Apple and Product Obsolescence Descriptive

Apple and Product Obsolescence

Descriptive Summary

Although the phrase 'comeback kid' has become a cliche, this overused term must be applied to the Apple Corporation. Although the Macintosh had long played second fiddle to Microsoft, the iPod become every marketer's dream. Apple made its version of the MP3 player synonymous with this form of musical technology. The iPod remains a triumph of branding. But has one of the most recent success stories in modern business become threatened by its own arrogance and commitment to technical innovation?

Nick Wingfield's January 12, 2008 Wall Street Journal article entitled "The downside to Apple's frequent product updates" suggests that Apple's current dominance may be unseated because of consumer frustration over its frequent product updates. Beyond Apple's own personal issues, the article raises important questions about how managers should cope with the pace of technology and the degree to which creating product obsolescence (when a product becomes out-of-date) is an advantage or disadvantage for a company. What is the best way to allocate resources within an organization? Should a company always focus on improving technology, and when should new products be released, and on what timeframe? Given that planning is one of the four functions of management, how should managers mitigate public resistance to continual new product releases, if these releases occur extremely rapidly?

General Analysis

As a company, Apple caters to a very young demographic, for whom 'built to last' has less value than living in the here and now, and buying the next trendy item. Because technology has changed so quickly, consumers have become accustomed to the need for constant system upgrades. However, Apple's pace of product releases has gotten so rapid that even relatively major purchases, like a laptop received at Christmas, may seem questionable if there is a similarly priced, portable version available to consumers during the first months of the next year. An obsession with innovation, and being a first mover into a new market can become too much of an obsession, suggests Wingfield.

Critical & Comparative Analysis

Of course, all technological products eventually become outdated. But the problem is that even in comparison to its competitors, Apple seems to tax its user's patience with its upgrades. Five years went by before the Mac's major competitor, Microsoft, released Vista after XP, but Apple has released a major upgrade of its Mac operating system almost every year. Mac loyalists must peruse independent websites like MacRumors to discuss the best time to make a new buy. This generates positive buzz and discussion about Macs, but can also create hostility.

The argument for planned obsolesce as an effective deployment of organizational resources suggests that producers face potential competition from already purchased goods, and thus, to avoid competition, firms introduce a new versions to make what is already purchased obsolete. Although some economists have argued "used units do not compete with new goods since the price of new goods reflect the present value of all future services of a product," even with products such as textbooks, empirical analysis shows that "textbook publishers revise editions more frequently when the share of used textbooks increases, holding time trends and other factors constant" (Toshiaki 2004:1; 3). In other words, the greater the dangers of comparative substitutes of lower price competing with the current product, the more incentive textbook authors have to change the model, to make using the older editions more difficult or impossible, underlining the value of obsolescence. Additionally, with new technology, the current version may not be useable or as functional when used in conjunction with the older versions, which makes getting the latest model even more critical. However, unlike textbook publishers, who have a virtually captive audience, because students are required to buy the latest edition of their books, Apple's customers have more options to opt out of the new purchases.

Apple's frequent innovations give it first mover advantage. However, it is also argued that while "first-mover advantage was initially touted as crucial in the Internet economy....there is a growing backlash...First-mover advantage can be instrumental in building market share, but this may or may not translate into business success" ("First mover advantage," 2008, Marketing Terms). Being first is seen as a crucial competitive and comparative edge that Apple has possessed against the relatively slower pace of change at Microsoft, but if this continual innovation is now becoming an annoyance, even a late night television joke, Apple may need to rethink its approach, and focus on different aspects of its marketing mix and allocation of resources, perhaps shifting from a focus on minor changes in products to increasing value and services for consumers.