The Innovation of the iPod and Its Inception into the Business Arena - Case Study Example

The Innovation of the iPod This Paper discusses a detailed profile of the technical entrepreneurship behind the Innovation of the iPod and its inception into the business arena.There will be a discussion of the business decisions and strategies which have been attributed to the success of this product as well the role of Institutional support in its evolution and success. Today the Apple Computer's iPod has become one of the greatest consumer products of its time and is an undeniable entrepreneurial success with over 20 million units have been sold its launch in 2001. (Winters, R. 2002), It has come with its own range of accessories which form an economy of their own.The crux of the entrepreneurial success behind the iPod is the Statement by Jeremy Horwitz, editor in chief of iLounge, a leading online iPod authority "Timing and execution are everything. Being first in an emerging market is neither as important nor can be as lucrative as designing the right products and services to cater to second- and third-stage growth .A smart company commands a premium for successfully blending off-the-shelf technologies into a new and useful product. Essentially, the iPod is a portable hard drive (in the Shuffle and Nano models, a flash drive) hidden inside a simple and beautiful enclosure, accessed through intuitive menus, buttons and a scroll wheel .separately, these parts were forgettable, but together they became unforgettable, Instead of creating a good product and knocking down the price until everyone could afford it, Apple has sold stripped-down versions at lower price points and hoped demand would follow. This strategy helped create Apple's bestselling music player, the bipod Mini." The development of the iPod is well reminiscent of the complex task of an entrepreneur who has to take all the monetary and intrinsic risks which will ultimately bring him success or failure in the cruel world of technology and innovation. (CNN Money 2005,Collingwood, H. 2005)As far back as in the year 2005 financial forecasters were predicting that the stock price of Apple Computer, Inc.had witnessed an increase of almost 6 times its original size . (CNN Money 2005,Collingwood, H. 2005) All this success can be attributed to the iPod digital music player which was introduced only a few years ago and has met unmatched success than any of its contemporary products and thus is an excellent study model in the field of entrepreneurship and innovation.The product itself has accelerated the growth of Apples digital music player market in the USA and has helped Apple increase its third-quarter sales to increase by 75 per cent within a single year. (CNN Money 2005,Collingwood, H. 2005)This success is puzzling for most critics in the sense that when originally introduced the iPod was neither the first digital music player, nor initially compatible with the majority of personal computers ( it was only compatible with Apple's own Macintosh computers, which only had a 4% market share of US computer sales). (CNN Money 2005,Collingwood, H. 2005) Before going on to discuss the success story of the iPod entrepreneurship it is worth reviewing what Product innovation entails for the entrepreneurial success. The concept of product innovation pertains to the whole process of bringing a new product or service to the market and which include the stages of product conceptualization, design and development. (Dyson, J.1997) More importantly there will be a need to improve upon the conceptions of production and distribution of the new product. (Dyson, J.1997) As the name suggests that the "innovation" pertains to the something new in terms technology and creativity .The innovation process will involve the activity of people and organisations who will be able to change themselves and the environment. (Dyson, J.1997).One of the most brilliant examples of product innovation comes from IBM which has become popular for successfully transforming itself from a provider of hardware-based products to more software-based services . (Dyson, J.1997) The new IBM aims to provide IT-consulting and outsourcing and the original parent IBM has benefited from this in a great way. (Dyson, J.1997) Coming to the product development approach of the iPod it would suffice to say that it has taken a rather customer-centric approach of providing them with the best product innovation through co-creation and customization .It has been able to assess successfully at the onset the intricacies of direct market relations and profit/loss responsibility with in the new product development of the iPod. The diagram above shows the various stages involved in product development of a product like iPod. (Dyson, J.1997) The first stage would invariably be research and whether the product requires to be patented and developed further.There would be the testing of the models and samples until it is confirmed that there should be full production of the product. Successful product innovation would entail the use of all these stages properly to develop the product thoroughly. In the light of the above the main element of curiosity (management wise )for the competitors was that how have the entrepreneurs of iPod managed to develop iPod into a whole family of products ranging from $99-399 and also triggered the creation of an accessories industry, such as protection cases and speaker systems, (worth $300 million in 2005). (CNN Money 2005,Collingwood, H. 2005) From a study into the innovative strategy adopted here it is obvious that the "cool factor" was utilised here as an early adopter through the use of opinion leaders to target the teen audience at the same time making the iPod the need of every mature businessman. (CNN Money 2005,Collingwood, H. 2005)Many academics and business commentators have commented that apart from the cool the aspect of the company's leadership and the ease with which iPod products can be used, as well as the attractive product design are all factors ,making the Innovation of iPod what it is today. (CNN Money 2005,Collingwood, H. 2005) From an organisational and marketing perspective the iPod has come far as a market leader and much can be understood in terms of the company's organisational culture which has been developed and improved over a considerable time period.Interestingly critics have often remarked that Apple is famous for its secrecy and any attempt to investigate the company's capabilities has been seriously constrained. (Malester, J. 2005,Mello, J.P. 2005), Academics have identified three different dimensions of design success to iPod which consist of a visceral, behavioural and a reflective component (Malester, J. 2005,Mello, J.P. 2005), and how the entrepreneurship has emphasised upon the personal component of an object attached to it by the owner rather than the designer or manufacturer, although the manufacturer or designer can try to influence this form of attachment through the three dimensions of design, cognition and emotion which are integral to a product like iPod , in varying degrees. (Malester, J. 2005,Mello, J.P. 2005), Much can also be attributed to customer perspectives and the way the entrepreneurship has aimed to adopt a rather holistic approach to it to customer reception where the customer has become the central figure in the company's product development efforts.This has been attributed to its attempt as a market leader in understanding how customers connect with products from the market leader and a large amount of qualitative research. (Malester, J. 2005,Mello, J.P. 2005), Also regarding the development of the iPod it can be seen that it was based on product innovation and enhancements of existing products and how this combination of enhancements and innovations to secure its position as a market leader.For example if we look at Apple's strategy it has had changing successful models with different variations, such as the "iPod mini" that was replaced in September 2005 with a much smaller model called the "iPod nano". (Malester, J. 2005,Mello, J.P. 2005), Interestingly the , the new model had a lower storage capacity than its predecessor,when a higher storage capacity is again commonly considered to be a crucial for a new digital music player. More importantly, however, the replaced model was not only a success but contributed a lot to Apple's popularity and profit gains. (Malester, J. 2005,Mello, J.P. 2005), The product development of the of iPod has been identified as the "technology-push" vs "market-pull" (Valentin, 1994) model where the intrinsic capabilities of the firms as well as the intuition of its top management count as ingredients for success. Innovation and Entrepreneurship is often associated with the technology-push approach which is evident with in the several organisational aspects of Apple. It uses the market-pull route to emphasise requirements of the targeted market. (Malester, J. 2005,Mello, J.P. 2005), Thus these product development approaches in the marketing research of the iPod played a dominant role in the market-pull approach but being responsive to consumer demands (demands. It seems that Apple's approach to new product development has tended to be more towards the technology-push route but without neglecting what the market actually demands. (Malester, J. 2005,Mello, J.P. 2005), This combined approach has been the most appropriate for meeting customer needs because it takes into account what customers demand and this has been another factor in the entrepreneurial success. (Winters, R. 2002), This has also been done largely by combining quantitative and qualitative research methods by aiming to reveal consumers' preferred attributes for the iconic brand and market leader, iPod. The entrepreneurs have used these techniques for the identification of the customers' desired benefits. (Winters, R. 2002), Apple has used online interviews successfully to get such information in order to get the customers of Apple products highly involved with the brand.This technique calls for invoking a "fierce loyalty to the brand" which is a subculture of consumption. (Winters, R. 2002), In essence the it can be seen that Apple has redefined the portable music market thus effectively creating an entirely new market segment by becoming a consumer phenomenon and a much sought after life style product (popularly referred to as an elegant method of promoting individual choice.) (Winters, R. 2002), Apple has been cautious not to "overload" certain features into their product and any innovations has clearly involved a clear understanding of what product attributes customers would value. iPod has lived up to its aptitude for reinvention which has been its prominent feature for the past three decades as it has been seen as a technology-based company utilising the "technology push" route relying highly on corporate capabilities and management intuition . The iPod Nano model is a case in point. It can be seen that it's storage capacity is less than preceding models and it has still gone on to become the best-selling model. This has come as a criticism as well that how come Apple which clearly has the capability among its software engineers, but are relying more on consumer response and popularity than technical matters. (Winters, R. 2002). The iPod campaign has benefited immensely from its control elements (like menu for navigation - essentially to find the songs and so on) and design. Equally from these control elements, it can be seen how much there is ease of use of the product and customers feeling good about using it. (Winters, R. 2002), This can be seen in terms of the business scorecard approach through which the s the company can understand the external compulsions and to devise internal regulations to manage their practices. .The internal policies and procedures need to be adjusted in accordance with them as is the internal factors that can be controlled, modified and regulated by the board and the management.They are internal when there will be internal system encompassing policies which will help the processes and people and serve the needs of shareholders and other stakeholders, by directing and controlling management activities with good business savvy, objectivity and integrity. Therefore a sound business card approach in terms of the iPod is reliant on external marketplace commitment and legislation, plus a healthy board culture which safeguards these policies of keeping all perspectives before it in its policy making.This, together with the iPod design is what differentiates the product from its competitors.Research has shown that design is in how customers feel about their iPods like it should be easy to use and still make them feel "cool" in essence capturing the connection between design, image and beauty is a vital one. Much worthy of mention here is that iPod does owe its development to the US government which is a fact seldom brought to the notice of the public.The iPod is a strategic tool for data and information so it is inevitable the Government had to have a hand in the development of the products as the original Mac and the iPod.. During a speech at Tuskegee University, President (and iPod user) George W. Bush told his audience, "the government funded research in microdrive storage, electrochemistry and signal compression. They did so for one reason: It turned out that those were the key ingredients for the development of the iPod." This along with efforts of government agencies such as DARPA and the coordination of private companies in the US and abroad, including IBM, Hitachi and Toshiba have paved the way forward for the technological innovation in the field of iPod development. There were also efforts by national institutes like Fraunhofer Institute, (responsible for developing the MP3 codec which was also made in conjunction with Sony, AT&T's efforts).They were also responsible for the AAC format used by Apple in the iPod.Therefore the iPod does own its innovation not just to Steve Job's entrepreneurial skills but also to contribution from the area of government research. Conclusion Apples approach as an entrepreneur is laudable as it has been analysed to stress upon proper analysis dialogue, commitment and action which are all the success factors in the development of a sound Business scorecard for any entrepreneur.iPod has been vary of not ignoring the uniquely cultural and individual needs of the organisation and their policy recognises the dangers of the one size fits all scenario.All in all the iPod has proven to be an interesting example of entrepreneurial success. References 1. Dyson, J. (1997) Against the Odds, Orion. 2. Bayliss, T. (1999) Clock this: My Life as an Inventor, Headline. 3. Davis, W. (1987) The Innovators: The Essential Guide to Business Thinkers, Achievers and Entrepreneurs, Amacom. 4. Van Dulken, S. (2002) Inventing the 20th century: 100 Inventions that Shaped the World, British Library 5. Baden-Fuller, C. and Pitt, M. (1996) Strategic Innovation: An international casebook on strategic management, Routledge 6. 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