Innovation and the Industry Life: Apple and the Industries It Has Created
This case analysis exercise reviews the role of competitive behavior throughout the industry life cycle. It reinforces Learning Objective 7-3 from the textbook. We will cover the five stages of an industry life cycle. Each stage has strategic and competitive implications for a firm.
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The typewriter was first introduced broadly to the U.S. market in the late 1800s and was the agreed-upon standard until firms like Wang brought to market electronic word-processing machines in the 1970s. In the last few decades, the personal computer industry led by Wintel replaced the need for typewriters as evidenced by the fact that in 2010 approximately 350 million personal computers were sold worldwide, while just under half a million typewriters were sold globally.
Meanwhile, in 2007 Apple introduced the iPhone and arguably created the "smartphone" industry. Apple then introduced the App Store in 2008, which stimulated more demand for the iPhone. In 2012 total mobile applications (including Android apps) generated $16 billion in revenues. The global smartphone "apps" industry is projected to reach over $100 billion in worldwide sales by 2017.
Growth in the revenue-generating mobile app market has taken place in tablet computers. In 2010, Apple introduced the iPad, taking the tablet computer to an entirely new level, selling 14.8 million units worldwide, with sales for 2012 of 58 million units. As sales growth for tablets began leveling off or declining, Apple introduced its first “wearable,” the Apple Watch, and offered a pre-order option in April 2015; the available quantity sold out in a matter of minutes. While the future of the Apple Watch is currently unknown, it is widely agreed that “wearables” may be the next big mobile-industry “thing.” Each of these innovations has created a unique industry with a life cycle that requires understanding which attributes and competencies best serve a firm for each stage of its industry life cycle in the quest for competitive advantage and sustainability.
Apple's first generation iPad was priced at over $800 when it launched in 2010. Three years later the same model is priced at under $300. This change is supported by all of the statements below EXCEPT
A. Apple has improved supply-chain capabilities.
B. Apple has access to large-scale manufacturing.
C. Competencies are shifting to manufacturing efficiency.
D. The industry moved from introduction to growth stage.
E. Apple is using a harvest strategy for cash flow focus.