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New products, services or processes
entering the market are rarely completely new, as their design is more
frequently derived from other alternatives and complementary technologies or
products. (Brandenburger and Nalebuff, 1995) However, in just ten years, Jobs
had led Apple to an intense innovation era: the iPod, the iPhone, and the iPad
created new markets and brought billions of dollars to the investors.

The process of innovations’ adoption has
been subject of study in numerous fields as medicine, agriculture, military,
and business; As stated by Gladwell (2000) three factors are indispensable to
have a successful diffusion: first, the innovation must be adopted at early
stage by a influencers or leaders; second, the innovation must have
characteristics that convince consumers to acquire it and, third, the social
environment will determine the innovation scope.

The aim of this paper is to define
Roger’s theory of Diffusion of Innovation an establish a case study of one of
the most important innovation in the past decade: The Apple iPad

 Diffusion of Innovation

In business management, the concept
of innovation shall be differentiated from technology and knowledge, as stated
by Rogers (1983), innovation is a new idea, technology is an instrumental
design aimed at reducing the uncertainty of the cause-effect relationship
involved in the achievement of a determined objective, and Benbya (2008),
defined knowledge as the mental capacity for effective performance.

Innovation applies by a process
through which a new idea, behavior, or product is planned and implemented, that
is qualitatively different from the existing forms; According to Usher (1954),
the innovation process has four steps:

Perception of the problem, as the
event or circumstances that trigger the necessity to solve a particular
situation; Setting of the stages, as the configuration of events is combined in
a particular manner; the Act of insight, when the solutions are found and
chosen between many options available and the Critical revision, where the
solution is tested and adopted by the stakeholders.

The measurement of innovation
adoption is referred to as diffusion and as the communication mechanism over
the period in which individuals and organizations adopt innovation; in Rogers’
words, Diffusion is the process by which an innovation is communicated through
certain channels over time among the members of a social system. (Rogers, 1983,
p. 5)

According to Rogers (1983, p. 162)
every member of the social system must face a five steps adoption of
innovation’s process: 1) Knowledge, as the first approach to the innovation and
how it works; 2) Persuasion, when the individual shows some level of acceptance
or rejection to the innovation; 3) Decision, when the individual or
organization adopt or reject the proposed innovation; 4) Implementation, as the
practical use of the innovation,  and 5)
Confirmation, as the evaluation of the innovation’s implementation.

   
Diffusion could be passive when peer distribution within social networks
is unplanned, informal, and horizontal or Active, where the spread is planned, formal,
and vertical. As stated by Glanz (2015) Innovation has five characteristics
that affect diffusion: Relative advantage, as the comparison of attributes
between the innovation and the former system; Compatibility as the innovation
fitness with the target market; Complexity as the Innovation’s grade of
difficulty to use; Trialability as the option to experiment with the innovation
before to adopt it and, Observability as a means of measuring the results of
the use of innovation.

Numerous theoretical frameworks have
been developed to explain the Diffusion of Innovation; Everett M. Rogers was
the pioneer when in 1962 published his influential book Diffusion of
Innovation
, and  developed a complete
theory, analyzing the elements of diffusion as “the process by which (1) an
innovation (2) is communicated through certain channels (3) over time (4) among
the members of a social system. (Rogers, 1983, p.11).

Rogers categorized the adopter by
the length of period taken to embrace the innovation: Innovators, as the first
individuals to adopt a  new idea, Early
adopters, Early Majority, Late Majority, and Laggards. For the author, the
early adopters have more education, higher social status, more exposure to mass
media and interpersonal channels of communication, grater social participation
and change agent contact and more “cosmopoliteness” (Rogers, 1983, p. 207).

 The most publicized Roger’s contribution is
the bell shape curve plotted figure, where the author classified the adopter’s
categories on the bases of innovativeness. 
From the left side to the right have 2.5% of innovators, 13.5% for Early
adopters, 34% for Early majority, 34% for Late Majority, and 16% for
laggards.  (Figure 1).

Rogers was a sociologist,
specialized in communication, and many Scientifics disqualified his book because
he did not include a mathematical derivation to sustain the Diffusion
Theory;  Professor Frank M. Bass
expressed the model by the formula

Where M is the potential market, p
is the coefficient of innovation and q, the coefficient of imitation,  f(t) — the portion of M that adopts at time t,
F(t) — the portion of M that have adopted by time t, a(t) — adopters (or
adoptions) at t and A(t) — cumulative adopters (or adoptions) at t. The
equation must be read as “The portion of the potential market that adopts
at t given that they have not yet adopted is equal to a linear function of
previous adopters.” (Bass, 1969).

Diffusion Theory has been subject of
severe criticism since, as a social science it is impossible to be mathematically
exact. Davies (1979) criticized these models because it is quite implausible in
a mass media society to rely on the spread of information through personal Contact.
Karshenas and Stoneman (1995) criticized such models
for the primitive use of information collection and provided that potential
adopters are considered to be passive recipients, not active information
seekers.

As stated by MacVaugh (2010), Rogers
and Bass failed to include an entire category of non-adopters, people who will
never adopt innovation, no matter what, for example, when new technology can
not replace older technology or when technological complementarity creates a
greater overall benefit for existing users than new technology would have
gained by adoption. There is a barrier to knowledge in other cases. Naturally,
the ability of a human or group of people to learn is limited (Cohen and
Levinthal, 1990). Access to learning in a given community can be limited
(Miller, 1994), And at times it can be made much more difficult to introduce a
radically new product if the product requires extensive marketing for consumers
to understand that the new product is in the same class as its old product
(Brucks,1985).

Apple iPad Case Study

Apple is an iconic technology American company,
for the last 44 years the  California corporation
has been a referent for innovation; According to Krishna (2019) is the first
company reaching $1 trillion in capitalization, more than the 5% of the U.S.
GDP, and larger of 183 countries’ economy. In 2019,  Forbes listed Apple as the most valuable brand
with $205.5 billion way ahead of Google ($167.7 billion), Microsoft ($123.5
billion), Amazon ($97 billion) and Facebook ($88.9 billion). Many authors
coincide with affirming that Apple transformed the computer business, (iMac),
music business (iTunes and iPod), Mobile telephone (iPhone) retail stores
(Apple Stores)  and invented new markets
for products like iPad (Thomke, 2012)

Created in 1976 by Steve Wozniak an electronics
genius and Steve Jobs, the paradigmatic business leader and innovator, Apple
rapidly reached the success with the Macintosh, one of the first personal
computers; however, in 1985  Jobs radical
management style was the cause of his separation of the company, and a period
of failed products like Newton Personal Digital Assistant and  Macintosh Performa brought financial losses
and investors hopelessness.  In August
1997 the Board approved the Next Computers acquisition and by this mean, Jobs
returned as CEO, as stated by Thompke (2012, p.6) he immediately stopped the
licensing program, shout down two divisions, eliminated 70% of new projects,
moved the production overseas, changed the distribution system, launched a
direct sales website and started a sophisticated marketing campaign, in just
one year Jobs, transformed the company and launched the iMac his first
commercial blockbuster.

The iPad was introduced in January 2010 and sold
3 million units in just 80 days (O’Boyle, 2019), with beautiful aluminum and
glass design, 1GHz Apple A4 processor, and 16GB, 32GB, or 64GB storage capacities,
10-hour battery life, was offered with a starting price of $499. The big iPhone
(as called by critics) was something between a personal computer and a
smartphone, was misunderstood for the computers’ experts, who criticized the
lack of power and the elevated price for a non-sense product. However, a  new peak on sales was reached in the fourth
quarter of 2014, when 26 million iPad was sold for Christmas gifts. The iPad
created a completely new market, composed by kids, artists, businessman,
elders, everybody found an application to use in the tablet; Microsoft, HP, Dell,
and Samsung was behind trying to create their own tablets, for six years in a
row iPad, was the best selling tablet and was displaced by inexpensive Korean
and Chinese copies.

The core question is how Apple created an
entirely new market for a misunderstood product? Computer Specialists and
writers recommended not to buy the iPad (Dilger, 2018) and qualified the
product as a fiasco and disappointment; however the tablet is one of the
best-sold technology products of the past decade.

The diffusion of innovations model could be
utilized to identify who adopters were and how the success and growth of the
iPad are responsible. Diffusion of innovations Refers to the dissemination of
abstract ideas and concepts, technical information, and actual practices within
a social system in which the dissemination refers to the flow or movement from
source to adopter, typically through communication and influence. (Rogers,
1983).

According to MacVaugh (2010), social conditions
account for the cultural and related specificities (e.g., norms, values,
hierarchies) widely divided among user groups or communities. For example, the
status that users acquired through the use of a given technology within their
social group influences their propensity to change it for new products. Apple
products are expensive and are “cool,” using one of the company products the
individual enters an exclusive club. “you can have a tablet, but I have an
Apple, ergo I have more status.” In this scenario, Jobs was a marketing genius
who convinced personalities as Bono, Serena Williams, Oprah Winfrey, Paul
McCartney, and other famous for appearing in Apple commercials, making the
Diffusion of Innovation less risky, since this type of person plays a critical
role in the spread of innovations.

Leaders of opinion are individuals who often
influence the orientations of others towards innovation (Rogers, 1962). If the
use of technological innovation within a community is not accepted or
misunderstood, the rate of adoption is also likely to slow down; companies
usually request support from opinion leaders to prevent this risk. Positive
appreciation by (if available) opinion leaders is essential to broaden social
acceptance.

A dominant design is a product widely used in the
relevant industry and appears to change the nature of competition in the
markets (Abernathy and Utterback, 1978). The main consequences are that the
first moving product is the Industry Standard; its competitors must follow.  After ten years, Apple first-mover strategy
still profitable, according to Reynolds (2019), iPad is the best seller tablet
with the 38% of the share market, far away is the closest competitor, Samsung,
with 15%, Huawei 10.3, Amazon 7.4%, Lenovo 5.8% and others (Chinese imitators)  with 23%; Using Roger’s Diffusion Model, we
can affirm that the late majority of adopters surpasses the expected 34%, since
now the iPad market share still strong with 38%.

In ten years, Apple has sold 360 million iPads,
now the market is declining as expected by competition and new products,
according to Nations (2019) new sales should be made from some other avenue,
such as business, new markets where people could not originally afford a
computer, or upgrades of people who thought their computer needed substitution.

Conclusion

            Diffusion models have
helped many companies to improve the success of their new products in the
market. Knowledge of how individuals perceive innovation attributes and how to
leverage social mechanisms to enhance adoption provides valuable support to companies
marketing their innovations. The diffusion of the iPad as innovation is
paradigmatic: one in twenty humans in the earth acquired an iPad in the past
ten years, Steve Jobs idea to have something between a computer and a phone was
object of severe criticism by computers business experts; however as innovator
Jobs risked his reputation and Apple future for an innovative technological
product and the bet paid off.       

References

Abernathy,
W. and Utterback, J. (1978) Patterns of industrial innovation. Technology
Review
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Vol. 50,
pp. 41-7.

Bass,
Frank M. (1969) A new product growth for model consumer durables. Management
Science
15 215-227.

Benbya,
H. (2008) Knowledge Management: Systems Implementation: Lessons from Silicon
Valley. Chandos Publishing. Oxford.

Brandenburger,
A., and Nalebuff, B. (1995), “The right game. Use game theory to shape
strategy”,

Harvard
Business Review, July-August, pp. 57-71.

Brucks,
M. (1985) The effects of product class knowledge on information search behavior.

Journal
of Consumer Research.
Vol. 12, pp. 1-16.

Cohen,
W., and Levinthal, D. (1990) Absorptive capacity: a new perspective on learning
and

Innovation.
Administrative Science Quarterly. Vol. 35, pp. 128-52.

Davies,
S. (1979) The Diffusion of Process Innovations, Cambridge: University Press

Dilger,
D. (2018) Apple’s eight years of iPad: a revolution in iOS computing. Retrieved
from https://appleinsider.com/articles/18/01/27/apples-8-years-of-ipad-a-revolution-in-ios-computing

Glanz, K. et al. (2015) Health,
Behavior, and Health Education. San Francisco: Jossey-Bass

Karshenas,
M. & Stoneman, P. (1995) Technological Diffusion in Handbook of the
Economics of Innovation and Technological Change. Oxford and Cambridge, p.
265-697

Krishna,
M. (2019) At $1 Trillion, Apple Is Bigger Than These Things. Retrieved from https://www.investopedia.com/news/apple-now-bigger-these-5-things/

MacVaugh,
J. and Schiavone, F. (2010) Limits to the Diffusion of Innovation.  European Journal of Innovation Management,
Vol. 13 No 2, pp. 197-221

Miller,
P. (1994) Gender discrimination in training: an Australian perspective. British
Journal

of
Industrial Relations.
Vol. 32 No. 4, pp. 539-63.

O’Boyle,
B. (2019) History of the Apple iPad: The timeline of Apple’s tablet from then
to now. Retrieved from https://www.pocket-lint.com/tablets/news/apple/146888-history-of-the-apple-ipad

Reynolds,
S. (2019) 2Q 2019 Data Shows Another Decline in the Tablet Market. Retrieved
from https://wccftech.com/2q-2019-data-shows-another-decline-in-the-tablet-market/

Rogers,
E. (1983). Diffusion of Innovations. New York: Free Press.

Thomke,
S. & Feinberg, B. (2012) Design Thinking and Innovation at Apple. Boston:
Harvard Business School Publishing.

Usher, A. (1954) A History of Mechanical Inventions, Cambridge: Harvard University Press

Figure 1. Adopter categorization based on innovativeness. Reprinted from Rogers (1983) Diffusion of Innovation (p. 247)

Diffusion of Innovation, Innovation, iPad, Steve Jobs, Victor Virueña, Victor Viruena


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