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Apple & disruptive innovation: 4 questions innovators need to ask before moving forward!

March 20, 2015 Leave a comment

Steve Jobs thought that most people live in a small box. “They think they can’t influence or change things a lot.” Jobs urged his staff to reject that philosophy as untrue.

Disruptive innovation is seen by many companies as a threat to them – but not by Apple who are happy to embrace disruptive technologies.

An interview with Tim Cook, Apple’s CEO, in FastCompany magazine shows that things are not as simple – and this offers lessons for all companies looking at new technology.

The key points are that Apple doesn’t go for every new technology. First they need to understand and have faith in the primary technology behind an innovation. They then consider two questions:

What can Apple add to this – and will it be embraced by society or be seen as something positive. These are interesting questions as a new technology will only be disruptive when people view it as adding to their overall well-being (even if initially people don’t fully understand the innovation – as was the case with first iPad where pundits said “so what” and “why do I need this”). Apple then looks to see if they can be the leader in technology – to own it. If they can’t they leave it to others.

This explains why often Apple isn’t first with something new. For example, they’ve just launched the Apple Watch. It’s too soon to say if this will be a success (although initial signs suggest it will be). Again critics have complained about it. It’s also not the first wearable on the market.

Essentially what’s being said is that to launch a truly disruptive product you need to answer four questions?

1) What is the new technology – and do we understand it?
2) Can we play in this market?
3) Will this innovation / technology / product or service contribute to society i.e. enable people to do things more easily or better than they could before or do things they couldn’t do at all before?
4) Can we be a primary player in this market?

If the answer to any of these 4 questions is no, Apple won’t enter the market. These are great questions that any company should consider before entering a new market. (The third question is perhaps the most interesting in respect of Apple – as what did the iPad offer people that other then existing devices couldn’t do. In retrospect, the answer is obvious but that’s hindsight. Spotting that the iPad, launched in 2010, gave you much more than the iPhone or the Amazon Kindle that predated it by 3 years, and that a laptop wasn’t as transportable, or easy to use was the genius of the device.

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The iWatch – is this the next disruptive innovation from Apple?

February 20, 2013 Leave a comment

Apple has developed a reputation for creating new markets that didn’t exist previously. The iPod was not the first mp3 player but it created a mass market. The iPhone launched the SmartPhone era – showing BlackBerry the potential of an Internet enabled phone, in a way that has almost killed BlackBerry’s manufacturer, RIM. The iPad was the next innovation – but since then nothing at all except rumours. The rumours include an Apple TV that would shake up the television industry, and an Apple watch – the iWatch. The AppleTV was said to be the next big innovation – and was briefly mentioned in Steve Job’s biography, where apparently Apple had something that would really shake up the TV industry. Nevertheless, the rumours relating to this have died down – and the iWatch is the latest rumour target.

One idea on the iWatch

My first thoughts on seeing images of the rumoured iWatch were why?

Why would anybody want something like this on their wrist when there were so many beautiful products from Citizen, Seiko, and higher-upmarket, Rolex & Patek Phillipe, among many others. It didn’t even have the look of the Swatch watch.

I also couldn’t see it as a replacement for a SmartPhone – as it’s too small to do all the current functions expected of phones that seem to be getting bigger, not smaller. So I personally dismissed the iWatch as just rumour, or a sign that Apple had lost its mojo, if it turned out to be true.

Nevertheless, the rumours have become pervasive – and so I’m sure that they are either a smokescreen or reflect something real.

I started to think about it.  The watch market can be divided up into a number of sectors. One sector views watches as a form of jewellery – and this is the market Rolex, Patek Phillipe follow. To an extent it is also the market that Citizen and Seiko chase too – although their watches also emphasise functionality, with the Seiko Solar and the Citizen Ecodrive watches that don’t need batteries or winding. Further downmarket, Swatch tries to be a fashion item. However all have a basic raison d’être – to tell the time. I couldn’t see an Apple watch easily replacing the jewellery element (or at least not initially). I doubt it will be a solar product – and so (again initially) it won’t replace Seiko or Citizen. It could compete with Swatch, but from previous Apple history would be much more expensive and so bring little to the pie.

The next question is who wears watches today – and that gave the clue to why I think the iWatch is real. Most watch-wearers are Generation X or older.  Millennials / Digital Natives don’t wear watches. They use their SmartPhones to tell the time. That’s the clue – and the target. A SmartWatch – especially if it could interact with existing devices – makes a lot of sense, as it could provide a more compact device to supplement their iPhone, iPod and iPad or even replace them for around the house, workplace or college dorm. I think that contrarians that say such a device won’t work are falling for the mistake I think I made, by not thinking about how people tell the time today. The potential problems revolve around the other expected features. Will it also be a phone? A music player? A portable sat-nav device? How would these work ergonomically?

Assuming that the iWatch is real and not a smokescreen for something else, the argument that it won’t be attractive fails when you see some of the suggested design concepts. Some are very attractive and wearable as both a fashion item and even as jewellery. The potential objections to functionality are also less if the iWatch were to interact with other devices.  The problem here is that there may be an expectation that the interaction is with another Apple device – which would mean that the iWatch would not be a stand-alone product. This limits its potential considerably. What about linking to Android phones – that have overtaken the iPhone in overall market share – or a Windows computer? If this were to be allowed then I think the iWatch would be another Apple success story.

If this is the case, then it does something else. The onset of quartz watches in the 1980s was highly disruptive to the Swiss watch industry. Initially the Swiss industry dismissed such timepieces as cheap and nasty, but in classical disruptive innovation style, they soon overtook mechanical watches to become the dominant format. The rise of quartz watches caused serious damage to Switzerland’s watch industry – until it recognised the threat, and created products such as the Swatch. An Apple iWatch that succeeds promises to be equally disruptive – and overtime, most of us may end up wearing such products.

The impact of disruptive innovation – on PCs and on Retail

January 17, 2013 11 comments

Two recent items highlight the impact of disruptive innovations on industries. The first is a presentation from the Business Insider called the The Death of PC. The second is an article looking at Amazon and mentioning its March 2012 purchase of Kiva Systems.

Since 2009, the PC market has hardly grown. In the same period, Smartphone & Tablet sales boomed. Many tasks that used to be done on PCs are now done on these newer devices: email, web-searching, social media, and more. This has had a massive impact on the traditional PC market and its suppliers such as Intel and Microsoft. Whereas Apple’s and Samsung’s share prices have grown substantially, Dell & HP have been static or fallen. The introduction of both Smartphones and Tablets illustrate how disruptive these technologies are to the traditional PC industry – although as the The Death of PC presentation shows, things are actually more complicated. This is typical for a disruptive innovation – especially in the earlier stages.

Disruptive innovations do not always kill the products and industries they replace. What they do is change them radically. Smartphones haven’t killed the camera industry. They have, however transformed it so that DSLR and higher-end / special function cameras are now the main products sold. The cheap mass-market snapshot camera has gone – who needs one, when a Smartphone does everything that they could do, and much more. Disruptive innovations also mean that companies that fail to adapt quickly enough disappear. Kodak’s filing for Chapter 11 bankruptcy is an example of this. Kodak and photography were synonymous – but the company failed to anticipate how digital camera usage would change the way people process photographs.

In the case of the PC market, so far it’s only the home PC that’s dying. The PC in the workplace is doing fine – and that’s because the type of task it is used for is different. It’s hard to work on a spreadsheet, or a complex graphic or even a long report using a Tablet and almost impossible on a Smartphone. These aren’t tasks that the home computer was used for. So Tablets haven’t changed the work PC – only the home PC market. However expectations have changed – and this has led to newer devices and cloud computing which promises to be as disruptive for the traditional hard-disk based PC and so the PC as we knew it last century is gone or going. It’s not yet dead – just changed.

Amazon’s purchase of Kiva Systems in another example of a disruptive innovation. Amazon itself has shown how disruptive e-commerce is to traditional retailing. The high-street and even the out-of-town retail outlets struggle to compete with Amazon on price. However they can still compete on service: if you want something on the same day, then such outlets beat Amazon, even if the price is higher. Further, Amazon’s warehouse distribution system could be copied and many of the larger retailers now offer online options. Currently both use human labour to select and package products for delivery – and this represents a significant proportion of retail costs. The Kiva Systems purchase promises to change all this. Kiva Systems manufactures robots and the software used to control them. The robots are designed for use in warehouses for accessing goods. They remove the need for a human being to go to the relevant shelf and remove a product for sending to a customer – instead a machine does this. Eventually such systems are likely to completely automate the distribution process – meaning that Amazon’s labour costs will fall dramatically.

Any retailer that still depends on human labour in their warehouses or retailing is likely to find it even harder competing with Amazon’s prices. Such retailers should start thinking now on how they could compete. Options include looking at ways of improving service or focusing on narrow niches requiring in-person expertise. Waiting and hoping that some shining knight on a white charger will come and rescue them is not an option. There will be no shining knight because, however much retailers may wish it was, true life is not a fairy story.

[After writing this post, Michel Bernaiche, Program Development Director of AurowaWDC and current Chairman of the SCIP board, pointed out this news story to me – highlighting how robots are impacting not just retailing but many other business areas – from hospitals & surgery to legal research. CBS News Video on Impact of Robotics in Industry]

Microsoft’s Surface and Disruptive Innovation!

October 27, 2012 4 comments

There is an old video with Bill Gates talking about Microsoft and Windows version 3, looking at multimedia, pen computing and an early tablet computer. Circa 1991! The technology shown in the video was forward thinking. Today we take it for granted. This was a time pre-web when only businesses had computers. Few people had computers at home and few knew about email or the Internet.

The idea of tablet computers is not new. Both Microsoft and Apple had looked at the idea years ago, but at the time the technology was not sufficiently fast, sophisticated or useful enough to grasp the majority of consumers’ interests. Techies loved such devices. (At about this time, ago, I had a boss who had a Psion Organiser.  He loved it. Everybody else wondered what he saw in it).

That’s the issue with disruptive innovations.  It’s not just the disruption that counts. It’s the timing. The Microsoft tablet was like the Psion organiser, and even the more tablet like Apple Newton device.

Apple Newton

The idea was a great idea but the timing was too early, and the product was not able to capture the consumer mind.

It’s not the first company that comes out with a disruptive innovation. It’s the first company that captures the consumer’s share of mind – their imagination.

As another technological example, the Apple iPod was not the first mp3 player. There were a few before  (e.g. the MDiamond Rio and the MPMan player) – but they didn’t have the panache of the iPod – and so were quickly overtaken when the iPod entered the scene.

At the same time, entering too late – or basing your product on competitors is also not the way – as Microsoft’s Zune product showed.

The jury is still out on Microsoft’s iPad type product – the Surface. This, at least, is not a copy but something different. To a large degree, it’s fate will depend on Windows 8 (RT). I think the Surface has a place – and I can see it destroying the netbook and low-value laptop market, and so it will be disruptive. I don’t believe that it will damage the iPad or most Android tablets (and also not the Kindle type e-book reader). People buy these for the apps – and there are too few Windows based apps. I don’t see this changing with Windows 8 either. (Why should an apps developer spend time and money building a Windows based app when the vast majority of tablet computers & smart phones are Android or Apple iOS?)

So who will buy the Surface. Techies – obviously! However businesses that currently equip sales people with netbooks or low-price laptops will also go for it as it is lighter, cheaper and trendier while offering the same or greater utility than the netbooks and laptops they had previously bought.

Of course time will tell. That’s what makes something truely disruptive – it’s often only after the new technology has taken over that you can say “but it’s obvious that it would succeed“. If this wasn’t the case – we’d all be flying across the Atlantic on another seemingly disruptive technology that failed to spread even though it provided utility, speed and worked. The supersonic Concorde aircraft never really took off, even though British Airways claimed it was profitable. Only British Airways and Air France flew Concordes. No other airline purchased the aircraft and the Concorde crash in Paris in 2000 effectively sealed its fate.

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