IMEN301: Technology Management and Strategy

Homework Assignment #2

Christina Lehmann Neelotpal Shukla Nijansh Verma

Apple Newton The first personal digital assistant

Apple Inc. A multinational corporation, headquartered in Cupertino, California. It was founded on April 1, 1976, and named Apple Computer, Inc. on January 3, 1977. (The word “Computer” was removed in 2007, the same day the iPhone was introduced.) It designs, develops, and sells consumer electronics, computer software and personal computer.

Apple Inc. Today it is the second-largest information technology company by revenue. Nevertheless, when the MessagePad was developed and launched, the company struggled with decreasing market share due to many failed consumer targeted products as digital cameras, portable CD audio players or speakers. High R&D costs were used to develop the MessagePad between 1987 and 1993 to prevent further losses in market share.

Apple Newton

Officially named the MessagePad, it was a hand-held communications assistant with a touch-screen and pen-stylus that allows the user to gather, manage, and share information.

Furthermore, to take notes, store contacts, and manage calendars, send fax and translate handwrite into text.

It took Apple ten years of development, it spent more than 100 USD Million and the product was five years on the market.

“The goals were to design a new category of handheld device and to build a platform to support it” - Steve Capps (Chief Architect of Apple Newton)

Apple Newton

Model H1000 MessagePad

Available August 1993

Price US $699.99

CPU ARM 610 (RISC) @ 20 MHz

RAM 640K internal, 4MB PCMCIA

Display 336 x 240 reflective LCD

Interface touch-screen w/ stylus

Ports RS422 serial, Infrared

Expansion one PCMCIA (Type II) slot

OS Newton OS v1.05

Design of Apple Newton Analysis of Design Dominance

Firm-level and Environment Related

1. Firm's technological superiority

The degree of the technological development was very high. Newton wasn't a Personal Computer (PC), it was a completely new category of device running an entirely new architecture and a completely new and bold design language: the first Personal Digital Assistant (PDA)

Following applications were included: • Names: contact database • Notes: small documents (in own handwriting/ to draw

free-hand sketches) • Dates: personal calendar for scheduling time and days • ARM6 processor

Nevertheless, there existed a few deficits concerning the performance and use. Firstly, the Newton PDA was 4.5 x 7 inches large and almost one inch thick. That's why it was considered as too large and heavy (almost one pound) to be pocket-size and to use on the go. Secondly, it was limited by the very short lifetime of their inadequate AAA batteries. Thirdly, the non-backlit LCD screen had poor contrast and made it difficult to read. Fourthly, Apple used a reduced flash memory and integrated the multi-tasking function. This greatly slowed down the processing speed of the device. (Apple tried to put together too many features within a short time span. So, applications were almost too complex to manage.)

2. Firm's Credibility

Core competency:

Handwriting Recognition Able to interpret the user's handwriting into computer-readable text. Only the 4kg heavy and $2,795+ costing tablet Linus Write-Top (incorporated in 1987) offered a touch-screen and handwriting recognition before. Problem: Newton's core competency was often inaccurate and gave mixed results.

3. Complementary Assets

Newton Connection Kit: serial cable to attach to other computer systems (Mac/ Windows) to synchronize, transfer files, restore Newton/ install software onto Newton Further simple tools: Calculator, Currency Converter, Time-Zones Maps etc. Newton Print Pack: printer-cable to plug into Newton serial port and print to a wide assortment of printers Support of type-II PCMCIA expansion cards (1/2/4MB flash storage cards) e.g. 4MB card stored 250 personal contacts, 200 notes, 500 calendar appointments, and 35 screens of text

Newton was a first of its kind standalone platform which was compatible with all the prominent document file formats present during that time (.rtf, .doc, .xls) and a large variety of computer operating systems (Mac OS, UNIX, Linux, Microsoft Windows) to facilitate package installation, capacity planning and disaster recovery.

4. Network Effects

Newton had no switching cost, going strictly by definition, since it was an entirely new concept.

However, priced quite steeply at $700, its value was often questioned and compared with relatively much cheaper paper notebooks that it was a replacement for. Considering this, the Newton can be said to have a very high switching cost.

5. Switching Cost

•There were no significant non-firm and non-market aspects of the commercial market governing the Newton.

6. Regime of Appropriability

7. Regulation

•Newton was not affected by any intervention from the government and/or industrial organizations.

•Although there were actors including Motorola and Sharp in the market, most devices were produced by Apple.

•Since there was no other platform available, other hardware manufacturers had to cooperate with Apple.

•The level of cooperation was higher than the level of competition.

8. Characteristics of the Technology Field

Timing of Apple Newton Apple as a First Mover in the

Personal Digital Assistant Market

1. Too much ahead of time.

• Newton was introduced to a society that was unfamiliar with electronic devices so the customer requirements were uncertain.

• As there was no product like the Newton PDA on the market before, Apple had to clear the usage of the device (whether to use as a toy, substitute it for a computer, or take it along when travelling).

• Therefore, Apple ran a series of ads that illustrated various applications the new device could be used for. But it wasn’t of much help.

• Basically, people didn’t know what to do with it.

2. Network Externality: Connectivity

● Apple launched it at time when internet was still in developing stages - 1993.

● Technologies such Wi-Fi and mobile data (2G, 3G, 4G, LTE) were unheard of at that time.

● So it was not much of use without the internet.

3. Immature Technology

Since it was the first time handwriting recognition was introduced, it had a lot of flaws which led to its rejection by the consumers. Additionally, the dictionary was very limited. Although the user could add words themselves, difficulties were caused by the long time required to "learn" the user's handwriting; this process took from weeks to months.

4. Slow Development Cycle

“The one stumbling block had become a joy to use, but it really never got a second look.” - Gavin Ivester (Newton’s Industrial Design Head)

Though they eventually improved the handwriting recognition function, it was too late by then.

5. Undeveloped Supply Channel

The heavy software on Newton OS required

powerful processors and

long lasting batteries which were unavailable at that time.

6. Undeveloped Distribution Channel

Apple's laptop/desktop operating system had a very large established and loyal user base. But the Newton was not similar to any product existing on the market. So, people didn't see the new device as a complementary good or substitute.

Apple had to build up a new installed base: only

300,000

units could be sold.

7. Firm's Strategic Maneuvering

Apple revealed too many details of the project too early (concept introduction in 1991, two years before first device was shipped) and was thus forced to release the product when it wasn't really ready. Not all deficits were worked out and marketing efforts hadn't have enough time to adequately support the product before it became available to consumers.

8. Firm's Financial Condition at the Time

Another reason for Apple's fast release was their financial issues. The company had to move fast and take decisive action to minimize losses, obtain new finance, and recast its strategic direction. After their launch, the product was described as overly ambitious but with a poorly disciplined product development. As Apple built high market expectations, the product launch sorely disappointed the market.

9. Cost

Apple being the first-mover in te personal digital assistant , Newton required immense research and development which was reflected it its price. And since it wasn’t so understood by the customers, they were not willing to pay $700 for a product they couldn’t undertand the use of.

10. Complements and Compatibility

As previously discussed, Apple had ensured that complements were available for the Newton with the Newton Connection Kit, the Newton Print Pack. Its compatibility was also ensured with all operating systems and with expansion cards. So even though being a first-mover, complements and their compatibility didn’t pose such a problem.

Thank You

References

http://fail92fail.wordpress.com/2008/09/17/the-first-pda-case-apple-newton/

http://silvexis.com/2010/07/02/reflections-on-apple-newton-messagepad-failure-on-the-eve-of-the-ipad/

http://www.edengene.co.uk/article/how-the-world-learnt-from-apples-failure/

http://macdailynews.com/2013/08/05/remembering-apple-newtons-prophetic-failure-and-lasting-impact/

http://myapplenewton.blogspot.com/2009/04/apple-newton-why-it-was-discontinued.html

http://oldcomputers.net/apple-newton.html

http://en.wikipedia.org/wiki/Newton_(platform)

http://www.storiesofapple.net/newton-the-right-idea-at-the-wrong-time.html

http://www.forbes.com/sites/richkarlgaard/2013/08/14/ahead-of-their-time-noble-flops/

http://en.wikipedia.org/wiki/Apple_Inc.#1986.E2.80.9397:_Decline

http://myapplenewton.blogspot.kr/2011/04/marketing-consultancy-gets-facts-wrong.html