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Iphone Blue Ocean Strategy

The document analyzes Apple's strategy for entering the cell phone industry with the iPhone. It discusses Apple's strengths in the iPod market and the opportunities presented by trends in cell phones. A 5 forces analysis shows minimal threats from substitutes or suppliers. The "4 Actions Framework" and "6 Paths" models explain Apple's strategy to reduce complexity, create new offerings, and differentiate the iPhone through its touch interface and apps. Risks are assessed around first-time phone production. Post-launch, the iPhone was a major commercial success and disrupted the industry by proving phones could drive revenue.

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Nyadroh Clement Mchammonds
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110 views11 pages

Iphone Blue Ocean Strategy

The document analyzes Apple's strategy for entering the cell phone industry with the iPhone. It discusses Apple's strengths in the iPod market and the opportunities presented by trends in cell phones. A 5 forces analysis shows minimal threats from substitutes or suppliers. The "4 Actions Framework" and "6 Paths" models explain Apple's strategy to reduce complexity, create new offerings, and differentiate the iPhone through its touch interface and apps. Risks are assessed around first-time phone production. Post-launch, the iPhone was a major commercial success and disrupted the industry by proving phones could drive revenue.

Uploaded by

Nyadroh Clement Mchammonds
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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iPhone Blue Ocean Strategy

INDE 599
11-3-09
Overview

• Industry Pre-Launch
• 5 Forces Analysis
• 4 Actions Framework
• Strategy Canvas
• 6 Paths
• Risk Assessment
• Post Launch Success
History of Industry
• 2002-20032
– Very successful iPod sales
– No desire from Apple to create a PDA
– Steve Jobs believes that cell phones will eventually
carry the PDA information
– Americans carried cell phones, Blackberries, & MP3
players
• 2007
– Cell providers marketing to kids & teens
– Boost in consumers wanting smart-phones3
– Motorola losing 2% of market share 1 month after
iPhone launch3
– Google reveals cell phone software4
Apple SWOT Analysis

Strength Weakness
• iPod 16% company revenue • Existing “convergence device”-Palm
• Favorable perception of brand Treo
• Ability to capture & retain customers • Need to create a new OS for the phone
• Launch of iTunes for music • Accused of having a niche market
• Fault screens & batteries in early iPods

Opportunity Threat
• 3G phones gaining popularity • Success of rival music stores
• Wi-Fi phones coming soon • Data networks sluggish
• Price of storage plummeting • Success of Palm Treo
• Fast & efficient cell phone processors • Wireless carriers that dictated hardware
devices
• Highly competitiveness IT industry
5-forces Analysis on Cell Phone Industry
• Threat of new entrants?
– Apple would be the new entrant
– Google, Microsoft could choose to produce cell phones, eventually.
– Other cell phone companies may re-design their products to compete, later

• Bargaining power of buyers?


– Minimal—Other devices, Palm Treo, Blackberry do not integrate all technologies
efficiently

• Threat of substitutes?
– Minimal. Palm Treo is only other existing convergence device.
– Blackberry does not have all of the same functionality, such as MP3s

• Bargaining power of suppliers?


– Minimal. Suppliers will want to get involved with new project, beneficial to their sales.

• Rivalry?
– Medium. iPhone can revolutionize the cell industry.
– Immediately, there will be little competition, but there will be competition from all cell
phone producers once it is released. (Motorola, LG, Sanyo, Palm, Blackberry, etc)
4 Actions Framework

Reduce Eliminate
• Carrying separate devices: phone, MP3, • Difficulty in text messaging-use keyboard
PDA instead
• Requirement to always hook up to PC
• Difficult user interface-make touch
screen

Create Raise
• Device to download music directly • User interface & improve navigation
• Hold more songs • Hold more music
• Simple user interface, no user manual • Applications-games, money
required management, news, etc.
• Sleek design • Wireless internet on phone
Relative Scale
Strategy Canvas 2-Highest Rating
0-Lowest Rating

Strategy Canvas: Cell Devices

2.5

2
Offering Level

1.5

0.5

iPhone
Blackberry
Other Cell
Feature
Areas to Change the Rules
“6 Paths” Framework
1. Alternative Industries
• Incorporate smart-phone technology
• iPod-MP3, email, applications
2. Strategic Groups within Industries
• Trade up from typical cell for smart phone technology
• Improved user interface from Blackberry
3. Chain of buyers
• Increase iTunes users
• Market to AT&T only
4. Complementary Offerings
• Incorporate iPod and & iPod touch capabilities
5. Differentiation
• Touch features, compared to Blackberry
• Integrated applications
• “Cool factor”
6. Look across Time
• Revolutionary user interface
• Touch screen, keyboard, directly connect to App Store, linkage to Mac/PC
Risks Assessment
1. First time Apple makes a cell phone
2. Aligning to a single cell carrier
3. Ability to successfully integrate software
4. Problems with battery life
5. Impacts to iPod sales 5

6. High price of product 4


4
7.
Likelihood
Data networks sluggish 3
1 6 3
2
2 7
1
5
1 2 3 4 5 Lo
w
Consequence Medium
High
Product Impact Post-Launch

• Product Impacts1
– Cell phone carriers realize that phones can win
customers & bring in revenue
• Upset the carrier-manufacturer balance of power
– Opportunities for application developers
• Sales
– March 20096
• 17 million iPhones sold
• 25,000 applications sold on App Store
• 800 million total downloads from App Store
– October 2009-Apple Profit increases 47%5
• Apple sold 7.1 million iPhones in single quarter
References

1. The Untold Story: How the iPhone Blew up the wireless industry:
http://www.wired.com/gadgets/wireless/magazine/16-02/ff_ipho
ne?currentPage=2
2. Steve Jobs: No Tablet, No PDA, No Cell Phone, Lots Of iPods:
http://www.macobserver.com/article/2003/06/05.9.shtml
3. Mobile Phone Industry Already changing due to iPhone:
http://arstechnica.com/apple/news/2007/08/report-mobile-
phone-industry-already-changing-due-to-iphone.ars
4. Google Unveils Cell phone software & alliance:
http://news.cnet.com/google-unveils-cell-phone-software-and-
alliance/
5. Apple Profit Surges on iPhone Sales:
http://online.wsj.com/article/SB100014240527487045006045744
83631612633824.html
6. iPhone Sales hit 17 Million:
http://www.pcworld.com/businesscenter/article/161725/iphone_s
ales_hit_17_million.html

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