Technology Intervention on Apple’s Operations
Enderle (2013) compares the technology market to surfing and argues that the waves that you cannot see matter more than the waves that you are riding. For instance, Apple may currently be the top technology company today. However, this is not as important as the question of how it will respond to future technology changes and intervention in order to retain its position at the helm.
Wearable technology has been touted to be the next big thing in the industry and everyone knows that competition is stiff in technology industry. Although Motorola is said to be in the process of innovating a watch which works similarly to a smartphone, Samsung has already introduced into the market the Galaxygear, which is “a ‘smartwatch’ that operates under a version of the Android mobile operating system” (Yunk, 2013). Google on the other hand, has released Google Glass while Apple in order to keep up has released the iPhone 5s and has plans underway to release its own smartwatch soon.
This paper will investigate the implications of such new technologies on Apple’s operations. Pertinent questions that will be examined include: What changes will the new technology undertaken by Apple bring to the market and how will Apple adopt to these changes in its operations?
Brief Background Information
Credit Suisse published a report on wearable technology in May 2013. The report suggested trending technological changes such as the move to wearable technology are increasingly affecting the economy in many yet subtle ways. The report also showed that of the 250 million smartphone users, all are capable of handling wearable technology and the popularity of this trend is evident from the $3-$5 billion that wearable technology has generated in actual revenue. This is just the beginning because the market is still growing and firms can tap into this (Kindergan, 2013).
With plans already underway for the release of its smartwatch, Apple is one of the major technology companies looking to tap into this market.The Credit Suisse report further shows that of the 250 million smartphone users, 15% are open to buying wearable gadgets such as the iWatch and it is predicted that by 2018, this market will beworth $30-$50 billion. Credit Suisse analysts have projected that Apple will earn an annual income of $10 million from this particular technology (Kindergan, 2013). Considering the failure of Apple to launch its 60-inch TV into the market, the reality of these predictions remain debatable. Ultimately, the success of the largest technology firm is pegged to how Apple will adapt its operations to the new inventions and markets.
One of the crucial elements of an organization is its culture and this usually constitutes its long-term strategy. Organizational culture results from long-term practices and norms and hence it is very difficult to change. It is therefore not reasonable to assume that Apple could change its entire organizational culture as it introduces the wearable devices into its product line. Nevertheless, one cannot rule out that Apple will make a few deviations when it establishes these wearable products.
Marketing and Customer Satisfaction
In order to compete effectively and beat its rivals, Apple will employ extensive marketing tactics for the iWatch. Yet this is not surprising. In fact, the more intriguing question is how Apple will utilize the wearable technology to market itself considering that wearable technology has heavily impacted digital marketing. The major advantage that wearable technologies over phones is that they provide non-substitutable functions that are always attached to humans. These may include attachments such as contact lenses, watches, glasses and computerized fingertips, among others and hence these wearable devices offer marketers the added advantage of computing functionality and digital information.
The designers, content creators and brands will particularly rely on responsive designs because wearable gadgets such as glasses, watches and contact lenses will make websites easily accessible from any location. In order to utilize this technological devices, Apple will be inclined to invest a lot in responsive designs. Responsive designs entail creating websites which can service every digital device including the wearable technologies with efficient internet access and web browsers. In order to invest in such designs, Apple will need to consider important factors such as the program specificity of devices, their functionality and size as well as the interface and capacities of the devices it creates. Equally, Apple will have to design an intuitive user experience for its clients and given its high reputation, the company must invest time, money and efforts on quality assurance tests for these devices.
Apple has already introduced M7 chip in its iPhones and Bradshaw (2013) states that this new chip is part of the company’s strategy to venture into the wearable technology era. The author further adds that the chip “opens up opportunities for developers of health-monitoring gadgets and apps, as well as other connected devices” (Bradshaw, 2013) hence it is more likely to be used in the iWatch as a wearable fitness tracker. As a motion coprocessor, the M7 chip continually measures the data. In the same breath, Apple has also launched a software interface that is called ‘Core Motion’ and this is said to provide consumers with “a whole new level of health and fitness solutions never before possible on a mobile phone” (Bradshaw, 2013). Such features will definitely outdo existing wearable devices that count track workouts or steps. These include the Jawbone’s Up and Fitbit applications both of which have received a lot of popularity in the wearable technology market.
Finance encompasses both expenditure and revenue. Developing a new product definitely comes with peculiar financial demands which may take the form of technology assets, human resources, marketing costs to help build the brand, strategies to meet customer expectations and needs, among others.
Despite these costs, developing new products also offers high financial gains and Apple is likely to make profit from launching its iWatch. As mentioned before, a study by Credit Suisse projected that Apple is likely to make $10 million annually from investing in wearable technology (Kindergan, 2013).
According to Yarow (2013) there is a high gross margin of 60 percent for global watch markets. In addition to this, the fact that Apple’s iPod Nano grossed a higher than expected margin of about 70% also shows the considerable success of Apple’s new products. The iPod Nano is an indicator that the iWatch can be more profitable compared to Apple’s 60-inch TV. Currently, the few smart watches are retailing at approximately $100 and $125 and given Apple’s significant reputation for quality products, it would be justifiable for launching its iWatch with a price tag of $200. At this price, the company would have to sell 50 million units annually so as to meet the projections set by Credit Suissie. The question of the feasibility thus arises and considering that Apple sold 125 million iPhones and 58 million iPads in 2012 alone, the 50 million units for its iWatch seem attainable and not so far-fetched.
New markets and products generally demand and depend on finding employees with the right skills and expertise. In order to successfully establish a niche in the wearable technology market, Apple will have to find the right human resources. This does not necessarily mean acquiring a whole new workforce because the company must still continue production of computers, phones and other gadgets. The wearable technology department being relatively new must have personnel who experience in handling specific elements such as fusing technology with fashion and design among other things.
In recognition of such elements as fashion, Apple has gone ahead to recruit the former Yves Saint Laurent CEO Paul Deneve, as the fashion executive who will run its wearable technology department. That Deneve has many years ofexperience in the fashion market, is not questionable and he therefore has a lot to offer in terms of attracting the right networks for marketing Apple’s wearable gadgets to the fashion industry segment.
Organizational responses can be prompted by changes in the external environment such as technology changes and necessary interventions within the organization or internal environment changes. The technology market is currently the most competitive and dynamic industry in the world. The intense competition has created high rates of substitution. For instance, there have been changes in the smartphone market with Apple and Samsung overtaking Blackberry. Additionally, IBM, which was once a “technology leader with eBook and smartwatches” has since been substituted by other players. There are thin boundaries between success and failure in this market and these are determined mainly by the strategies undertaken by organizations in terms oforganizational culture, marketing and other customer satisfaction strategies as well as investing in the right human resource management, among other things. These technological changes and interventions definitely have considerable implications on the finances of a company (Lucas, 2005; McKeen & Smith, 2009; Pearlson& Saunders, 2010).
As we have seen here, all the discussed factors are intertwined and can therefore not be divorced from one another. Instead, they complement one another and firms must consider them when making deliberations and decisions regarding their responses to technological and changes and interventions.
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Bradshaw, T. (2013). New iPhone Chip Paves the Way for Apple’s Wearable
Technologies, Investors Chronicle, Sept. 13. Retrieved 22 November 2013, http://www.ft.com/cms/s/0/3312bdd2-1b66-11e3-b781-00144feab7de.html#axzz2lMv7kqJ9
Enderle, R. (2013). Opinion: What HP Missed about the Future Could Affect Other