AppleOpen: New Operating System for Apple
- Executive Summary
Apple is currently world’s second most valued company after Google (Farber). This rank, which was first only a few months ago, is attributed to a broad range of factors. These include brand equality, market value, innovative products and extensive international presence. The medium- and long-run prospects for Apple are not in company’s favor. This is attributed, largely, to Apple reliance on iPhone series as a major revenue generator (Tibken). There is, indeed, growing industry reports which highlight how Apple is apt to lose market leadership, if not leadership in innovation as well, should Apple continued to rely on iPhone series as company’s main revenue generator. Understandably, Apple needs to diversify her current product and service portfolio in order not only to maintain her leading innovation position but also to grow more sustainably. For current purposes, Apple is best recommended to develop a new product, namely AppleOpen.
AppleOpen is an open source operation system which is compatible with different desktop, portable and mobility devices. Needless to say, open source operations systems, platforms and applications are gaining not only mainstream foothold but is also becoming an increasingly important source of revenue (Kerschberg). If anything, AppleOpen is apt to offer numerous benefits for Apple. First, AppleOpen would provide Apple with an additional and viable revenue source. Second, AppleOpen is an up-and-coming force across different operating and browsing systems, platforms and applications. As such, Apple should capture market well reception to open source systems by investing in innovative products. Third, AppleOpen would offer a valuable opportunity to re-establish her position as a market leader in innovation. Indeed, Google appears to catch up with Apple – and, for that matter, bypassing different competitors – in almost about every product and service area including in particular mobility (Google Pixel) and operating systems (Andriod). Thus, AppleOpen is apt to be a game changer for Apple in her strategic game to regain market leadership in profits and innovation.
- Company and Product/Service Description
Apple offers a broad range of mobility and media products and cloud-based services. According to Apple’s own introduction of her products, services and focus, Apple “designs, manufactures and markets mobile communication and media devices and personal computers, and sells a variety of related software, services, accessories, networking solutions and third-party digital content and applications” (“Form 10-Q“). The company’s mobility products include, most notably, iPhone®. Computing devices include iPad® and Mac®. The operating systems include iOS, macOS® and iCloud®. Primarily, Apple sells her products via her retail stores, online stores, direct sales force and third-party cellular network carriers, wholesalers, retailers and value-added resellers (“Form 10-Q”).
Clearly, Apple is focused most primarily on mobility devices and portable computers. This focus, albeit understandable, remains short of achieving market leadership in profits over medium and long ranges. Accordingly, AppleOpen should, if anything, enhance Apple’s market positioning along innovation and profitability dimensions. As noted above, AppleOpen is apt to diversify company’s product and service portfolio in a way which would make growth more sustainable. Moreover, AppleOpen is, in fact, compatible to Apple’s product portfolio, particularly Apple’s iOS, macOS® and iCloud® offerings. More specifically, while Apple’s iOS, macOS® and iCloud® are commercial systems which are based on sales for profit, AppleOpen, which is an open system, is based on licensing for revenue. By offering an open source operating system, Apple would be able to diversify her product portfolio, revenue sources and models and, not least, her market positioning.
- Strategic Focus
If anything, AppleOpen offers numerous benefits for and meets diverse needs of customers. Notably, AppleOpen is a free operating system which would enhance loyalty to Apple. Indeed, just as search is for Google, AppleOpen is positioned to play a central role to capture more customers and enhance Apple’s brand equity. Moreover, current usability patterns show that users / consumers, particularly younger ones, are becoming more demanding and are relying more on collaborative and peer-to-peer applications and platforms, including open source operating systems. Accordingly, AppleOpen caters to a growing need of a sizeable customer base. Interestingly, open source systems offer another strategic advantage for Apple. Specifically, while conventional, commercial operating systems are code-closed, i.e. cannot be changed by ultimate users and are protected by intellectual property rights, open source operating systems offer numerous ways by which end users can modify an existing code to better customize operational features. From an R&D perspective, deferring innovation process to end consumers is not only cost-effective but, more importantly, optimizes product and/or service features as best fit usability patterns since modifications to a given open source operating system are made, after all, by actual, end users.
- Situation Analysis
Needless to emphasize, Apple operates in a highly competitive industry. This industry is characterized by a number of business and market features. Notably, ICT industry in general, and mobility devices industry in particular, is characterized by rapid developments in product and service features, emergence of new players and rapidly changing consumer perceptions of and loyalty to product and service offerings. These characteristics inform, of course, how Apple operates in current business ecosystem and under complex and dynamic market conditions. For instance, if Samsung, with company’s Galaxy series, is Apple’s main competitor, with her iPhone series, emergence of Google, with her Pixel phone, highlights how mobility industry is particularly competitive and is not even limited to mobility players. The rapidly changing consumption habits and patterns of consumers is another significant risk factor. More specifically, as big and small mobility players offer an increasingly diverse product and service options, consumers are becoming more and more empowered and are capable of shifting market power from one player to another very rapidly. (Consider, for example, recent “lukewarm” reception of iPhone 7.)
Accordingly, in order for Apple to be able to make a viable business case of AppleOpen, proper financial and non-financial investments should be made. Apple needs to invest in licensing agreements which should guarantee Apple generates adequate revenues. These should include careful selection of business partners, platforms and/or services which would enable Apple’s AppleOpen to be properly positioned for both end and business customers. Indeed, mush like Google’s Andriod, Apple’s proposed AppleOpen should be offered for free but should be bundled with proper services, platforms and devices (mobile and portable laptops). Needless to say, Andriod and Linux are main competing operating systems which are apt to bit against AppleOpen across different markets, platforms and devices. This would require proper identification of market gaps into which Apple could enter to create an adequate, initial niche market from which further expansion could possible. Notably, Apple could value differentiate AppleOpen from Andriod and Linux, by making exclusive licensing agreements with wireless mobile carriers in order to ensure AppleOpen is compatible with current mobile offerings. In so doing, Apple should not bundle AppleOpen with specific platforms and/or mobility devices. If anything, bundling a product / service to specific platforms and/or devices has proven to be particularly distasted, if not completely rejected, by consumers. Moreover, service bundling limits, after all, a given service’s ability to be available across different platforms, markets and devices.
- Marketing Program
AppleOpen would ideally be marketed and promoted based on a dual marketing strategy. That is, while AppleOpen would be marketed by Apple herself in specific, main markets, AppleOpen would be marketed by licensees and/or third-parties in different markets, particularly emerging ones. The rationale for a dual marketing strategy is that local competitors, particularly in emerging markets including China, enjoy a powerful market position. Accordingly, Apple would be strategically disadvantaged by marketing AppleOpen single-handedly, let alone involved costs. On another hand, by marketing AppleOpen in Apple’s main markets, i.e. North America and Europe, Apple would have not only of better business understanding of such markets but is also well positioned to place AppleOpen in more “favorable” distribution channels. Targeting younger generations would not be a novelty since Apple’s current end consumers mostly fall into younger segments. Moreover, while end consumers is only one important market segment Apple should continue to focus on to market AppleOpen, small business, another market segment which Apple also focuses on, should be targeted as well. Needless to say, small enterprises, particularly startups, have cost as a central challenge to fund different growing activities. By replacing legacy, commercial operating systems, AppleOpen is projected to be well positioned to assume a strong market positioning among small enterprises.
In order for Apple to introduce AppleOpen properly, an adequate marketing mix should be in place. This can be broken down as follows:
AppleOpen can be value differentiated from comparable offerings, e.g. Andriod, by being installable across different mobility and portable computing devices. Moreover, AppleOpen could be customizable based on consumer’s request. More specifically, while a generic edition would be rolled out globally for free, a customizable edition could be installed upon specific devices and/or platforms in order to be compatible with unique device and/or platform features. This would enable Apple to offer a product which is free while catering for different user needs.
As noted above, AppleOpen is a free operating system. However, one initial, proposed revenue-generation model is licensing. This model would require Apple to make favorable licensing agreements across different markets in order to generate adequate revenues.
AppleOpen should be, ideally, installable across as many mobility and portable laptop devices. To do so, Apple’s licensing agreements should, above anything else, guarantee that AppleOpen is not only compatible with different mobility and portable laptop devices but also, more importantly, capable of generating enough revenues. Thus, AppleOpen is best placed on devices and platforms of existing and/or potential business partners. Understandably, AppleOpen is apt to create a major conflict. Specially, by offering AppleOpen, Apple would in fact be biting against established mobility and operating system players, particularly Samsung and Google, respectively. Since Apple is, primarily, phone and portable laptop manufacturer, introducing AppleOpen would be, of course, a “splash” in current mobility scene. Thus, exclusive licensing agreements, coupled by customizable features in different markets, are apt to make AppleOpen’s introduction smoother and, over long run, enhance product’s market positioning.
Paradoxically, one most effective channel via which AppleOpen could be promoted is Google’s advertising program AdWords. Needless to say, Google is already one of Apple’s main competitors in different areas, including in operating systems. Understandably, AdWords would not be an optimum, or at least not a main, marketing and advertising channel for AppleOpen. Accordingly, AppleOpen could be promoted via Apple’s own proprietary marketing channels. These would include company’s corporate website, social media platforms (including, paradoxically, YouTube, owned by Google) and conventional marketing and promotion events. Indeed, while Apple is known historically to reveal her new devices in a much highlighted product launch event, marketing AppleOpen by conventional marketing and promotion means would not, in fact, be incompatible with company’s marketing and promotion strategy. If anything, Apple’s stores are, after all, conventional brick and mortar locations which market and promote, in addition to selling, different products and services by Apple. Thus, Apple’s central message in marketing and promoting AppleOpen in conventional marketing and promotion events would one which should emphasize usability and computability across different devices and platforms.