by Merlin Hernandez

Also see article titled Apple and Samsung

Apple’s new blue ocean strategy appears to be less reliant on innovation and more on superior value creation through service delivery. In the face of intense competition, and similar products on the market before the company can achieve its full market projections, Apple has shifted its emphasis from value innovation as its principal differentiation strategy to heightened value-creation as a way of securing profit margins. This can be seen as a strategic re-alignment that integrates the components of value by measuring both qualitative (value) and quantitative (financial metrics) tools for strategic and economic control. It is a methodology based on the integration of the investment curve for innovation, the value of the market generated by these investments, and the value-price ratio that impacts a firm’s market position.

Given the expectation that competitors will quickly develop similar products and threaten the investment curve, and litigation for real or perceived violations of IP rights remain costly and time-consuming, companies like Apple need to push the life cycle boundaries as far as possible by ratcheting up value-creation – not based on product improvement at additional R&D outlay but on the level and quality of service that will secure customer loyalty. It is a strategy of great market value and will serve the function of buying sufficient time to cover capital investment, keep the share price in growth mode, and have the surplus for the next wave of innovation. Apple stores have become oases of warmth and friendly support…you hope you’d have a problem just to have a reason to drop by.