- 1 -© Minder Chen, 2011-2012

Apple Case Study iPhone, iPad and iCloud

Lana Bachman

BUS 527

Special Topics in Entrepreneurial Management

(Creativity and Innovation in Business and IT)

May 28, 2014

- 2 -© Minder Chen, 2011-2012

The Birth of iPhone: Three Revolutionary Products in One

• By 2005 iPod sold 20 million, 400% increase over previous year, accounting for 45% of Apple’s revenue that year It was also burnishing the hipness of the company’s image in a way that drove sales of Macs.

• Steve Jobs was always obsessing about what could mess us up.

• The device that can eat our lunch is the cell phone.” As he explained to the board, the digital camera market was being decimated now that phones were equipped with cameras. The same could happen to the iPod, if phone manufacturers started to build music players into them. “Everyone carries a phone, so that could render the iPod unnecessary.”

作《易》者，其有憂患乎？百物不廢，懼以終始，其要無咎。此之謂《易》之道也

。

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Motivations• iPhone team would sit around talking about

how much we hated our phones.

• Jobs and his team became excited about the prospect of building a phone that they would want to use. “That’s the best motivator of all.”

• Potential market size: More than 825 million mobile phones were sold in 2005. (*207 M for PCs in 2005)

http://www.etforecasts.com/products/ES_pcww1203.htm

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Multi-Touch

• Apple acquired FingerWork in 2005 for its multi-touch technology, initially intended for iPAD.

• FingerWorks had developed some tablets with multi-touch sensing capabilities and taken out patents on ways to translate various finger gestures into useful functions. In early 2005 Apple quietly acquired the company, all of its patents, and the services of its two founders. FingerWorks quit selling its products to others, and it began filing its new patents in Apple’s name.

• January 9, 2007 iPhone released.

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Virtual Keyboard

• iPhone should have been all about the display, but in their current design the case competed with the display instead of getting out of the way. The whole device felt too masculine, task-driven, efficient.

• Apple “pressed the reset button and started over.”

• iPhone was tightly sealed (desire to control)

• Thin is beautiful.

• No keyboard

• Gorilla Glass from Corning Glass

Materials (translucent & colored

plastic Titanium aluminum)

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$46 China: Labor and Parts

$46 mostly by FoxConn

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Profit Sharing ???

• http://pcic.merage.uci.edu/papers/2011/Value_iPad_iPhone.pdf • http://www.isuppli.com/Teardowns/News/Pages/iPhone-4-Carries-Bill-of-

Materials-of-187-51-According-to-iSuppli.aspx

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Closed System Innovation

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Open Innovation Model (Henry W. Chesbrough)

New Products/Services

Technology Spin-Offs

Other Firm’sMarket

Licensing

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iPad Launch, Jan 2010 – Sold April 3, 2010

Steve Jobs said the iPad was a new category between the iPhone and the laptop.

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Simplification

• “He made devices simpler by eliminating buttons, software simpler by eliminating features, and interfaces simpler by eliminating options.” – Steve Jobs by Walter Isaacson 

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Ecosystem• iPod + iTune + iTune Music Store

• iPhone + iPhone Apps + iTunes Store

• iPad + iPad Apps• Third-party as well as Apple application software is

available from the App iTunes Store, which launched in mid-2008 and now has over 500,000 "apps" approved by Apple.

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Apple Outsources or Acquires Innovation

• In April 2010, Apple acquired Siri (a spin-off from SRI) and in October 2011, Siri was unveiled as an integrated feature of the Apple iPhone 4S.

• Apple paid more than $200 million.” Siri’s investors put a total of $24 million into the startup.

• “A speech-enabled concierge at your service.” A “Virtual Personal Assistant” that, like a human assistant.

• An example of cloud computing.

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Sources:

• Minder Chen, Ph.D. Professor of MIS, Martin V. Smith School of Business and Economics California State University Channel Islands. Minder.chen@csuci.edu, Jan. 15, 2014