Report - Innovation at Google and Apple
Table of Contents
Most of the people think that innovation technology as coming up with the technology breakthrough or new patterns. It is significant to note that innovation might occur in various shapes and forms. This paper will discuss the innovative approaches of Google and Apple and try to explain, how their innovation strategies have helped them in gaining competitive advantage in the global market (Bell, 2007). One of the different things related to Apple is that it can quickly figure out various ways to couple together with technological innovation along with innovation in a business like Touch Screen with Apple Store and iTunes. It’s considered as a classic way, where complete is found more than the sum of few parts. The trickiest way about innovation is that it includes the approach of forwarding-looking, such as viewing what is needed by customers before they come to know about it (Bell, 2007). Both Apple and Google has depicted that innovation is the most useful tool that can help in beating the competition and can easily disrupt the market, more than only providing things for just free (Armstrong, 2009). It is evident that Apple approach towards innovation has profoundly contributed more in the community, as compared to Apple that has only offered free items without any clear case behind it like Google Wave, which creates a difference between Apple and Google.
Google make use of different plan of attack, and try to combine with innovation strategies and commoditization. Just like many other organizations, Google can also afford to penetrate in the new market without even worrying about how to turn the same in the business of revenue generation like Apple and Microsoft have done it (Chesbrough, 2006). They depend on the lying revenue channel of advertising for the purpose of funding in new business and try to disrupt the market with the product offerings that is based on the internet. They also depend on the content that is generated by the services to produce the indirect revenue ad rely on the community to support them in explaining the product (Chesbrough, 2006).
In the beginning, a model of Google seems to appear as a win-win model. One can attain services for free, and through which Google achieve their share. But it was evident later on that Google model is applied only to the Google, and therefore, it presents the unfair competition. The benefit might quickly become a threat to the similar community. The question is that what makes the Google innovate and offer high-quality items if they become monopoly then they will work in the market having no competition. Many instances can be considered as alarming for the company. It is posted by Michael Gray’s that whether Google is trying to steal the content or either they are hijacking it (Chesbrough, 2003). Their statement has taught that people are becoming more vulnerable.
Both the companies Google and Apple could be referred as an innovative company. But still, there is a fundamental variation among Apple way of doing innovation and the Google way. The difference exists in the evidence that Apple has tried to innovate the things that are important for the business and that it will generate the direct revenue with an aim to justify the investment. While Google attempts to innovate the stuff, which indirectly help in business (Chesbrough, 2006).
The outcome of that is that while Apple tries to release the item, it comes out as better scoped as well as polished because Apple understands that the price which the charge from the customers will hold less tolerance for the defects and it might look clumsy in user experience. In comparison with the Wave, Google Buzz, Google products and AppEngine, this is not the case (Chesbrough, 2007). Google had released its half-baked items and had left on the community to develop and debug it. Through analysing the examples of Apple and Google, it can be easily viewed that through the product strategy standpoint innovation done for the purpose of innovation is not considered as enough. Change that fails in the contribution the bottom line can be abandoned at a particular stage, or it might go through the great maturity cycle, which can harm the business (Dodgson, 2006).
Apple and Google are most admired company and can be seen as the most innovative technological companies all over the world. The ability of both the companies continues to do innovation, and the same is always highlighted (Dodgson, 2006). One can mention it as innovator’s dilemma, but innovating on top of the industry automatically make the process of innovation tougher. Many successful companies had become beholden towards the items, which make them more successful, as they have the feature like support, iteration, operations, and maintenance (Dodgson, 2006). Being successful often signs the rhythm of profitable business, in which innovation plays the optional or frankly role.
To their credit, none of the organizations consider innovation as an optional, rather both the companies place innovation on top down and consider it as a grassroots effort. Both societies have their official research divisions that include accomplished scientists, and both of them are related to academia. Both the companies includes highly dedicated teams that think about the future day and night, and both the companies has their successors (Fitzgerald, 2006). However, it is evident that both the companies are aware that innovation is not something that can happen purposefully (Fitzgerald, 2006). Innovation grassroots efforts clearly depict that they believe in creativity that is not governed by the title or organization of people, in which they work. Creative people can be considered as anyone, or the one is having the advanced degrees and without having any entrepreneurial track record (Fitzgerald, 2006). However, they take the different type of approach, which can encourage people to move towards innovation.
CEO of Apple, Tim Cook, has mentioned in the conference of Goldman Sachs in 2015 that Apple Corporation could be differentiated from many other organizations due to the expertise of company in software and hardware services (Gallo, 2010). In the case of vertical integration, which is followed by enterprises of the last few decades has also mentioned that Apple possesses the ability on all the three spheres towards bringing innovation and is causing magic (Gallo, 2010). People at Apple is desperately trying to catch up and exploring that it not easy to bring innovation that could fulfil requirements of customers.
Vertical integration has offered the Apple with a competitive advantage, because the company owns the chip manufacturing unit, and is also trying to control production, follow the extreme strict standard of software and operate its operations in the nearly closed proprietary retail stores ecosystem (Hill, 2012). With all such benefits, the firm has made its more control over the value chain and most significant its element cost.
Acquisition of Motorola by Google and acquisition of Nokia by Microsoft was mainly made with an aim to pursue the end to end strategy, which until now, only work in the case of Apple. Apple is popularly known for its addictive and tightly associated ecosystem in all the technological companies (Koontz, 2015). The software and devices of Apple are mainly designed to work with one another and to get sync easily, to copy or share the media and preferences with all the multiple devices with less effort. Applications work on various devices simultaneously, even with one purchase as well as user interfaces having the similar devices (Koontz, 2015).
As per Harvard Business Review post, created by Ron Adner mentions that, when Apple broadened their portfolio of products from iPods to iPhones, it just not only carried the software and technology, which could power the iPod, but also the entire collection of music and iTunes for user supplier base (Muller, 2011). This work was not only viewed as their switching cost, but it also links with the previous relationships for improving their offerings (Muller, 2011).
Presently, Google and Apple have entered the fray through establishing the ecosystems by covering up the games, music, books, storage and media services. Both the companies has formed their different strengths and are also trying to grab the market share. Where Google dominates the internet search and advertising (Muller, 2011). Apple had gained their success through iPods, iTunes software as well as iTunes store. Apple has also pioneered in the market of touchscreen technology in case of phones. The App stores of Apple had recorded around $10 billion sales in the year 2013.
In December, customers had spent around $1 billion on around 3 billion downloads at App store by making 2013 as the most successful year in the history of App store. In the year 2013, a conference of the worldwide developer, the Cook had mentioned that ecosystem of Apple designer covers up 6 million developers, and they had around 1.5 million new developers, which were added in 2012 (Hill, 2012). In the recent earnings of Apple in the year 2014, it was noted that 80% of the iOS devices were running on iOS7. This had to dwarf the adoption percentage of a single unit, which measures the current version of Android OS, and the same make iOS7 as the most modern OS all over the world (Hill, 2012).
A study conducted by GFK research firm mentions that 84% of the total owner plan of iPhone for buying the other Apple handset, when the same is replaced by cell phones with various smartphones users mentions that mobile OS ecosystem is considered as the determining factor for upgrading (Radjou, 2012). The study had depicted that around 70% of the customers had a feeling that seamless access and features towards content are the key factors that continue with the modern mobile OS. Therefore, the push for the value-added ecosystem is rapidly becoming the top priority in the industry. The brand scope towards the lure customers through rivals has reduced and rich the reward that goes to the providers, which can develop the brand loyalty and create the harmonious user experience (Williamson, 1975).
As per the 2013 report of Distimo, revenue of Google Play is increasing at the expenses of Apple. In the year 2013, App store of Apple was leading with 63%, which is about 37% in case of Google Play. In the year 2013, Google Play was highly responsible for 30% share, and share of Apple was around 70% (Radjou, 2012).
The vision of Job towards Apple was to create the premier quality products and then charge the premium prices of it. The cheapest product of Apple is mainly the price set in mid-range, but the company also made sure that high-quality user experience is given to customers along with features. The user interface and hardware are also designed to offer the highest value for the product price that enhances the profit margin (Williamson, 1975). However, the company can even charge the premium cost as long they are gaining competitive advantage, or when analysts believe that the brand has to start losing its aspirational status. With the rising competition from the low-cost and Android Smartphones, and coming of saturation in developed markets (Zittrain, 2008). The company might risk in a high-end niche market.
Apple is attaining 93% of the profits through its smartphone industry, and it’s the only company that makes profits through a smartphone. Each quarter Michael Webley, analysts take the look at the state of its smartphone. It is found in this quarter that Apple has gained the record-breaking 93% of the total profits of industry (Zittrain, 2006). Apple is the market leader, but it is discovered that Samsung has catch Apple, but this factor has come a long way, and it is found that Apple has blasted through its pack. Samsung industry share is around 9%, since 2008 and is known as profit creator. But again Apple attacked Samsung at the high end through its ipone6 plus that had big screens. Apple had also sold around 74.5 million phones in its last quarter, which comes to around $12.6-$13.5 billion in profits (Gallo, 2010).
The emphasis of strongest opponent goes more than Microsoft. Microsoft tries to control the PC market and it speaks for itself so that they can be viewed as the strongest competitor. Eventually, Apple will require to tackle and take away the market share, but their head on battle will not be considered as the best approach. Another aspect of competition is their music side, in which Apple is doing pity well (von Hippel, 2005). Napster 2.0 and Samsung had combined it to release the new services, which are highly intended to compete directly with the iPod and iTunes Music Store. The published scheduled is to provide the unlimited downloads as well as services that are offered by iTunes Music stores (von Hippel, 2005).
Rivals expected strategic moves
The strategy of Apple has not gone unnoticed. The rivalry had created the bad blood among the digital competitors of Real Networks. Apple management had mentioned that the firm has stunned with Real Networks and had even adopted the ethics and tactics of the hacker to break the iPod, and in this way, the company is anticipating the implications of their actions under the various law (Armstrong, 2009). Speculations had also surfaced that the functionality of video conferencing might be added with iChat. This move is viewed as the biggest step in company’s innovation approach.
Economics of scale
The cost incurred in creating software is highly extensive, but once it is refined with the production cost of copies for sale it gets reduced. The variation in expenses existing between Apple and Google is the system placed in the home. Apple had selected to move with the closed system and is not assisted with testing, programming, as well as bugging as done by Google. Google has gobbled with various other companies, which had moved towards sustainable improvements to enhance their operating systems (Dodgson, 2006). It had minimized some up the front of Google cost and had increased their progress.
While it is important to address the privacy issues of Apple, but it’s equally significant recommended to strengthen and improve the current research and development team of the company. There are two main critical areas that it is required from Research and development team to focus over (Zittrain, 2008). The first area relates to enhancing the brand name recognition of Google by advertising, and the next is to pursue the telecommunication. Various other search engines like Yahoo and Bing had also followed the Google that leads towards setting the brand equity by advertising and had even continuously gained ground on the company and is becoming highly competitive (Zittrain, 2008).
Due to the enhanced risk of lost profits and increasing popularity in advertising, it is recommended that Google should develop the efficient ways towards solidifying its position in the global market. Currently, Google has revised their policy of trademark and had even offered the ways for advertisers that include brand name in the text of its advertisements (Zittrain, 2006). Through the right step was taken by the team of research and development towards building and improving it, so that there should be more advertising and exposure of firm in the brand name like Google.
Another second area of interest is that research and development team is recommended to pursue the communication process. According to the burgeoning of online use, more consumers are now accessing the internet from their smartphones, which has created a vast and surging market (Zittrain, 2008). About this trend, it is recommended that Google research and development team should implement and take benefits of the current company acquisition with the AdMob.
With AdMob, Google will be highly equipped with the information on the phone applications. BY this way, Google will better inform about complete statistical data related to how people are presently using the applications of iPhones; how much loyal are their user, and how responsive they are towards the advertising of applications (Chesbrough, 2007). This acquisition will be supportive in determining what implementations are required in the currently evolved Droid applications that are created by Google. Exploring the niche in the world of telecommunication implies increasing the strength and undivided profits of Droid items that offer an efficient source of income (Chesbrough, 2007).
It is recommended that by strengthening the department of research and development, Google can get an opportunity to make use of its opportunities and strength, which also enable the company to be within mainstay in proliferating telecommunication world. Through accomplishing the things, the research and development expansion should be implemented by various step (Radjou, 2012).
Regarding strategically thinking about different types of innovation, the central question is to create the balance and mix. Google is defiantly experiencing the growth by their routine change in the business of advertising like Google X facility and driverless car. Apple is not relying on their iPhone laurels; rather they are exploring their payment systems and wearable devices (Muller, 2011). While incumbent automobiles organizations are creating high revenue through their traditional fuel-powered technology, most of them had already built the alternative energy vehicles that include both all-electric and hybrid vehicles and had even made serious R&D efforts in their advanced options like cell motors having hydrogen fuel (Muller, 2011).
Innovation is the key element for all the companies to survive in the market. In the modern time, most of the companies had adopted the innovation approaches, so that they could offer technologically advanced products to their customers and gain competitive advantage. In this report, Google and Apple are selected, and their innovation approaches are discussed. Both the companies are famous for their unique features and their jest to offer unique items to customers. It’s analysed from the report that if both the companies want to advance in the global market, it is significant for them in focus on research and development and try to bring improvement in it.
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Initially, Google was developed as per simple as well as a fast search engine that offers high-quality feedback. The portfolio of Google was diverse with its services of Gmail, Google Images, News search engine, Google Maps, Chrome Internet Browser, Earth map tools. Google TV middleware, Android operating system and a wide range of powerful and innovative tool for making use of the internet. Google had also conducted the broad strategy with an aim to acquire the most emerging technologies. Google service portfolio looks quite motivated through the technological issues, the possibility of initiating innovation and offering new and compelling online services.
Apple is successfully built according to the Macintosh legendary, whose user interface provides the revolutionary new ways of making use of computers. The products of Apple backed through the strategic innovation. Apple had tried to bring change in its business model by IBM and had even targeted the professional users, and with the purchase of microprocessors through the external suppliers and network stores. With the return of Steve Jobs, Apple had tried to manage the paradox and had even widened its portfolio from PC and move towards entertainment devices. The company is highly focused towards innovation and focus towards small products like iPod, iPad, iMac, and iPhone. Apple had designed its products within the stable ecosystem, and through which they are offering a huge range of accessories that were promoted from App store of Apple.