Steve Jobs is a magician. His best innovation magic is the iPhone. Surprisingly, despite creating a huge buzz at the launching, the willingness to pay for this magical product starts drifting downward subsequently. Instead of keep selling the same version, why does Apple keep releasing successive better versions? Such reality raises a question, is innovation magic or a seasonal crop? It underscores the importance of innovation management. In contrary to a sudden spark in creative minds, the market economy demands the release of successive better versions. In a competitive market, irrespective of the greatness of the idea and legal barrier to intellectual properties, innovation keeps suffering from the erosion of the willingness to pay. To counter it, innovators are required to keep releasing successive better versions. Even Steve Jobs’ magical iPhone could not avoid facing this reality. Hence, we are observing the evolution of iPhone as a seasonal crop.
Sustaining innovation need made evolution of iPhone as seasonal crop
Once an innovative product is released in the market, the product starts facing eight major variables or factors. These factors belong to two major categories. The first four factors belong to the competition force, and the remaining four form the externality effect. These variables will be affecting the willingness to pay (WtoP) of the innovation. Hence, they make the WtoP function of time. The profit-making opportunity invariably encourages some competitors to release an exact replica, clone. Invariably, the clones are priced far lower as the replicator does not face R&D cost.
Besides, some of them that have similar products will imitate certain features to make them closer to the newly released innovation. They may also imitate the whole products. Subsequently, some imitators will succeed in innovating certain features. The fourth force in the competition category is the response with products having component level substitution effect. Invariably, the effect of competition unfolding due to these four responses keeps driving the willingness to pay of the innovation downward. Hence, it demands a response to sustain innovation in the market.
Unlike competition force, often externality effect has a positive effect on the willingness to pay. One of the externality factors is complementary goods and services from the 3rd party. The next one is about the reduction of information and the experience gap. The third one is the network effect. And needed infrastructures and standards form the last one. These four factors combinedly have a positive impact on the WtoP of the released innovation.
Resultant force keeps drifting willingness to pay downward– a key reason for making the evolution of iPhone as a seasonal crop
However, the resultant effect of these two forces, created by eight variables or factors, keep drifting the WtoP of the innovation downward. As a result, sales start falling. For example, within just one year, the sales of iPhone 1 came down to zero. To sustain sales, there is a need to push up the willingness to pay up. Thus, innovators are required to release better versions, preferably at the same or lower cost. To sustain the sales of iPhone in the midst of this reality, Apple has made the evolution of the iPhone as a seasonal crop.
iPhone released on June 29, 2007
To enter the smartphone market, Apple faced the challenge of finding its place. Nokia led the crowded market. As opposed to replicating, imitating, and incrementally innovating, Apple pursued the component level substitution strategy. Hence, it substituted keyboard and stylus with the multitouch based user interface. Customers expressed awe upon touching and feeling this unique user interface. It led to the sale of 300,000 units on the first weekend. Consequently, the willingness to pay of incumbent smartphones produced by Nokia, Research in Motion, and others started to experience sharp fall. To take advantage of the externality effect, Apple also introduced 3rd party apps download option from its app store. It kept improving perceived value with the subsequent releases of apps from 3rd parties. Despite witnessing huge awe, iPhone’s WtoP kept falling, turning the sale volume to almost zero by the end of one year. By this time, Samsung started imitating iPhone features in their product line with android OS. In fact, instead of showing one-time magic, Apple started a long journey for driving the evolution of iPhone as a seasonal crop.
To arrest the plummeting sale of the first release, Apple introduced the successive better version-iPhone 3G. Among the new features, the most powerful one was 3G mobile internet connectivity. In the iPhone 3GS model, Apple upgraded storage from 16GB to 32 GB. Apart from upgrading the camera to 3MP, Apple also added video recording. These three features significantly improved the perceived value, leading to even switching the previous version by some customers. The addition of video recording feature also caused the substitution effect on the portable video camera market. Consequentially, Apple recorded 1 M units of sale of iPhone 3G and also another 1 M units of iPhone 3GS during the first weekend. It was remarkable performance indeed with the given fact that sale of previous model virtually came down to zero before the launching of iPhone 3G.
Like the past, upon showing a spike, iPhone 3G also started suffering from the erosion of sales. In the meantime, competition from Samsung started to gain momentum, mostly through imitation though. To regain the sale, Apple released iPhone 4 and 4S. They included new features like a front-facing camera and Siri in 4S.
In fact, both these two features gave a big push to the WtoP of the iPhone. Particularly, the front-facing camera created a new culture among smartphone users—selfie. However, Sony Ericsson introduced a front-facing camera, in Z1010 mobile phone back in late 2003, for the purpose of selfies and video calls. It’s widely believed that Siri feature contributed to four million units of the iPhone 4S sale in its first week. Apple also improved existing features. It increased the resolution of the screen, making it a retina display. Apple also sharply enhanced image quality by upgrading image sensor to 5 MP in iPhone 4 and 8 MP in iPhone 4S. The upgrading of video recording to 1080p further dented the video camera market. The combined effect of feature addition and enhancement led to sales of 1.7 M and 4 M units of iPhone 4 and 4S respectively on the first weekend of their releases respectively.
Screen size enhancement from 3.5 inches to 4 inches contributed to pushing WtoP up. Some new features were Touch ID, dual flash, and slow-motion video. The inclusion of M7 motion coprocessor opened a new realm of possibilities and also helped save battery life. The upgrading of Internet connectivity from 3G to LTE connectivity increased the perceived value of iPhone 5. Release of iPhone 5, 5S, and 5C boosted up sale recording sales of 5 M, 9 M, and 9 M units of these models respectively on the first weekend of their releases.
Subsequently, Apple released iPhone 6 & 6 plus in 2015 and 6s & 6s plus in 2016. iPhone 6 saw a big jump in display size. Furthermore, the camera saw a big lip from 8MP in iPhone 6 to 12 MP in Phone 6s. The advancement of these two features made a significant contribution to push up sales. Consequentially, Apple succeeded selling 10 M and 13 M units of iPhone 6 and iPhone 6s on the first weekend of their releases.
As explained before, to sustain in the market, Apple kept releasing successive better versions. In 2016, Apple released the iPhone 7 and 7 plus. Instead of adding a new feature, Apple removed one of the existing features. In replacement of headphone jack, Apple released AirPods. Apart from EarPods, Apple offered a new dual camera in 7 plus model. Apple also introduced wireless AirPods. Moreover, software updates let iPhone 7 Plus users take impressive photos using Depth of Field. By the way, iPhone 7 also came in shiny Jet Black color.
iPhone 8 and 8 Plus came up with wireless charging with the glass cover on the iPhone’s back. Upgraded tools for editing and filtering made images impressive indeed. Users also got improved viewing experience due to the true-tone display.
iPhone X, Xs & Xs Max
For improving the camera feature, Apple added an extra front-facing camera in iPhone X. Among the major improvement, the display was an edge to edge. It looked great with the Super Retina HD display. Apart from it, the underlying A12 bionic chip increased the processing power while decreasing the battery drain.
iPhone 11, 11 pro & 11 pro max
In 2019, iPhone 11 showed up with a 6.1-inch Liquid Retina display, in six crisp colors. Apple added a second camera on the back of the 11, both 12 MP. They were powered with wide and ultra-wide lenses. Contrary to offering increasingly bigger display, the iPhone 11 Pro offered smaller phones with a 5.8 inch top-of-the-line display. As opposed to two, three 12 MP HDR camera lenses offered wide, ultra-wide, and telephoto lenses. However, 11 Pro Max is Apple’s largest and most expensive phone.
Apple’s Strategy to sustain iPhone in the market made evolution of iPhone as a seasonal crop
Apple knew that the magical iPhone would supper from the erosion of the sale due to competition. To counter it, Apple leveraged the externality effect and offering of successive better versions. Subsequently, it kept adding new features and improving existing ones to fend off competition. In adding new features, it targeted the camera subsystem. The addition of Siri also played very positive role. For taking advantage of improving existing features, it focused on display. It also kept improving storage, battery life, core processors, connectivity, and also iOS. In retrospect, Apple’s success did not fall all of a sudden from the unveiling of the iPhone in 2007–due to the magical idea of Steve Jobs. Instead, Apple has been distilling success from the smart execution of a sustaining innovation strategy, which has made the iPhone’s evolution a seasonal crop.
In the absence of the release of the subsequent better version, iPhone’s history could have been quite different. Such reality demands focus on managing innovation to profit from innovative ideas. Most importantly, to make a great creative spark to succeed, there is a need for a flow of ideas for releasing successive better versions.