I. Business Summary Apple Inc.

(Apple), incorporated on January 3-1977, and is headquartered in Cupertino, California, along with its subsidiaries is engaged in designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and sells a range of related software, services, peripherals, networking solutions, and third-party digital content and applications. The Companys products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and Mac OS X operating systems, iCloud, and a range of accessory, service and support offerings. Apple sells its products worldwide through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and resellers. In addition, the Company sells a range of thirdparty iPhone, iPad, Mac and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and various other accessories and peripherals, through its online and retail stores. As of September 24, 2011, the company had 357 retail stores, including 245 stores in the United States and 112 stores internationally. The Company operates in five segments: Americas, Europe, Japan, AsiaPacific and Retail. The Americas segment includes both North and South America. The Europe segment includes European countries, as well as the Middle East and Africa. The Asia-Pacific segment includes Australia and Asia countries, other than Japan. The Retail segment operates Apple-owned retail stores worldwide.

As of 2011, Apple is the largest technology firm in the world, with annual revenues of more than $60 billion II. Business Strategy

The Company is committed to bringing the best personal computing, mobile communication and portable digital music and video experience to consumers, students, educators, businesses, and government agencies through its innovative hardware, software, peripherals, services, and Internet offerings. The Company's business strategy leverages its unique ability to design and develop its own operating system, hardware, application software, and services to provide its customers new products and solutions with superior ease-of-use, seamless integration, and innovative industrial design. The Company believes continual investment in research and development is critical to the development and enhancement of innovative products and technologies. In addition to evolving its personal computers and related solutions, the Company continues to capitalize on the convergence of the personal computer, mobile communications and digital consumer electronics by creating and refining innovations, such as iPhone, iPod and the iTunes Store.

Apples strategy shows that innovation is the most important for developing of company. Folowing the companys strategy, Apple is the creative king in over the world. Company is always at the top of the list are the masters of many genres of innovation. After that, we will analyze in the details Apples innovation strategy.

III. Apple innovates

1. What did Apple do?

Apple Inc. came into existence in 1976 when Steve Jobs and Steve Wozniak left their jobs to create an inexpensive, simple personal computer. So they came up with Apple I worth $666.66, and after that they never looked back and as they say the rest is history. After that Apple came up with innovative products like Apple II, MAC, IPOD, IPHONE and their latest forefront product IPAD.

Apple can be used as a synonym to innovation. Steve Jobs has lead Apple to be a pioneer of innovation and creativity for many years. It fosters innovation in products, processes, leadership, customer satisfaction and models for business. Apple has a Innovation Factory in which it harvests the talent, ideas and creativity from its people which can lead to profitable ventures. Apples culture and its eminent employees, partners and customers drive innovation and help the business to grow by grabbing every opportunity available.

Apple believe that is has to lead its customers rather than being led by them, as Apple tries to come up with such revolutionary products which the customers

cannot have knowledge about. Apple comes with only limited products in different lines as it can focus on its target market and tries to efficiently penetrate the chosen markets and maximize sales. Apple moreover creates such products which is difficult to duplicate, thereby helping them fight against the competitors. Apples motto of Think Different, is what separates it from its competition as they come up with forefront products. Apple has also been effective reorganizing inefficient business sectors by its markets and networks thereby proving innovation does not mean invention. Innovation can be carried out in products, service, processes, systems, etc. The 4Ps of innovation are Process, Product, Paradigm and Position. Apple has been effective in the implementation of these 4Ps. Process innovation has been made by Apple when it made available music to be purchased online through the App Store on the itunes, and started online shopping of the products. Innovation made in products by Apple have been novel. They have come up with products like Macbook, Ipod, Iphones, feather touch technology, slim laptops, high battery life in their products. Apples paradigm has changed from being computer manufacturers to Creator of Designer products. Moreover position of Apple in the minds of the consumer has changed from being just another computer manufacturing company to being an Innovative and Creative company, and their products are not only bought for the ingenuity and use but also as a fashion accessory. Apple has followed push strategy for marketing their products and their innovation has been incremental and radical after analyzing the inside and outside environments. Apple has effective research and development departments probably the best in the world. It analyzes information from competitors, suppliers and customers to help them innovate. It tries to forecast future demands and creates products to create demand automatically. Apple had high absorptive capacity has it is a highly learned organization.

Innovation process in Apple can be linked to the Simplified Model of the Innovation process which consists of Searching opportunities for innovation then selecting the best option, Implementing the option and capturing the benefits. Proper and effective networks and linkages have to be made to make it an innovative organization and then a learning organization. Apple is definitely a learning organization and carries out proactive and open innovation. Apple innovates through: Apples innovation in Products To launch the iPod, says innovation consultant Larry Keeley of Doblin Inc., Apple used no fewer than seven types of innovation. They included networking (a novel agreement among music companies to sell their songs online), business model (songs sold for a buck each online), and branding (how cool are those white ear buds and wires?). Consumers love the ease and feel of the iPod, but it is the simplicity of the iTunes software platform that turned a great MP3 player into a revenue-gushing phenomenon. Apple's innovation in the way to use its product Apple created some Macs, iPods, iPhones and iPads. And these devices much like their counterparts (PCs, MP3 players, smartphones, tablets) changed the lifestyle of the users using them. These are some of the ideas that Apple has in mind and that it has already patented.

iTreadmill

Apple has recently patented the concept of a sports equipment apparatus with smart components that can interface with iOS devices. The patent specifies the circuits, method and apparatus that allow sports equipment to write data to a media player. It cites cardio equipment specifically, and provides diagrams of how the interface would work with a treadmill.

iBike

Think about a Nike+ running system on two wheels. The bike will not only show the relevant data from you (heart rate, pulse) and your bike (speed, distance) on connected iPod or iPhone but also communicate with the group biking with you.

 Solar Powered iPhone

In theory, Apple has already integrated photocells into the touch screens. This means your future iPods, iPhones or iPads may power themselves by simply soaking up some sun.

iKey

Your iPhone has already replaced your compact camera, MP3 player and handheld gaming console. Chances are it could now replace your keys as well. Apple has patented the idea that your iPhone could unlock your car and home with a proximity-based PIN code system.

 Magnetic Lens

In this patent, Apple has designed a system that can enhance iPhone/iPod camera functionality by attaching to it a magnetic zoom or macro lens arrangement.

Macbooks with built-in projectors

Just think about carrying a portable projector with your laptop all the time and you would at once realize how big an impact it could make. Apples innovation in culture Recently, Apple's market cap surpassed Microsoft's (MSFT) to make Apple the most valuable technology company in the world. Yet as Jobs said at All Things D,

Apple was near the brink of death only 10 years ago. It had $150 million in the bank, and its stock was trading at a few bucks a share. Jobs could have focused on near-term fixes. Instead, he focused on building a highperformance culture by doing three things well. 1. He refocused the strategy to be about one thing. That meant he killed off even good things. I led server channel management at Apple when Jobs returned to the company in 1997, and I was there when he made the decision to shut down big portions of revenue-generating businesses (including my division) because they didn't fit with his vision for the company. Some people thought he was crazy. But he was being extremely clear, and in doing so, he "MurderBoarded"eliminated many options to get one cohesive strategyhis way to greatness. 2. He eliminated passive aggressiveness and encouraged debate when new ideas were forming. When you are thinking about difficult problems together with exceptionally bright people, there are going to be disagreements. But it is through the tension of that creative conflict that new ideas get born, new angles get explored, and risks get mitigated. Thinking together means you deal with conflict up front, rather than have to counter passive aggressiveness on the back end. 3. He set up a cross-disciplinary view of how the company would succeed. This holistic vision means there is cohesion throughout the company, from concept to product to sales. For example, the retail strategy could have been a separate or disparate part of the whole, but Apple has made its retail strategy part and parcel of its overall promise of ease of use. None of these three things is easy to do. It would be easy to count any revenue as good revenue, to allow a few people to stay even though they were rotting the culture, or to allow the different parts of a business to act in their silos. Apple's leadership doesn't accept easy. Executives believe that when the company wins, everyone wins. That belief drives the necessary behavior and tradeoffs necessary to

achieve success. That's why Jobs has earned the respect of his peers. He has recreated a culture in which the company acts like all the best parts of a startup. Apples innovation culture is closely coupled with that of its leadership: Do what you love Put a dent in the universe Kick-start your brain Sell dreams, not products. Say no to 1,000 things. Create insanely different experiences. Master the message 2. What drives Innovation in Apple? Apple generates ideas, manage innovation and then effectively diffuse the innovation. They generate ideas or search for opportunities by carrying out effective research and development, Apple has an innovation factory which carries out all experiments using the talented pool of people they have. It follows competition and tries to stay one step ahead of them. Effective linkages and networking is very important as valid information can be gained from them, so relations should be maintained with suppliers, dealers and other partners. Apple believes in learning and working in teams. Apples innovation is driven by external uncertainty and competition. Apple is also very effective in finding new market opportunities and reorganizing areas which were inefficient. It fills the gaps existing in the markets for example the gap of a product which was needed to fill the gap between a computer and a phone, so Apple came up with IPAD.

Authority is delegated by Apple so that the innovative people can focus on their creative work rather than sorting out other problems. Apples credibility is very high, it is a trustworthy company and trust breeds innovation. Criticism should be accepted willingly by the company as it helps out shaping good ideas into great ones. Looking outside your organization is very important as in the inside everything might be all right but when you compare it to the outside it might not be. Moreover every time a company brings out new ideas or products it need not be from using new technologies. Constraints of resources also breeds innovation. To implement the innovative strategies requires communication of the idea to the company and to the outside world. The information made available has to be managed and projected effectively. Optimum use of Apples resources has to be made at the right time and place and proper project planning has to be carried out. Effective marketing activities has to be carried out to position the new idea or product in the minds of the customer. Apple is way ahead in this field in comparison to the other competition it develops such a demand for its products even before its production, for instance their pre-booking of the new product IPAD even months before launch of the product, this proves Apple to be the pioneer of innovation. Risks for the projects have to be assessed and managed for the proper diffusion of the innovative idea and project. 3. What are the strategic enablers? Enablers of innovation capability in Apple are its Organizational Culture, People Management, Innovation Strategy and its Innovation Competencies. Apple develops an innovative culture right from the top of the management. Innovation has to be managed properly by the collaboration, leadership and the culture of an organization. Apples culture of innovative thinking also fosters the innovation process. Moreover leadership of Steve had been empowering to the

company, he has inspired many new ideas and helped sharing the visions of the company. Apples functioning has been smooth and open, without any bureaucracy. Apple has been able to develop models of change and innovation through systems theory and used focused groups and experimentation. Apples motto Think Different promotes all working people in the organization to be innovative. Apple recognizes, protects and encourages all innovators in the organization. Innovators in the company are also rewarded either in monetary terms or recognition based. Apple has invested much resources in innovation because innovation requires much funding and lack of it can hinder creativity. Apple promotes diversity in their workforce as people from different background perceive things differently, so new interpretations and ideas can be created if diverse thinking is involved. Through benchmarking you can learn from outside and make changes within the organization. Innovation is internalized in all people working for Apple as it is everyones role. Apple regularly evaluates all on going projects, as analyzing current activities is essential to ensure proper work is being done, double loop learning should be followed. The employees who are in direct contact with the customers and the managers are most likely to initiate innovation in Apple. So they should be managed properly as they area also the ones who are the most resistant to change. Views of all stake holders should be considered as they are also a source of innovation. The employees of Apple are skilled so they are able to handle the risk, it also tries to learn from their mistakes in the fast. Financial resources available to Apple also helps in funding the innovation of the company. Best human resource is available to Apple which keeps them a step ahead of the rest, as there is no substitute for knowledge and talent, unless Apple innovates and tries to comes up with an alternative. Jokes apart, the implementation of the innovation is very important as proper testing of its working and effectiveness has to be done then only can be a

successful endeavor. The innovation should be exploited well to get the most profit possible by carrying out the support activities like production, selling, ,marketing and after sales services efficiently. 4. What are the barriers to Innovation? Apple faces a few hurdles which curtails their innovation capability. Apple always launches any new idea quite early and gives a date for the product launch in the future, it starts it marketing activity early. So Apple has to be efficient to make the deadline, this hinders any further innovative changes that could have been brought to the product as its focus shifts on to production. Moreover under delivery pressure products are made costly, rather than cost effective. Administrative pressure also increases as the products have to meet the launch date, so they stop thinking about things differently. Under this daily pressure to stick to time horizons and budgets, innovation leaves to be of prime importance until the goal is met. Apple sometimes tries to avoid risks , but low risk leads to low rewards, so Apple must take some calculated risks if it wants high rewards, Apple can do so. Apples culture and structure of the organization can sometimes constraint innovative thinking even if the technology is available, so culture needs to be shared by all and communication should be open. Public can sometimes doubt the effectiveness of some of the Apple products and expects a lot. This expectations can burden Apple a lot, so constant efforts have to be made to keep up the innovation. Apple sometimes tries to protect its reputed identity to increase their credibility and sustain itself, so it creates limits and gives responsibilities and lays down rules but innovation crosses the limits set by the organization. So instead of limiting its network, it should broaden it and manage all stakeholders effectively. Apple sometimes calculates the value of innovation in quantifiable terms like market share and profits and forgets things like reputation, leadership, talent, etc. These things

neglected sparingly make the value of the firm so it should change the way it values innovation. Apple lead the customers rather than following them, this can hurt their company in the long run. So customers should be given utmost importance. Apple may have diverse workforce but overtime their thinking will start matching this may hurt the innovativeness of the company. Apple tries to make all its products look quite similar, this stops the creativity of the design innovation. Apple itself is its biggest enemy so it manage innovation effectively. Negativism and giving up can hurt Apples innovation capability. Complexity should also be avoided, managed or used effectively. Innovators come up with many ideas but which is the most appropriate one is hard to decide Apple has to keep that in mind. Microsoft were not going to work on the internet idea until now but they did this made our life so much easier. Apples market research is limited and this can hinder their organization as customer is the ruler and not Apple and importance should be given to their needs. Apple has also faced some barriers to Innovation when it has outsources some parts to other companies and they have come up short, or some suppliers did not provide in time. Apple relies on logic a lot but innovation is not derived by logic and some assumptions are also made which may be incorrect. 5. What does Apple do differently? If you read the various interviews that Jobs and Jonathan Ive (Senior Vice President, Industrial Design at Apple) have given over the last few years, youll find a few specific trends: (1). Apple does not do market research. This is straight from Jobs mouth: We do no market research. They scoff at the notion of target markets, and they dont conduct focus groups. Why? Because everything Apple designs is based on Jobs and his teams perceptions of what they think is cool. He elaborates:

Its not about pop culture, and its not about fooling people, and its not about convincing people that they want something they dont. We figure out what we want. And I think were pretty good at having the right discipline to think through whether a lot of other people are going to want it, too. Thats what we get paid to do. (2). Apple has a very small team who designs their major products. Look at Ive and his team of a dozen to 20 designers who are the brains behind the genius products that Apple has delivered to the market since the iMac back in1998. New product development is not farmed out across the organization, but instead is creatively driven by this select group of world-class designers. Jobs himself has delegated away many of his day-to-day operational responsibilities to enable himself to focus half of his week on the high- and very low-level development efforts for specific products. (3). Apple owns their entire system. They are completely independent of reliance on anyone else to provide inputs to the design and development of their products. They own the OS, they own the software, and they own the hardware. No other consumer electronics organization can easily do what Apple does because they own all of the technology and control the intimate interactions that ultimately become the total user experience. There is no other way to ensure such a seamless experiencea single executive calls the final shots for every single component. (4). Apple focuses on a select group of products. Apple acts like a small boutique and develops beautiful, artistic products in a manner that makes it very difficult to scale up to broad and extensive product lines. Part of this is due to the level of attention to detail provided by their small teams of designers and engineers. To think that a multi-billion dollar company only has 30 major products is astounding, because their neighbors at that level of revenues have thousands of products in hundreds of different SKUs.

As Jobs explains, this is the focus that enables them to bring such an extensive level of attention to excellence. But it is also an inherently risky enterprise, because they are limited in what new product areas they can invest in if one fails. (5). Apple has a maniacal focus on perfection. They say Jobs had the marble for the floor at the New York Apple store shipped to California first so he could examine the veins. He also complained about the chamfer radius on the plastic case of an early prototype of the Macintosh. You had better believe, given the 10 to 3 to 1 approach for design, that every shadow, every pixel is scrutinized. Its in their DNA. They are willing to spend the money to make sure everything is perfect, because that is their mission. 6. What can other companies learn from Californias master of innovation? (1). Network innovation: Combine outside innovation with own ideas The first is that innovation can come from without as well as within. Apple is assumed to lock away its inventors in the tradition of Thomas Edison or Bell Laboratories. In fact, its real skill lies in stitching together its own ideas with technologies from outside and then wrapping the end product in elegant software and stylish design. The idea for the iPod was originally thought up by an external consultant hired to run the project. This approach is known as network innovation, which involves cultivating contact with startups and academic researches and constantly scouting for new ideas. (2). Design products around the needs of the user instead of the technology Too many technology firms think that clever inventions are enough to sell their product, resulting in gizmos for engineers by engineers. Apple combines clever technology with simplicity and ease of use. Apple is not alone in this field. Philips is sharing a similar approach. Niklas Zennstrom and Janus Friis, our European Steve Jobs, did the same with Skype and hope to do the same with internet television (3). Stay hungry, stay foolish

Listening to customers is important, but sometimes you have to know better. Sometimes you have to ignore what the market says it wants today. The iPod was ridiculed when launched in 2001 such as the Nintendo Wii, the most successful game console of the last year. (4). Fail and try again The Macintosh was born from the wreckage of the Lisa, an earlier product that flopped. The iPhone is a response to the failure of the Apple/Motorola music phone. Apple has learnt from its mistakes and tried again. The wider lesson is not to stigmatize failure but to tolerate it and learn from it. The rigid bankruptcy laws in Europe are one the of reasons Europe has failed to create an European Silicon Valley. IV. Achievemant of Apple iMac was invented in the year of 1998. With the innovative leadership of Jobs, Apple launched the iMac in 1998. Impressive sales results make a great profit to Apple. This computer was an attractive Bondi Blue (named after the famous Bondi Beach in Australia), abandoning the traditional floppy disk and letting the public be familiar with the USB iPod was launched in the year of 2001. Apple launched the first iPod music player in 2001. The advent of iPod opened the curtain of digital music revolution. While it is not the first portable MP3 music player, but iPod is the first most successful player. Mac OSX debut in the year of 2001. In the year of 2001, Jobs announced that Apple launched the new Unix-based operating system - Mac OSX, and ultimately kept the commitment that Apple made port.

when buying the NeXT. Mac OS X uses the new interface called "Aqua", compatible with earlier Mac OS 9 operating system. Early Mac OSX version had bugs and compatibility problems. In the following year, Apple optimized it through a series of upgrade. Now Apple's Mac is installed Mac OSX, iPhone, iPod touch and iPad.

MacBook was launched in the year of 2006. MacBook won a lot of interests from all kinds of consumers, including ordinary people, professionals, students and creative people obsessed with the product. Even though many other inexpensive computers were available on the market, many consumers still have a soft spot on the MacBook. From then on, the gap between Apple computers and other computers widened a lot. According to market research firm NPDGroup data, MacBook was the best-selling notebook on the US market. iPhone debut in the year of 2007. With the invention of smart phone iPhone in 2007, Apple set off a revolution in the mobile phone market. After a year, Apple opened application store - App Store, which allows users to download the third party application to add iPhone functions. Phone and App Store both eventually made Apple become the leader of mobile phone revolution.

Safari for Windows launched in the year of 2007 Mid-way through 2007, the technology company gave Windows users a gift: a beta version of Safari for Windows. Within two days of its release, more than one million users downloaded the free browser. iPad was listed in the year of 2010. At the same time when Apple launched iPad, Apple also created a new electronic product category, that is Tablet PC. It has a 9.7 inches (about 25 cm) touch screen, using the same operating system with the iPhone. Apple iPad weekly sales had reached an alarming 0.2 million. iCloud store launched in the year of 2011 iCloud Storage seamlessly stores all documents created using iCloud Storage APIs, and automatically pushes them to all your devices. When you change a document on any device, iCloud automatically pushes the changes to all your devices. In 20111, Apple increase revenue more than 1,200% since 2000, increase net profit more than 3,000% since 2000 and increase market cap more than thirty five times to over $300 billion