Apple Inc.: Disruptive Innovation, App Store, and Apple Watch Analysis

This report provides a detailed analysis of disruptive innovation at Apple Inc., examining the App Store as a successful disruptive platform and the Apple Watch as a product facing challenges. The report discusses the value propositions, resources, processes, and profit models of the App Store, highlighting its impact on the technology industry. It then explores the reasons behind the Apple Watch's failure, including its lack of defining features, dependence on the iPhone, and pricing issues. The report also applies the diffusion of innovation theory to explain the Apple Watch's struggles. Finally, it discusses the current state of the Apple Watch and its efforts to regain market share. The report concludes by emphasizing the importance of innovation for Apple's continued success.

Running head: DISRUPTIVE INNOVATION IN APPLE INC.
Introduction
Apple Inc. is a multinational technology based organization that has its headquarter in
Cupertino, California. The organization mainly designs, sells and develops computer
software, consumer electronics and other online services as well. Apple has also developed
its position among the Big Four organizations in the technology industry. The hardware
products that are offered by Apple include, iPhone smartphone, Mac personal computer, iPod
media player and Apple TV (Apple.com 2019).
The report will be based on the analysis of the case study titled ““Has the Apple
Innovation Machine Stalled?”. The ways by which lack of proper innovation have been able
to affect the operations and revenues of Apple and its position in the technology industry will
be analysed in the report in detail. The position that has been gained by Apple Watch in the
industry in comparison to the other products of the company will be analysed in the report as
well.
1. Discussion of App Store as a disruptive innovation
The App Store is considered to be a digital disruption based platform that has been
developed and is maintained by Apple Inc. for different mobile apps on the iOS related
operating system. The store mainly allows the customers to browse and also download that
different apps that are developed with the implementation of iOS software development kit of
Apple (Chiaroni et al. 2016). The apps can thereby be downloaded for use in the iPhone
smartphone, iPad tablet, iPod Touch computer. The App Store was developed by Apple Inc.
in the year 2008 and the company had started its operations by providing 500 apps for
fulfilling different needs of the consumers (Christensen et al. 2016).
Value propositions – The value proposition that has been implemented by Apple App
Store is based on the ways by which the company aims at convincing the customers that the
services and products are better than its rivals. The brand of Apple has been a major factor
that affected the value proposition of the App Store. The company has been able to maintain
its value proposition with the support that is provided by different apps that are offered to the
consumers (Coccia 2018).
Resources – The major resources that have been gained by Apple App Store are based
on the effective marketing related activities performed by the organization. The product
images of Apple, App Store based badges and the identity guidelines are highly important for

1DISRUPTIVE INNOVATION IN APPLE INC.
the proper development of the operations of Apple in the technology industry. The App Store
badges mainly consist of the different marketing materials that are used by the organization in
order to increase the levels of awareness based on services and products that are offered by
the organization (Colombo, Franzoni and Veugelers 2015). The preferred badges are useful in
order to promote the app and the proper development of marketing communications as well.
The graphic standards that have been developed by the apps have been helpful in the
development of a major competitive advantage. The product images have been used in order
to promote the apps that can be used in the devices that are able to support the apps (Ghezzi
et al. 2016).
Processes – The operating processes that have been implemented by the Apple App
Store have been able to provide major levels of support based on the products and services
that are offered to the consumers. The guidelines that are provided in the website of Apple
App Store are considered to be important aspects of the development of different apps (Gloet
and Samson 2019). The Apple Developer Program License Agreement is considered to be the
most important factor that is able to affect the services of the store. The review that is
conducted based on ways by which the apps are operating is also highly important for the
completion of the development of apps in an effective way (Greco 2016).
Profit formula – The business models that have been implemented by the Apple App
Store are considered to be the most significant part of the development of profits by the
organization. The goals of the organization have been balanced in order to meet the
expectations of the customers. The business model is chosen with respect to the start of
proper development of the app and providing a seamless experience to the customers as well.
Free model is a type of business model that is implemented by the App Store in order to
provide the apps to customers for free (Hopp et al. 2018). This is mainly aimed at increasing
the levels of awareness based on apps that are offered as a part of the store. The earnings
related to this model are gained from the advertisements that are displayed. Freemium Model
is the model that is based on the ways by which the apps are offered to the customers for free
and then they are offered with optional premium features that can help in improvement of the
levels of engagement. Subscription model is related to the apps that are provided to the
customers at a particular price. The subscriptions are auto-renewable in nature (Hult and
Ketchen 2017).

2DISRUPTIVE INNOVATION IN APPLE INC.
The Apple App Store has been able to develop and implement high levels of
disruptive innovation in order to attract huge number of customers. The three different types
of business models that have been applied by the App Store are also related to the needs and
demands of the consumers. Disruptions have affected the revenue levels of the competitors of
the organization in the technology industry (Kovács et al. 2019).
2. Reason behind failure of the development of innovative product by Apple
Apple Watch has not been successful in gaining a prominent position in the
technology industry. The features that have been packed in the product have not been able to
provide major options to the organization in order to fulfil the needs of consumers. The lack
of a defining feature in the watch is one of the major reasons behind its failure in the industry.
The biggest products that have been offered by Apple are highly disruptive and
transformative in nature (Nagy, Schuessler and Dubinsky 2016). The usage of Apple Watch
is totally based on the ownership of iPhone by the customers. The customers need to possess
that latest iPhones in order to use the Apple Watch in an effective manner. The need of watch
among the consumers have also reduced in the recent times due to the extensive usage of
mobile phones. The gadget is able to play a major role in increasing status levels of the
customers (Osiyevskyy and Dewald 2015). The Watch has however not been successful in
adding anything extra or developing a competitive advantage in the industry. The price level
of Apple Watch is another major factor that has an impact on the revenues and development
of customer base of the organization (Reinhardt and Gurtner 2015).
As discussed by Vecchiato (2017), diffusion of innovation based theory is based on
the ways which new technology and ideas can be spread effectively. The Diffusion theory
had been suggested by Rogers in the year 1962. The fifth edition of the theory has been
developed recently and is used in order to communicate the innovation based capabilities.
The four most significant elements of Diffusion of innovation theory are, the developed
innovation, communication based channels, time and the social system as well (Yeh and
Walter 2017). The innovation process that is implemented by an organization is based on the
human capital. The employees are able to play the most significant role in the development of
revenues and profitability levels and ensuring the success of innovation process as well (Hult
and Ketchen 2017). The major categories of adopters of the innovation based processes that
are implemented by the organization mainly include, the innovators, early adopters, early
majority, late majority and laggards. The process of diffusion is able to the manifest itself in

3DISRUPTIVE INNOVATION IN APPLE INC.
many different ways and is also subject to various types of innovation decision process and
the adopters as well (Nagy, Schuessler and Dubinsky 2016).
The different aspects of Diffusion of innovation theory are able to play a major role in
the development of a major product of Apple named, Apple Watch. The failure that has been
experienced by the product is totally based on the inappropriate implementation of the
aspects of Diffusion of innovation theory. The innovativeness levels of the products are quite
low and the development of competitive advantage has also not been possible. The channels
based on communication that have been used by the organization are also not able to improve
the levels of awareness among the consumers (Nagy, Schuessler and Dubinsky 2016). The
human capital of the organization has not been used effectively in order to reach the
consumers within less amounts of time. The adoption of innovation in a wide manner has also
not been able to play a significant part in the proper development of Apple Watch in the
technology industry. The role of adopters in the operations of Apple and development of
Apple Watch is not considered to be satisfactory. The organization has not been able to
maintain an effective position in the industry or gain its position as a major innovative
product in the portfolio of Apple (Christensen et al. 2016).
3. Ways by which Apple Watch is tracking in 2019
The failure of Apple Watch has been a major factor that has been able to affect the
reputation of the organization in a huge manner. The device has further started retreating
from mainstream business based operations. Apple Watch 4 has thereby represented one of
the epic fails that has been experienced by the organization in the recent times (Hult and
Ketchen 2017). The reviews of Apple Watch 4 had been quite positive in nature in the last
few years. The display of the Watch has also been able to play a major role in the
development of a major competitive advantage. The new fitness based functions that have
been developed within the Watch have played a key role in promoting the product among the
consumers (Colombo, Franzoni and Veugelers 2015).
The Apple Watch 4 Series has been facing major levels of issues based on the quality
of the products. The high brightness of the products has been able to affect the watches in a
huge manner. Another major glitch that has been experienced in the watch is based on the
messages that are received in the Watch. The build quality of the Watch has also been a
major issue that is able to affect the sales and success levels of the product (Hult and Ketchen
2017). The lack of proper connection with LTE network is also an important issue that has

4DISRUPTIVE INNOVATION IN APPLE INC.
led to the failure of the product. The company has however tried to improve the levels of
revenues in the technology industry by making improvements in the products. Apple has
thereby aimed at fulfilling the expectations of the consumers with the help of addition of new
features in the product (Colombo, Franzoni and Veugelers 2015). The market of wearables is
niche and Apple has faced competition from a major organization like Fitbit. The requirement
of iPhone for the operations of the product is considered to be a major aspect that has led to a
major failure of the Apple Watch (Ghezzi et al. 2016).
Conclusion
The report can be concluded by stating that the innovation based facilities that have
been developed by Apple are able to support the organization in the recent times. The App
Store of Apple is a major aspect of the ways by which the organization is able to maintain its
position and fulfil the needs of the consumers. The failure of Apple Watch in the industry has
affected the reputation of the organization in a negative manner. The communication
channels and distribution channels that have been used by the organization are also
considered to be a major factor that has an impact on the levels of operations. The lack of
proper innovation is also an important factor related to the failure of the product.

5DISRUPTIVE INNOVATION IN APPLE INC.
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