is
always security updates in this phone and making on the reason for the company that has
competitors in the market. The smooth experience that the user gets out of the iPhone makes the
customer loyalty stick with the product.
China in the recent years are giving a tough competition to brands like Apple and Samsung.
Xiaomi one of the Chinese Phone is providing similar features in their phones. These phones are
within the budget of the consumers. Hence, they fall in the trap of buying these phones that gives
the features of the high end ones. The competition is very high, Apple has to make more
innovative technologies in their smartphones which the other companies are unable use them.
But Samsung is a rivalry brand when it comes to the phones. Sony, HTC, Xiaomi and OnePlus
Two are not behind in the competitive market. The use of retina displays, finger print scanner
and other aspects makes the use of technology a reality for Apple.
Future Innovation Potential
Brands with potential always seem to find out ways to create something innovative and
interesting. In the case of Apple, the diffusion of innovation theory can be suggested to elaborate
its steps towards joining the mobile phone production phase. According to Lawson and Samson
(2014), the stages that are involved in diffusion of innovation theory practices include a clear
purpose, major differentiation points, channels of communication and application of plans. If the
theory is to be carefully assessed in detail, it can be suggested that iPhone must focus on aspects
that people find attractive to use. The very purpose of innovating must be clear. Apple is about to
launch its anniversary edition iPhone in 2017 and it becomes important that their purpose is
understood before judging the personality of the product. Moreover, the company needs to
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contribute and develop their products and services to perform better each year. In the case of
Apple, the unexpected performance of the business resulting in bad returns makes the purpose to
deliver a strong phone nil.
As per Kanter (2015), the key factors mentioned in the theory deals in needing to innovate to
devise confidence and advantages of an already existing part. In this case, the better way to
understand is the introduction of Apple’s Airpods. These are supposedly meant to highlight the
progression from the traditional headphone jack. The wireless nature of the Airpods allows the
company to create and promote such a product that has future implications. The innovation of
developing wireless hearing is the way to the future. Developing the Airpods allowed the
development of personal improvement. Since the theory suggest creating something new to
surpass the existing product, Apple must focus on providing GPS locking system on the Airpods
so that any mishaps can be prevented or lost Airpods can be found out quickly. Further, Airpods
should be used for interconnectivity of two or more iPhones across a nation. The other
innovation that can be used is the introduction of additional hardware so that a chain of link can
be made efficiently using the iPhone, Airpods and Apple watch.
According to Jinjin (2013), communication channels allow better feedback from consumer
which in turn allows better frame of mind to help in developing innovative ideas. In the case of
Apple, the major reason behind the backlash for the Airpods and the iPhone 7 were the lack of
wireless charging that was present in Samsung galaxy 7 edge. Gathering customer feedback can
allow Apple to build a wireless charger and scheming potential ways to charge a phone. Apple
must develop lots of patents for wireless charging facilities and launch them in sequence so that
customer excitement can be mapped. They must also plan to develop a curved display and a
curved phone that can keep them away from competition also. It must be ensured whether their
patents do not infringe any copyright issues. The need to innovate a universal design loved by all
is necessary in this cutthroat competition.
Lastly, the major role of applying the scenario of understanding business position so that
effective measures can be taken. Considering the tumultuous situation that Apple’s sales in 2016
stood at. It was found that after several years of impeccable service, the profits of Apple declined
to some extent in the fiscal year 2016. As per the theory, the need to innovate when business is
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slow makes the need for creating a new and advanced product to redeem the revenue
opportunities. The current scenario of Apple is in dire needs of a revolutionary new iPhone so
that it regains its market share and improve on its innovative ideas.
Considering this fact, if the competitors are looked upon, it can be seen that Samsung’s flagship
phones performed way better in performance and sales. It is imperative that Apple launches the
new iPhone with revolutionary design so that market monopoly can be curtailed from Samsung.
Apple can focus on the basics of human needs to design the phone. From incorporating a 4K
display, stereo speakers, full screen edge-to-edge display and memory starting from 128GB
RAM could be interesting specs for the company. Moreover, the patent of a curved iPhone could
be used. However, since wireless charging option is available in the phones of Apple’s strongest
rival Samsung, Apple could go to the next level by charging phone by remotely using Airpod
from someplace else. Cloud linking with Airpods and Apple watch can make the new product
very efficient to use and handle and give it the necessary sophistication it needs.
The decision to remove the 3.5mm headphone jack did meet with a backlash and resulted in the
reasons behind poor sales. However, keeping its future utilization in mind, it can be said that it is
a leap of faith that has to be taken. Apple has always been a pioneering company and anything
short of perfection is either omitted or rectified. Innovation in such organizations is mandatory in
nature and it will be every interesting to notice Apple’s venture into developing television sets of
their own as an attempt to increase product line. With the outstanding rate of smoothness and
clarity in its phones, tablets and laptops, a foray into developing television handsets along with
subscriptions to Apple TV can be a good and profitable package.
Conclusion
The above study clearly helps in binging forward the role of innovation in a global smartphone
business operation. The case of Apple makes the study more relevant due to the massive impact
that the factors of sale can have on people. The study suggested how the innovation of new
technology can help Apple in dealing with the problems faced from competitors. The study
elaborated that a particular innovation of that of better interface and smooth multimedia
applications can give any product a run for their money. It could also be seen that the form factor
of the iPhone has seen constant development since the year of launch and now the product is
more bent towards being a crowd pleaser. From a mere 3 inch screen, the iPhone has seen a
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radical overdrive to 4 inches to 5.5 inches of new phone.. This also suggests the fact that
systematic ways of handling matters such as rivalry and innovation audit.
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Reference List and Bibliography
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