Classic case study: How Apple become the world largest tech company? (2)

    

New Business Model Innovation (iTunes Store, App Store.)

Apple not only do the great innovation for their product but also for their business model. The business model innovation means innovator can figure out the new way to create, distribute, and market this idea. Henry Ford did not invent the car, but he found the new way to distribute mass production. Apple and Steve Jobs gain so much great reputation not only because their innovative product but the reinvented way to change industry. This is why FORTUNE magazine choose Steve Jobs as “CEO of The Decade” on Nov. 30, 2009 edition, they admire him in the past ten years he radically changed three markets - music, movie, and mobile industry. For entrepreneurs, if they can create or change one industry already done the remarkable job, but three is never heard-of.

For example the iTunes Music Store opened on April 28, 2003. Before this there is no one in music industry can figure out how to deal with the illegal MP3 download problem, and Steve Jobs persuaded the five major music labels (EMI, BMG, SONY, UNIVERSAL, WARNER) to try selling songs for $0.99 each, in 2003 the Apple Music Event Steve Jobs described that the user want to own the music, because good music they will listen a hundred times maybe, and you just simple click the button ”BUY SONG” and iTunes do the rest for you, and Steve Jobs said illegal download have so many bad things, including no previews, stealing, bad karma etc. iPod+ iTunes+ iTunes Music Store are perfect ecosystem. Hardware, software, and content combine together to make golden triangle for Apple. According to the Apple press release in April 3, 2008. Apple surpassed Wal-Mart to become the number one music retailer in the US, based on the data from the NPD Group‘s MusicWatch survey. It just takes only five years Apple dominate music industry.

Retail Store Innovation (Apple Store.)

The other great example of Apple’s philosophy about innovation is their retail store strategy, since Apple open the first store in May 2001, it become the fastest growing in retail history, according to Apple fiscal 2010 fourth quarter report, they have 317 stores and their store’s quarter revenue was 3.57 billion, it is very impressive achievement, because when they opened the first Apple store, the critics believed they just wasted money, because other company like Gateway just closed their retail store. But Apple is always different than other competitor, they want reinforce the user experience, how they do that? When you walk into the Apple store, there is no name on the outside, only the big, bright Apple logo on there. And you can notice that they all build by glass, metal, and polished plastic, and this decoration all match Apple’s products. It always has newest computers, i-gadgets on the table, you feel no pressure to try anything you want, and if you have any problem you can go to the genius bar to ask, and those employees are always kind and try to solve your problem, so from the design, layout and material, everything you can see that Apple have set up a new standard of how to build a great retail store.

According to the interview by tech blog “The Cult of Mac” editor Leander Kahney on Oct. 14, 2010, the former CEO of Apple John Sculley said “Apple store has the highest revenue per square foot of any store in the world but it’s not just the revenue, it’s the experience. Apple store are packed. You can go to the Sony center, there’s nobody there, you can go to the Nokia store, they have one in New York on 57^th street. There’s nobody there.” Finally we think Apple store demonstrate their way how to focus on the whole user experience, not just about the product or some marketing stuff, they always have complete strategy about process R&D, completely vertical integration, and differentiation.

Classic case study: How Apple become the world largest tech company? (1)

         

         

Bloomberg TV broadcasted “Game changers: Steve Jobs” on Oct 14, 2010. In this episode Mike Moritz, one of Silicon Valley’s leading venture capitalists, described that “Apple has done the biggest turnaround in the business world.” He is absolutely right, because back in 1996, no one believed that Apple would become the largest tech company in the world. Apple was a total mess inside: its product lines made consumers confused; no one wanted to buy its products; Apple’s stock fell sharply; and it almost went bankrupt, but Apple did at least one thing right, it brought Steve Jobs, the legendary co-founder of Apple Computer, back to the Apple.

In fact, Steve Jobs has so thoroughly reinvented the company that Apple Computer changed its name to Apple, Inc. in 2007 to reflect the changes. So how did Steve Jobs reinvent Apple? I find that Jobs made amazing changes that affected everything inside Apple. He used lots of innovative ways to build an entire strategy not only for external threats, but also for creating a strong internal system. Here is what I learn from Apple:

Marketing Innovation (Think Different Campaign, I’m Mac.)
When we talk about Apple’s marketing campaigns, it is hard to distinguish between innovation and strategic competitiveness and we believe Apple did both. When Steve Jobs came back to Apple in 1996, he found out that its product line was bad, but the brand still had good value, and this was an important asset for Apple. When Steve Jobs was interviewed by TIME (TIME: Steve’s Job: Restart Apple, Aug 18, 1997) he said “What are the great brands? Levi’s, Coke, Disney, Nike. Most people would put Apple in that category, you could spend billions of dollars building a brand not as good as Apple.” Jobs wanted a big, bold marketing campaign, so held a competition between three advertising firms. The winner, TBWA/Chiat/Day, had created the legendary 1984 Super Bowl ad for the first Mac: “Why 1984 won’t be like ‘1984’”.




For Apple’s 1997 marketing campaign, TBWA created the “Think Different” advertising slogan. The idea was to celebrate the persons whose ideas changed the world, featuring black and white photos of forty famous people such as Albert Einstein, Bob Dylan, Martin Luther King Jr., John Lennon, Picasso etc. The ads said “The people who think they can change the world are the ones who do.” There were no computer pictures in this advertisement and it was a bold statement to associate a downtrodden Apple with luminary thinkers, scientists, and artists. Such a campaign had never happened in the PC industry to that time and it worked to acclaim Apple as still having uniqueness, creativity, and ambition. The widely commented “Think Different” campaign vaulted Apple in a higher esteem for its customers and also brought back Apple’s core values for its employees and restored their confidence.




Product Line Innovation (I-series product such as iMac, iPod, iPhone, iPad, etc.)
Apple is known for its distinctive products, and people recognize Apple as the most innovative company because of its unique product line. Apple is similar to luxury or fine art, with relatively inelastic demand, as we mentioned in our above discussion about strategic competitiveness and a differentiation strategy. As matter of fact, one of their products, Apple PowerMac G4 Cube, has already been accepted into the Museum of Modern Art in New York.

When we look at its product line history, we think Apple followed the “Not Invented Here” mindset, because compared to Google or Microsoft, Apple acquired fewer companies and Apple has always wanted to be the market leader. Apple wants to build breakthrough products that nobody has created, mostly to great success. The Macintosh product brought graphical user interface to the mass market, the iPod changed the entire MP3 and music industry, and the iPhone has highlighted the new era of the smartphone. Apple conducts R&D in its own labs and wants to create a new market, but unlike other companies that release a product as soon as possible to capture profits, Apple always wants to create the best products in the segment.

We continue to look deeply to ask why Apple does distinguish itself from its competitors? First, Apple is very serious about design. When iMac G3 was released in 1998, many in the PC industry were shocked by its appearance, because prior to the iMac, all desktop computers looked the same: khaki color, boring design, separate display and system unit, and the iMac appeared to be from different world. The iMac was made with translucent colour plastic, and it was an egg-shaped all-in-one computer, with Apple providing a sleekly designed keyboard and mouse. The iMac was a big hit for Apple. According to a Macworld speech by Steve Jobs in 1999, only four and half months after the company released the iMac, it had already sold 800,000 iMacs at a very important juncture for Apple because this product kept the company financially solvent and able to produce more innovative products in the future.

Design is not only for the product but also the whole company. Design is inside Apple’s DNA. According to an interview by tech blog “The Cult of Mac” editor Leander Kahney on Oct. 14, 2010, former Apple CEO John Sculley said, “a friend of mine was at meetings at Apple and Microsoft on the same day…recently. He went into the Apple meeting (he's a vendor for Apple) and when he went into the meeting at Apple as soon as the designers walked in the room, everyone stopped talking because the designers are the most respected people in the organization. Everyone knows the designers speak for Steve because they have direct reporting to him. It is only at Apple where design reports directly to the CEO.” From this we know Apple has its own design team, and that team members participate in every product development, working closely with the engineers. Together, the engineers and designers try to match the best design and product structure not only externally, but also internally. For this reason, we believe Apple’s structure is more organic and more flexible. Many other firms have their hardware, software, and design teams discuss products together, but Apple puts an emphasis on design.



Secondly, Apple’s product is all about details. When you look closely into their hardware and software, you will notice that everything is fitted and polished. For example, the first generation iMac’s power cord is translucent, and the power button, keyboard, bottom of the iMac all matches this style, showing that Apple genuinely cares about its products! According to an interview by Marcus Fairs, iconeye.com, July/August, 2003, Jonathan Ive, the senior vice president of Design, said “I think one thing that is typical about our work at Apple is caring about the smallest details.” And we think Apple really does not comprise on that.

Third, besides the appearance and design, we think another important factor why Apple’s products are so innovative and popular is the user experience. Consumers notice that Apple’s products are easy to use, have a low level to entry, and are fairly intuitive. According to the article “The seed of Apple’s Innovation” by Peter Burrows, Business Week, Oct. 12, 2004. Steve Jobs said “You need a very product-oriented culture, lots of companies have tons of great engineers and smart people, but ultimately, there needs to be some gravitational force that pulls it all together.” This means that even though a company may build great hardware, it will not create a good user experience, if the hardware is not integrated with the software or is complicated to use. When customers buy a product and are frustrated when using, the product will quickly become obsolete. So finally, we think the most important innovation Apple has created is for the user experience: the interactive interface, the buttons, the navigational menu, the setup steps are all factors that add to buyer value. When we think in terms of strategic competitiveness, customers become very satisfied with Apple’s products and become loyalists, even though Apple’s product are priced higher than its competitors.

WSJ: Facebook gonna to IPO at $100 billion for early 2012?

2011 is the year that many internet companies went to public, some people say it will be another web bubble, like the early of year 2000, but most people agree that now is different than those days. Now angel investment, venture capital companies care about every detail of the new company, they will check their financial statement, their revenue goal, investment strategies etc., not like those days if you have good idea, the basic facility the investment bank will give you huge money and wait the company wasted it. So here there are some big IPO news in 2011.

First wave started from LinkedIn, it becomes the world largest professional social network company since 2010, and it has very good record because it got profit in first nine months of 2010, and it is very unique, it provides the way to let people become more social and link with other professional people in their career, basically it's free, but most people are willing to pay the premium fee to let them search no matter career or job more easily, it indeed, a truly innovation from the internet world.

Next is the famous game FarmVille creator Zynga, it all start from Facebook, and FarmVille got a huge success, last year Zynga made about 91 million profit, and in 2011 first quarter it already made $11.8 million profit, so far so good, isn't it? Zynga say it has 60 million users playing their games on different platforms everyday, and CEO of Zynga Mark Pincus said "It's just the beginning, and we need to maintain the good relationship with Facebook, that's important."

Next big thing is Groupon, it raised $700 million after increasing the size of its IPO, and it becomes the largest IPO since Google in 2004, the most famous function it provides is "Daily Deal" and it spreads very fast those two years, but some people criticize that business model is not so staple, and it's very easy to be imitated by other competitors, such as LivingSocial, it provides even more innovative idea than Groupon, so for the long-term we still need to wait and see.

Now the biggest, largest, 800-pound Gorilla, Facebook, will go to IPO next year? A lot of analysts predict that, and a lot of investors eager to get one of their private stock, because Facebook has largest users in the world, this is huge market, so undoubtedly it will cause Wallstreet a huge impact and phenomenon in 2012. 

Black Friday: Casio Tryx saves me 150 bucks and how it try to create the blue ocean!

Black Friday is a very unique holiday for Americans, when I was in Taiwan I usually saw the news said how Americans crazy about the discount and sales, almost every retailers ready to give the deepest discounts and promotions on black Friday, and recently the retailers even eager to make money so they push the store opening hour further: Toysrus open on Thursday 10pm, Walmart open at 10pm, and Target, Best buy all open at midnight. There always have long line outside the store to wait and want to grab their most-wanted stuff, for me as a international student, this is insane but full of fun.

So before that weekend I surfed online and try to find the best deal of camera; I plan to visit San Francisco and New York this winter so I need a pocket camera that can record HD movie and easy to use, and suddenly I found a very interesting camera: It's called Casio Tryx, it released in January during CES 2011, it has a very unique design, it just like a DV, the view panel can twist to 720 degree, and it use the touch screen and motion catching technology, when it released in the CES booth everybody just curious how it works, and for me I think Casio try to create a entire blue ocean from the highly competitive camera market!

Casio Tryx has some attributions that other point and shot cameras don't have, and the unique design indeed catch people's eyeball, it just like the hybrid between DV and DC, but unfortunately it seems not sold well, because it sells $249, to some people maybe want to try this whole new design camera, but most people still prefer traditional point and shot camera in this price range, so during this black Friday I notice that RadioShack and Staple have the promotion: Casio Tryx now only costs $99! It means if you can grab one you save $150!

So finally I went to RadioShack at 3:30am and there was no one to get the line, maybe RadioShack's promotion is not so attractive, and after that I got my camera! And it's really very attractive camera, and it has some unique features, I think it is a very good case study to our blue ocean strategy, there only has one problem: the price tag, maybe Casio still needs to figure out what is the best price for this kind of new camera market.

HTC is not another Nokia?!

HTC is one of greatest case study from Taiwanese electronic manufactory history, almost ten years ago HTC was a white-label, no-name manufacturer to now it becomes fourth biggest phone-maker in the world, but recently HTC faced some fierce challenge, including IP patent lawsuit, compete with Apple and Samsung, and acquirement issue (S3 graphic company), last week they downgraded their financial prediction in future Q4, and their stock price in Taiwan downed to almost half price in just few weeks, foreign investment banks review  HTC stock from "Hold" to "Sold". So what is the problem with HTC?

First I think HTC needs to build the flagship phone, a phone can catch most people eyeball, a phone can beat other competitors to the ground (Like Samsung's Galaxy), a phone can change everything (Like Apple's iPhone), some might say HTC has Vivid for AT&T, Rezound LTE 4G phone for Verizon, Amaze 4G for T- Mobile, but there are some problems: for the design part, you can hardly to tell each one from another one, and HTC hasn't changed its design language for couple years. For the spec part, Samsung recently releases faster CPU and larger and clearer screen to it smartphone product line, even Apple already passed by Samsung, it become the number one smartphone maker in U.S. For the software part, although HTC has very successful strategy with Google, the Google G1, first android phone in the world, is from HTC, and their customize theme "Sense" got very good review from user, but it's still not enough, HTC needs to catch up with Samsung and Apple, it needs to build the complete unique, eyeball-catching, top-rated spec smartphone, HTC already hints that they will bring more powerful, amazing device in 2012, we can wait and see.

But I think the most serious problem is not about the device, it's about the brand image, Apple and Samsung already build a very strong brand recognition, I know HTC tries very hard to build a world brand, it's marketing campaign is "YOU" and "Quietly Brilliant", but it still need to penetrate more to customers' radar.

I think HTC definitely knows that, and I believe their strategy has planned to change, actually HTC really needs a bold move to compete this fierce "red ocean". 

Here's the very interesting Ad from Samsung, it attacks Apple fan directly, and I think this ad is very weird but worth to take a look.

Here's to the crazy one, Steve Jobs

Dear Steve,

I don't know whether you felt deeply sad as me when your idol John Lennon died on December 8, 1980. Maybe you were busy to develop the Macintosh, maybe you were busy to change the world. But you know what? You completely change my entire life, you also change the whole generation, our generation. In 2003 I didn't know why I need to go to college, until I watched your Macworld keynote, I was shocked by your presentation, your speech, and your charisma. Those days Apple's product is completely strange to me. iPod, iMac, and iTunes, you completely change the entire PC, music, movie, and mobile industry. You also change my life direction, just like you said, everything you learn is a dot, and then each dot will connect and become a line.

After that event I started to search all the information about Apple, Chinese, English, books, videos, images from internet. I know how you founded Apple with Steve Wozniak in 1976, how Apple II created the PC industry, and how Macintosh changed the world again. I also know how cruelly you got fired by your own company, and your lost 10 years life. But your story just like movie trilogy; you came back to Apple just like hero in 1997, you secured Apple not to be bankrupt, and next chapter is the story everybody know; iPod, iPhone, iPad, Apple become the most valuable technology company in the world.

I was lucky before I came to U.S. I got a job in Apple Inc. Taiwan branch, this year I also got a job interview from Apple Store in Chicago, I feel I'm getting close to my dream, step by step. But on October 5th, 2011 I got the message said you just passed away... I was shocked, you just showed up during WWDC in June, didn't you? It just happened so fast, although we all know you have cancer and need to take a rest, you really gone... There will be no other Steve Jobs, but we all learned from you, we will follow our heart to do what we want to do, we won't settle, and we'll always remember that your vision and your inspiring story. Thank you Steve, I will miss you immensely.

Apple to open first store in HK, Taiwan will be the next?

Apple to open first store in HK to boast sales

According to the Apple latest financial report, Asian Pacific region sales boosted 247% to $6.3 billion, and Apple now only have four stores in China. The company said it plans to expand 25 stores in Asia-Pacific region for next five years. All that means Asia already becomes the very important market for Apple.

Actually Apple has been criticized that it took too long to enter the China market, before if Chinese people wanted to buy Apple stuffs they must through Apple Authorized Reseller to buy, but sometimes it may have some risk, the service is not the same, and employee education is not so high quality, sometimes they even bought the fake one but they didn't know.


Now China has four Apple Stores and those stores became so popular, when iPad 2 released there even had a fight in front of Beijing Apple Store, Apple knows China market has huge potentiality, Apple briefly talked about the "greater China" idea when it announced the financial report on July 11, 2011, the COO Tim Cook said "We consider greater China to be Mainland China + Hong Kong + Taiwan. Sales 6x year-over-year. This quarter, revenue $3.8b from Greater China. $8.8b over last 3 quarters from Greater China. "We believe this is a substantial opportunity for Apple and we're just scratching the surface."

From this point I can predict that next few years Apple may consider to open one store in Taiwan, the best location Apple can get, we all know Apple is very serious about the location, they can wait for several years or pay higher rent to get the best location. Actually I'm from Taiwan, and before I came to IIT to pursue my MBA degree I got a job in Apple Taiwan, they planned to open apple shop in center Taiwan. The shop outlet is completely the same with Best Buy's Apple shop, even the chairs, tables, and demo videos, apple is very strict about this, you can't even judge or customization those things, so we can know Apple is very centralized and it wants to keep the quality of store, user experience, employee education the same. Because I research a lot in Apple, so I predict boldly that Apple will open the retail store in Taiwan within two years.