Apple's Strategy

Steve Jobs is known for creating revolutionary products and launching them like a box office thriller. The movie producers should learn a few tips from him! The launch of IPhone marked a new milestone in the history of tech products. Now, it is the time for IPad. What is IPad? In the last few years, the world has seen that the technological gap between a phone and a computer is reducing. Earlier people were satisfied with a basic phone which can be used to communicate only. Gradually the products’ expected features like internet, WAP and data processing abilities crept into the basic features. However, mobile manufacturers could not break the ice to think further, which Apple has done. Apple is trying to create a new segment where people want a multipurpose mobile device through which all basic needs of a mobile and a computer can be experienced with ease. IPhone implemented this unique ‘Filling the Gap’ strategy successfully. It seems that Apple has made this ‘Filling the Gap’ strategy it’s unique selling proposition. Is it sustainable? The sustainability of a strategy depends on the entry barrier for competitors. If the entry barrier is low then apart from the first mover advantage, Apple will have nothing. It will not be able to milk this newly created segment for a long time. One feature which is valuable about this product is that more than one lakh applets can be accessed through this device. These features are currently used in Iphones and IPad is compatible with it. So, the product is different but the features are developed on a common platform which can be used only on Apple products. It reminds me of the era when Apple tried to rule the market with Macs which could use only Apple’s applications and software. This strategy of Apple decades ago, did not last much because the competitors could sniff it and Microsoft and IBM reaped the benefits. Is it that this time the competitors are not aware or Apple has done its homework well enough. Apple has penetrated deep enough in most of the developed markets with its platform featured products IPhone, iTouch and IPod. Gradually they are moving back towards the PC in terms of features. WOW! Steve Jobs seems to implement his old strategy well enough to reach the levels of Microsoft with huge strategic advantages. Analysts say that IPad will not be able to replace the PC/Laptop market but you do not know what Apple is all for. It will not be surprising if Steve introduces an iPC which will run on the same platform used for iPod, iPhone and iPad.

Rogues

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what is manufacturing?

It is value addition to the various raw materials like ores, chemicals, wood etc. Mechanical and chemical operaions like segregation, reaction and size reduction are some of the important operaitions which add value to raw materials. This large scale value addition to the raw materials is termed as manufacturing.

why china is the leader in manufacturing?

Raw material+Utilities+Manpower+Technology = Finished Product

China has the largest and the cheapest manpower in the world. The cost of utilities are still the cheapest in this country. Another factor is automation, which leads to low manufacturing costs.Though this has not reached the levels of a developed country, the cheap manpower and other abundant natural resouces of China makes the overall manufacturing cheaper. China may not be the leader in technologies but world’s technology leaders like Intel outsource most of their manufacturing to this country. Taiwan Semiconductors of Taiwan, worlds largest independent semiconductor manufacturer, gets most of the production done in China. To remain competitive, the best and the largest companies of the world have knocked the doors of China for manufacturing. 50% of world cameras, 30% airconditioners and 25% of the washing machines are made in China. 70% of the metallic lighters sold in the world are made in the city of Wenzhou, China. No wonder China is the manufacturing hub of the world.

So What?

Most of the developed countries like US and UK are facing increased trade deficits of more than 5% after decades, thanks to the sustainable competitive advantage of Chinese manufacturing companies. Most of the companies have made it the rule of the thumb that manufacturing can be cheap only in china. This change in the strategies of outsourcing have increased the bargaining power of China as a whole. Now China has earned the power to negotiate with the most powerful economies of the world, not with weapons but with supply of goods. China has gained what weapons of US could not!

Rogues