Thursday, March 3, 2011

Innovation and Tactics Series: iPad2 and iPhone Nano?

Executive Summary: Sometimes, the simplest things can be lost in the daily tactical maze. There have been a slew of statistics demonstrating that Android phones have been eating Apple's lunch over growth in marketshare. If you were Apple, how would you react to these market developments? With its product pipeline and brand dexterity, does Apple really care? From the Desk of Beatles-Were-Wise-With-Live-And-Let-Die.

... More: Think a simple 2x2 matrix covering- market penetration via existing and new products, adjacent market development via new and existing products, and entirely new markets via new products.

The Statistic

Google’s Android becomes the world’s leading smart phone platform:

So, there have been rumors swirling about the iPhone nano:
1. Rumors of an iPhone Nano Continue: Smaller, Cheaper, No Memory?

2. Opportunities & Challenges Galore for Apple with 'iPhone Nano':

Could they be true? What should AAPL be doing?

The Structure Around The Idea

Here are some steps to aid the thinking process:
1. Current Product for an Existing Marketing- iPhones:
Apple smartly squeezed all it could through its relationship with ATT. Now, to seek increased market penetration, it partnered with Verizon. iPhones are still positioned as products that are a "cut above the rest", and continue to generate great margins for Apple.

The feature pipeline for the current iPhone product line is strong and Apple can expect to continue to dominate the market.

2. New Product for a New Market- iPads:
Apple at the netbook's lunch. No other product is near the customer's utility curve (read conjoint analysis). With the iPad2, Apple widens the gap with competitor products, and safeguards its margins. However, would we say that the Android's smartphone market is a "new" market for Apple? Perhaps it needs a "new" product for this "new" market?

3.  New Products for Existing Markets: 
Really? See point 1. Even better, Apple's strong brand and positioning with its existing product line is so much "gold" that it can practically launch what were traditionally new products under the guise of extensions of existing products.

4. Existing Products for New Markets:
Make no mistake, the iPhone nano is a *new* product in the product development sense. However, in terms of messaging, the iPhone nano is brilliant in leveraging the consumer connection and premium positioning with the "nano" and pit it against "fancy-scmancy" andriod phones.

The Bottom Line

Now, the questions that remain:
1. Internal Assessment: Do Apple's current financial position vis a vis its margins, and its future product margins trends, demand the iPhone nano launch?
2. Competitive Assessment: What does the iPhone Nano launch do its competitors? You can't expect them to shrivel up and disappear. :-)

Stay tooned.
What do you think?

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