The birth of Apple IPod as the first portable music player was an idea of Jobs that reshuffled the Market cards into new worlds of users needs. Adapting to change and reaction is not sufficient. Change and experimenting new things and renewal synthesis.
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Institute of Educational Leadership
University of Jyvдskylд
Course code: EDLS 820
Lecturer's Name: Jukka Alava
In the last hundred years Information technology has developed from its very basic shape to its unlimited powerful applications which touch every single aspect of our today's life.
Only in the last 40 Years electronic communication devices, computers, and digital news and media developed from being used only by big companies or scientific labs to be used by everyday man.
Computer and digital devices has strongly evolved from huge chunky room sized machines to pocket size mobile devices, Information transfer has rapidly increased both vertically and horizontally (Size of data, amount of data), new innovations appeared and the missing link between the benefit of electronic devices and the average human need has decreased.
The Apple revolution
Today's business and IT news, blog entries and articles recognize Apple's advantage over Microsoft. In the short report Rosoff (April, 2011 “Apple's profit is now higher than Microsoft”) shows the financial difference between these two companies, which is $0.76 billion, $5.99 billion of apple versus Microsoft's $5.23 billion. Both companies are used to publish their quarter profits, and it is first time during this competition when Apple takes the first place. According to these data, Apple's gadgets are the most demanding on the market. From the strategic planning point of view it means that company's vision is aware of people's needs and ready to respond any demand.
But it was not always like this. The free encyclopedia Wikipedia gives very good and detailed information on the topic. Both companies were founded in the 1970, and since those days it is the first time when Apple wins.
Apple Business maturity cycle
Apple has gone through several ups and downs since its early days until present. The struggles and the rises Apple has gone through can typically fit the vicious learning circles illustrated below (Alava, 1999).
Figure 1. Vicious circle and the organizational learning
The following point's demonstrates the vicious learning circles applied on Apple Inc.
1. Continuous learning balance
Apple started as a home based computer factory in 1976 where Steve Jobs, Steve Wozniak and Ronald Wayne assimpled what is called the Apple 1 computer board. They could produce up to 200 computer and sell them to a local computer store. That encouraged jobs to move on and introduce Apple 2 computer in 1977which was much advanced and more close to a full computer with a display on TV. Apple 2 computer has been well established and widely sold in the market however that did not stop Jobs from moving on and producing Apple 3 computer. With Apple 3 computer in 1980 Jobs decided to take the IBM personal computers at that time into the business environment by providing a bundled PC with a Screen and desk drive.
2. Adapting to change and reaction is not sufficient
However Apple 3 computer had a better design and improved features which was more sufficient for the market, Jobs had made a decision to not assemble a cooling fan into the computer case box thinking that the chips and the computer board would circulate the heat itself. This assumption was wrong and caused the company thousands of computers to be returned from not satisfied customers due to heating problems. That failure forced Apple to dedicate a separate group to design a new computer which could change the world. Also to try to make up the great loss they had by the Apple 3 computers. So they came out with LISA computer, 1978-1982. LISA computer was the first computer to introduce the mouse, the Icon and the desktop, which at that time was a revolutionary innovation from apple to the computer world. But LISA was very expensive to be buying by wide range of customers. And because of its high price it has failed to penetrate the market.
After that Apple came up with a new computer (an upgrade of LISA) in 1984 and bundled it under the name Macintosh. Macintosh was introduced to the world with a better design, fancy writing and painting software. That was introduced to the world through a huge multimillion marketing campaign however it has not penetrated the market as expected since it was not empowering the command line users which was the main strength point of Apple before that.
Even though the marketing difficulties Apple suffered, the Macintosh name was still in power especially after the partnership with Adobe Systems which supported apple to provide software for desktop publishing and computer animation. That made apple position stronger as a Technology provider in the media, advertisement and publishing business.
Apple adapted to changes when they came out with LISA, They found out that the market is changing and new companies like Xerox, IBM and Adobe are pioneering the market with there new innovations and ideas. The way LISA was designed was based on deep analysis for the market needs. However that creation of such a new idea was not sufficient due to the pricing problems apple had.
3. Great unbalance Insecurity
In 1985, due to an internal power struggle Jobs resigned from Apple however he was still a main shareholder in the company. First, John Sculley was introduced as the new CEO, then Gil Amelio. At that time the company was about at great unbalanced insecurity stage. During that era the board did not introduce completely new strategy, but some insignificant or non-profitable changes. Even though the introduction of new products such as Quadra, Centris, and Performa. This was mainly to compete with IBM pc and return Apple back to the PC market, the poor marketing caused a huge drop in company profits.
4. Culmination crisis
Gil Amelio was ousted in 1997 due to a huge drop in Apple profits. The main reason was that Apple was trying to compete in to directions both home users and business users with the same old product lines. However those product lines have been evolved but that evolution was not enough for Apple to grow or even to keep its market share among compotators. Competition in both sides, hardware (IBM) and Software (Microsoft) caused a great loss for Apple products. This affected the stocks of the company and also divided it into a mild crisis.
5. Vision/strategy change
Jobs returned to Apple at 1997 with a strict plan to restructure and rebuild Apple product lines. During his absence Jobs co-founded the visual effects house, Pixar. He also went on to found Next Inc., a computer company that built machines with futuristic designs. Jobs was coming back from different field with fresh ideas and new vision. In Wikipedia this period is called Appel's Renaissance, which was a turning point for its vision and strategy towards the computer industry.
6. Transformation Change
The company was run by different CEOs but not Jobs about 12 years, and during this time it experienced two stages: insecurity and crisis. After Job's returning, Apple went through other stages much faster. Thus, already in the end of the 1990s company started to work on iMac project, which was already available on the market in 1998. Next fundamental change was partnership with Microsoft. Jobs also saw the benefits of producing other goods than computers, and already in October 2001 iPod series was marketed and launches. Till the year of 2003 there were no Apple offices abroad, what was very different from Microsoft situation. The first oversea office was opened in Japan in 2003, then in the year of 2004 in such countries as Denmark, Norway, Sweden, and Switzerland; the UK, Canada in the 2005.
apple ipod experimenting synthesis
7. Experimenting new things and renewal synthesis
From 1998 until present Apple went into the circle of experimenting new ideas, new innovations that raised Apple to the high rank where they exist now.
The new innovations Apple introduced were both vertical and horizontal dimensions. Vertical innovations such as All-In-One Mac which came in a fancy user friendly and cheerful plastic case which combined the computer and the screen in one cheerful case. The same design team of All-In-One Mac was also responsible of designing IPhone, IPad and IPod which came later on the following years.
Mac OS X, the operating system based on NeXT's OPENSTEP was also released on March 24, 2001 after several years of development. Mac OS X became simply the most stable and reliable operating system produced by Apple and it gained great credit to the company from its customers.
The birth of Apple IPod as the first portable music player was an idea of Jobs that reshuffled the Market cards into new worlds of users needs.
Then Apple upgraded its IPod idea into a phone which became the number one Phone in the last 3 years the Apple IPhone.
IPad was a significant upgrade which could expose new user needs and maybe create those needs which haven't existed before.
Ideas such like IPod, IPhone widgets and IPad were purely new user experiences discovered or created by apple. Those ideas succeeded to find their way into every single market nowadays.
Apple has expanded horizontally by opening various retail point of sales around the globe to push the Apple sales into a higher stage of market penetration. Also the online Apple store which is selling hundred of thousands of application every day was cutting age idea into the marketing strategies.
The comparative chart below (Yarrow J., Angelova K, 2010) shows the income of Apple versus Microsoft. As we can see from there, from 1976 till 2005 Apple was predictable, was working in the same way, doing just small inefficient changes. But Microsoft was much smarter, especially since 1998, they grew; it means that all the time they introduced something new and accessible for people, not very expensive. Since 1998 Microsoft has been doing changes, not very big, but on regular basis, but look at Apple. Since Sept 2005, they have been surprising people with big changes, bigger than Microsoft; their blue line makes big jumps.
This chart also proves that since the middle of the 1990s till nowadays, business situation has changes a lot. It is possible to explain due to the political and economic changes of that time. And as we can see, Microsoft Company understood this change much earlier and as a result is more adaptive to unpredictable future than was Apple till the beginning of the 20th century. Looking at Apple's diagram we can see big ups and downs while experiencing new things. Although the history of the company itself already passed through one vicious learning circle and now is back to the balance.
Figure 2, Apple Vs. Microsoft revenue/income
1. Rosoff, M. (April, 2011) Apple's profit is now higher than Microsoft [Electronic version] http://www.businessinsider.com/its-official-apple-earns-more-than-microsoft-2011-4 3.05.2011
2. http://en.wikipedia.org/wiki/Apple_Inc 4.05.2011
3. Alava, J. (1999) Organizational change in the union of professional engineers in Finland and the union of professional social workers in Finland. Dissertation. University of Kentucky.
4. Yarrow J., Angelova K, (2010) CHART OF THE DAY: Apple Trumps Microsoft In Revenue For The First Time In 14 Years [Electronic version] http://www.businessinsider.com/chart-of-the-day-microsoft-apple-revenue-income-2010-10 3.05.2011
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