Introduction

September 7, 2016 - the day that marks the beginning of a new listening experience.

This was the day Apple announced its iPhone 7. The most awaited product of the evening stirred the
smartphone industry by doing away with the traditional headphone jack. With this, Apple introduced
its newest product - Apple AirPods (which has subsequently undergone improvements and resulted
in the launch of AirPods 2.0 and AirPods Pro)

What Apple saw as means to revolutionize the listening experience, to reinvent how we listen to
music, watch TV shows & movies, and make phone calls, the world saw a money-making gimmick. It
is only interesting to note how Apple AirPods (1st generation) became 85% of the wireless
headphone market in a year since the launch.

Apple is the epitome of innovation and product development, and AirPods are its finest launch in the
last 5 years. We, thus, intend to study Apple's new product development process with emphasis
on how they market and commercialize the products.

New Product Development at Apple - AirPods

AirPods were first conceived by Jorge S. Fino in March 2011. Fino filed a patent, which was credited
to Apple, for "EarPod-like headphones that could work with or without wires". This patent marked
the beginning of the product development journey of Apple AirPods. This was the first stage - Idea
Generation.

However, despite the break-through design, the AirPods were far from done. The design failed the
preliminary technical assessment when Apple realized that the charging technology was yet to be
developed. The development process was halted, and the idea docked.

The timeline for the next steps is unclear but the AirPod design surfaced again with pre-production
units being tested in August 2016, before the launch. These in-house product tests were part of
Stage 6 - Product Development and Testing.

The last step, the product launch was done as a part of the Apple Special Event, an annual "gala" for
Apple enthusiasts. The product was opened for pre-booking in December and sold online and offline
through Apple’s own stores.

Stage 1: Idea Generation Stage 2: Idea Screening Stage 3: Concept Testing Stage 4: Market Strategy
(Patent filed by Fino) (Technical screening - fail) and Development Development

Stage 8: Stage 7: Market Testing Stage 6: Product

and Pricing Stage 5: Business Analysis
Commercialization Development & Testing

The commercialization
The removal of the headphone jack in the latest iPhone and the introduction of AirPods at $159, as
against $29 for Apple's EarPods stirred up controversy. The AirPods soon became a cultural
phenomenon, first as with viral memes mocking its appearance and pricing and later, its
identification as a "status symbol".
Apple's willingness to weather criticism in the wake of unpopular decisions is perhaps an essential
part of the company's success today. Apple's genius in new products does not end at technology and
design, it ushers its products to success through a successful commercialization strategy.

Thus, as a part of the Product Management project, we have emphasized on how AirPods were
driven to be a commercial success despite the lukewarm reception and disheartening pricing.

Literature Review

Sources of Capabilities, Integration, and Technology Commercialization

Today’s competitive markets view TC as ‘the process of acquiring ideas, augmenting them with
complementary knowledge, developing and manufacturing saleable goods, and selling the goods in a
market.’ This process begins with product conception; includes the product definition, design,
prototyping and pretesting stages; and is consummated by effective product manufacturing and
marketing.

Capability sources and TC

Internal and external sources are the foundations of a firm’s manufacturing capabilities. These
capabilities evolve, reflecting shifts in technological trajectories, defined as the paths particular
technologies follow over time.

AirPods are high on

Advanced internal human and radicalization and the
technological capabilities technology is patented, the
frequency is moderate

Formal – through chain of command for external & internal

Informal – through company culture for internal

The moderating effect of integration

Integration is the process by which the firm coordinates and deploys its different manufacturing
sources to achieve successful TC (Grant, 1991). It includes the approaches, systems, and processes
management uses to involve the firm’s manufacturing staff in the TC process.

Conclusion
Technology commercialization is an important means for gaining market share, satisfying customers’
needs and achieving profitability. Our results show that a company’s internal human and
technological sources are important for successful TC. Further, some external sources (both human
and technological) are conducive to successful TC. The contributions of internal and external
manufacturing sources, to TC increase significantly with the use of formal integration. The pay-off
from informal coordination in enhancing TC success is higher with internal than with external
technological sources.

Verdict: Successful Commercialization

From New-Product Development to Commercialization Through Networks

This paper talks about how the activities undertaken by a firm differ vastly in R&D and
commercialization stages. It also concedes that the organization can rarely mobilise all the resources
it needs for commercialization on its own and hence, requires the firm to renew its existing relations
or create new ones. The changes can be broadly classified into two – change in activities and
resource requirements and change in network relations. The firm needs to mobilise resources for
engaging in marketing, customer education and communication.

A host of activities contribute to commercialization –

1. Ease of use of the innovation facilitates its diffusion and speeds-up its adoption
� The AirPods were criticized for their shape, and called a “marketing gimmick” but
their ease of use and elevated user experience made them a “runway hit”, as the
CEO Tim Cook called them
2. Running trials reduces customer uncertainty and reinforces positive attitudes, and thus
eases adoption
� AirPods were tested under multiple conditions and went through Apple’s iterative
Design Thinking process involving testing by potential customers and improving the
product based on the feedback loop
3. Awareness-building, customer education and trial opportunities improve innovation
success
 � Most of Apple’s work was done by their product itself. Technology enthusiasts
(innovators for Apple) were eager to get their hands on a one-of-its-kind Apple
product and were quick to put out reviews. Though Apple too had information on its
website, it was word of mouth and customer generated content that made them a
hit
� Trial opportunities are available for in-store product but since AirPods were late to
the in-store phase, this opportunity was not fully capitalized
4. Communicative activities, such as synergetic marketing communication and supporting
brands and word-of-mouth communication weaken resistance toward adoption
� Launching AirPods with the anticipated iPhone 7 made it a must-buy and almost a
necessity
� The strong word of mouth from the army of Apple supporters, innovators and early
adopters made it a hit

A diverse network of factors like competitors, distributors, buyers, consultants, suppliers, research
institutes and universities, government agencies, and industry associations contribute to
commercialization activities-
1. Customers and other actors external to the firm may have a role in commercialization by
identifying potential users, demonstrating how the product works, assessing its market
potential, and evaluating the extent to which it meets user needs.
� Role of innovators and early adopters who posted reviews
2. Vertically related actors provide distribution resources, and horizontally or diagonally related
competitors or partners beyond the traditional supply chain facilitate bringing innovations to
market by pushing/pulling the new product through or creating new markets
� Apple is famous for its managed outsourcing of manufacturing and focus on sales
& marketing. While the marketing aspect was on point, the vertical partners fell
short of the mark – waiting in sales and delay in in-store availability
3. Intermediaries are crucial in the case of consumer products because they make the product
available to users. Their resistance can negatively affect commercial success, and hence they
need educating and convincing of the value of the innovation for their customers.
− Since the sales & distribution is largely controlled by Apple, this is not relevant

Verdict: Okay to good commercialization

Lean Commercialization

The paper provides a framework representing a transformation of new technology and knowledge to
products and services through the application of the lean/agile methodology. This methodology
focuses on how resources can be minimized during the development, manufacturing, and marketing
of new products and services, while still being accepted by customers.

The Lean Start-Up Methodology

The primary underpinnings of the lean start-up methodology are to ensure efficiency and
effectiveness, minimize wastes, and produce acceptable products and services. The method employs
a build–measure–learn feedback loop that enables an individual person or company to build and
verify an idea or innovation. It also enables them to learn from test results.

The Acceleration Framework

It was developed from the lean start-up methodology and other agile methods, and consists of four
stages: Idea, High-value concept, Validated Minimum Viable Solution, and Scale Solution. These
stages mean that a need or problem must be discovered; then, possible solutions need to be
identified and tested. When these activities are achieved, there should be a focus on the scalability
of the solution to make business sustainable.

Last Stage
A positive result should encourage teams to continue with full commercialization, but a neutral
result suggests that the opportunity should be pivoted. Pivoting means that problems discovered in
the minimum viable product test are addressed and re-tested, the minimum viable product is
introduced to a new market, or the new technology is repurposed. However, pivoting does not mean
that the new technology needs to start again from stage one.

� Apple’s product development began in 2012, and its development of AirPods was kept a
closely guarded secret till the launch. Over the 4 years, Apple put in all its energy to develop
a product that would resonate the company’s obsession – customers. Despite the
breakthrough, the AirPods were carefully protected from scope creep and feature bloat, and
yet, provide a unique customer experience. This was all a result of iterative design thinking,
not necessarily all lean.
 � To characterize Apple’s commercialization processes as Lean would be an understatement.
Though the launches happen in a phased manner, and the turnaround time for corrective
action is short, the development process is typically long, and the result is phenomenal.

Verdict: Lean Commercialization is dubious concept for Apple, good for an FCMG
Profiting from Technological Innovation: Implications for Integration,
Collaboration, Licensing, and Public Policy

The framework offered through the study identifies the factors which determine who wins from
innovation: A firm which is first in the market, a follow-up firm, or a business with similar resources
that the innovator needs.

In the narrow sense of the word, the followers may or may not be imitators, but often they are. The
system seems to be helpful in describing the share of the innovation gains accruing to the innovator
in connection with its followers and suppliers, as well as in describing a number of interfirm practices
such as joint ventures, coproduction deals, cross-distribution arrangements and technology
licensing. It then addresses implications for strategic strategy, public policy, and foreign trade and
investment.

Innovator Follower-Imitator

Win Apple Airpods Cheap Knock-offs/ One Plus/ Samsung

Lose Xerox Kodak

AirPods

� Apple came through with their innovation as AirPods, which opened a stream of imitators/
followers. One Plus has recently announced its wireless earphones and it is among a long list of
brands to do so. Interestingly, cheaper, unbranded products have also taken over.
� The investment required to prevent multiplicity of players is extremely high, and the market can
quickly change sides with a new product launch. Thus, Apple AirPods’ are strategically positioned
to cater to customer in its ecosystem and is capitalizing on the cohort of loyal customers who
aspire to be in the ecosystem.

AirPods

Conclusion
The above analysis has attempted to synthesize from recent research in industrial organization and
strategic management a framework within which to analyse the distribution of the profits from
innovation. The framework indicates that the boundaries of the firm are an important strategic
variable for innovating firms.

The ownership of complementary assets, particularly when they are specialized and/or
cospecialized, help establish who wins and who loses from innovation. Imitators can often
outperform innovators if they are better positioned with respect to critical complementary assets.
Hence, public policy aimed at promoting innovation must focus not only on R&D, but also on
complementary assets, as well as the underlying infrastructure. If government decides to stimulate
innovation, it will seem important to clear away barriers which impede the development of
complementary assets which tend to be specialized or cospecialized to innovation.

To fail to do so will cause an unnecessary large portion of the profits from innovation to flow to
imitators and other competitors. If these firms lie beyond one's national borders, there are obvious
implications for the internal distribution of income.

Verdict: Exclusive positioning implies good commercialization

Executive Influence on Invention and Commercialization
The paper seeks to expand the understanding of the “front end” of innovation by examining the
influence of top executives, who allocate the resources and cultivate the culture in which inventions
are born, on the innovation process.

Methodology

The effect of executives on innovation can be better understood by explicitly separating innovation
into the component processes of invention and commercialization. This allows us to consider how
executive characteristics might have a different effect on technology development outcomes than
they do on the subsequent transformation of those technologies into new products. The theory is
tested on a sample of firms from the biomedical device industry.

Conclusion

The findings indicate that top management team (TMT) age and tenure have no effect on the type of
technologies a firm develops (radical vs incremental) but do significantly affect the efficiency with
which new technologies are turned into new products in some contexts. TMT heterogeneity affects
both the type of technologies developed in the firm and their transformation to new products.
Interestingly, the effect of executives on commercialization depends on the type of underlying
technologies which the firm has developed.

� Steve Jobs’ role at Apple is well known. It is a case-in-point that truly resonates with the
context of this paper. Apple’s Top Management is known to strongly believe in innovation
and is obsessed with customers, as is the company’s general culture. The flat structure, with
permeable internal and external walls for ideas makes it an ideal place for innovation.
� The culture is reinforced in the products launch – they are often simple, with impeccable
design and user experience, and simple and protected from feature creep.
� The stability of the TMT is also a plus point, which Apple has been able to maintain over the
years.
� Thus, for AirPods, the TMT can be credited for the launch and successful commercialization.

Verdict: Successful Commercialization

Technology Commercialization Factors, Frameworks and Models
The paper defines commercialization as “the conversion of a given technology into economic profit.”
The paper undertook a survey of technology commercialisation enthusiasts to find out the
influencing factors that firms should consider during commercialization. These included intellectual
property issues, technology management issues, commercialization environment issues, marketing
strategy issues, innovation development issues and finance issues. The survey helped ranked the
factors based on priority. The ranking, influences and Apple’s POV on each of them are as follows:

Influencing Factors Sub-Factors Apple AirPods’ POV

Commercialization Access to assets that Favourable Apple is a technology giant and had
environment issues are required for the access to assets, including a strong
technology success sales & distribution network for its
success

Favourable Neutral The policies in the US and India

Government policies were neither particularly in favour,
nor against Apple or the launch of
AirPods

Skilled employees and Favourable Apple’s team of professionals are

experienced well-versed with large scale
managers launches of phenomenal
technology breakthroughs like
iPhone, iPad, etc.

Stakeholder Favourable
relationships esp.
government relations

Level of development Favourable Both the US and India offer a

in a country numerically large high-income
audience to be wooed

Intellectual Partnerships with Favourable Apple relied on its network of

property issues other firms to subsidiaries (including Apple India)
commercialize in and its owned or franchised
foreign markets network of distribution centres

Strategic partnerships
with government

Partnerships with a
competitor can be
necessary sometimes

Technology KPIs (Cash flows, Apple uses a balanced scorecard

management potential market with five KPIs (in this order) –
issues share) to measure customer satisfaction (which is the
 success core tenet of the brand), core
competencies, employee
commitment & alignment, market
share and shareholder value

Ability to manage a Favourable The manufacturing is outsourced

multi-functional team to Vietnam (moved from China in
2020) while Apple’s in-house teams
Valuable stakeholder
handle the R&D, sales & marketing
relationships
aspect of commercialisation
Experienced finance
and marketing team

Systematic process of Favourable Apple has an established process of

commercialization commercialization and uses the
same for all product launches, it
involves product reveal at the
Special Apple Event and
subsequent launch internationally
in a phased manner

Setting and achieving Favourable The balanced scorecard approach

milestones is well established and forms the
baseline for setting milestones

Marketing strategy Marketing activities Favourable The marketing team, in their

issues must include advertising efforts, put emphasis
technical expertise on the technical and user
experience part of the AirPods.
While their technical stats were
Marketing must always advertised, their
follow a systematic uniqueness, ease of use and
sequence of steps comfort were given equal
importance

Marketing is done at Favourable The big reveal of AirPods was only

the end of product after the product was ready to be
development launched

Study of market and Neutral Though wireless earphones is a

competition fairly blue ocean, the customer
perception, initially at least, was
questionable

Potential customers Favourable Potential customers were involved

must be a part of in Apple iterative Design Thinking
every phase of process for AirPods’ design and
 product development development

Innovation Ongoing R&D is Favourable Both the AirPods’ software and

development necessary even after hardware has been upgraded
issues the product is in the multiple times since the launch
market based on feedback and new
developments
Focus on improving
core technology

Innovation and AirPods 3 is rumoured to be

development must be launched in 2021
systematic

Presence of Favourable ● Presence of iPhones,

complementary MacBooks compatible with the
assets technology

● Launch of iPhones without

headphone jack is a plus

Demand for an Unfavourabl AirPods were in fact ridiculed and

innovation should e labelled unnecessary at the time of
originate from the launch
market

Evaluation of progress Favourable An active feedback loop and

after the creation of development of iterations of
final product AirPods basis the feedback and
R&D

Finance Issues Favourable Cash from other products was

ploughed in for R&D and marketing
of AirPods

Drawing from the paper summarized above, Apple launched its AirPods in a near perfect
commercialization environment. Apple had acquired the patent rights to a wireless ear pods in 2012
and developed the perfect technology for the next 4 years.

Apple AirPods launched in the US and were then introduced internationally in a phased manner.
Having established relationships with the government and the sales & distribution network in all
countries (either owned or franchised), Apple was off to a good start. The cash ploughed back from
previous products was used for R&D and marketing of AirPods, which started off during the Special
Launch Event, and Apple trademark and became a necessity should someone purchase the latest
iPhone (the first to be sold without the 3.5mm earphone jack.

AirPods were therefore, set for success given almost all influencing factors were tilting towards its
successful commercialization.
Verdict: Successful Commercialization
Combining Networks, Ambidexterity and Absorptive Capacity to Explain
Commercialization of Innovations: A Theoretical Model from Review and
Extension

The paper identifies several things which a firm must do to remain competitive globally and
encourage commercialization of innovations-

1. Ambidexterity: A firm’s ability to explore newer frontier and emerging markets while not
destroying traditional and established markets
2. Absorptive capacity: A firm’s ability to increase its capacity to absorb and assimilate new
information to help explore new frontiers
3. External networks: A firm’s ability to find sources of new competencies and technologies
outside the firm’s existing boundaries to expanding knowledge, which is complimentary to
the firm’s existing stock

Factors Apple AirPods’ POV

AirPods were in themselves a new frontier. It complemented

existing flagship successes (iPhones). Apple also has through the
Ambidexterity High years, expanded its presences across the world and sells to the top
of the pyramid and the growing middle class in developed and
emerging markets.

Though AirPods were a breakthrough, the subsequent iterations

have been basis feedback, without another technological
Absorptive
Medium breakthrough for the last 4 years. Several branded and unbranded
Capacity
knock-offs are giving AirPods strong competition in emerging
markets like India.

AirPods exemplified Apple’s external networks – Apple’s strong

External manufacturing set-up (outsourced to China, later moved to
Medium
Networks Vietnam); the network however failed to keep up with the runway
success of AirPods leading to a delay

The three parameters are linked, and the paper suggests a list of propositions in this regard. The
following propositions are considered to impact commercialization of innovations in firms.

Propositions AirPods’ POV

Proposition1a: Centrality, and multiplexity of external networks, positively Favourable

affects commercialization of innovations
(Central marketing,
Proposition1b: Behavioral context within firms positively moderates the multiple
relationship between centrality and multiplexity of external networks on manufacturing
commercialization of innovations. units – outsourced)
Proposition 1c: Behavioural integration of Top Management positively
moderates the relationship between external networks through centrality
and multiplexity on commercialization of innovations.

Proposition 2: Higher absorptive capacity increases commercialization of Unfavourable

innovations.

Proposition 3: Better the balance between exploitation and exploration Favourable

higher probability of commercialization of innovations.
(Exploits the Apple
brand to sell
products, explores
through
technological
innovation)

Proposition 4a: Top management teams, has a positive relation, while Favourable
organizational structure and behavioural context has a negative
(Apple follows a
relationship with potential absorptive capacity.
flatter structure,
Proposition 4b: Top management teams and organizational structure has a with emphasis on
mixed while behavioral context has a positive impact on realized absorptive employee
capacity. satisfaction and
innovation)

Proposition 5a: Diversity of ties among organizations and with academia/ Favourable
research laboratories positively affects ambidexterity.
(Own R&D team,
innovation from
employees strongly
encouraged)

Proposition 5b: Centrality has an inverted u-shaped relationship with Favourable

ambidexterity. Such that at moderate levels of network population,
ambidexterity is maximized.

Proposition 5c: The dual structure architecture within firms positively Favourable
moderates the relationship that interorganizational network through
centrality and multiplexity has on ambidexterity.

Proposition 5d: Behavioural Context within firms positively moderates the Favourable
relationship between external networks through centrality and multiplexity
on ambidexterity.

Proposition 5e: The top management team within firms positively Favourable
moderates the relationship between external networks through centrality
and multiplexity on ambidexterity.

Proposition 6a: Realized absorptive capacity, through its ability to Moderate

transformation and exploitation of external knowledge positively affects
 ambidexterity.

Proposition 6b: Potential absorptive capacity moderates the relationship Moderate

between realized absorptive capacity and ambidexterity. Such that,
potential absorptive capacity positively and negatively moderates the
relation between realized absorptive capacity on exploration and
exploitation, respectively.

Verdict: Decent to good Commercialization

Shareholder Value Creation During R&D Innovation and Commercialization
Stages
This paper examines the impact of announcements made about R&D projects in 2 different stages -
innovation and commercialization on the market value of the firm’s stock.

Methodology

The paper measures the wealth impact of R&D developments for two indicators – technology and
market-related variables. It was found out that technology was more important than market
variables in the innovation stage, and both played an important role during commercialization.

Shareholders

Shareholders are a vital element of the firm and hence, any R&D project undertaken by the firm
must seek to create value for them. However, the way they value announcements made by a firm
depends on the informational context they receive. This means the value of the information
decreases if they have already received the same information earlier from a different source and
vice-versa.

� Apple’s launch of AirPods was a well-guarded and took the shareholders and technology
enthusiasts by surprise, given its revolutionary nature. Today, the AirPods and Apple
Watches are poised to drive stock price growth for Apple investors which was the best
performer in the Dow Jones Industrial Average, up by 84% YoY, credited to AirPods.

Variables related to Wealth Creation

● Technology-related variables: The indicator of technological opportunity in an environment is

often measured by the industry and relative firms R&D intensity and how much an innovation is
likely to create value.
● Market-related variables: The paper considers two market variables – industry concentration
and relative firm growth rate.
� The wireless earphones industry is today crowded by branded and unbranded products,
but AirPods opened a blue ocean. It grew on iPhone users almost immediately.
Additionally, the close association of AirPods with other Apple products (iPhones and
MacBook) gave it an edge, driving higher sales.

Commercialization

During the commercialization stage of a product, the organization carries out activities which will
help it compete in the product market. As opposed to the innovation stage when the firm’s
technological capability or the technological opportunity its environment offers is of paramount
importance, the success of commercialization depends on whether the firm is appropriately
positioned to take advantage of the new product. The cash flows generated from successful
commercialization is thus dependent on the market-related variables.

� Apple’s marketing team was fully positioned to take advantage of the

commercialization. AirPods were launched internationally and were sold online and
offline, through Apple’s own stores and franchises.
 � AirPods were launched after weeks of delay (announced in September, launched in
December) AirPods had a six-week waiting list for more than a month after their launch
and their in-store facility was available only after more than three months.
� AirPods were soon followed by AirPods Pro and AirPods 2, which superseded the initially
product. The manufacturing and commercialization of AirPods was soon ceased after the
launch to allow for premiumization and positive cash flow in case of product upgrade.

Conclusion

Large firms with lower levels of firm R&D from concentrated industries often make more commercial
stage announcements as compared to innovation stage announcements. Companies which make
frequent announcements often experience a positive response from the market when they
announce a new product. Moreover, firms which announced R&D projects at the innovation stage
saw their value soar up by an average of 0.88% while the firms which announced R&D projects at the
commercialization stage saw their value soar up by an average of 1.02%. the increase in value was
significant for both stages, implying announcements eventually benefit firms.

Verdict: Okay Commercialization and Value Creation

Corporate Reputation and the Commercialization of Innovation: Does
Reputation Match Reality, and Does Innovation Matter?

This paper is an evaluation of the level of innovation and commercialization at different firms and it
seeks to understand whether there is any overlap between the top innovative firms in the study and
the Business Week/Boston Consulting Group’s annual ranking of the most innovative companies.

According to the paper, firms with greater commercialization success often maximize their
innovation chain - spend on R&D, protect intellectual property, launch new products, and have
consistent financial performance.

Methodology

In the study, the companies were ranked on four measures – spending on R&D Spending, Patenting
and Commercialization of Innovations. Moreover, it also studied the relationship among R&D,
patents, and product releases and the role they play in driving revenue.

The ranking done by the Business Week/Boston Consulting Group was based on reputation
measured as perceptions among sitting CEO’s rather than definite measures of activities carried out
by the firm. This ranking was influenced more by financial performance of firms, and innovative
business models and strategies.

Conclusion

It was found that innovation and commercialization activities, jointly can influence the bottom line.
However, there is a lag time from R&D spending to patents and then to commercialized products
implying revenues increase in later years. There seemed to be a vast chasm between perceptions
and reality in this realm. The overlap between both the rankings was insignificant indicating that the
perception is influenced more by the ubiquitous presence of firms and not by comprehensive
measure of success.

Hence, reputation may place some firms at the top in the list of innovators but unless these are
corroborated by consider hard measures of innovation and of commercialization, it cannot be said
that they are successfully commercializing innovations.

Apple and AirPods Launch

AirPods came as yet another innovative breakthrough from Apple, the company famous for iPads,
iPhones and were multitude of innovations. Apple ruled the BCG’s Innovation Survey in 2016, the
year of launch of AirPods. However, it was not merely the launch or its reputation as an innovative
company.

Within a month of launch, AirPods had taken 26% of the Bluetooth headphone market. "Apple being
able to capture 2 percent of the market in units and 3 percent in dollars with one product in its
debut month is significant, given how big the headphone market is," an executive at the NPD Group
had said post the launch.

Apple’s sales history is replicated in AirPods. Post the launch, AirPods took the market by storm. As
the demand died down, they were replaced by a new product launch, a better product from the
AirPods family. This spend on R&D and constant NPD characterizes Apple and is the key reason for
its stable and growing financial performance over the years.

Verdict: Financial Stability and higher/ faster NPD

Commercialization of Innovations
The paper considers innovation promotion, which is vital to entrepreneurial growth, as a blend of
multiple business practices. Based on studies from management, planning, entrepreneurship,
economics, and marketing fields, the paper summarized the current literature to establish a strategic
paradigm and a forward-looking research agenda.

Innovation Source: Innovation may come from inside or outside the company's borders. Innovation
factors have been described in the literature as: organizational creativity; research and
development; partnerships and collaborations; innovation engines; technology clusters; and spill
over technology.
� Apple’s innovation comes both internally and externally. They monitor the environment and
competitor products and their in-house R&D team, and the culture of innovation brings new
ideas to life.

Organizational Creativity: The creativity of the organization is a function of creative individuals and a
variety of social processes and contextual factors that shape the way individuals interact and
behave. To maximize creativity and idea generation processes that subsequently translate ideas into
products, firms have routines and incentives in place. Firms with the highest conversion ability are
those that first focus on a moderate number of ideas in areas of market importance and in which
they have expertise, and, second, that deliberate for a moderate length of time on promising ideas.
� Apple instils a need to obsess with the customer and involve them in product design.
Employees enjoy autonomy over their work and are not micromanaged. Employees also
have access to the “Apple University” to stay close to the roots of innovation and design.

Research and Development: Firms' R&D intensity have been shown to have a positive correlation
with sales from new products, sales growth rate, and profitability. Thus, as a source of ideas for
innovation, the R&D function, whether internally funded or externally contracted, is key.
� Apple’s robust R&D is reflected in its innovative launches year after year. AirPods is an
example of this. The newer generations in the AirPods family are an example that R&D does
stop at product launch at Apple.

Alliances and collaborations: Recognition of an opportunity to commercialize an idea at the

confluence of different groups is more likely to happen. Alliances and partnerships will help get the
organizations together by exchanging and passing information. For example, networks with clients,
manufacturers, supplementers, and competitors are useful sources of new ideas for goods.
� Like its product ecosystem, Apple also has a self-sufficient network. It focuses on marketing,
its core competency and R&D, outsources manufacturing.

Technology clusters: Clusters encompass an array of industries that are linked together in a
geographical proximity through relationships among suppliers, buyers, and producers of
complements. A cluster of Firms with high innovation-productivity can lead to new firms starting up
in the immediate vicinity and attract other firms in that area.
Technology spill over: Technology spill over is defined as a positive externality from R&D resulting
from the spread of knowledge across organization and regional boundaries and is a function of
patenting, copyrights, and trademarks in addition to the mobility of knowledge workers.
� AirPods’ technology was a result of a patent, but resulted in changes in its complementary
products, and changes for the better. The Apple Watch, iPhone and AirPods now make a
perfect ecosystem for everyone, irrespective of their profession.

Development: Three major aspects of developing an innovation are:

− Design and manufacture: In-house or collaboration with other firms in the form of alliances
or joint ventures
− The process of developing the innovation
− Deciding the launch form: Product enhancement, new product development, wholly owned
subsidiary, spin outs, or joint ventures

Design and manufacturing in-house vs collaboration: The decision to collaborate is

multidimensional and is dependent on factors such as:

− Whether the firm or the collaborator has the required capabilities and resources - Internal
− The degree to which collaboration would make proprietary technologies – Internal
− Vulnerable to expropriation by a potential competitor – High (Internal)
− The importance a firm in controlling the development process for its innovations – High
(Internal)
− The degree to which a firm can access another firm's capabilities – Low to Moderate
(Internal)

Deployment: Research on commercialization of innovation specific to deployment of an innovation

to a market has concentrated on launch timing, licensing, and compatibility (whether to make the
product compatible with older versions), selecting a pricing strategy, distribution, and marketing.
� AirPods were launched at the Special Apple Event, when the entire world tuned in to witness
it. AirPods were soon made compatible with all of Apple’s recent launches (not the old
models, in line with its cannibalization strategy).
� They were initially marketed online, and then later introduced in Apple stores.
� The price point was extremely high, and thus was a serious barrier to purchase.

Conclusion & Practical Implications

The literature was categorized into six broad themes of entrepreneurial activities: sources of
innovations, types of innovation, market entry (capabilities and feasibility), protection, development,
and deployment. Most of the research papers that were reviewed were concentrated on single
theme. Given the identification of six key themes of entrepreneurial activity leading to the
commercialization of innovations, research questions were posed to move the research forward by
integrating the themes.
Implementation of Literature in Indian Context
The existing literature pens down challenges and factors that are omnipresent and faced my
multinational firms in all geographies and cultures, including India. However, in India, some factors
take precedence over others.

For instance, the paper “Profiting from Technological Innovation: Implications for Integration,
Collaboration, Licensing, and Public Policy” studies how imitators often creep up with the success of
a product. For AirPods, this is especially true. In an emerging market like India, appreciation for
sound quality is low, which in turn gives way to knock-offs that rule the street markets. Cheaper
alternatives, starting from Rs. 300-400 are available, both online and offline, to compete with
AirPods which are priced at Rs. 14,999. Therefore, AirPods become a “public luxury”, more than a
source of comfort and quality sound as they were intended. Like all Apple products, AirPods also find
their market among the high-income class in India, and therefore, serve a limited market. In this
context, AirPods must not invest huge amounts to gain market share, but to invest to gain their
niche market. They shall also suffer through the abyss of imitators in India, more than in other
countries.

A second paper that takes precedence for India is the need for Lean Commercialization. Though the
idea is not directly applicable to AirPods, it holds high relevance for entrepreneurs and product
manager who intend to serve the middle class and lower class of the country. Striping the process
of product development and commercialization of unnecessary time and money will result in faster
NPD and launch of products. Additionally, as FMCGs look to expand into rural India, lean
commercialisation would allow them to beat their competition to product launch, allowing greater
market share at lower cost, thus a win-win situation.

In addition to the above two, the paper “Technology Commercialization Factors, Frameworks and
Models” is a comprehensive set-up that covers all bases of product launches for all technology-
related innovations. Commercialization environment often posing a strong challenge for
entrepreneurs. The emerging nature of the Indian economy puts constraints on how the product
can be commercialized, high-level of bureaucracy, lack of incubation centres and lack of private
capital (seed and further funding) in comparison to other economies like China or Singapore. Apple
has been present in the Indian markets for years now, and thus AirPods were launched in an
environment conducive to their commercialization. However, they were not excused from the
government’s efforts to move manufacturing to India either.

This said, the literature provides an overview of commercialization, influencing factors and
frameworks which must be chosen basis the product/ technology to be commercialized and the
resources available with the commercializing business.

Limitations of the Literature

The current literature assumes a product/ technology that arises off consumer needs. However,
Apple is known to identify latent or non-existing needs and serve them. AirPods offer convenience
but the world would not be a different place had they not existed. Thus, when marketers called it
“unnecessary” and a “marketing gimmick”, they were not very wrong.

Apple is known to create a product so simple and convenient to use that it is often adopted through
word of mouth, or by its army of loyal customers. Sometimes, that is the key to commercialization –
a good product and band of loyal customer.

Metrics for Measuring Commercialization Success

We suggest two primary metrics for measuring how successful the company’s commercialization has
been –

Primary Metrics

Customer Satisfaction NPS, Customer feedback, Candid reviews

Market Share Volume share and Revenue Share

Secondary Metrics

Profitability Net Margin and Operating Margin

Shareholder Value Share Price

Way Forward
Apple is all set to launch Apple AirPods 3, a new generation in the family of AirPods. Given its
successful premiumization strategy, AirPods 3 are also believed to be a success, especially as the
previous models are rendered incompatible and the users are addicted to the comfort of using
AirPods. However, COVID-19 poses additionally challenges, particularly as consumer ration their
spend on luxury. To enjoy the pent-up demand in India, Apple can undertake one or all of the
following –

1. Financing: A strong financing network can go a long way as consumers can satisfy their urge
to buy and splurge, yet rationalise it against the EMI payments
2. Online Availability: Most consumers are likely to remain averse to shopping in-store and are
likely to shop online. Studies reveal a shift in consumer presence and a step-change in favour
of online shopping
3. Trials: As in-store trial will be less used, an alternative to that should be put in place. Such
facilities may include local representatives, or at-home trials
References
1. Amadi-Echendu, J. E., & Rasetlola, R. T. (2011, June). Technology commercialization factors,
frameworks and models. In First International Technology Management Conference (pp.
144-148). IEEE.
2. Datta, A., Jessup, L., & Reed, R. (2011). Corporate reputation and the commercialization of
innovation: does reputation match reality, and does innovation matter?. Technology and
Investment, 2(4), 256-272.
3. Aarikka-Stenroos, L., & Sandberg, B. (2012). From new-product development to
commercialization through networks. Journal of Business Research, 65(2), 198-206.
4. Datta, A. (2011). Combining networks, ambidexterity and absorptive capacity to explain
commercialization of innovations: a theoretical model from review and extension. Journal of
Management & Strategy, 2(4).
5. Kelm, K. M., Narayanan, V. K., & Pinches, G. E. (1995). Shareholder value creation during
R&D innovation and commercialization stages. Academy of Management Journal, 38(3), 770-
786.
6. Sharp, B. M., Iyer, D. N., & Brush, T. H. (2017). Executive influence on invention and
commercialization. American Journal of Business.
7. Gbadegeshin, S. A. (2018). Lean Commercialization: A New Framework for Commercializing
High Technologies. Technology Innovation Management Review, 8(9).
8. Teece, D. J. (1986). Profiting from technological innovation: Implications for integration,
collaboration, licensing and public policy. The Transfer and Licensing of Know-How and
Intellectual Property: Understanding the Multinational Enterprise in the Modern World, 15,
67-88.
9. Zahra, S. A., & Nielsen, A. P. (2002). Sources of capabilities, integration and technology
commercialization. Strategic management journal, 23(5), 377-398.
10. Datta, A., Reed, R., & Jessup, L. (2013). Commercialization of innovations: an overarching
framework and research agenda. American Journal of Business.
11. appleinsider.com/articles/18/09/07/the-surprisingly-long-history-of-the-apple-airpods
12. patents.justia.com/inventor/jorge-s-fino
13. support.apple.com/kb/SP750?locale=en_IN
14. www.apple.com/newsroom/2016/09/apple-reinvents-the-wireless-headphones-with-
airpods/
15. www.apple.com/shop/product/MV7N2AM/A/airpods-with-charging-case
16. www.forbes.com/sites/christinemoorman/2012/07/10/why-apple-is-a-great-marketer/
#3210ea27297d
17. www.forbes.com/sites/louiscolumbus/2017/01/21/strong-innovators-mine-big-data-
insights-from-bcgs-50-most-innovative-companies-2016/#354ff99283b3
18. www.performancemagazine.org/apple-balance-scorecard/
19. www.theguardian.com/technology/2016/sep/07/apple-airpods-launch-problems-with-
wireless-headphones