Apple [Computer] Inc has just hosted its 2007 WorldWide Developers Conference.
There are many internet sites that provide detailed commentary on the conference but the main themes from the conference are greater commitment to games; new functions for October 2007 release of OS X Leopard; Safari web browser for Windows and on-schedule release of iPhone. All interesting stuff to Apple fans, of which there are lots, but it is the iPhone imminent release that is of particular to those interest in corporate strategy as this new product represents a major shift in strategic direction for Apple.
Once upon a time Apple was a niche, if sometimes successful, computer company. This was less than 10 years ago. Now its future prospects have been entirely rewritten. Its corporate strategy has, in my view, changed twice in the last six years - from 'Mac computer specialist to 'cool media company' to 'designer technology giant'. Many companies have neither the organisational flexibility, skills nor leadership to execute one successful change in corporate strategy. So two relatively rapid changes are certainly quite a feat. Particularly given that many of the Apple staff are not privy to new major Apple technology products until they they are released in a fanfare of publicity - such as the annual WorldWide Developers Conference or MacWorld.
Phase 1 - 'Mac computer' specialist
What products? Computer hardware and software bundled
Who customers? Niche computer users (e.g. education sector, accounting profession)
How operate? Simple, intuitive easy-to-use interface only available on Apple hardware
In its infancy, Apple invented the now modern graphic user interface. Think back to typing DOS commands, rather than point-and-click, and the impact is huge. The Apple GUI was a strategic innovation that fundamentally altered the usability of computers. In doing so, it enabled a far greater number of people to quickly and easily, in relative terms, to use computers.
Phase 2 - 'Cool media' company
What products? Technology for the home (e.g. lifestyle computers, OS X, iPod, iTunes)
Who customers? Young, design-conscious, techies (including many graphic design firms)
How operate? Attractive, innovate product designs. High profile product launches
The iPod and iTunes concepts were both highly innovative and highly successful. The iPod/iTunes launch and subsequent development has strongly reinforced Apple's exceptional design skills. It has also substantially expanded Apple's target market - to both Windows users and youths - which has provided a 'halo' effect by encouraging satisfied iPod/iTunes customers to purchase Apple's computers.
Appropriately given its new positioning, Apple Computer Inc was renamed Apple Inc in 2006.
With this change in strategic direction, Apple stated its intent to claim the entertainment hub for the home. All your photographs, music, movies and podcasts on an Apple computer and accessible on-the-go via your iPod or enjoyable via your television screen (Apple TV) and/or surround sound system (Apple Airport Express). All integrated, synchronised and an easy experience. But the home entertainment space is fiercely competitive, with multiple major technology / electronics firms with similar ambitions.
Phase 3 - 'Designer technology' giant?
What products? Suite of innovative, integrated, lifestyle, technology consumer products
(design & build of computers, accessories, music players, phones)
Who customers? Multiple niche markets with clear product offerings for each segment
How operate? Strong, consistent brand across all customer touch points. Crisp adverts
(e.g. stores, computers, iPods, iPhones, website, support, adverts)
Not content with computers and home entertainment, Apple will imminently take its design skills and functional innovation to the cellphone handset market. With 'real web browsing', enhanced voicemail and a bunch of other neat features then the iPhone is certainly a new. But the integrated iPod technology and running Apple's OS Xoperating system then the iPhone truly is a mega-Apple-bundled product. But it comes at a cost. Slower development of Apple computer software for one, with OS X Leopard 'launched' almost a year ago and 'launched' again today but still not available until October 2007. The iPhone has and will require a change on resource allocation for Apple developers. Choices. Regardless of whether the product is an immediate success then it is a strong innovation that will influence its industry and unquestionably will impact Apple's existing business.
Leading strategy academics define 'strategic innovation' as (a) the discovery of a new or different business model within the existing business of a company, (b) that grows to a materials size and (c) often conflicts with the existing business model. In short, strategic innovation involves business model revolution rather than incremental product evolution.
Is Apple a master of strategic innovation? Absolutely.
Will Apple be successful with its new corporate strategy? Ask your professional investment advisor! Certainly it now plays in a bigger market, with larger profit opportunities but fiercer predators. But one thing is certain, its strategic innovations have and will enrich the lives of a great many people.
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