iPhone Blue Ocean Strategy INDE 599 11-3-09 Overview • • • • • • • Industry Pre-Launch 5 Forces Analysis 4 Actions Framework Strategy Canvas 6 Paths Risk Assessment Post Launch Success History of Industry • 2002-20032 – Very successful iPod sales – No desire from Apple to create a PDA – Steve Jobs believes that cell phones will eventually carry the PDA information – Americans carried cell phones, Blackberries, & MP3 players • 2007 – Cell providers marketing to kids & teens – Boost in consumers wanting smart-phones3 – Motorola losing 2% of market share 1 month after iPhone launch3 – Google reveals cell phone software4 Apple SWOT Analysis Strength Weakness • • • • • Existing “convergence device”-Palm iPod 16% company revenue Favorable perception of brand Ability to capture & retain customers Launch of iTunes for music • • • Treo Need to create a new OS for the phone Accused of having a niche market Fault screens & batteries in early iPods Opportunity Threat • • • • • • • • 3G phones gaining popularity Wi-Fi phones coming soon Price of storage plummeting Fast & efficient cell phone processors • Success of rival music stores Data networks sluggish Success of Palm Treo Wireless carriers that dictated hardware devices Highly competitiveness IT industry 5-forces Analysis on Cell Phone Industry • Threat of new entrants? – Apple would be the new entrant – Google, Microsoft could choose to produce cell phones, eventually. – Other cell phone companies may re-design their products to compete, later • Bargaining power of buyers? – Minimal—Other devices, Palm Treo, Blackberry do not integrate all technologies efficiently • Threat of substitutes? – Minimal. Palm Treo is only other existing convergence device. – Blackberry does not have all of the same functionality, such as MP3s • Bargaining power of suppliers? – Minimal. Suppliers will want to get involved with new project, beneficial to their sales. • Rivalry? – Medium. iPhone can revolutionize the cell industry. – Immediately, there will be little competition, but there will be competition from all cell phone producers once it is released. (Motorola, LG, Sanyo, Palm, Blackberry, etc) 4 Actions Framework Reduce Eliminate • Carrying separate devices: phone, MP3, • Difficulty in text messaging-use keyboard • • PDA Requirement to always hook up to PC Difficult user interface-make touch screen instead Create Raise • Device to download music directly • Hold more songs • Simple user interface, no user manual • User interface & improve navigation • Hold more music • Applications-games, money • • required Sleek design management, news, etc. Wireless internet on phone Relative Scale Strategy Canvas 2-Highest Rating 0-Lowest Rating Strategy Canvas: Cell Devices Offering Level 2.5 2 1.5 1 0.5 0 C t os Im ag e U rI se ce fa r e nt A li pp n tio a c t In e s ed at r g C ap ilit b a s ie Feature C l el C ri ar er n In o tio va n C to us ice e m v er S r iPhone Blackberry Other Cell Areas to Change the Rules “6 Paths” Framework 1. 2. 3. 4. 5. 6. • • • • • • • • • • Alternative Industries Incorporate smart-phone technology • iPod-MP3, email, applications Strategic Groups within Industries Trade up from typical cell for smart phone technology Improved user interface from Blackberry Chain of buyers Increase iTunes users Market to AT&T only Complementary Offerings Incorporate iPod and & iPod touch capabilities Differentiation Touch features, compared to Blackberry Integrated applications “Cool factor” Look across Time Revolutionary user interface • Touch screen, keyboard, directly connect to App Store, linkage to Mac/PC Risks Assessment 1. 2. 3. 4. 5. 6. 7. First time Apple makes a cell phone Aligning to a single cell carrier Ability to successfully integrate software Problems with battery life Impacts to iPod sales 5 4 High price of product 4 Likelihood 3 Data networks sluggish 1 2 2 6 3 7 5 1 1 2 3 4 Consequence 5 Lo w Medium High Product Impact Post-Launch • Product Impacts1 – Cell phone carriers realize that phones can win customers & bring in revenue • Upset the carrier-manufacturer balance of power – Opportunities for application developers • Sales – March 20096 • 17 million iPhones sold • 25,000 applications sold on App Store • 800 million total downloads from App Store – October 2009-Apple Profit increases 47%5 • Apple sold 7.1 million iPhones in single quarter References 1. 2. 3. 4. 5. 6. The Untold Story: How the iPhone Blew up the wireless industry: http://www.wired.com/gadgets/wireless/magazine/1602/ff_iphone?currentPage=2 Steve Jobs: No Tablet, No PDA, No Cell Phone, Lots Of iPods: http://www.macobserver.com/article/2003/06/05.9.shtml Mobile Phone Industry Already changing due to iPhone: http://arstechnica.com/apple/news/2007/08/report-mobile-phoneindustry-already-changing-due-to-iphone.ars Google Unveils Cell phone software & alliance: http://news.cnet.com/google-unveils-cell-phone-software-andalliance/ Apple Profit Surges on iPhone Sales: http://online.wsj.com/article/SB1000142405274870450060457448 3631612633824.html iPhone Sales hit 17 Million: http://www.pcworld.com/businesscenter/article/161725/iphone_s ales_hit_17_million.html