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A Strategic Analysis of Apple Corporation

A Strategic Analysis of Apple Corporation


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Published by: mahantesh123 on Feb 09, 2009
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Apple’s iPod and iTunes are a powerful combination that fosters a network style of

increasing returns. (Barney, 124) By selling iPods, Apple increases the consumer demand for

music from iTunes. By placing more musical choices on iTunes (including less popular songs

that appeal to niche audiences), there is more demand for iPods. Apple had 70% of the legal

music download market in early 2005. (Yoffie)

Apple is shooting for the digital living room of the future. For example, Apple just

released a “boom box” portable version of the iPod. This iPod (the iPod Hi-Fi) comes with a

remote control. Instead of forming a strategic alliance, Apple engineered the iPod Hi-Fi and

designed it with high-fidelity features. (Burrows) Apple is clearly trying to develop a stronger

core competency in the entertainment area.

Page 19 of 54

Figure 3: The Apple Hi-Fi

Apple may also release an Apple-branded cell phone and iPod combination device by the

end of 2006. (Burrows) This product would again position Apple as a “second mover”

responding to Palm’s Treo and Verizon’s VCAST technology.

Strategic Alliances and Entertainment

Jobs had the early strategic vision to complement computing with movie entertainment.

After founding NeXT, he personally acquired a majority interest in the young movie company

Pixar in February 1986. (Linzmayer, 219) Jobs went on to invest ¼ of his personal wealth into


In 1995, Pixar solidified its position within animated movies with the debut of Toy Story.

Grossing $358 million worldwide, it became the 3rd

-largest grossing animated movie in history.

(Linzmayer, 222) After this success, Jobs took Pixar public and negotiated far better terms with

Disney. Later successes included Toy Story 2, Monsters Inc., and Finding Nemo. Ironically,

Jobs stated in the November 23, 1998 BusinessWeek, “I Think Pixar has the opportunity to be the

next Disney – not replace Disney – but be the next Disney.” (Linzmayer, 222-4)

The alliance between Pixar and Disney has tremendous potential for economies of scope.

As CEO of Apple and Disney’s largest shareholder, Jobs is the strategic link between Disney,

Page 20 of 54

Apple, and Pixar. Opportunities include combining the animated movie expertise of Disney and

Pixar, as well as sharing the content of Disney’s ABC or ESPN networks over Apple’s digital

offerings. (Burrows, Grover, and Green)

A current example of the fusion between Disney, Jobs, Apple, and technology is video on

the iPod. Disney’s Desperate Housewives was one of the first television programs available for

purchase and download to the newer video-enabled iPod.

There are concerns about whether these synergies will come to fruition. There are fears

that the personality and style of Jobs may conflict with Disney, and that Disney CEO Iger could

be “Amelioed” -- driven out of office by Jobs in a manner similar to how Jobs drove Amelio out

of the CEO post at Apple. (Burrows, Grover, and Green)

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