A relevant example is the 64 bit processor that Apple designed in house to

A relevant example is the 64 bit processor that apple

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more difficult the innovation is to copy, the longer the resulting competitive advantage will last. A relevant example is the 64-bit processor that Apple designed in house to power the iPhone 5s. Up until its development, the 32-bit processor was the most powerful processor used by smartphones. The release of the iPhone 5s with a 64-bit processor is representative of a chip 3
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BLOOMBERG ESSAY advantage resulting from Apple’s chip design strategy. The innovation created an advantage over the competing smartphones and their respective chip designers[ CITATION Lyo13 \l 1033 ]. Fast forward six months and the major vendors were set to release a 64-bit processor powered version of their high end smartphone[ CITATION Cer14 \l 1033 ]. The quick response of the competitors to a significant innovation is evidence of the short lived competitive advantage of the Apple processor chip design strategy. iPhone Production Costs The effect that insourcing has on the production costs of the iPhone is left to speculation. The sensitive nature of such information necessitates that Apple not share with outsiders. However, I would suggest that the production costs would not be lower as a result of the processor chip insourcing strategy. The suggestion is based on the fact that at no point is lower production costs offered as a reason for Apple to design their own processor chips. Differentiation through innovation is given as a reason for the strategy. As indicated in the article, chip design is very complicated and risky. Implementing strategies that increase complexity and risk are not typically associated with lowering production costs. However, the fact that production cost are not reduced by the insourcing strategy cannot mean that the strategy is not one that can increase profits.
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