business process analysis
DESCRIPTION
The following is the report developed by four first year bachelor students attending the Technical University Eindhoven. It is a post mortem analysis of the Apple G4 Cube.TRANSCRIPT
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Table of Contents
Introduction 3
Company 1.1 Problem description 4 1.2 Ishikawa 5 1.3 IDEF 7 1.4 MIR analysis 9 1.5 Basic cost analysis 11 1.6 Product success factors 13 1.7 Design for X 15
Micro business environment Porter Analysis 16
2.1.1 Suppliers 17 2.1.2 Substitutes 17 2.1.3 New Entrants 18 2.1.4 Buyers 18 2.1.5 Rivalry 19
Porter Analysis Conclusion 19 Macro business environment Trends 20
3.1.1 Complexity 20 3.1.2 Product Understanding 20 3.1.3 Globalization 21 3.1.4 Time-‐To-‐Market 21 3.1.5 Other relevant (business) trends 22
Conclusions & Recommendations Conclusions 23 Recommendations 25 Reflections 27
References 29
Appendix 32
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Introduction
In this report the Post-‐Mortem-‐Analysis is presented for the Apple PowerMac G4 Cube. There is analyzed what the reasons were behind the failure of this PowerMac G4 Cube, by exploring the different levels that may have had an influence on the product-‐to-‐market-‐process: the Company, the Micro Business Environment and the Macro Business Environment. Conclusions have been made about why the PowerMac G4 Cube has failed, also recommendations have been made so Apple won’t make these mistakes again. We would like to thank Roozbeh Rezazadeh Malek for his support, his help and for coaching us.
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1. Company
1.1 Problem description
The problem description: The Apple PowerMac G4 Cube was launched in 2000 but has failed on the market one year later, so Apple had to cancel the production. The process description:
The product was launched in July 2000, sold for $2299 December: the price of the PowerMac G4 Cube was reduced and sold for $1499 February 2001: the PowerMac G4 Cube had gone through some changes in price and in configuration: The low-‐end configuration version was sold for $1299 A PowerMac with a better configuration was launched (Power Macintosh G4 Cube 1996-‐2010) for $1599 The high-‐end configuration version was sold for $2199 In July 2001 Apple suspended the production of the PowerMac G4 Cube
Arguments: For Apple the failure of the PowerMac G4 Cube has led to a loss for the company. If they don’t analyze what has gone wrong and why it has gone wrong, it could happen again when they want to launch another product on the market. To make a better product in the future, the Post-‐Mortem-‐Analysis of the PowerMac G4 cube, but also for all the other products can be helpful.
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1.2 Ishikawa
The Ishikawa can be used to find the root causes of the problem. In this diagram the problems and everything that had an influence on these problems are described. They are well structured in the Ishikawa, so the main causes of the failure can be found leading to the root cause. In this Ishikawa four groups of causes for the failure of the PowerMac G4 Cube are analyzed: the design failure, the technical failure, the marketing failure and the competition with other products. There is a larger version of the Ishikawa in the appendix A.
Design failure
There were problems with the design that caused the user to feel unsatisfied. The design did not include enough space for extra ports. The chosen material did not absorb the vibration caused by the hardware but instead it increased the movement which causes the desk to vibrate. Marketing failure
Apple’s main failure in the marketing department was that the price point was too high for a computer which did not include a monitor and had limited expansion possibilities.
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Technical failure
Extra external installations were required if the user wanted to use their existing output and input devices. This meant that the customers would have to buy special audio devices created especially for the G4 Cube. Competition
At the time Apple launched the G4 Cube, there were other options for buyers. Windows launched Within Apple’s product line there were similar computers with more options. (Apple introduces Revolutionary G4 Cube, 24-‐2-‐2010) (Power Macintosh G4 Cube, 24-‐2-‐2010) (30 years in Apple products: the good, the bad, and the ugly, 24-‐2-‐2010) (The great failure of Apple #7 24-‐2-‐2010) (Mac Cube: Is it all it’s cracked up to be? 24-‐2-‐2010)
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1.3 IDEF
The IDEF can be used to analyze the information-‐flows that were present during the process of the Power Mac G4 Cube. The following chart shows the possible routes of communication failure within the processes. There is a larger version of the IDEF in the appendix B.
The design process started with a design problem. In this case it was to make a desktop computer more compact. Ideas were generated based on this problem. The design was developed to be innovative. The compact nature of the product caused restrictions for the engineering stage. The job of problem solving and product planning played a large role in the development of the Apple G4 Cube. Through blog posts from users of the Apple G4 Cube about their experiences working with it, there appeared to be a problem in the marketing and research. There was no one clear user group. If manufacturing had problems they would have to go to either the engineers, but because the engineers had the restriction of size they also had to go to the designers with their problems.
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(Learning From Failure: Apple's Most Notorious Flops, 2-‐3-‐2010)
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1.4 MIR (Maturity Index on Reliability)
The quality of the information flows that are generated in the IDEF, can be analyzed to achieve a MIR analysis. The MIR analysis consists of four levels that Apple can achieve, when making a successful product. If Apple is a MIR 0 organization, Apple should be able to predict reliability aspects of the PowerMac G4 Cube and analyze the product and the components they used by making the Cube. As a MIR 1 organization, they should be able not only to predict the reliability of the PowerMac G4 Cube, but also to validate this reliability. If Apple is a MIR 2 organization, Apple has to be able to confirm or rejects the predictions they made and also to translate deviations from these predictions back into the product realization process. If Apple is a MIR 3 organization, Apple should know the root causes of the problems, so that can be avoided in future products. They have to be able to allocate reliability problems to the various activities in their business processes, but it also to identify the root cause of the problem. The knowledge of these root causes should enable Apple to modify the existing products. If Apple is a MIR 4 organization, Apple should be able to learn from previous events, in a way that the differences between prediction and the performance are well controlled. They need knowledge on the root causes of problems and on the control mechanisms and enablers/disablers.
MIR 0
Apple made predictions about the product, and used components that were also used in other products of Apple, so they already knew something about the reliability of the components they used. The PowerMac G4 Cube is based on the iMac and the PowerMac G4 and is also an upgrade of these products. Apple analyzed the Power Mac G4 Cube and the components that they had used, so Apple can say they succeeded as a MIR 0 organization. MIR 1
Apple made predictions about the product and analyzed the PowerMac G4 Cube when it came on the market. They thought about what they could change in order to make the product more profitable, so Apple succeeded as a MIR 1 organization. MIR 2
Apple analyzed the PowerMac G4 Cube on the market by changing the price after the sales went down and they also made different versions of the PowerMac G4 Cube by changing the configuration of the product. That means they did analyze the product on the market, and looked how they could improve the PowerMac G4 Cube and make more profit out of it, so Apple succeeded as a MIR 2 organization.
MIR 3
Apple did not find the root causes of why the PowerMac G4 Cube failed on the market, since they couldn’t help it from failing. They did find some causes: They found out that the price of the Cube was too high and that people didn’t want to pay for it. They also tried to improve it by making different versions with other configurations. Found in the IDEF and the Ishikawa there were still many problems that weren’t analyzed. The G4 Cube still had some problems with the components. The components often broke and the Cube missed some parts according to the users. Also compared with other computers the Power Mac G4 Cube was still very expensive.
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Since Apple couldn’t find the root causes to save the PowerMac G4 Cube from failing, they couldn’t solve their problems, so Apple couldn’t reach the MIR 3 level or the MIR 4 level. In next cases Apple will have to analyze their products more and find root causes to make next products a success.
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1.5 Cost analysis
In order to make profit a company has to earn more money than they spend. This sounds easier said than done because there are a lot of things to take into account. To get a clear view on the expenses of the Apple G4 Cube a basic cost analysis is made. The main source of information used is Apple’s own Annual Report of 2001. The costs figures in this report are combined. Through allocation individual costs are calculated. Costs of sales: 4.128 million US Dollars
Materials, labor costs, shipping, inventory, rent, etc.) Advertising costs: 261 million US Dollars
Overhead costs: 430+11+1.139 = 1.579 million US Dollars
R&D: 430 In-‐process R&D: 11 Selling, general and administrative: 1.138 Total of costs Apple (in million US Dollars) Costs of sales
4.128
Advertising costs
261
Overhead costs
1.579
Total
5.968
The total sales of the G4 Cubes were estimated 150.000. The total of Macintosh units sold in 2001 was 3.087.000. Therefore the quota of the G4 Cube is 150.000 / 3.087.000 * 100% = 4,9% Total allocated cost of the G4 Cube:
5.968 * 4.9% = 292,432 million US Dollars
Because the Cube has had different versions and prizes, an average is calculated out of the different cost. (2.299 + 1.499 + 1.299 + 1.599 + 2.199) / 5 = 1.779 US Dollars
Allocated cost per G4 Cube:
292.432.000 / 150.000 = 1.949,55 US Dollars
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The G4 Cube was sold for an average of 1.779 US Dollars, which means that they made a loss of 170,55 US Dollars per cube (1.779 – 1.949,55). Total loss G4 Cube:
170,55 * 150.000 = 25.582.500 US Dollars Obviously Apple tried to generate profit by selling their G4 Cubes but due to their disappointing sales number they made a loss. Apple had to sell 164.380 G4 Cubes (14.380 more than they did) in order to start making profit. (292.432.000 / 1.779 = 164.380) (Annual Report Apple 2001) (UNITED STATES SECURITIES AND EXCHANGE COMMISSION, 25-‐2-‐2010) (Apple Cube: Alive and Selling, 3-‐3-‐2010) (Power Macintosh G4 Cube,
3-‐3-‐2010)
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1.6 Product success factors
The purpose of conducting a product success analysis is to assess what was done properly within a product launch. By analyzing what makes a new product a success it becomes clear where apple went wrong with the G4 Cube. There are three main points to consider when analyzing product success. The following is an analysis of the Apple G4 Cube.
Steve Jobs says that he wants his employees to be able to make the same or better design decisions than he would make. He does this by involving all the employees in every aspect of Apple’s process. Jobs comments about the weekly meetings in his interview for Fortune Magazine, “[w]e don’t have a lot of process at Apple but that’s one of the few things we do just to all stay on the same page.” (Morris, 2008).
A high quality new product process
The problem with Apple’s product strategy for the G4 Cube was that they failed to realize what the market would be interested in at the time. When asked about strategy Jobs replies by saying, “We do no market research. We just want to make great products.” (Morris, 2008). This theory failed when it came to the G4 Cube. Apple was forced to adjust their business strategy several times while the G4 Cube was on the market by reducing the price.
A defined new product strategy for the business unit
Apple puts a lot of effort into hiring the best people for the job. Jobs comments that, “[m]y job is to take these great people we have and to push them and make them even better” (Morris, 2008). Even through the dot-‐com crash Jobs kept his employees because he finds each one useful. Also through the dot-‐com crash Jobs comments that funding will not be affected.
Adequate resources of people and money
Apple’s margin for R&D during the development of the Cube was 430 million which is significantly lower than their competitors Hewlett-‐Packard and Microsoft (Wolverton, 2006) That being said Apple tends to focus on one new product at a time so all the money that goes toward R&D was mainly reflected in the Cube. Steve Jobs also comments that they plan to “up [their] R&D budget so that [they] would be ahead of [their] competitors” (Morris, 2008).
Proficient R&D management
Apple was able to recognize an opportunity to advance technically. The designer of the Apple G4 Cube, Steve Jobs, is under the opinion that, “Apple’s DNA has always been to try to democratize technology” (Morris, 2008). The Apple G4 Cube is a desktop computer engineered to fit inside an eight by eight by eight Cube. The Cube had the same specifications and power as the PowerMac G4, This was a very impressive use of technology.
A recognition of a technical opportunity
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Apple did not conduct proper market need analysis before entering the G4 Cube into the market. According to the Fortune article, What Makes Apple Golden, “Apple scoffs at the notion of a target market” (Morris, 2008). This lack of market focus was one of the attributes that lead to their failure with the G4 Cube. The market was not interested in a compact, beautifully designed desktop computer when they could get a similar computer for cheaper. The Apple G4 Cube was an, “expensive piece of kit and mostly aimed at non-‐technical users who do not want to get involved in upgrades” (Joseph, 2000). Considering many of Apple’s users are professionals, the elegance of the G4 Cube was not worth the lack of upgradeability. Both preliminary market assessment and technical assessment were lacking.
Market need recognition
(Wolverton, T. 2006, 25-‐2-‐2010) (Joseph, C. 2000,
25-‐2-‐2010)
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1.7 Design for X The design for X principle that supports apple’s X for the cube most, is the design quality principle. Although apple has not focused on the inside (technological) qualities of the cube it has focused on the external (outer design) of the Power G4 Cube. Apple is famous for its innovative designs and good quality products. The Apple G4 cube looks like a very sleek gadget and amazingly enough they have fit all the components of a computer in an 8x8x8 inch box. We can tell that apple chose external design as an X by looking at the difficulty of producing that they’ve set for themselves. They even left some crucial upgrade possibilities away to keep to the 8 inch box and therefore the possibilities to upgrade the cube with extension cards are very limited. The designers must have been very stubborn on making the cube any bigger which shows that this was their ideal product and that they felt that the sleekness of the design was the most important factor of their new computer instead technological qualities. Another key in this X is that people who buy apples generally (want to) pay more for the apple logo, apple design and exclusiveness. The designers at apple are aware of this and they made something which fits perfectly in the exclusiveness of apple. Apple’s smaller X’s
Apple is famous for their stable systems so the design for reliability was probably another X for their Apple G4 Cube. The power Mac G4 its components are quite similar to the Cube’s and therefore Apple knew that the system would run stable, moreover it uses the same Mac OS which has also proven stable by the predecessor. Design for Disassembly (for the user) is also partly a focus for apple. The Design of the Cube makes it very easy for the user to get the core of the pc (the inside of a computer motherboard etc.) out of the case of the cube. Although they made this process very easy the next step of taking some memory out of this core is much more difficult. This again has to do with the minimalistic design apple has chosen for its cube which makes it very cozy for the inside of the cube. Apple has also been busy with the environment and the recyclability of their products. There weren’t many articles directed straightly at the cube but since the cube’s case is made from plastic it can be melted down and reused. Apple also participated in environmental acts and uses green energy. (Apple.com, 5-‐3-‐2010)
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1. Micro Business Environment
2.1 Porter Analysis
The environment has a big influence in order if a product will be a success or a failure. The micro environment of the company is the direct surrounding of a company. The Porter Analysis is a structured method to analyze the micro environment. It consists of five forces:
-‐ Suppliers -‐ Substitutes -‐ New Entrants -‐ Buyers -‐ Rivalry
In some new literature they say there is a sixth force, but no one really knows what that factor exactly is. It could be the force of the government/law or it can be the complementor.
2.1.1
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Suppliers
Apple has a strategic approach when it comes to their suppliers. Timothy D. Cook, Chief Operating Officer of Apple, has reduced the number of suppliers from more than one hundred to only twenty-‐four. This caused an increase in business for the remaining suppliers, which allowed Apple to gain more influence over them. Cook also used bargaining power to convince key suppliers to locate close to the apple facilities in order to ensure on time delivery. “The entire production process has dropped from almost four months to just two, so Apple can more quickly move to the latest, fastest parts.” (P. Burrows)
2.1.2 Substitutes
There were available substitutes for the Apple G4 cube. In fact due to Apple itself there were many substitutes for the Cube. This is because Apple hadn’t really got a real target group for its new PC. The high end user is in need of upgrade availabilities and the low end user wants a lot for a little. The cube wasn’t really cheapish and neither an upgradeable computer, so many people that have doubts would have chosen for one of Apple’s competitors or another Apple PC. The people that did buy the Apple bought it for its looks and for the brand. So what were the available substitutes at that time? The Apple PowerMac G4 is the product which seems to be the biggest substitute for the Apple G4 Cube. This is because people looking for an Apple computer are willing to pay a bit more. But because the Cube is very expensive compared with the PowerMac, which also offers many more upgrade possibilities, the PowerMac would have been the choice of many people looking in this branch of computers. The PowerMac is also a G4 pc and it offers many different options for all type of users for a in comparison cheaper price. The iMac DV is another product from apple with a typical Apple look although it is slightly less pretty it does have a screen attached to the pc itself and it offers enough for the low end user for a better price and again you do not have to buy a screen! Other competitors are windows pc’s (think of HP, ASUS, Toshiba and Acer) these computers were usually a lot cheaper as any apple and for most computer users the standard. Also the upgrade possibilities are a lot greater. The case of most windows pc’s of that time were all in one form factor(ATX) and all motherboards from all producers and all other components are interchangeable. In other words many people who have a Windows pc usually still have their first case with completely new hardware inside. This compatibility is strikingly better as apple’s and therefore many people must have chosen for one of these instead of the expensive non compatible cube. The last group of competitors would be the laptops people who are hesitating in buying a new computer and who saw the prices of the cube might have considered buying a laptop instead. A laptop is also small and Apple’s own laptops also have a nice design. Why buy an expensive G4 PC if you can buy a laptop for around the same money? (Apple, Steve, you fixed it. congrats! Now what’s act 2?
12-‐3-‐2010)
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2.1.3 New Entrants
New entrants can have a big influence on the market. In the computer industry, there are many different products on the market. Companies are willing to improve the products they already made or make new computers that are better than the ones that are already on the market. But making it on the market is more difficult than with the most other products. When there are new entrants on the market, they can be responsible for a price drop or the costs of all the other companies can become higher. In the computer industry there are not that many entrants. One of the biggest competitors of Apple is Windows. When Apple released the Power Mac G4 Cube, Windows 98 was already very popular and windows XP was launched right after the failure of the Power Mac G4 Cube (2001). These systems became a huge success. Also Dell and HP are competitors of Apple. The Power Mac G4 Cube was very expensive in the contrary with products of Dell and HP. Dell and HP did focus more on a lower price when Apple was really focusing on the design. Though Dell, HP and windows made competitive products for the Apple PowerMac G4 Cube, it shall not have led to the failure of the PowerMac G4 Cube, but the Cube may have suffered from the success of other products. (HP, Compaq follow Dell with price cuts, 10-‐3-‐2010
2.1.4 Buyers
)
What buyers a company chooses should be seen as a crucial strategic decision. Obviously, choosing buyers who have the least power gives a company more security and improves its strategic posture. Customers can force down prices, demand higher quality or more service, and play competitors off against each other. The amount of power a buyer has depends on several factors. The core market for Apple, accounting for over 26% of net sales in 2001, is the sales in the United States to both elementary and secondary schools, as well as for college and university customers. Because these buyers purchase in large volumes, they have a lot of power. In the case of the Apple G4 Cube, the buyers had a lot of power. Because the computers have so many competitors, customers easily switch to another product and may play one company against another. This is probably also what happened with the G4 Cube. The price of the Cube was too high which made the costumers switch to another company with a comparable product for a lower price. Also, this computer focused a lot on the design of the outside appearance of the cube. Because of that interesting innovative design, combined with the high price, the main buyers of the G4 Cube were professional designers. The core market, the schools and universities, weren’t interested in the cube. Eventually Apple had to lower their price if they wanted more sales. But unfortunately this was already too late and to prevent itself from a bigger loss, Apple had to take the G4 Cube of the market. (Porter, M.E. (1979). How competitive forces shape strategy. Harvard Business Review, (How competitive forces shape strategy, 1979)) (Annual Report Apple 2001 (UNITED STATES SECURITIES AND EXCHANGE COMMISSION, 2001))
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2.1.5 Rivalry
The computer market is large, so there is also a lot of competition for Apple due to the many leading companies. Apart from Apple, there are big companies like Dell, Hp, Compaq and IBM. The rivalry amongst existing firms is the most dominated force of the five forces. The company can use different tactics to stand above others, like focusing on the price front, the marketing-‐front, innovation or branding. By first wanting to create and later on actually creating that innovative design, Apple had mostly focused on the innovation-‐front. On the other hand, Dell and Hp were more focused on the price front. From March 11, 2000 to October 9, 2002 there was a great market crash, the Dotcom crash. Many argued that this happened because it was a case of too much too fast. Companies that couldn't decide on their corporate creed were given millions of dollars and told to grow to Microsoft size. So there was also a competition between the competitors, and they start to reduce the prices of their products. Apple stood on the opposite with their expensive new product, which not many people wanted to buy. The customer wanted to invest their money in a cheaper device. (The Apple G4 Cube Promotional Video, 10-‐3-‐2010) (IBM Delivers Workstation Power for the Price of a PC, 10-‐3-‐2010) (HP, Compaq follow Dell with price cuts, 10-‐3-‐2010) (Market Crashes: The Dotcom Crash, 10-‐3-‐2010
Conclusion Porter Analysis The Porter Analysis on the Apple G4 Cube shows its position in the industry while it was on the market. The five forces involved in a Porter Analysis relating to the Apple G4 Cube are summarized as follows. The supplier has little bargaining power because Apple uses them for simple components, which can easily be made by other suppliers. This gives Apple power over them. Because Apple has such a great power over their suppliers they are able to influence them in a strategic way. When a buyer is choosing for Apple brand there are similar products that can substitute the Cube; however, substitutes can also be found in a Windows PC. When Windows introduced XP around the same time as the Cube the capacity of the market was increased. This meant that there were more options for the buyer. Because there were similar products in the market for less money, the Apple G4 was not the only option. The buyer has a great amount of power over the company because they are able to shop around for the best deal. Apple targets a professional user who they thought would be willing to pay a higher price for its unique design. This target group provided some income for Apple but they missed focusing on the core market, such as schools. Apple’s competitors influenced the success of the G4 Cube. Apple had mostly focused on the innovation-‐front while their competitor focused on the price front. When the competitors entered cheaper comparable products Apple was forced to drop their prices. The innovative design couldn’t compete with the low prices of the competitor’s comparable products.
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Each area is important because each area has an influence on the company and how their product survives on the market. Apple didn’t pay enough attention to the desires of the buyers. This meant that when rivalry companies presented similar products for less money the buyer chose the cheaper substitute over the nicely designed G4 Cube.
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3. Macro Business Environment
3.1 Trends
There are trends in the macro environment of Apple that may have contributed to or limited the success of new products. There are four trends that are investigated:
Complexity Product understanding Globalization Time-‐to-‐market
Also there is described something about other relevant business trends.
3.1.1 Complexity
Due to the ever growing demand to new computers and electronics the design of both the components and software has increased in complexity. The Apple G4 Cube was really searching for the boundaries of computers back then, when they tried to fit the “huge” PowerMac G4 inside an 8x8x8 box. The size of the box to which the engineers were limited gave them little freedom when it comes to fitting the parts in a logical way. Therefore the Cube has become very complex within its core. Another thing Apple chose to do because they wanted to give the Cube a “clean” look, is add all the external ports for example a mouse, keyboard and usb device underneath the case of the cube. This makes it hard for the user to reach them and the cube must be lifted to put any device inside. Also a range of special cables were developed by Apple to extend larger cables onto smaller cables which were able to reach underneath the cube. So the designer’s idea of a clean 8x8x8 inch cube made the PowerMac G4 Cube quite complex for both the engineers and the users.
3.1.2 Product Understanding
Apple puts a great deal of effort into the esthetical aspects of their products; this was not a problem until they allowed the appearance to overpower the functionality. In the case of the G4 Cube, a decrease in product understanding occurred mostly due to technical flaws. Many of these technical flaws came about because the designers put too much emphasis on the look and not enough on its usability. Although the plastic casing was designed in a very visually appealing way, it was not strong and it cracked. The casing also generated a static charge which, when placed on a glass surface, caused the computer to shut itself down unexpectedly. The Apple G4 Cube did not have ports for upgradeability nor did the price include a screen. The professional user, who Apple targets as their major user group, felt that they could find a more sensible computer for less money. Although The G4 Cube didn’t present new software related problems, the hardware issues were significant enough to cause an overall decrease in product understanding.
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3.1.3 Globalization
One of the trends that can be very important is the globalization. A product can be designed, build and assembled in different parts of the world. The PowerMac G4 cube is also made in different parts of the world. Apple is from California, but Apple has manufacturing companies in Sacramento, California, Cork, Ireland and Singapore. The final assembly of products is done by external vendors often in Taiwan, but they have also external vendors in Korea, Mexico, the People’s Republic of China and the Czech Republic. Apple sometimes gets disruptions because they have problems with the economic, business, environmental, political or military conditions in these countries. Apple is dependent on these countries. They have to obtain governmental permits and approvals, exchange fluctuations, restrictions, political instability, labor problems, trade restrictions and changes in tariff and freight charges. When companies have their operations all over the world, it is harder to deliver high quality products. Communication and teamwork is more difficult then because of different cultures, language and the long distance. This can lead to miscommunication. Not only there can be a miscommunication with the manufacturing companies, also the users can react different in different countries. Sometimes a product can do very well in America, but it can be a disaster in Asia or Europe. The difference between cultures and what they like can be very huge. Sometimes companies have to change their product, to sell it in other countries, to make the product more popular over the whole world. The Apple Power Mac G4 Cube was only sold in America. Probably because of the disappointing sells in America, they didn’t bring the Power Mac G4 Cube on the market in Europe or Asia. (UNITED STATES SECURITIES AND EXCHANGE COMMISSION, 14-‐3-‐2010)
3.1.4 Time-to-Market
What time a product enters the market is very important. Due to competitors, entering the market second can have a big influence on the profit the company is going to make. The company who is first on the market has great benefits such as receiving feedback so that improvements can be incorporated, building a reputation, and a shorter payback period. To make sure a company is first on the market research and development has to be very fast. This means the company will have to invest a lot of money in this area. Because the personal computer industry is characterized by rapid technological advances, Apple spends a lot of money on research and development, especially focused on the design. The amount of money Apple spent on R&D was $314 million in 1999, $380 million in 2000, and $430 million in 2001. The Apple G4 Cube was an innovative product, especially for its appearance. It was something people had never seen before, a desktop computer engineered to fit inside a cube, so on that aspect the Cube was first. The first cubes sold were probably bought by early adaptors, customers who buy the product as one of the first and are prepared to pay a high price for it. After that, others costumers stayed away. The cube just wasn’t the product people were looking for. So, although Apple was first of the market with this innovative design, Apple didn’t even succeed in earning back the costs they made. Looking at the software of the G4 Cube, it was similar to the PowerMac G4 and other personal computers on the market. So in that aspect, Apple wasn’t the first. (UNITED STATES SECURITIES AND EXCHANGE COMMISSION, 14-‐3-‐2010)
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3.1.5 Other relevant (business) trends
A trend in the computer market is that the software will be accessible, scalable, elastic and shareable according to analysts (July 14, 2008). IBM did some research in new trends, including Dynamic e-‐Business, Privacy Enabling Technologies and Intelligent Learning Agents and ‘Bots’. The Requirements of the Dynamic e-‐Business trends are: speed (inside the decision loop), Automation (with appropriate tasks by people) and Depth and scope of interactions. IBM recognized that it’s important for a company to design a computer which works with high speed, automation and more interaction between the computer and the user. “The Top Ten Computer Trends for the 21st Century
1. Computers will become powerful extensions of human beings designed to augment intelligence, learning, communications, and productivity.
2. Computers will become intuitive-‐-‐-‐they will "learn," "recognize," and "know" what we want, who we are, and even what we desire.
3. Computer chips will be everywhere, and they will become invisible-‐embedded in everything from brains and hearts, to clothes and toys.
4. Computers will manage essential global systems, such as transportation and food production, better than humans will.
5. Online computer resources will enable us to download applications on-‐demand via wireless access anywhere and anytime.
6. Computers will become voice-‐activated, networked, video-‐enabled, and connected together over the Net, linked with each other and humans.
7. Computers will have digital senses-‐speech, sight, smell, hearing-‐enabling them to communicate with humans and other machines.
8. Neural networks and other forms of artificial intelligence will make computers both as smart as humans, and smarter for certain jobs.
9. Human and computer evolution will converge. Synthetic intelligence will greatly enhance the next generations of humans.
10. As computers surpass humans in intelligence, a new digital species and a new culture will evolve that is parallel to ours.” (Top Ten Trends)
(Trend Micro Ships PC-‐cillin 2000, 14-‐3-‐2010) (Entellium CRM Enters Channel Through PC Mall and Zones, 14-‐3-‐2010) (e-‐business Trends and Research Challenges , 14-‐3-‐2010) (World Computer Industry Analysis, 4-‐3-‐2010) (Top Ten Trends, 14-‐3-‐2010)
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4. Conclusion, recommendations and reflections
Conclusion
The G4 Cube did not succeed when placed on the market due to commercial failure as well as technical malfunctions. Being able to understand what, when and why something went wrong in the process of a product’s life can aid in future product development for the company. The conclusion that follows outlines the errors that occurred on a company level, as well as a micro and a macro business level. Company
The source of the problem defined during the Ishikawa is linked to the IDEF analysis. For example some of the design failures can be seen in the links between design and engineering. Technical and design failures could have been avoided if the problem was noticed and adjusted in the testing engineering phase. The design decisions made also had an effect on success of the G4 Cube. It was a decision of the designer not to include space for extra installations even when it was recognized by the engineer that it would cause for problems in upgradeability. Apple failed to properly assess their buyers’ wants and needs. The MIR analysis showed that Apple was unable to find the root cause of the failure of the Power Mac G4 Cube. Apple tried to analyze their product on the market and realized they had to change the product in order to make it a success, but since they couldn’t find the root cause of the failure of the Power Mac G4 Cube, they couldn’t help their product from failing. They did find other causes, and they react on these causes. They lowered the price and they tried to look at the user, by offering versions with different configurations for a different price. Unfortunately it didn’t help enough to save the product from failing, because it apparently wasn’t the root cause. That means that Apple was on his way to become a MIR 3 organization, but because they couldn’t find the root cause, they couldn’t reach that level, MIR 3 or the upcoming level, MIR 4. It is apparent that Apple spent less than their competitors on research and development. If Apple would have increased their R&D spending during the making of the G4 Cube and focused on the user and market more, they may have been able to make more sales. Due to the low sales amount Apple suffered a loss, which eventually also contributed to their overall loss of 2001. The success factors are guidelines that are used to show how the Apple G4 Cube compares with a successful product. Through this analysis it is found that Apple paid attention to most of the areas but failed to execute them all effectively with the development of the G4 Cube. This can be seen most clearly in market need recognition. Apple was unable to make a proper assessment of what the market was looking for in a new desktop computer. A factor that Apple uses to their advantage is a good reputation with their customer. The Designers focused heavily on the appearance of the G4 Cube. Because they have a reputation already with their existing customers, they thought a computer purely focused on design would be a success.
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Micro Business environment
Each factor in the porter analysis has an effect on the product. If any of these factors change, the company must be able to adjust their strategy in order to remain successful. Apple was forced to adjust their strategy while they were on the market because of the large power of the buyers and the amount of substitute products. They lowered their price point several times; however, it was still not enough to compete in the micro business environment. Their change in strategy was not enough to prevent the Apple G4 Cube from failing. Macro business environment It is important to be aware of trends so that a product will be accepted into the market. When the G4 Cube was introduced it was discovered that the general market was not interested in a product with a beautiful design but that functionality was the principal need. Even though Apple was the first to present a revolutionary designed computer on the market, at the time, people still seemed to be uninterested. Presenting a product in different parts of the world is a good idea because trends in global markets can be significantly different from one another. The G4 cube was only presented in the US, this may have been because by the time the G4 Cube failed there was not enough money to start another launch in another market. Due to the technical errors that the G4 Cube presented many users did not have an understanding of the product, which resulted in many returned computers. It is clear that there are several main issues relating to the failure of the G4 Cube. It had problems within the company level including a high price point, and technical failures. The macro business environment was influential on both the micro level and the company. When the G4 Cube was brought into the market it’s problems caused the buyers to choose for comparable substitute products.
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Recommendations
Recommendations for the company: To recommend anything to Apple we should first look at the biggest flaws during the process of production of the Apple Powermac G4 Cube. All the flaws combined can be seen as the reason for the failure of the Cube thus solving these would eventually lead to the recommendations. Marketing Failure
The biggest problem that the user had with the Cube was its high price. The price was set much too high compared to the competitors of the Cube not only Windows pc’s but also compared with other Apple computers. Why would a consumer buy a more expensive computer with likewise configurations if they can but the same for less (competition problem)? To solve this issue Apple should track back the design process and search for the source of this high price.
If it is found within a certain department, this department should look at different possibilities to reduce
the price. For example the 8x8x8 design could have been changed to a 9x9x9 design which might have
made it easier to fit in the components instead of customizing them to fit in and customizing is
expensive.
Another thing is that it was very unclear what user Apple targeted with their PC. The Cube was much too expensive for the average family desktop pc. But it was neither capable of delivering enough upgrade possibilities for more advanced users, who’d rather but a Powermac G4 which offered many more possibilities and about the same hardware configurations. For the future Apple should target at a particular user group instead of floating in between. The price
and technical specifications should be equal to what this target group can expect for the product.
Technical Failure
The Apple G4 cube coexisted with many small technical problems some of these are: a static case, no conventional input/output for audio devices and no cooling devices which leads to a lower life expectancy especially when upgrading to a higher performance system. The issues that are mentioned above could all be fixed by apple during the product testing stage. During
the end of the design process the company should always try to test the product as extensive as possible
these logically include user tests.
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Design Failure
The design’s biggest problem was that it was very small. The size lead to many other small problems such as integration with other Apple product components and the lack of a sufficient amount of available ports (think of USB and PCI-‐slots). Other design failures were that because of the material that was used the Cube vibrates and the same material also consists of many minor cracks within the case. Apple should be aware of what they sell, instead of going for a very good looking design they could have
made a less attractive pc with different material and more ports available. Apple chose to be very
stubborn with their design and took these small problems for granted. In the future they should weigh off
the other possibilities instead of producing a very good looking product that has many small problems
caused by the external design. And again excessive product testing is a must.
All in all just as shown in the MIR analysis Apple should have paid more attention to the Cube its design before and during production. And in the future should try and find out about the problems that users encounter during an early stage of production, which offers the opportunity of fixing these problems in future versions of their product. Another thing apple should look at more extensive is the price that users have to pay and what they have to pay it for. What makes this Apple product stand out from other products and makes people buy an Apple instead of one of its competitors?
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Reflections
Understanding of the complexity of new product development processes: According to the many steps that have to be taken in the Post-‐Mortem-‐Analysis for researching the failure of the product (in our case the Apple G4 Cube) can be concluded that there is a lot involved within this analysis. After a product has failed the designer wants to know the causes and the position of the failure, for not making the same mistakes in next designs and actually improve the product. Doing a Post-‐Mortem-‐Analysis for an industrial product is as looking back on the development process of that product. This shouldn’t be done in an inverse way, but step by step from the beginning of the development process when making that new product. Therefore the complexity of new product development is much more intricated than we, as a group initially thought. By reflecting on this statement could be said that the analysis is classified in three different levels (for finding the problem, there has to be researched on Company level, Micro business environment and Macro business environment) and more steps within each level. There are usually a lot of causes for the problem and it’s hard to say what they are and where we can find them. It’s even harder to find the root cause, because how could the designer know for sure that all problems started there? It is a large statement to conclude what the root cause is if he sees what it has instigated. Where the root cause of the problem is situated, where the company has stranded, that’s what is researched in the MIR analysis. Product failure can also depend on the direct business surrounding of the company that had developed the product. A product can be developed for different reasons. On the market there are more companies that make a consistent product for other reasons. With the five forces of the Porter Analysis the competition between the company and the surrounding can be analyzed. The third level is a more global level, enclosed the worldwide trends. We found it more complicated to research the company level than the micro and macro environment level, because in our case the company wasn’t very high-‐spirited to talk about the failure reasonably. Understanding of industrial designer’s position in the new product development process: As an industrial designer it is important to make products that will do well on the market. When we want to make good products, we now know why a product will be a success and maybe even more important, why a product would fail: A designer has to make the conception of the product. When there is something wrong with the product, it is often because there is something wrong with the design part. That means that when a designer fails to do a sufficient job, the product will probably become a failure already. A problem with the manufacturing or the engineering can often be fixed, but when there is a problem with the design, the whole concept will have to be changed in order to make the product still a success. A designer will first have to do research about what people want, what there already is on the market and how they can realize the product. Therefore you can say that the designer has the role of a manager in the process. The designer leads over all the steps to be taken, and if the participators of the cooperation are stuck somewhere, the designer coordinates them. In our case we have learned to look at trends that can influence our product development. But there is much more to consider when making a good product. Of course the looks of the design is generated by an industrial designer and it is also an important factor to sell more of the product. Also the price of a product is a huge factor for making a product that will sell well. The Power Mac G4 Cube was way too expensive for the normal customer and that was one of the reasons why the Power Mac G4 Cube failed. A designer has to take in account that the product they make can be sold for a reasonably price. Therefore the designer has to be aware of the prices of the components and the relation to the selling
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price. That means that an Industrial Designer has a major role in the business side of the product development. It can be said that an Industrial Designer has the biggest influence on the success (or failure) of a new products development. The Post-‐Mortem-‐Analysis did help us to analyze the whole situation of why the Power Mac G4 cube has become a failure, from the beginning to the end. In next cases we can use this Post-‐Mortem-‐Analysis to analyze why a product has failed. But for us it is even more important to look at all the information we gained by doing this Post-‐Mortem-‐Analysis. It showed us what the most important factors and levels were during a new product development. In the future we can analyze all these factors and levels before the product will be launched on the market. A failure can be prevented when an industrial designer takes account of all these factors. Problems can be solved in an early stage, and mistakes can be detected early, which will increase the success of a product. Nevertheless, the product can still fail. Then a Post-‐Mortem-‐Analysis can be done, to find the root causes and to make better products in the future.
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5. References
http://www.upvery.com/6487-‐the-‐great-‐failure-‐of-‐apple-‐7-‐power-‐mac-‐g4-‐cube.html, 24-‐2-‐2010 (The great failure of Apple # 7: Power Mac G4 Cube, 2010) http://news.cnet.com/2100-‐1001-‐246329.html&tag=mncol%3btxt, 24-‐2-‐2010 (Mac Cube: Is it all it's cracked up to be?, 2000) (Ishikawa/IDEF) http://apple-‐history.com/?page=gallery&model=g4cube, 24-‐2-‐2010 (Power Macintosh G4 Cube, (1996-‐2010) (Ishikawa/IDEF) http://www.wired.com/gadgets/mac/multimedia/2008/01/gallery_apple_flops?slide=5&slideView=3, 2-‐3-‐2010 (Learning From Failure: Apple's Most Notorious Flops, 2010) IDEF
http://www.thestreet.com/story/10273658/2/apple-‐frugal-‐to-‐a-‐fault.html (Wolverton, T. 2006) http://md1.csa.com/partners/viewrecord.php?requester=gs&collection=TRD&recid=103601AN&q=apple+g4+cube&uid=789092931&setcookie=yes (Joseph, C. 2000) Annual Report Apple 2001 http://pb-‐eweb.vwd.de/GB/apple%202001-‐10K.pdf, 25-‐2-‐2010 (UNITED STATES SECURITIES AND EXCHANGE COMMISSION, 2001)
http://www.wired.com/gadgets/mac/news/2003/07/59764#ixzz0hVhv7VwH, 3-‐3-‐2010 (Apple Cube: Alive and Selling, 2003)
http://www.apple-‐history.com/?page=gallery&model=g4cube, 3-‐3-‐2010 (Power Macintosh G4 Cube, 1996-‐2010)
Betsy Morris, “What makes Apple Golden”, ProQuest – Fortune , March 17, 2008, Vol. 157, lss. 5; pg 69. http://www.thestreet.com/story/10273658/2/apple-‐frugal-‐to-‐a-‐fault.html, 3-‐3-‐2010 (Apple: Frugal to a Fault?, 2006) http://www.apple.com/, 5-‐3-‐2010
http://www.comug.org/newsletters/0008.pdf, (APPLE YES, STEVE, YOU FIXED IT. CONGRATS! NOW WHAT’S ACT TWO?, 2000)
12-‐3-‐2010
http://news.cnet.com/HP,-‐Compaq-‐follow-‐Dell-‐with-‐price-‐cuts/2100-‐1001_3-‐257015.html, 10-‐3-‐2010 (HP, Compaq follow Dell with price cuts, 2001)
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http://www.comug.org/newsletters/0008.pdf, (APPLE YES, STEVE, YOU FIXED IT. CONGRATS! NOW WHAT’S ACT TWO?, 2000) Porter, M.E. (1979). How competitive forces shape strategy. Harvard Business Review.
10-‐3-‐2010
http://books.google.nl/books?hl=nl&lr=&id=lp3v6-‐ Rz7X0C&oi=fnd&pg=PA102&dq=porter+m.e.+1979&ots=6fN19MHZAL&sig=zqAxs4_SbsVHTID9rFpnDgOD_cE#v=onepage&q=&f=false, (How competitive forces shape strategy, 1979)
12-‐3-‐2010
Annual Report Apple 2001 http://pb-‐eweb.vwd.de/GB/apple%202001-‐10K.pdf, (UNITED STATES SECURITIES AND EXCHANGE COMMISSION, 2001)
12-‐3-‐2010
http://www.youtube.com/watch?v=4-‐PB86oy044, 10-‐3-‐2010 (The Apple G4 Cube Promotional Video, 2006) http://www-‐03.ibm.com/press/us/en/pressrelease/1517.wss, 10-‐3-‐2010 (IBM Delivers Workstation Power for the Price of a PC, 2000) http://news.cnet.com/HP,-‐Compaq-‐follow-‐Dell-‐with-‐price-‐cuts/2100-‐1001_3-‐257015.html, 10-‐3-‐2010 (HP, Compaq follow Dell with price cuts, 2001) http://www.investopedia.com/features/crashes/crashes8.asp, 10-‐3-‐2010 (Market Crashes: The Dotcom Crash, 2000)
http://pb-‐eweb.vwd.de/GB/apple%202001-‐10K.pdf, 14-‐3-‐2010 (UNITED STATES SECURITIES AND EXCHANGE COMMISSION, 2001)
http://pb-‐eweb.vwd.de/GB/apple%202001-‐10K.pdf, 14-‐3-‐2010 (UNITED STATES SECURITIES AND EXCHANGE COMMISSION, 2001)
http://www.thefreelibrary.com/Trend+Micro+Ships+PC-‐cillin+2000,+First+Desktop+Antivirus+Solution+to...-‐a061482727, 14-‐3-‐2010 (Trend Micro Ships PC-‐cillin 2000, 2000) http://smallbiztrends.com/2008/07/entellium-‐crm-‐enters-‐channel-‐through-‐pc-‐mall-‐and-‐zones.html, 14-‐3-‐2010 (Entellium CRM Enters Channel Through PC Mall and Zones) http://atlas.eml.org/ICDE/StuartFeldman, 14-‐3-‐2010 (e-‐business Trends and Research Challenges, 2001)
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http://www.mindbranch.com/Computer-‐R53-‐63/, 14-‐3-‐2010 (World Computer Industry Analysis, 2001)
http://jcanton4.securesites.net/about-‐igf/top-‐ten-‐trends/top-‐ten-‐computer-‐trends-‐for-‐the-‐21st-‐century.html, 14-‐3-‐2010 (Top Ten Trends, 1990-‐2010)