Analyzing Core Competencies of Apple iPhone: Innovation & Development

This report delves into the core competencies of Apple's iPhone, examining its impact on the smartphone market and technology. It explores the iPhone's innovation model as a technology push, detailing the drivers and stages of product innovation, including its hybrid innovation type and product design considerations. The analysis includes barriers to innovation for the first-generation iPhone (2007), a SWOT analysis, Porter's Five Forces, and a PESTLE analysis to evaluate the competitive landscape. The report concludes with a competitive analysis, highlighting Apple's strategic advantages and challenges in the market. Desklib provides access to similar solved assignments and study resources for students.

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

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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.

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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.

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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

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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).

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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.

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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

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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).

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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.

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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.