An Analysis Of The Smartphone Industry On The Grounds Of Innovation And Sustainability
Executive Summary
A contrast in this analysis is drawn between the outcome-driven supply chain theory and platform vs pipeline theory. An emphasis is laid down on Apple as it is the major innovator in this industry and uses 100% renewable energy in its campus 2 headquarters, situated at Cupertino, California. The outcome-driven supply chain model talks about the six dynamics, namely – cost, sustainability, innovation, responsiveness, security and resilience. A business tends to incorporate a strategy that can make most of all these outcomes. On the other hand, the pipeline and platform model suggest that the market has changed and the developers meet the consumers over platforms laid down by the companies. Earlier the pipeline model used to be the one in which owners transform the input to output in a linear series. Apple iPhone is a part of the pipeline model but the App Store provides a platform for the creators to meet the users. Apple’s innovation in the smartphone segment has led other players such as Nokia, Sony Ericsson, Blackberry move out of the market because of their inadaptability to change. Samsung is the only company that has survived. Other Chinese companies like Huawei, Vivo, Oppo have emerged due to the platform business model which was initiated by Apple in 2008.
Theory Analysis
Supply chain offers various outcomes to a business. Outcome driven supply chain theory suggests that one combination does not suit every business. Out of the six outcomes, namely-cost, resilience, responsiveness, innovation, security and sustainability, a business may choose various outcomes to focus upon. Like for Walmart cost is their breakthrough but for Apple innovation is. A business may be great in one outcome and a loser in the other outcomes. But, the blend of these outcomes in the supply chain can make a difference. These outcomes are not mutually exclusive and go hand in hand.
By cost, it means that a business strives hard to bring down the cost. Responsiveness is the ability to change. Security accounts for being free from contaminations. By sustainability, it means eliminating waste and reducing pollution. Resilience tells about covering quickly and cost-effectively from any hurdle that comes in the way. Innovation provides new ways of doing business. A business is more likely to be identified by its distinguishing feature.
Adaptability is the key to success. Earlier the supply chains were demand driven but nowadays they can be supply driven or technology driven. A business has to make several choices in order to succeed. Highlighted in the strategic theory that contrasts the traditional way of doing business i. e. pipeline with the platform business. Pipeline business is the one wherein the owners transform the input into output in a linear series such that inputs at one end go through a series of transformation. Whereas platform business is the one in which the producers create offerings and the consumers use them. Apple iPhone belongs to the pipeline business but the way it came up with the idea of the App Store, it introduced the platform way of doing business. These days more and more businesses are either migrating or seeking to move from the pipeline way of doing business to the user interactive platform business. Apple’s domination in the smartphone industry compelled other giants such as Samsung, Nokia, etc. to innovate or move out of business. Whenever a pipeline business is compared to a platform business, the latter always succeeds. There are different players in the platform business ecosystem such as owners, providers, producers and consumers.
Industry Analysis
For a smartphone, its operating system is an essential element without which it cannot survive. Today, there are various operating systems available like IOS (iPhone), Android (Samsung), OS (Blackberry), Symbian (Nokia), etc. but IOS with 20. 66% and Android with 76. 61% have dominated the market.
A decade ago, in the year 2007, the major players were Nokia, Samsung, Sony Ericsson, LG and Motorola who had a combined market share of 90%. But by 2015, Apple gathered 92% market share solely. Apple succeeded with its platform outlay which led its competitors to innovate. This way the smartphone industry began the transformation and made it open for developers to interact with consumers through the App Store and Play Store. Today, innovation in the smartphones mean shorter bezels, better camera or face unlock. Although these smartphones are low on battery life, Energizer is working on that and has come up with a Power Max P16K Pro (a smartphone that is twice the size of an average smartphone) that has a 16000 mAh battery in comparison with iPhone X’s 2716 mAh battery. On the other hand, is the Light Phone 2 which looks similar to a credit card and equivalent to a stack of four such cards in width. It is not exactly a smartphone but can be used to make and receive calls, send messages, take pictures or register location. It can act as a backup phone on occasions when the main smartphone fails. This year Apple and Samsung have launched their flagship phones which have a better camera and nothing more than the previous smartphone. Smartphone sale has fallen for the first time in 2017 (last quarter). People are buying older devices as the new ones are worth the same technology and at twice the price.
Smartphones are not evolving; the technology is getting advanced instead. The three innovations in technology for smartphones are Augmented Reality (AR), Virtual Reality (VR) and Artificial Intelligence (AI). In June 2017, Apple introduced AR and helped developers introduce games on such a platform. Microsoft and Huawei are still working on this technology. Along with AR, VR is another key innovation that lets a user experience reality in the virtual world. Coming to the third innovation i. e. AI, the software’s like Siri, Alexa, Cortana etc. these assistants can perform tasks from ordering an Uber to shopping for groceries. This is creating a new platform for the Internet of Things (IOT) (Sappin, 2018). Currently, innovators are working on advancements such as foldable screens or fingerprint scanners inside the screen. Instances like these make room for other creative advancements.
Theory Application to the Company
Apple has a content first innovation approach which means the creation of unique content. This approach was developed when Steve jobs (late CEO of Apple) met Akio Morita (Co-founder of Sony) and took the idea of owning the content. Apple is an operating system company which is excellent in the user interface. Hardware is the second thing but the way they create their products is phenomenal.
Apple follows a blue ocean strategy (creating and capturing new demand). Due to which it has seen the worst and the best pictures. In the mid-1990’s, when Apple was into the operating system, there was a tech crash and Apple suffered due to low market share. In 2001, with the introduction of iPod, it reinvented the music industry. iPod became the iPod touch and in 2008, it was an iPhone. Looking at Apple’s advancement, right from the iPod to the watch series 4 (that enables a dynamic ECG at any place and at any time), this journey is quite interesting and full of innovations. Apple innovates on aspects like - process, product, business model, customer experience and leadership. Moreover, Apple products are known for its simplicity as even a three-year-old kid can use an iPhone without any prior knowledge. Sustainability is vital at Apple. Recently, Apple built its Campus 2 in Cupertino that is powered completely by renewable energy from its solar farm. Commuting is done by biofuel buses and bicycles and this campus has 300 electric vehicle charge stations.
The new MacBook Pro is made of 74% less aluminium and steel in comparison with the previous models. Apple takes back its products for free recycling and won the Greenpeace award by removing hazardous toxins from its products. Apple focusses on three aspects – usage of renewable resources, conservation of precious resources and usage of the safest materials in the products. The packaging of Apple products is sustainable. Moreover, plastic usage has dropped by 78% as they have used 85% recycled content over the years.
Recommendations for the Company
Apple is the first company to reach a valuation of one trillion dollars. But, for the first time in seven years, it is not among the top two smartphone brands. In the latest quarter, Samsung followed by Huawei have beaten Apple’s market share. Even after Huawei’s removal from the US market, there is a serious threat to Apple’s Chinese future.
Apple created the demand for its product. It came up in a different segment and with its high-end pricing. Apple follows an aggressive and highly innovative market strategy. Continuing such a strategy will help it compete in the market as the competition is high and Samsung is getting closer. Also, Chinese brands like Huawei, One Plus One, Vivo and Oppo are upcoming threats. A major problem in this industry is the imitation of products. The moment Apple came up with a full-screen display, the whole smartphone industry replicated it. So, a major recommendation can be to innovate in such a way that nobody can copy Apple’s way of doing things.
iPhones tend to lose battery fast. A major improvement that Apple could work upon is creating iPhones with large battery life and fast charge capability, such that it could be charged within five minutes and last for a whole day.
