| Product life-cycles are shortening, with new | | | | call to rally round the iconic company, Apple is |
| products hitting the market faster and faster. At | | | | alive and very well. Its amazing recovery owes a |
| the same time, consumers are spending more | | | | lot to its out-of-the-blue dominance of portable |
| time on the Internet looking for products and | | | | digital music players, a product category that |
| services, and seeking out suppliers who can | | | | barely existed in 1997. In the first quarter of |
| deliver them with maximum value at a | | | | 2006 Apple shipped 8.5 million iPods, some 60% |
| competitive price. This is a tough, challenging | | | | more than in the same quarter of 2005, taking |
| situation that should scare complacent businesses. | | | | total iPod sales to 50 million worldwide since 2001. |
| But it offers exciting opportunities for smart | | | | With iPod sales bringing in $1.7 billion in Apple's |
| business people who recognize the need to | | | | second quarter, the iconic music player now |
| understand the external business environment and | | | | generates more money than Mac computers at |
| have the internal processes to enable them to | | | | $1.57 million. And now that it has started producing |
| quickly turn changes in the market into new | | | | Macs with an Intel CPU, Apple is expecting the |
| products and services.Rapid History of Rapid | | | | "halo effect" of the iPod to lure Windows users |
| Growth | | | | into buying Macintosh computers.That's not all. |
| Back in the 1980s the notion of an Information | | | | Apple, who's product dominates the market |
| Superhighway was touted around the mainstream | | | | through their approach to partnering and brand |
| media. Over the next few years this | | | | development, also dominate another category |
| mind-boggling notion went from a science fiction | | | | that didn't exist in 1997 - downloadable music. In |
| scenario to a slow but functioning reality.A few | | | | the space of just over two years, since Apple's |
| far-sighted manufacturing businesses installed fast | | | | iTunes Music Store was launched, broadband |
| always-on connections and some created | | | | Internet users worldwide are now spending more |
| websites, although most of them were little more | | | | than $1bn a year on song downloads. Apple has |
| than online brochures. A few also saw the | | | | sold more than 600 million songs in two and a half |
| benefits of e-mail but most dismissed the flexibility | | | | years, and in the US iTunes ranks as one of the |
| of the Internet as irrelevant to their business. | | | | leading music stores alongside major |
| Many invested significant amounts in alternative | | | | bricks-and-mortar retailers. It has also added |
| 'fixed' technology that quickly became outdated | | | | Podcasts and Video downloads to its |
| such as EDI (Electronic Data Interchange) | | | | offering.Industry analysts reckon that iPod and |
| networks that connected two companies through | | | | iTunes have not only added to Apple's bottom |
| a single dedicated line. Even the mighty Microsoft | | | | line, they have also given a significant boost to |
| seemed to regard the Internet as a sideshow; it | | | | the company's computer brand. In short, Apple's |
| allowed Netscape to become the dominant | | | | fortunes have been turned around by music, yet |
| Internet browser of the early Internet and well | | | | music wasn't mentioned in any of the 101 ways |
| into the mid 1990s before realizing that it was | | | | to save Apple in 1997. There are few magazines |
| missing a trick.In many respects consumers were | | | | more switched on than Wired magazine yet |
| quicker to embrace the Internet, even with the | | | | nobody there suggested music as a route to |
| limitations of dial-up access. In 1990 there were | | | | salvation - it was down to the insight of the Apple |
| around 2.6 million people using the Internet, with 2 | | | | management and their ability to size up an |
| million of them in the United States . By the end | | | | opportunity and deliver a solution which saved the |
| of 1997, there were 99.96 million Internet users | | | | day.Before iTunes and the iPod, the music |
| worldwide . Two years later there were 280 | | | | industry had been fighting a rearguard action |
| million worldwide, and within another two years it | | | | against illegal file sharing - millions of people |
| almost doubled to 530 million, with 16% of those | | | | copying each other's music for free through |
| accessing the Internet wirelessly. In 2005 global | | | | peer-to-peer systems such as Napster and Kazaa. |
| Internet users tipped over the magic billion to | | | | For many analysts, the music industry was |
| reach 1,080,000,000 users . It's largely thanks to | | | | "broken" with no prospect of fixing itself. Its only |
| consumer uptake that companies have been | | | | recourse was to track down and prosecute |
| forced to recognize how the Internet can be used | | | | file-sharers. Then along came Apple, a complete |
| as both a marketing and a sales channel to reach | | | | outsider, to show the way forward and put |
| huge marketsBecause of the speed of this | | | | together the first site to offer a really wide range |
| change, many businesses, and not just | | | | of legal music downloads.Not bad for a company |
| manufacturers, have not been able to keep up | | | | that looked ready to die in 1997.So What? |
| with developments - missing out on opportunities | | | | At the heart of the Apple story were two new |
| to find new collaborative partners, actively market | | | | technologies - MP3 (or similar music compression |
| their products or develop new services for | | | | systems) and broadband Internet; without them |
| customers. A wide range of business have seen | | | | none of its success would have happened. More |
| market share (and profits) slump as products | | | | importantly, Apple's management were able to |
| become outdated faster than new products and | | | | recognize that their experience in developing digital |
| services are introduced. They have seen costs | | | | technologies would enable them to rapidly break |
| slashed by competitors producing in lower-cost | | | | into digital music - and they used this expertise to |
| countries and buying low cost technologies, as well | | | | market and launch a leading edge product before |
| as the introduction of alternative products and | | | | their competitors were able to recognize the |
| technologies.According to one e-manufacturing | | | | change that was coming.Broadband and MP3 |
| site, the critical issues that need to be faced up | | | | enabled Apple to go from nowhere in the music |
| to include:- Reduced consumer switching costs | | | | industry to become a highly-influential industry |
| with the Internet making it easier for an existing | | | | player in a few short years. The underlying |
| customer to find, contact and collaborate with | | | | technologies have existed for some time - |
| competitors- Rapid comparison of prices, | | | | high-speed Internet, file compression codecs and |
| particularly low value or commodity items, allowing | | | | ever-higher-capacity, smaller data storage |
| customers to drive costs down faster than | | | | systems. Yet any industry analyst forecasting this |
| companies can improve performance- An | | | | scenario back in the late 1990s would have been |
| increasing number of customers are placing their | | | | dismissed as a dotcom-crazy fantasist - but that |
| requirements and posting tender opportunities via | | | | did not stop the Apple management.For decades |
| the Internet, making it likely that organisations | | | | big music companies dominated the music |
| who are not linked to portals relevant to their | | | | business. They looked after the promotion of the |
| industry will miss out on sales opportunities- The | | | | artists and their music, and the distribution of their |
| Internet provides opportunities for enhanced | | | | LPs and later their CDs. It was only through them |
| customer service (such as online updates for | | | | that artists could reach big audiences. But once |
| delivery etc) which in turn allows for organisations | | | | the Internet was established and file-sharing was |
| to differentiate themselves more easily- | | | | flourishing, the big music companies could see their |
| Recognising that there will be a need to invest as | | | | grip on music distribution slipping.All this had serious |
| much in developing brand and services as there | | | | implications for all the traditional players who are |
| will be in leading edge production technology to | | | | between the artists who create products, and |
| enable businesses to 'stand out'- Lastly, the | | | | their audiences who consume them. And beyond |
| Internet is driving the desire for consumers to | | | | the music business it has serious implications for |
| place smaller orders, in shorter timescales whilst | | | | any business who can size up a change in the |
| expecting a greater number of options - | | | | market. Apple's innovation was recognizing the |
| something which manufacturers with inefficient | | | | shift from physical to digital product would (and |
| systems will find significantly increases their | | | | could) continue and that they were well placed to |
| production costs and reduces profitsOpportunity | | | | capitalize on it.The iPod+iTunes case history |
| Bites | | | | shows that there are probably existing |
| However, for other businesses, the rapid change | | | | technologies waiting to be configured and |
| in technologies has offered significant opportunities | | | | combined by smart entrepreneurs in such a way |
| to turn things around. Take the case of Apple.In | | | | as to make current business models irrelevant. |
| 1997, when it was already clear that the Internet | | | | And it's absolutely certain that |
| was here to stay, Wired magazine ran an | | | | soon-to-be-invented new technologies will be |
| alarming cover story about Apple Corporation, | | | | applied to leverage the Internet in ways that defy |
| asking readers to "Pray" under the headline "101 | | | | prediction today.So here's a closing thought, the |
| Ways to Save Apple - An assessment of what | | | | Apple story tells us that a key skill for |
| can be done to fix a once-great company." In little | | | | manufacturing businesses in the 21st Century is |
| over a decade Apple had gone from being a | | | | the ability to spot trends early enough and to |
| pioneer of mass personal computing to being a | | | | convert those trends into market-leading products |
| niche player serving a dwindling band of loyal | | | | and services, backed by effective marketing, as |
| users.And now, just eight years or so after the | | | | quickly as possible.What do you think? |