New product development at Apple

The recent launches of Apple iPhone 5 in selected countries across the globe have been welcomed with mixed expressions. The customers are happy about the product features like its appearance and design, the high-speed internet connectivity, the long-lasting battery life and the large number of applications; but at the same time the company’s new mapping software proved to be a great failure. Apart from that, the company also had to stop pre-orders temporarily owing to the problems in demand-supply balance and manufacturing. All this can be well attributed to the faults in New Product Development (NPD) initiative of the company. Though it is too early to review Apple’s iPhone 5 from the consumers’ perspective, the product can be analyzed from the perspective of the company’s new product development (NPD) initiative.

Is Apple a failure in new product development?

Apple is a renowned brand and a world leader in computers.   Apple’s customers take pride in associating themselves with the company, no matter if they have to pay a little extra for this. Apple is a trusted brand and that is why the company affords to charge their customers premium prices for the products. But the latest offering from the company’s product portfolio proved that even the world’s leading firms will have to face serious repercussions if they do not undertake new product development (NPD) seriously. New Product Development is a major initiative and it involves high amounts of funds  as well as high failure risks. Therefore, it can’t be expected that Apple did not conduct any market research to forecast demand for its iPhone 5. The company started pre-booking for iPhone 5 on September 14 for the customers who wanted to possess it on the first day of launch i.e. September 21. But the demand exceeded far above it was expected and that the supply could support. As a result, the company was compelled to stop pre-order booking and the delivery was also delayed. Also, it was much in news that Sharp, Inc. which is one of the leading manufacturers of iPhone 5 in-cell panel touchscreen display failed to deliver the output on time leading to a further imbalance in demand and supply. But this is not all. The company’s initiative to launch its own mapping software iOS 6 also proved to be a big failure. A number of places were found to be wrongly located while the images were also not clear.

So, the questions that arise at this point are:

  1. If Apple failed to conduct proper demand forecasting?
  2. If Apple failed to communicate with and manage its supply chain partners?
  3. If Apple failed to carry innovation?

In brief it can be said that Apple failed in new product development.

Costs related to failure in new product development

Now let’s analyze the price the company had to pay for this. The company had to forego the customers who wanted to place pre-orders but were denied. The delivery delays and problems in mapping software negatively impacted customers’ trust on the company. Moreover, the CEO of the company Mr. Tim Cook had to publicly apologize for the problems faced by the customers. And this is not all, the company offered an opportunity to the rivals to win the game. So, there are both immediate as well as long-term losses of inefficient management of new product development.

The need to adopt contemporary approach in new product development

Apple also probably committed the same mistake as most others conduct to concentrate more on the time schedules and cost-minimization, rather than providing for the flexibility required in NPD. Had the schedules been not so rigid, the company could have focused on demand forecasting, supply chain management and innovation in a better way. But this acts as a lesson for other companies that traditional approach to NPD focusing on time schedules is no more effective. It is time to allow better flexibility in order to gain better results out of NPD.

References:

Ankita Agarwal

Analyst at Project Guru
Ankita is working with the editorial board of Project Guru as a Research Analyst and Writer. With Masters in Commerce and Business Studies, Ankita learned much of what she knows about management through experience. She has previously worked in various financial institutions like Birla Global, HDFC Ltd. and Citi Financial. She is self-motivated and writes for the Knowledge Tank section of Project Guru. She has authored more than 80 articles so far in Human Resources Management, Strategic Management, Finance and Marketing. She likes to pen her thoughts about the latest issues gripping these areas across the world.

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