13 Sep 2017
The Coming of Apple’s iPhone X
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by Willy Shih

Apple created world-wide buzz yesterday with its announcement of several new products, including the much-anticipated iPhone X. Harvard Business School professor Willy Shih, an expert on manufacturing and product development, gives his take on some of the challenges the company faces on the tenth anniversary of the first iPhone.

By the time Apple finally announced its new iPhones yesterday, details of most of the features had already leaked out. Expectations were high. After all, it was the tenth anniversary of the introduction of the original iPhone. But for a company that always pushed itself to be “insanely great,” as Steve Jobs used to say, the company had to perform a difficult balancing act.

Apple had to balance using expensive components like their custom OLED (organic light-emitting diode) screen with curved edges and rounded corners, with the need to keep costs down to fight increasingly capable mid-range competitors coming out of China.

It had to balance its desire to push the limits of manufacturability – which means higher costs and lower production yields – with the need for their suppliers to be physically able to produce enough components to meet demand. (We heard of these supply chain issues for much of the summer.)

And could they balance the demand for the iPhone X from die-hard Apple fans – with a price point that exceeds the per capita GDP of Niger – with the desires of consumers who might just say they don’t really need to spend that much on a phone?

So the three new iPhones are a balancing act – a classic example of market segmentation. But not the revolution some people may have been expecting to mark the ten-year anniversary of a truly transformational product.

In 2007, the first iPhone took advantage of a technological convergence of low-power computing with always-on connectivity in a well-executed package that established a benchmark design for the whole category. Yesterday’s announcement was more of a balancing of conflicting pressures – something Apple has been doing extraordinarily well in the past decade since then. That’s an accomplishment worth celebrating as well.

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