Apple’s Global Dominance

The global dominance has once again been shown by ‘Apple’ as the company made history when its shares hit $600 for the first time on 15th March. Apple’s market capitalization is, at time of writing, $559 billion, according to Yahoo Finance. To highlight the value of wealth of Apple Inc, it is worth more than the rest of the US retail sector, the GDP of Poland and Belgium. But how has Apple brand achieved so much success? How does Apple sustain their success? What is it about their products that appeal to millions of people? These are question that many of us wish to examine in closer detail.

A famous quote of Steve Jobs’, the late CEO of Apple was “… you gotta start with the customer experience and work backwards to the technology.”– a quote central to Apple’s philosophy. The whole Apple ‘package’ encompasses aesthetics, customer service and performance, with each of their products concentrating on consumer experience as a whole which is visible in the Apple stores.

Some critics believe Apple takes customer service too far, pointing how it appears to hand out new iPhones or iPads without fully checking there are no faults aspects. Apple prefers to take the route of trust in its customers rather than legitimacy of the return. Greater trust builds a stronger bond between firm and consumer. Although there may be more cases of illegible returns, the quantity of return for the business is guaranteed by customer loyalty because the benefits of good customer service heavily outweighs the costs of reissuing new phones.

Apple’s aesthetics of its products can be summarised as minimalistic, usually with one colour, such as black or white, for iPads and iPhones and various colours of the rainbow for iPods. The products are very slim, uses gloss finishes and the interfaces are simple. They are not complex, not outdated and do not contain irrelevant switches or buttons. These styles are a reflection of Apple’s pursuit for total perfection. All aspects of Apple’s design is scrutinised to ensure nothing is left mediocre to the extent that the packaging itself is highly aesthetic. For example, imagine HP’s packaging; distasteful, boring and obsolete. Compare this to an Apple’s packaging; vibrant, innovative and fashionable. Clearly, the Apple packaging will make consumers want to be seen with it, especially on Christmas morning when parents are trying to please their children.

Apple’s business plan, radically different to most companies’ approaches, of conducting their operations and teaching of their business schools, is the ideal model for all competitors to follow as well as envy. Most companies expect employees to gradually move up the rank and focus on employee. In contrast, Apple prefers to keep people where they work best. This structure, similar to investment banks, enhances the firm’s productive efficiency and the productivity of workers themselves. To use an example, Apple senior vice president of design, Jonathan Ive; it was wrongly speculated that Ive was being groomed to become the next CEO. However, Ive kept doing what he loved and did best- designing. This organisational structure concentrates and improves on people’s expertise in certain fields rather than just their role in the business as a whole.

iTunes, because it revolutionised the manner music was bought, allowed Apple to dominate the music market for iPod owners. Take this scenario; one has bought an iPod yet one needs music to fill inside it. Sure, one probably has CDs ready to insert but in order to obtain new music one must buy new music. Cue iTunes. When confronted with the choice of either going to the nearest music store to buy a CD or instantly download a whole album from iTunes, one would select second choice since it requires little effort. Indeed there are other online music stores which exist but the convenience of buying music from your iPod managing application, which automatically adds the songs to your library after purchase, outweighs, for the majority of customers, buying from other online retailers and adding the songs by oneself, despite iTunes higher prices. iTunes is now the largest music retailer, a feat achieved only 6 years after its debut in 2003. The Application or, more commonly known, the ‘App’ Store was launched in July 2008 and within 4 years it has celebrated its 25 billionth download. Sneered upon during its opening by its rivals, the App store made the iPhone, iPad and iPod Touch, along with ‘apps’ for all genres, which appealed to the mass market. Gaming, language, news ‘apps’, just to name a few, became so popular amongst the majority of consumers that Apple enjoyed a ‘monopoly’ over iOS apps due to the way they were programmed. The recently opened ‘Mac App’ store has enjoyed the same success with 1 million downloads after the first 24 hours. The Apple stores are also an example of Apple playing on ‘convenience buying’ in which the store offers accessories for the Apple products such as headphones, keyboards, mice and software. Once you buy a product in the store, one feels compelled to buy accessories and is more likely to do so due to the close proximity.

Apple has reinvested majority of its money into research in order to stay ahead of its competitors with regards to its cutting edge technology and products. Innovation is rife inside Apple and everyone is encouraged and open to share their ideas. Designers are paid around 50% more than their counterparts working in other technology companies and coupled with the respect they have for the company and rewards and credit they receive for their job, they are really motivated to work hard. Apple organises workshops where engineers and designers are encouraged to think freely and allow others to pinpoint the best parts of their creations. Staying ahead of competitors is essential and the majority of people have probably now experienced that “wow” reaction to a new feature of a new Apple product which people have never seen before.

The Apple Inc has been compared to religion in the way that they operate some parts of their company. Their store openings and product in-store releases are famous due to their fans who queue up for hours and even days, along the streets in order to be the first to get into the new store and get their hands on the new product. In a BBC program, named ‘Secrets of the Superbrands’, journalist Alex Riley likened the store opening to ‘an evangelical prayer meeting’, as staff riled up the crowd with cheers and ‘Hi-5s’ akin to spiritual music. Apple has managed to strike a chord inside its customers which Microsoft or Google has not managed to do. These customers are not just consumers of Apple, they are devotees which ensures these customers will conduct repeated business with Apple in the near. In addition on the BBC program, an MRI scan of the brain of an Apple fan showed that his brain had the same reactions to Apple products that devoted Christians have to pictures of Jesus. Although this experiment has only been done on a very small group of people, it is not hard to believe this seeing the reactions of many after the death of Steve Jobs with footage of people crying and messages of their condolences. The reaction from people who never met the man shows that Apple is able to create more than just a business-customer bond. Apple is well known for being a very secretive organisation, which is well documented in Adam Lashinsky’s book, with employees kept in the dark about things not related to their division. This has two benefits; 1) no competition can know everything about new products if someone was to leak anything and 2) this mystery builds hype as nobody knows about the product and everybody wants to be the first to know everything about and own the product on launch day. Apple makes employees sign agreements acknowledging that you will never reveal information to anyone, and they can take legal action if you do, and it is said that since many employees are so committed and passionate, they will not hesitate to report a colleague if they feel they are damaging the company. Lockdown rooms with tinted windows are reported to be the only place where the next product can be discussed.

These recent milestones suggest Apple still has plenty of capacity to grow to the extent that it could become the first trillion dollar company, in terms of market capitalisation. But is its stranglehold on the market coming to an end? The iPhone 4S was not radically different iPhone 5, which surprised many, but simply an iPhone 4 with some extra features such as Siri. Apple has always tried to under-promise and over-provide but with the iPhone 4S it over promised and under-provided. In terms of hardware and product specification, the iPhone 4S didn’t lead the pack, but settled in amongst the herd, despite boasting a dual-core processor on release. However, Android phones such as the Samsung Galaxy SII were using these for quite a bit before- is it a sign of competition closing in? The camera was exaggerated – Facetime with 8MP camera and 1080p filming being highlights of the 4S, again the default of many Android phones at the time. The detail on ‘Retina’ screens took everyone’s breath away when announced, but now when placed side by side to a Super AMOLED screen, Samsung receives the most praise. This is likely to be a wakeup call for Apple that they cannot rely solely on their brand to make sales. Yet one can be sure they will be investing most of their $100 billion cash reserves into R&D. Apple will not lose their global dominance without a fight.

Contributed by Mark Kelly

The Future of Energy

In a constantly growing population, the demand for energy has rocketed, driving up
the price of fuels struggling to fulfil this rising need. The growth boom from the East, in
countries such as China and India, has added pressure on energy firms to increase their
output as they invest in resources to improve their infrastructure and feed their expanding
populations. Alternative energy sources have been in the headlines more frequently and the
awareness for them has increased because the public and the government realise that the
world has to lose its dependence on fossil fuels and change to more sustainable means. But
will these new sources of energy relieve us from the energy crises that have occurred over
the years and will they be fully viable to meet the new challenges of the modern age?

The majority of energy used in the world at the moment is produced from the combustion
of fossil fuels (oil, natural gas and coal). But these resources, known as non-renewable fuels,
due to their scarcity will not last forever and thus, it is only a matter of time before they can
no longer meet our requirements. Another problem which arises from using fossil fuels is
that they enhance global warming. Expansive, environmental research has shown that man
has and is contributing to global warming, largely by burning fossil fuels, although it is not
fully understood the magnitude to which we are doing so. Carbon dioxide is released when
the fossil fuels are burned and it collects in the atmosphere, allowing sunlight in but not
allowing it to escape out of the atmosphere when it turns to heat. This causes the Earth to
heat.

New forms of energy are on their way. With 81% of its energy coming from geothermal
(66%) and hydropower (15%), Iceland has the largest proportion of its primary energy
produced through renewable means in the world due to its geographical features
(volcanoes and hot springs). Other countries, are also investing heavily into renewable
energies and China is leading the way with the highest installed renewable energy capacity,
pushing America into second place. From 2005 to 2010 it has seen a 106% increase in its
renewable energy capacity. With its economy coming on terms with the US, could this could
be yet another indication that China is on its way to becoming the largest superpower? This
competition from countries to show themselves as the “green countries” could boost the
attractiveness of renewable sources even more and help countries examine its benefits
more rather than the expensive price tags they usually entail. Renewable energies are an
investment, costing relatively large sums of money but providing savings over their lifespan.

Emerging economies such as India and China are investing billions into hydropower
electricity. They have begun projects to build dams all along the rivers in Kashmir to harness
the energy in the rivers in order to produce enough energy to power its economy and
population of over a billion. It plans to add 3,000MW to its grid in the next eight years. The
potential for hydro-electric energy is huge projects like those in Kashmir could be replicated
on the majority of the rivers around the world.

Using renewable energy sources does create some problems. Firstly, many of these rely
on the natural elements, namely wind, solar, tidal and hydroelectric. If the sun isn’t out or
there is not enough wind, the energy gained from these methods can be severely limited.
This could be a real problem in the future if renewable energies were our sole providers
because unexpected weather patterns could dramatically change the energy we receive.

For wind power, this can be partially by building them far out in the ocean. On average,
the wind speed is 90% faster than that on flat land and predicting where it will be is more
predictable. Solar energy is obviously only efficient in countries where there is large
volumes of sunlight, meaning colder and less sun ridden countries will have to use the other
alternative energy resources.

Renewable energy has a huge role in the global macroeconomic objective of obtaining
sustainable development. Sustainable development is formulated of economic, social and
environmental sustainability, in which the use of resources is aimed to meet human needs
as well as preserving the environment now and for future generations. The majority of
alternative energies are carbon-neutral, including nuclear, solar, wind and hydroelectric,
and when energy is produced by these means they do not cause a net release of carbon
dioxide which is what sustainable development promotes.

A new type of energy is being researched and tested by scientists. Nuclear fusion is the
process in which two nuclei of protium, an isotope of hydrogen are fired together to
form a larger nucleus, which releases a huge amount of energy when the repulsive force
between nuclei are overcome. Protium is 1 in every 8000 hydrogen atoms and although it
technically isn’t renewable, the abundance of protium means it will last for a long time. The
technology is in relatively early stages though. The process is also very safe. If there was
any malfunction which allowed leakage of any material, the conditions required for nuclear
fusion to take place would be compromised and its ‘shutdown’ process would be quicker
in comparison to nuclear fission reactors in which the process can carry on for days such as
the Fukushima Plant. Yet the major problem currently with nuclear fusion is that the energy
needed in order to create the right conditions, is around the same as it is produced, making
it an inefficient source of power. The aim is to reduce this input energy which is needed
to create a larger output. Many scientists believe that nuclear fusion will be available as a
viable energy source from as early as 2025 to 2040 yet nobody can be fully certain whether
it will produce enough energy to be commercially used.

Whose light will burn brightest between non-renewable and renewable? Although
renewable energies have been slow to ‘get off’ the ground, for majority of countries, the
future looks set to be one where renewable energies provide the bulk of our energy. Large
businesses are pouring money into these opportunities, seeing renewable as a profitable
investment as they decline in price. But it all lies with the separate governments around the
world to act. Despite organizations such as the EU have set targets to cut carbon emissions
and over 119 have some form of renewable energy policy, the changeover from fossil fuels
to newer, cleaner and maybe even safer resources cannot be forced upon anyone and so,
we must hope that the world will come to their senses that accepting these alternative
sources is logically the way forward.

Contributed by Mark Kelly