Apple’s Strategic Technology 1

Running header: APPLE’S STRATEGIC TECHNOLOGY PLAN MUSIC INDUSTRY

Apple’s Strategic Technology Plan Supporting the Music Industry

Jocelyn Nicholson

Managing The Technology Enterprise - ITMGMT 540

Professor: Tony Wolf

City University of Seattle

December 5, 2010

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Apple’s Strategic Technology Plan Supporting the Music Industry

“In South Korea, it's not just iPods but phones that let you instantly choose and listen to new

music while walking around” (Lesk, March/April, 2007). Innovations in technology have

completely changed the sound of music, music distribution, listener acquisitions, how music is

heard and shared (Karr, December 3, 2010).

The 21st century has developed the preferred method of listening to music through digital

on line access capabilities on the World Wide Web. Apple products (i.e. iPhone) fall in the

category of preferred methods and the company is well known for being a leader in the music

revolution. According to Lesk (March/April, 2007), “Mobile phone sales in Korea grew six times

between 2004 and 2005, and first half of 2006 saw sales of 39.2 billion won—more than 2005's

entire revenue of 33.7 billion won”.

Music, as the old saying goes, makes the world go round. In other words, music can be

found in all cultures globally. The variety of music whether Blues, Jazz, R&B, Classical, Opera,

Pop, and Country will be experienced by all cultures to some extent. The advancement of

technology (i.e. digitization, virtualization, and personal creations) has expanded the field of

music drastically and globally.

Critical to technology advancement is the understanding of varying cultures. Regardless

to one’s personal beliefs, cultures, background and heritage, we are all one human being. Thus

common comparisons and differentials will be found within the music industry.

The intent of this paper is to explain Apple Incorporation’s strategic initiatives in

development of music ventures. The cell phone (i.e. Apple’s iPhone 4) and music will be focused

on to outline processes to follow in developing a strategic plan. Imagine what it would be like to

have technology advancement (i.e. features of Apple’s iPhone, iPad 4G wireless and live

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concerts) capabilities anywhere, anyplace, anytime. A further reach, picture the ability to access

live musical concerts, sports packages and a boxing match from one’s cell phone. Lesk

(March/April 2007) points out “record sales in 2004 were roughly $12 billion, whereas concert

ticket sales were roughly $2 billion”.

The television, DVD, and CD players would soon become obsolete. Furthermore, the

ability to reduced cost to support increase storage and increased computing power could be the

new wave of the future. Musical technology functions will be researched and analyzed. Apple’s

business growth could expand further, with integration of live musical concerts and iPhone and

wireless innovative solutions. Let’s start with the features of the iPhone 4, currently one of

Apple’s latest technology releases.

Features of iPhone 4

Facetime

The idea one can actually video call to someone anytime, anywhere, anyplace in the world is

absolutely amazing. The ability to video chat on the Apple iPhone has made this dream come

true compared to the older conventional way of video conferencing. For example, imagine

accessing a music concert and video chatting with friends through the use of Apple’s iPhone 4.

The ability to purchase a concert ticket by scanning a barcode with the iPhone and having online

live access could be the next innovative technology advancement, yet to be discovered.

According to Apple (2010),

The human race has dreamed of video calling for decades. iPhone 4 makes it a reality.

With just a tap, one can wave hello to ones kids, share a smile from across the globe, or

watch ones best friend laugh at ones stories — iPhone 4 to iPhone 4 or to the new iPod

touch over Wi-Fi. And it works right out of the box.

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Retina Display

The Retina display on iPhone 4 is the sharpest, most vibrant, highest-resolution phone

screen ever, with four times the pixel count of previous iPhone models. In fact, the pixel

density is so high that the human eye is unable to distinguish individual pixels. The

feature makes text amazingly crisp and images stunningly sharp.

Multitasking

iPhone 4 introduces a whole new way of multitasking. Now you can run your favorite

third-party apps — and switch between them instantly — without slowing down the

performance of the foreground app or draining the battery unnecessarily. This smarter

approach to multitasking is available only in iOS 4.

HD Video Recording and Editing

Shoot your own movies in high definition. Capture impressive video even in low-light

settings, thanks to the advanced backside illumination sensor and built-in LED light.

Then edit and create your own mini-masterpiece right on iPhone 4 using the new iMovie

app — with Apple-designed themes, titles, and transitions. It’s available on the App Store

for $4.99.

5 MegaPixel Camera with LED Flash

Take beautiful, detailed photos with the new 5-megapixel camera with built-in LED

flash. The advanced backside illumination sensor captures great pictures even in low

light. And the new front-facing camera makes it easy to take self-portraits.

Ready for Business

Businesses around the world are choosing iPhone for its enterprise-ready features and

powerful security. iOS 4 works with Microsoft Exchange and standards-based servers to

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deliver over-the-air push email, calendar, and contacts. iOS 4 protects your data by

encrypting information in three separate areas: in transmission, at rest on the device, and

when backed up to iTunes. You can securely access private corporate networks through

industry-standard VPN protocols. And companies can easily deploy iPhone across an

enterprise using configuration profiles.

Mission Statement

According to Investor Relations FAQ (2010), Apple’s mission statement is comprised of

the following information:

Apple designs Macs, the best personal computers in the world, along with OS X, iLife,

iWork, and professional software. Apple leads the digital music revolution with its iPods

and iTunes online store. Apple reinvented the mobile phone with its revolutionary iPhone

and App Store, and has recently introduced its magical iPad which is defining the future

of mobile media and computing devices.

Vision Statement

Apple’s newest vision is to reach a global society with products capturing the music

industry and empowering the customer base. Attain productive excellence and quality with

insourcing support and outsourcing of low product development. One will capture a large

percentage growth rate of the market by accessing live musical concerts online, broadening the

market range and continuing technology advancements for the iPhone.

Strategic Perspectives

A strategic planning workshop will be used to focus on the strategic themes for

resolution. The Information Technology (IT) Governance Board will sponsor, support and

provide funding for the latest strategic plan phases and deployment. The process of matching

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strategic themes to available resource will be carried out by designated employees and core

planning teams. Software Engineering Institute (SEI) assessments will address current concerns

and problems for resolution by identifying, documenting, tracking and measuring results.

Strategic Themes and Results

Apple must be able to identify effective strategic themes and results to maintain the

company mission and vision statements. The following strategic themes and results will carry

Apple into a newer generation of technology advancements. Apple’s strategic themes will focus

in on operational excellence, outstanding customer satisfaction, empowering working

environment and strategic partnerships (Rohm, H., 2008).

Strategic Objectives

In developing a strategic plan the creation of processes to follow is a crucial approach to

success. According to Hamm (2007), making innovation an essential part of a strategy can be

essential to attain increased revenue gains. In the next 3 – 5 years, Apple will focus on the

following list of objectives explaining how to make innovation part of the strategic plan:

Picking the right type of innovation for the company

Each company needs to figure out what innovations (i.e. technology, engineering,

business processes, software services) is best for the business. The choice of technology

advancement will be the approach taken to move Apple products further into the innovative

developments of the music industry. For example, imagine accessing a live musical play through

the use of Apple’s iPhone 4.

Strive for breakthroughs

The process of incremental innovations produces a steady flow to keeps Apple’s

organizations energized. An example, hiring a consulting company to work with employees,

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during brainstorming exercises (onsite and offsite), to identify strategic ideas. The process of

documenting each idea and establishing action plans is one approach to maintaining incremental

releases throughout the year.

Consultants can work with employees encouraging thinking out of the box creativity and

innovative. Teaming exercises are great techniques to energize new ideas for expanded market

reach and development. In addition, consultants are good at “conducting best practice

benchmarking surveys and publishing the results” (Hamm, 2007, pg. 161).

Invest like a venture capitalist

By investing in small groups, offering special incentives (i.e. stock, stock options, and

cash awards) and giving one the permission to fail will be another approach to reach newer

musical technology advancements. Establishing a website for company employees to gain insight

on the various incentive programs would be a great way to keep innovative ideas flowing within

the company. Ensuring special incentive processes, policies and procedures are readily available

is the key to maintaining a successful approach.

Make everybody responsible for innovation

Techniques such as Six Sigma and Information Technology Infrastructure Library

Methodology (ITIL)/Lean disciples will be used to initiate creative ideas and improve

operational excellence. Each employee will have innovation listed as a goal on one’s annual

performance evaluation plan. In addition, innovative goals will be listed on senior manager’s

business performance scorecard as a way to keep all involved.

Give innovators room to think

An established research and development (R&D) lab will be encouraged for funding and

full time employees will be hired to support innovative grassroots ideas. The process of allowing

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company employees to focus primarily on grassroots ideas, in a safe, quiet environment is

important. The approach will give one the satisfaction of acknowledgment and thinking out of

the box achievements towards innovative solutions.

Spread the (innovation) wealth

The process of feeding new creative innovation directly into core businesses and giving

rise to new ones will be mandated. Example, the ideas and technologies that are being developed

by R&D labs will be distributed throughout the organization. Surveys and assessments will be

used to gain feedback on R&D developed ideas, to gain suggested improvements and or

innovative ideas from all employees in the working environment.

Augment R&D and Partnering and Development (P&D)

The process of bring new efficient products to market faster will be relied on by others.

Example, Apple moving client products (i.e. outsourced product development, open source

software) from concept to the marketplace will be an approach. Lower fees up front for a chance

to get a share of the profit once a product goes to market will be the approach to increase revenue

and market growth.

Transform your company and your customers

Sharing company secrets and capabilities with others instead of hoarding and holding

back will be a new process agreement. The reinventing of the Apple Inc. and helping ones

customers (i.e. music industry) to do the same is a new way of doing business. For example, UPS

reinvented the company from delivering packages anywhere in the world to synchronizing global

supply chains for companies large and small (Friedman, 2007, pg. 167).

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Technology Priority Process

The approach to prioritizing IT initiatives (i.e. outsourcing, in-sourcing, and off-shoring)

will be accomplished with a IT governing board consisting of management team members,

sponsors, senior executives, and CIO’s. The process for prioritizing technology processes will be

the function of the governance board. The plan of action will define how, when, and in which

order one gets there.

The governance board will be responsible for the accountability and authority of IT

decisions. A board responsible for reviewing, prioritizing and approving IT resources (i.e.

organization, staffing, spending, projects and management attention) to support strategic

business initiatives is crucial (Baschab & Piot, 2007). The governance board is a forum in which

a structured, constructive dialogue with business leaders can take place daily, weekly or on a

monthly basis (Jakubik, 2005).

Keep in mind; communication among managers and employees is crucial for the

organizational business. Therefore, effective communication will occur when cultural differences

are studied and understood among business personnel. Failure to overcome these types of

obstacles will result in negative impacts to both employees and the company (Baschab & Piot,

2007, pg. 481).

Technology Analysis

The technology analysis will be based on typical perspectives such as financial /

stewardship, customer / stakeholder, internal business processes, and organization capacity. The

following analysis (i.e. Figure 1.0) explains the internal strengths, internal weakness, external

opportunities and external threats.

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Figure 1.0 Technology Analysis (Mind Tools, 2010).

Internal Strengths External Opportunities

* Technology Advancements * Growing revenues - online music concerts

* Digital Music Leader * Online music concerts accessibility

* DirecTV, Cable and Satellite music market

Internal Weaknesses External Threats

* Customer base * Economic changes (i.e. wars)

* Cash * Terrorist impact to company

* Music trends

* Unemployment rates

Strategic Analysis and Choice (Figure 2.0)

The globalization impacts, such as economic changes, technology advancements and

social behaviors are only a few issues which the music industry will encounter. For example,

economic impacts will affect the product advancement of Apple’s products (i.e. iPhone, iPod,

iPad) or other competitor such as Window and Japan’s DoCoMo. All competitors will fall suite

to the changes required to further the advancements of one’s products.

DoCoMo is working with other companies to provide one the ability to scan a bar code

(i.e. from a Madonna poster) to purchase a concert ticket and or Madonna’s new CD. This is a

prime example to meeting customer satisfaction ratings. Apple and Windows competitors will

soon fall suite engaging with the latest technology advancements. Figure 2.0, identifies and

analyzes Apple’s strengths, weakness, opportunities and threats (SWOT) to reach on line live

music ventures (i.e. live concerts, boxing, sports packages) as the choice strategy.

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Figure 2.0 SWOT Analyses (Mind Tools, 2010).

S-O W-T

* Digital Music Leader and outsourcing * Lack of market base and economic impact

* Technology advancement and wireless * Lack of customer base and changing economy

* Grass root innovations and in-sourcing

S-T O-T

* Digital Music leader and music trends * Technology advancements and economic impacts

* Innovator and lack of market base * Off-shoring, Iraq and Afghanistan war

W-O S-W

* Lack of Market range & Technology Adv * Grass root innovations and music trends

Business Case

The approach in gaining management support and buy in will be accomplished by using a

common tool, called the Situation – Target - Proposal (STP) statement, during IT Governance

meetings and reviews. The STP easily explains the following sections situation (i.e. the current

situations and or problems experienced), the target (i.e. the vision for improvements) and

proposal (i.e. the recommendations for approval). The STP is a great tool to summarize why one

believes there is a problem to solve (Ezine Articles, 2010). The following STP (i.e. Figure 3.0)

will be used to attain Apple executive committee’s buy in and budget approvals.

Figure 3.0 STP (Ezine Articles, 2010).

Situation

Live shows (i.e. musical concerts) are being overlooked as revenue gain for company.

Productions of live concerts are producing large revenue for music industry.

Supporting pay TV live programs is marketed by DirecTV, Comcast and Satellite companies.

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Target

Accelerate growth in-source and supply chain management of live programs (i.e.

musicals, boxing, sports packages – football, baseball, basketball).

Develop new technology advancements (i.e. iPhone, iPad, live concerts, and wireless

technology) as future initiative solutions.

Gain increased revenue by off loading administrative tasks (i.e. sales department).

Support Six Sigma, ITIL/ Lean Principles - 20 percent cost savings annually (next 3 – 5 years).

Partner with DirecTV, Comcast, Satellite companies.

Proposal/Recommendation

Approve Research and Development (R&D) funding to identify innovative ideas and solutions.

Deploy ITIL, Lean and Six Sigma Methodologies.

Provide resources to support outsourcing, in-sourcing and off-shoring markets.

Ensure mandatory employee training in ITIL/Lean and Six Sigma.

Financial Comparison of Outsourcing Options

The options required to support the financial comparison will focus on comparing Apple

to competitive peers. Benchmarking company processes and performance against one’s peers

will help with establishing the financial comparison. A standardized process will be followed to

assist Apple in ensuring efficient and effective outsourcing options (i.e. analysis of current state,

industry comparison, potential improvements and a financial model (Barrington Partners, 2010).

Garner Consulting Company and questionnaire surveys will be used to compare the perspectives

of potential risk associated with IT outsourcing. The survey will focus on large multinational

companies (i.e. Group 1 - Wipro) and (i.e. Group 2 - Cisco) business within the United States

(Carroll, J., Gatti, P., Greiner, E., & Gupta, A., (2007). Survey questionnaires with a return date

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will be sent to both international and domestic companies involved with IT outsourcing in the

past 5 years. Of course follow up emails will be sent out one to two weeks after the initial

surveys have been mailed. Figure 4.0 (see attachment “A”) Financial comparisons of outsourcing

provides survey data results. Based on the operating expenses comparison, the recommendation

is to outsoure (i.e. products and services) with Wipro Corporation.

Tactical Plan

The process of executing and linking strategy and tactics will be accomplished through

Six Sigma, ITIL and Lean Methodologies. Core Planning teams, IT Governance Boards, will use

employee surveys, score cards, performance plans, 360 degree evaluations and measurement

plans to establish week reports and evaluation results. The process will help maintain status of

each strategic objective for tracking and oversight.

Conclusion

Employee satisfaction and the results of survey data collection is one means to validating

the successful implementation of a company strategic plan. The partnering of the Apple iPhone

technology advancements and innovations with live musical concerts anytime, anywhere,

anyplace is bound to capture increased revenue. The reinventing of Apple Inc. outsourcing,

insourcing and supply chain management will be essential to continued growth opportunities.

Building strategic objectives tied to Apple’s company mission and vision statement ensures

success for the company, partners, customers and employees.

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