11/11/2009

Will Apple Make the First Move?

According to articles 1, 2, and 3, Apple is changing the world. By utilizing Michael Porter's principle of disruptive technology to create First Mover's Advantage, Apple is "shaping what entertainment we watch, how we listen to music, and what sort of objects we use to work and play" (article3), "throw[ing] the status quo into disorder" (article2), and "set[ting] the gold standard for corporate America" (article1). Apple's most recent contributions to the marketplace - iBook, iPod, and iPhone - are massive hits around the globe, but is its disruptive technology method of creating First Mover's Advantage sustainable? Or will Apple be forced to slow down its pace of innovation and disruption to take a more defensive strategy?

It is quite clear from these articles that Apple will continue its relentless dependence on First Mover's Advantage strategy. While such strategy is not without its risks, it is apparent that Steve Jobs, President & Founder of Apple, and Apple have mastered the art of disruptive technology and should capitalize on it. And it's not just Jobs' and Apple's egos either, others recognize this competitive advantage as well. A renowned analyst is quoted in article2 saying, "The thing that most people don't realize about Steve [Jobs] is that he is not only really good at taking technology and turning it into good-looking, easy-to-use products, he's also really good at doing it faster than anyone else." Thus while most companies are out identifying target markets and surveying consumers to discover what it is that they desire, Jobs and his people are back at Apple showing that "you can't ask people what they want if it's around the next corner" (article1).

The most intriguing and most indicative part about Apple's disruptive method of creating First Mover's Advantage is that it doesn't even restrict its own products from scrutiny and disruption. In fact, article3 shares that instead of sitting around and waiting for its newly released five-gig, monochrome screened, and very popular iPod Mini (the original iPod) to make its way through the product cycle and while competitors were busy just trying to piggyback and keep up with the Mini, Apple disrupted the Mini technology and released the 16-gig, color-screen, and sleek new iPod Nano for about the same price, while the Mini was still at the top of its game. Thus, competitors were caught off guard once again, cash was flying into company coffers, and Apple preserved its First Mover's Advantage. Hence, perhaps Apple's relentless disruptive method of creating and maintaining First Mover's Advantage is sustainable. With a history flush with innovation, creativity, and "building products that really turn us on," they have staved off the traditional risks of First Movers such as piggybacking, price undercutting, and 'borrowing' R&D without much investment. Consequently, with such a history, how can one question Apple's ability to continue to disrupt technology, even its own if necessary, to establish and maintain First Mover's Advantage for years to come? I would stick with Apple, that is, until Jobs and the crew create some kind of iFruit to replace it.

6 comments:

Kyle said...

This is very interesting strategic thinking on the part of Apple. As our textbook mentions, Nokia used a similar approach in the 1990's and early 2000's. Nevertheless, their first mover advantage came to an end when companies like Motorola released the RAZR. Nokia spent much time tweaking and perfecting one idea and failed to think outside the box. Apple, as it appears so far, has not followed that same trend. I believe Apple success will continue in the near future; nevertheless, someone else will soon come up with the next technological revolution. Thank goodness for a free-market society where innovation and competition are always welcome!

Jayden said...

Christopher, I was surprised to notice that your most recent article was dated March 5, 2008. Everything in your post is as relevant today as it was two years ago which goes to show that Apple is still on top of its game.

On a whim, I went to Apple's website to see if they have anything new, and of course they do: the world's first multi-touch mouse.

Dr. Tufte said...

Apple is a tough nut to crack. I'm not really comfortable with anyone's analysis of it.

For my part, I think a good analogy might be Coke. Both Coke and Apple are able to get people to pay a premium for something that other companies are pushing towards zero profits. How do they do that?

We don't know how to measure this yet, but I wonder if companies like this are actually in a different market from their competitors. Perhaps it's consumers who are segmented before these companies arrive on the scene, and all they do is notice the segmentation and take advantage of it.

Dr. Tufte said...

Sorry - I hit enter before commenting on what Kyle and Jayden said.

I think Kyle's point is complementary to mine. There are a lot of other companies that have had first mover advantage, and lost it. Why hasn't Apple or Coke? (Actually, they both did in the 80's, but the recovered it.)

Jayden's point is also interesting. To an Apple person - and I'm assuming Jayden is one - this all looks like great new stuff. But to someone who finds Apple's stuff limiting - like me - that just isn't a destination I'd go to. I know far more people that find Microsoft's labs more impressive than Apple's (or Google's), but they don't have the cache.

Fred George said...

I think that Apple’s products and technology design for the future will surprise each consumer in the same way that it has in the past. Steve Jobs is an expert at inventing new products that have not been discovered before. Although Apple is and has been on a huge rise, I don’t think that the analysis should try and predict when or if they will slow down. I think that Apple products are very expensive and there are many other products made by different companies that satisfy the same need, function just as well and are half the price.

chase said...

It is very interesting to read about how Apple products compare to other products which usually pale in comparison. To comment on Professor Tufte's question of why coke and Apple get customers to pay premium is because they make their products seem very appealing and edgy, they advertise well, and their products are usually very dependable, high quality, and very easy to navigate. To refer to whether Apple will make the first move is questionable because with all the technology that Apple has they are are so successful anyway that they don't need to stand by and wait for innovative ideas to improve upon. A lot of times whoever is second in the market can also have the upper hand depending on whether the product needs some tweeking.