Oct 25, 2016, Apple announced sales and earnings. For the first time in 15 years, ever since it rebuilt on a strategy to be the leader in mobile products, full year sales declined.

http://media.idownloadblog.com/wp-content/uploads/2016/10/q4-2016.png (IMAGE IS TOO UNCLEAR WHEN IT WAS INSERTED, PLZ CLICK ON)

Apple’s value took a huge hit because stagnating sales of iPhone caused the company to completely lose its growth story. From the prediction of chip suppliers of Apple, the order for Apple in 2017 will decline to 80%, due to the data collection from 2016 (in the first quarter, the order reduce to 45000 thousands, the number of first quarter in 2017 will reduce to 35000 thousands).[1]

All of the informations show that people‘s enthusiasm of iPhone is decreasing. Because the major profit of Apple is based on selling iPhone, the structure of high dependency on iPhone would finally leads to the decay of Apple. Since the decreasing of iPhone is unavoidable due to the market saturation of smartphone .

iPhone is losing the advantages of their differentiation strategy.[2]

• As we learned from COMM101, being different is the key strategy for sustainable development.[1] At the beginning, Apple was well-done. Minimalism design of the product, IOS system, unique technology accessories, special charging interface and so on, which are the reason why iPhone could be the leading enterprise in the market. It not only bring them the profit on sustainable development of charging from Apple Store, but also bring them the high brand value. iPhone becomes a symbol.
• However, the smartphone market is near saturation and more and more customers disappointed Apple. Many of phone companies are approaching to the same innovative ideas. They all cannot find a new direction, so that they catch up Apple in the way of following the trend of minimalism design. In this environment, being special and the only is far more harder than before. Innovation and “changing the world” as Steve Jobs said are too hard for Apple for now. The appearance of recent versions of iPhone are approaching to the same, the decrease of intensity of innovation results customers’ leaves.

For now, the normal way for phone company to remain the customers is upgrading on products’ hardware to improve the practicality. But if they still want to attract customers by the innovation, they can only change the ideology of cell phone and create a new style. It might be things like wrist-worn smartphones, phones with bendable screens, curved screens, transparent phones, projectors, and laser keyboards are going to completely change the way we interact with our technology. Or it will be something we can’t image what it is? The innovation from the higher level of the appearance of the phone could bring them power to stand on the top of the world again.

Overall, after the iPhone touches to the ceiling of growing , the crisis of Apple is seems on the way.

If Apple cannot do something or finds another product to replace the position of iPhone in the company. The world would never mention phones in the way of “iPhone and others”.

And people will never think of tech company when they mention the word “apple”. It would fall into the mundane world finally.

[1]”Apple IPhone Sales 2007-2016 | Statistic.” Statista. N.p., n.d. Web. 29 Oct. 2016.

[2] Concept of differentiation strategy

Samsung says Galaxy Note 7 recall to cost at least $5.3 billion, but is it enough?

Last week, from peer blog I got some interesting opinion which is iPhone7 is not quality enough but customers are still willing to purchase it due to the reputation of brand APPLE. As Prof joked in class, when we mention “apple”, it almost directly lead everyone to think about that company. So, the boom issue of Galaxy Note 7 would bring Samsung how much invisible damages?

Timeline:

Aug 24th – Note 7 “BOOM”  (one million WON bomb) ->

Aug 31st –  Samsung recalled 2500 thousands Note 7 and announced the reason to explosion is battery of SDI. (but actually the explosion is caused by the design of Note7 hardware)

Sep 2ed – Samsung announced that Note 7 is safe to use and continued to sell.

Unfortunately, Note7 still BOOM BOOM BOOM. Oct 10th, Note7 stopped selling and becomes the phone which was died earliest in the history of Samsung.

As an ancient Chinese proverb, “You may escape an untoward act of God, but never the evil of your own.” If Samsung from the most beginning realized the importance of explosion and calling back all the phones to figure out the reason, they would not be pushed to this dangerous place. Comparing to the cost of recalling the phone, the bankruptcy of Credit in consumers obviously brought Samsung destruction level of harm.

Last Friday (Oct 14th), Samsung Electronics said that the discontinuation of the Galaxy Note 7 would cost the company about $3 billion (U.S.) during the current and next quarters, bringing the total cost of the recall to at least $5.3 billion(1). This must be the reason why Samsung don’t want to recall the phones back as soon as possible.

For now, the value of newest Gear VR is dynamic falling to one of fifth compare to original price due to it’s the accessories of Note7. In addition, Samsung’s action of deceiving consumers that the main reason of explosion is the battery made people angry. The true reason of “BOOM” is on the process of assembly, so that the change of manufacture of battery is impossible to improve the quality of Samsung Phone. With the doubt of quality of the company, the impact which will be brought to Samsung is unbelievable.

https://www.thestar.com/business/2016/10/14/samsung-says-galaxy-note-7-recall-to-cost-at-least-53-billion.html?utm_source=twitterfeed&utm_medium=twitter

As the largest e-commerce company of China, Alibaba’s unique business model cannot be copied. Its success is established on both opportunity and predictable strategy. For now, Alibaba can be called a conglomerate. It has set foot in C2C, B2C, B2B, group buying, online payment, logistics, online advertisement and cloud.

What makes the figures more interesting, is that the company was not even the first comer of e-commerce in China. EBay entered China first through a joint venture, EachNet. However, it failed to enter the Chinese market due to lack of the knowledge of China.

Mr.Ma realized the increasing price of rent due to the upgrading cost, which will inevitable lead to the rise of e-commerce. He targeted at C2C segment by the trend of China. Taobao was launched as a fee free business for small and medium-sized Chinese sellers. The action is meaningful because FREE IS THE MOST EXPENSIVE. In other word, Mr.Ma used “Free” to open the market. Totally free service gave Taobao the largest advantage over its major rival at that time, eBay. As such, buyers and sellers had no good reason to accept the fee structure of EachNet.  Although by the end of 2005, EachNet had eliminated fees, it already had been reduced to a trivial player. That’s how Alibaba opened the market under the pressure of eBay.

Another strategy is Virtualization. For E-commerce, logistics is pretty important. Many company prefer to choose self-logistic to earning profit, but Mr.Ma outsource it to existing big logistic company, he gave the sellers power to choose which delivery company they want. Let’s do a simple calculation, if he choose to build a logistic department, he has to pay for the salary of Hundreds of thousands workers. It will be a heavy burden of the company. So why don’t use the strategic of virtualization and outsource the logistics to the existence logistic company? It’s a clever strategic vision for the sustainable development, cash flow is always the most important thing for a company.

Lastly, communication between parties was crucial for shopping online. Buyers may not have been so familiar with the product, they may have wanted to bargain, a common habit in China. All these called for a communication channel. But the business model of EachNet prohibited such direct communication between parties. Taobao adopted a free mode, and hence did not have to face the same dilemma. Its communication tool, AliWangWang, became correspondingly very popular.

Overall, the rise of Alibaba can be attributed to its local knowledge, which is not an accidental of the heat in e-commerce, but a result of a series of thoughtful strategic decision. It understands the local buyers and sellers better than western competitors. Until now, Taobao dominated the market. eBay, Amazon all  have an eye on Chinese e-commerce, but none of them have achieved noticeable market size.

Word Count: 465

Work Cited:

Graphics, WSJ.com News. “What Is Alibaba?” – WSJ.com. N.p., n.d. Web. 02 Oct. 2016.