iPhone Blue Ocean Strategy INDE 599 11-3-09

iPhone Blue Ocean Strategy
INDE 599
11-3-09
Overview
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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
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• Existing “convergence device”-Palm
iPod 16% company revenue
Favorable perception of brand
Ability to capture & retain customers
Launch of iTunes for music
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Treo
Need to create a new OS for the phone
Accused of having a niche market
Fault screens & batteries in early iPods
Opportunity
Threat
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3G phones gaining popularity
Wi-Fi phones coming soon
Price of storage plummeting
Fast & efficient cell phone processors
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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
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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
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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
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iPhone
Blackberry
Other Cell
Areas to Change the Rules
“6 Paths” Framework
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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
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Touch screen, keyboard, directly connect to App Store, linkage to Mac/PC
Risks Assessment
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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
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High price of product
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Likelihood
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Data networks sluggish
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Consequence
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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
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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