Apple: Incremental Innovation and Impending Obsolescence.
From the humble beginnings of a portable music player to the empire we know today of phones, computers, music players, games systems and of course, if they don’t have it, ‘there’s an App for that’ – Apple Inc. is an innovative force to be reckoned with in the current portable communications and entertainment industry. It owes this success to constant, incremental changes made to its products over the course of many years – closed innovation allowing them to fend off all comers while delivering something unique to the market.
It started in 2001, when the first iPod music player – Mac compatible only – was released. Sales were slow, through analysis of the sales, market transition and the wants and needs of the consumer Apple determined that through development of Windows-compatible iTunes software they could increase their market share. This product (service) development enabled Apple to establish a presence within the market dominated by Microsoft at the time, while not directly threatening their market share. Apple exclusive formats were offered through iTunes, which was at the front of the commercial market in licensed online music distribution, such as .AAC, Quicktime Movie (.mov) and Apple Lossless (an FLAC clone) enticed users to make the switch from their MP3 players to the iPod. This was followed up by multiple hardware innovations, incremental changes in design and product functionality, from the iPod to the Mini to the Nano, iPod Shuffle and eventually the precursor to the iPhone – the iPod Touch. The combined technological R&D, market analysis and continuous product development were cemented firmly in the Cyclic innovation model (Fig 1.1), showing each area clearly linked and building upon advances in the other; when the market called for a more portable product, the technology was available and the product was engineered to fill the need of the market. As people became accustomed to the iPod, something more interactive, an exciting new innovation in the form of the iPod Touch, the software was quickly emulated by phone manufacturers to which the answer of the iPhone came. Each advance brought another, the cycle continues for what seems like an endless growth and innovative process.

Fig 1.1 – Cyclic Innovation Model (Source: Berkhout et al. (2010))

Apple introduced the standard in portable music players; they were the first to penetrate the market and quickly became the leaders. Although their innovation has been matched at every turn, they still maintain a foothold in the market, but sales are slipping. Some due to cannibalisation of iPod sales to new iPhone users, some due to the massive amount of cheaper alternatives and some due to the obsolescence of singular purpose devices. With the rise in smartphone sales has come a drop in low-end video and digital camera sales. Once a core market of companies like Canon and Nikon, the growth in smartphone sales has directly impacted a decline in their individual components. We are living in an age where everything we need is at the push of a button or swipe of a fingertip – having to carry around a separate device for a singular purpose will become a thing of the past when the iToothbrush is released. In all seriousness, however, the iPod itself, as a standalone music player is doomed to diminish into nothing as it is rapidly absorbed by the ever growing smartphone market. It’s this utilitarian outlook on the future of MP3 and music players is true, soon the iPod will likely become a small part of the overall iPhone or iDevice of the future. However, there are options for the standalone iPod to survive, maybe even thrive in its own niche market. The current market for Electronic Dance Music is booming. Bedroom producers are becoming renowned DJ’s seemingly overnight – all using simple sample, loop, synth and other virtual studio technology (VST’s). Apple’s inbuilt DAW (Digital Audio Workstation, a program for the recording, mixing, editing and mastering of sounds) Garage Band helped to launch Grammy award winning electronica duo LMFAO in 2006, with the simple loop based program providing the backing track and platform for their first commercial hit “I’m In Miami Bitch”. ‘Mashup’ and ‘vs’ tracks are major floor-fillers at nightclubs around the world, if Apple was to combine elements of music editing into their iPod platform, be it as simple as tempo changes, gradually introducing the iPo-DJ software to keep people interested, or at least extend the product lines shelf life in this declining market. Furthermore, music streaming services; Pandora, Spotify (of which I am a paying user), MOG Music, Rdio, Sony Music Unlimited and Rara just to name a few, are rapidly growing and encroaching on formerly iTunes dominated territory. They offer subscription based universal access to their licensed content rather than paying for every individual track and album before being allowed to listen. Unique to many of these services is the option of Cloud-storage, where you store a small file on your device which links the lookup data to the main server of whichever streaming service you’re using, essentially enabling you to save all the music available on the service with a minimal amount of space taken up on your device and very little bandwidth usage. iPod streaming is another possible route the company could take to extend the products profitable life, while utilising innovations such as cloud storage for virtually limitless music for the consumer.

Apple’s main strategy to deal with competition is continuous advancement in closed innovation circles, to establish a relationship between all its products as not just complimentary, but necessary and exclusive. It was immensely successful in the early stages where there were few competitors and virtually no interconnected product lines to serve as equal competition, but growing threat from Google with the Android open-source operating system, Sony, Samsung and HTC coming up with new and improved smartphones to rival the iPhone combined with the new services in music streaming and app markets, the iPhone no longer has a totally unique product, just a separate product with a host of other interconnected products. With the market trending the way it is it’s entirely likely that Apple will not be able to survive if it continues to exclude itself with restrictive file formats and hardware incompatibilities. For a long time you could not get versions of popular video games compatible with Apple operating systems, meaning gamers (A very large market within high-end pc and hardware sales) would never even consider an Apple computer. That motivation led to a lot of video gamers opting for cheaper mp3 players over iPods to avoid incompatibility issues and the greater cost. Slowly, at expense to the game companies, big name titles are being made available on Apple computers, but it’s still not an enticing option for most PC gamers. The first of many changes I would implement within Apple is a platform which is compatible with games for Microsoft. Furthermore, iTunes in its current format is gradually declining and being superseded by streaming services. Introducing an iTunes streaming capability parallel and optional to the traditional iTunes card/points purchasing system would hopefully re-introduce itself into the forefront of music delivery. Spotify enabled iPhones and iPods, much like the Android and Windows compatible Spotify would allow Apple to both tap into the streaming service at minimal cost to itself. The continual incremental innovation strategy adopted by Apple is slowly creeping up on the company. While they opt for new versions, the market around them is creating new products and without something to put them back on the forefront of technological innovation, the advancing market will gradually eat up their share.

Jack C Frawley, s3918169
Wednesday 12pm Tutorial.