PGDM IB 2011-13

Apple Inc. in 2010
Submitted by: Vinayak Naik (56)

Apple. and Tim Cook took over. A notable feature of the iPhone 4S was Siri voice assistant technology. However whether Apple can sustain this superior performance in face of growing competition and without a visionary like Steve Jobs remains to be seen. and cloud-sourced data with iCloud. but also the most-successful launch of any mobile phone ever. Apple’s market cap stood at $500 billion making it the largest company in the world. As of March 1. Performance in post . However this would be the last product launch attended by Steve Jobs. similar to the existing iOS App Store. Apple continued to launch innovative and cutting edge products throughout 2010.06 billion. The year 2010 also saw the launch of the iLife suite of applications. iPod Touch with FaceTime. On March 2. with a market cap of $282 billion.Steve Jobs era: In January 2011 jobs announced that he would be taking an indefinite leave of absence to allow him to focus on his health. Apple. valued at $227 billion had become the largest technology company in the world. and software. Other features of the phone included an updated 8 megapixel camera with new optics. Mac OS X Lion operating system. and Mac App Store. was the man responsible for bringing Apple back from dead and making it one of the most successful companies in the world. Steve Jobs passed away on October 5. Apple sold 4 million iPhone 4S phones in the first three days after its release. 2011 Jobs stepped down as the CEO of Apple Inc. Apple posted annual revenue of $108 billion and profit of $26 billion in the year 2011. Apple in 2010: Apple’s success story continued in 2010 even after the launch of iPad. After all Steve Jobs. Apple has began the year 2012 on a high note and posted a record quarterly revenue of $46. 2011. a dual core A5 chip. market capitalization of Apple surpassed that of Microsoft for the first time since 1989. Backed by record Mac and iPad sales. The only American company valued higher was Exxon Mobil. 2011. Apple introduced iPad 2 which had a faster processor and two cameras on the front and back respectively. 2012. Jobs surprisingly took stage to launch the iCloud in June 2011 which is an online storage and syncing service for music. often referred to as ‘soul’ of the company. In May 2010.33 billion and record quarterly net profit of $13. On August 24. The iPhone 4S was officially released on October 14. Many skeptics doubted whether Apple would be able to survive this huge loss. 2011. which Apple had acquired in 2010. photos. and iPod Shuffle. The iPad 2 also added support for optional 3G service provided by Verizon in addition to the existing offering by AT&T. 2 . under the leadership of Tim cook has continued to post robust performance figures and also launched a host of new products. files. which made it not only the best iPhone launch in Apple's history. marking an end of an era at Apple Inc. a digital software distribution platform.1. It released the iPhone 4 in June 2010 and refreshed its iPod line of MP3 players by introducing a multitouch iPod Nano. Update the case to date.

Also the buyers are highly price sensitive. The product sold by most of the PC manufacturers is highly standardized and hence the competition amongst the firms is price based resulting in very high degree of rivalry. and keyboards and 2. The second category of products was supplied mainly by two firms namely: Intel and Microsoft.Those that made products such as memory chips. Hence these suppliers had a very low bargaining power. education. However. Home consumers form the largest part of buyers. Degree of rivalry: The PC industry is consolidated. c. Compleme ntors Industry Analysis: a. Hence the bargaining power of buyers is significantly high. industry for its attractiveness based on value net. These smaller players sell ‘white box’ PCs at lower prices. Bargaining power of suppliers: The suppliers to the PC industry fall in two categories: 1. Consider key dominant features and industry driving forces. small and medium sized businesses. Analyse the P. b. The switching cost for the buyers is very low due to falling prices of PCs and large number of options available. thus cannibalizing the profits of the larger players. Bargaining power of buyers: The buyers for the PC manufactures are categorized into five categories: Home. the rest of the industry is fragmented by clone manufacturers and smaller players. The first set of products had many sources were available at competitive prices. however the margins of PC manufacturers are getting eroded because of downward pressure on PC prices.C. Those that made products like operating system and microprocessors. 50% of the market is captured by the top four players of the industry. Thus these suppliers were highly consolidated and had a very high bargaining power. 3 . disk drives.2. and government. Hence the overall bargaining power of suppliers was moderate. The industry is growing as by volume of PCs sold. corporate.

However players like Apple who can innovate can benefit immensely. Also these substitutes are very costly resulting in high switching costs for buyers. Technological changes: Technological changes have resulted in product improvement and lowered costs. Technology/Innovation: Very little scope for innovation as the products are highly standardized. Market growth rate: The market growth rate is increasing but it is not in proportion with the volume growth rate of PCs sold. intense rivalry and diminishing margins. Internet and e-commerce: Customers are becoming more informed due to the internet and ecommerce provides them a choice in how they buy PCs.d. e. 4 . Key dominant features: a. b. c.2 million as of 2009 (exhibit 6) b. Threat of substitutes: The number of substitutes available for PCs is growing rapidly with advent of innovative products like smartphones and tablets. e. The relative concentration of the complementors is high and hence they have a higher bargaining power. Thus the threat of substitutes is moderate. g. i. c. Scale economies: Large players have lower costs due to scale economies. Threat of new entrants: The PC industry is highly capital intensive. Product Characteristics: Highly standardized products. It is difficult for new entrants to achieve such large scales or to innovate. However these new devices cannot completely replace the PCs. content and peripherals form the complementors for this industry. Entry/Exit Barriers: High entry barriers due to reasons like high capital requirement. Lack of access to necessary inputs and distribution network deters new entrants from entering this industry. organizational learning and innovation. Increasing Globalization: Saturating US markets forced industry players to exploit international markets (Especially emerging countries like India & China). Degree of vertical integration: There is a scope for vertical integration but only a few players like Apple have actually indulged in it. Market size: $294. The large players have lowered their costs due to economies of scale. f. Learning and Experience effects: These are extremely important as they play a major role in reducing the costs. d. attitudes and lifestyles: People are becoming highly oriented towards digital lifestyle and are looking for products which keep them in touch with the digital world. Thus the barriers to entry are high and hence the threat of new entrants is low. Changing societal concerns. Complementors: Application software. h. Stage in life cycle: Mature d. f. Industry driving forces: a.

Today. Apple’s shift towards digital hub strategy was initiated by debut of I-pod in 2001.3. How did Apple position itself initially in 1976. to marking the official repositioning of the company. However because of its slow processor speed its sales were limited. Apple’s competitive positioning changed fundamentally in 1981 when IBM entered the PC market. Thus Jobs positioned Apple as an R&D oriented and innovative organization. and monitors. It sparked a revolution in the PC industry and Apple became the industry leader. In 1985 Steve Jobs was forced out of the company by the board of directors. However the Macs started looking overpriced when the prices of the IBM PCs dropped drastically. which led to release of Apple II in April 1978.000 Apple IIs by the end of 1980s. Apple is well known for its differentiated and innovative products. Thus. Apple’s cost structure was high as compared to other players in the industry. Apple retaliated by launching Macintosh in 1984. Jobs also revamped the distribution operations of the company. Apple drew down its inventory and started focusing on R&D. followed by the iPhone in 2007 and finally iPad in 2010. Apple also designed its products from scratch. disk drives. He killed the licensing program started by Spindler and started outsourcing the assembly of Apple products to Taiwanese manufacturers. Jobs unveiled his digital hub strategy for the Mac in 2001. As a result of IBM PC’s superior performance. Sculley tried to reposition Apple as a low cost producer of computers with mass market appeal. selling more than 100. Sculley pushed Mac into new markets. and loyal customer base. knowledge based technology company producing innovative and revolutionary digital products. Apple slashed the Apple’s 15 product line to 4 categories. Apple positions itself as a highly differentiated. Apple Computers was renamed Apple Inc. These products set Apple on a path to become a digital convergence company. Apple however relied on its own proprietary design and refused to license its hardware to third parties. When Steve Jobs became the interim CEO of Apple in 1997. he started collaborated with Microsoft in order to develop core applications like MS Office for the Mac. In 2007. The boardroom coup left John Sculley alone at the helm. 5 .C. industry when it started? Does apple have it now? What is Apple’s competitive position today? Trace changes in competitive positioning in previous years (Major Changes) Apple was founded in 1976 by Steve Jobs and Steve Wozniak. In 1990. Their mission was to bring an easy to use computer to market. 1981 and thereafter? Did apple have KSF for the P. His goal was to differentiate the Mac and other Apple products from the competitor’s offerings. Apple returned to the premium priced differentiation strategy when Gilbert Amelio became the Apple CEO in 1996. IBM became the new market leader. The IBM PC used Microsoft’s DOS operating system and a microprocessor from Intel and was an open system that other producers could clone. Apple’s net income fell by 62% between 1982 and 1984 sending the company into a crisis. Apple positioned itself as a highly differentiated premium player. using unique chips. most notably in desktop publishing and education.

Convenient locations d. Resources which are valuable. Superior information systems c. Superior workforce talent All the above KSFs exist even today. the following resources can be identified: a. Under his guidance the firm has rebounded and created many products that revolutionized the entire consumer electronics industry. Apple has gained this capability through its proprietary business model and by deciding against licensing its technologies. Explain Apple’s resources and core competencies & how they were developed? Which of the above are Apple’s competitive resources & critical capabilities & why? Resources and Core Competencies: Resources are assets. Overall low cost e. Managerial experience f. Design expertise in making its products (hardware and software) right from scratch c. Thus then new product did not cannibalize the sales of the older product.Key success factors: The KSFs of Apple at the time of inception are given below: a.) 4. inimitable. Apple sold the new product at a high price whereas it slashed the prices of the older product to boost its sales. rare. Apple has gained a strong control over the 6 . Apple adopted a similar strategy even for the iPods. inimitable and non. The same model was priced at $99 when the third generation iPhone 3GS was launched. b. Clever Advertising e. attributes and knowledge controlled by a firm that helps improve efficiency and effectiveness. The additional KSF’s of the company today are given below: a. Product Lifecycle Management (PLM) process: Apple timed the launch of its new products perfectly. rare. Scientific research expertise b. c. Reputed Brand name b. Steve Jobs Apple founder and CEO Steve Jobs was an incredibly valuable resource to the firm. His unique vision and approach to business established Apple as an industry leader in the beginning and he saved the firm from a crisis when he returned in the mid-1990s. Low distribution costs (iTunes.substitutable are a source of sustainable competitive advantage. The introductory 8 GB iPhone was priced at $499. It introduced new product with innovative features into the market when the older product had reached a maturity stage. Technical capability to make product innovations and improvement d. iCloud etc. App Sores. Tailored Hardware/Software Systems Apple is one of the few companies that control both hardware and software for its products. Resources are of two types: tangible and intangible. An example of this is the PLM of iPhone. and non-substitutable resource. To Apple Steve Jobs is a valuable. In case of Apple Inc.

and engineers each represent key resources the ability of the firm to exploit their abilities to create their entire software/hardware ecosystem is the firm’s key capability. Innovative design and technology: Apple’s incredible industrial design capability is a function of their innovative design teams. The relationships between Apple and their suppliers are very close to provide Apple with excellent service and high quality products. right from the Mac to the iPad. f. the resources only represent competitive parities and temporary advantages. in order to ensure it got the best quality supply at lower prices for its iPods. For example. Apple’s retail stores are designed to provide an out of the world buying experience. Such innovative designs cannot be easily imitated by the competitors. Micron. d. Mutually beneficial business relationships are time-consuming and difficult to develop. No other firm in the industry has a system like Apple’s and it would cost millions or billions of dollars to imitate. Apple Retail Stores: The introduction of Apple stores has provided the company with an important physical presence to act as both a sales location and an advertisement. It wants you to redefine the buying experience. while focusing on design internally. Toshiba etc. The combination is their key capability that has established a sustainable and ongoing competitive advantage and above average performance within the industry. The stores allow Apple to tightly control the image of the brand and provide excellent customer service. create value for their customers because of their elegant and user friendly design. g. not regarding success. Capabilities: While Apple’s designers. All the Apple products. An example of this is seen from the contracts that Apple signed with flash drive manufacturers like Intel.components and hardware it requires by carrying out extensive backward integration. 7 . programmers. Matching success and impact like the Apple store model is difficult for other firms to achieve. Apple acquired two microprocessor design companies so that it could develop its own branded chips for the iPad. e. Relationship with OEMs Apple has outsourced all of its manufacturing processes to OEM partners in China. Customer experience: Apple doesn't just want you to think differently about their products. Taken each individually.

Mobile Phones – iPhone: With the launch of iPhone 2007. Beginning as a company which produced full-sized desktop computers Apple now offers a line of desktops.iPod: When the company launched iPod it went for unrelated diversification as it had no prior experience of producing MP3 players or any knowledge about the music industry. c. and a mobile phone. istore. mobile digital media players. This time however iTunes was the common thread for the company as well as the consumers. 8 . Once iPod became a success Apple launched many versions of the product. Mp3 Players . Thus this diversification also falls in the 3rd quadrant.5. This kind of diversification falls in the 2nd quadrant where Apple catered to the same market with a new product. Comment on Apple’s diversification so far (from P. both related and unrelated. Also the iOS was the common thread between iPod touch and iPhone. This time the common thread was the App Store. From the above diversification strategy it can be seen that Apple has successfully transformed itself from a computer company to a digital convergence company. Thus broadly speaking Apple has diversified into the following categories: a. Apple entered the Mobile phone market. to ipod. iTunes and the iOS used in the iPhone. Thus this diversification falls in the 3rd quadrant. playable across many of its most popular devices. iphone and ipad) with respect to Ansoff’s matrix 7 comment on common thread. if any? Ansoff’s Matrix Apple has already implemented a successful strategy of diversification.C. notebook computers. Thus this kind of diversification falls in the 4th quadrant. Apple has also entered the content distribution business. among many other devices. selling music and applications for its devices as well as renting digital video. Tablet PCs – iPad: Apple entered the tablet PC market with the launch of iPad. b.

Smartphones: a. This coupled with iTunes gave the iPod dual competitive advantage. Competitor’s found this particular capability of Apple very hard to imitate as they relied heavily on third party vendors for hardware and software. b. This is a source of differentiation for the iPad. MP3 Players: a. Apple projected it as highly differentiated premium product. smartphone and ipad? PC: a. This combined with Apple’s innovative design differentiated the iPhone from the other smartphones.C. Also iPod’s unique design. Apple’s innovative design capability was very hard for competitors to imitate. c. The App store launched by Apple in 2008 further enhanced the user experience by making it possible to distribute. b. Apple has uniquely positioned the iPad between a smartphone and a laptop computer. Proprietary applications like iTunes. The iTunes software and the iTunes Music store were the two features that differentiated iPod from other mp3 players in the market. e. b.. The Mac added value to the consumers who were becoming entrenched in a digital lifestyle. iPhoto. Analyze how is Apple`s competitive advantage sustainable in P. d. ease of use and superior performance were difficult for the competitors to imitate. Apple’s control of both hardware and software gave it a unique capability of designing and developing its products right from scratch. Also falling component costs coupled and design improvements helped Apple reduce iPhone’s cost structure. Thus Apple’s iPhone had a dual competitive advantage. Apple started using Intel chips for the Mac which dramatically improved its performance and helped in Mac’s resurgence. AT&T provided subsidy on the iPhone which brought the prices of the subsidized phone to $199. Right from the launch of the Mac. The iPhone ran on a specially adapted version of Apple’s OS X platform. iTunes. The popularity of the App store with the users as well as the app developers further strengthened iPhone’s competitive advantage. e. access. Mac App Store added value to the overall consumer experience. MP3. c. This in turn boosted the iPhone sales. Under Apple’s pricing model agreement. 9 .6. d. iPad: a. Steve Job’s vision of the “digital hub” for the Macintosh helped Apple grow in the PC segment. f. This gave Mac its own set of loyal followers which give it a competitive advantage over the competitor’s products. Apple was also able to source the flash drives at a competitive prices because of the agreements it had signed with the suppliers. and download mobile applications directly onto the mobile phone. c.

However the Macs started looking overpriced when the prices of the IBM PCs dropped drastically. Apple however relied on its own proprietary design and refused to license its hardware to third parties. b. 1985-1993: In 1985 Steve Jobs was forced out of the company by the board of directors. Apple’s cost structure was high as compared to other players in the industry. Sculley tried to reposition Apple as a low cost producer of computers with mass market appeal. In June 1993. What are the current and emerging challenges? a. However because of its slow processor speed its sales were limited. Sculley was replaces by Michael Spindler. However the competitive position of Apple changed fundamentally in 1981 because of IBM’s entry into the PC market. Here again Apple resorted to backward integration in order to gain more control over the components. including hardware. Apple acquired 2 microprocessor design companies in order to develop chips for the iPad. This loyal customer base allowed Apple to charge a premium on its products and it gross profit hovered around 50%. In the process Apple built a great brand image for itself and gained customer loyalty. Apple’s net income fell by 62% between 1982 and 1984 sending the company into a crisis. 7. Apple also came out with a plan to run the Mac OS on Intel chips. By 1990. Apple retaliated by launching Macintosh in 1984. Sculley pushed Mac into new markets. Analyze performance from 1981 (decade wise). In 1990. disk drives. using unique chips. 14 points below the company’s 10-year average. IBM became the new market leader. c.b. c. Apple offered its customers complete desktop solutions. 10 . software and peripherals. Despite these efforts Apple lost momentum and Wintel (Windows OS + Intel processors) based PCs continued to gain ground. most notably in desktop publishing and education. As a result of IBM PC’s superior performance. He also tried to cut costs by slashing the work force and reducing the R&D spending. 1993-1997: Spindler killed the plan to run the Mac OS on Intel chips and announced that Apple would license a few companies to produce Mac clones. and monitors. Apple had $1 billion in cash and was the most profitable PC company in the world. Apple recorded a loss of $69 million in Apple’s first quarter of 1996. The boardroom coup left John Sculley alone at the helm. The company appointed Gilbert Amelio as the new CEO. Spindler also pushed for international growth. Apple also designed its products from scratch. Here again iTunes and the App store enhanced the user experience. Despite these efforts Apple’s gross margin dropped to 34%. The IBM PC used Microsoft’s DOS operating system and a microprocessor from Intel and was an open system that other producers could clone. 1981-1985: Apple had become a leader in the PC industry by 1981 with the success of its Apple II computer. Sculley also forged an alliance with rival IBM to work on developing new OS and create new multimedia applications.

Thanks to iMac Apple’s sales outpaced the industry sales for the first time in years. 1998-2007: Steve Jobs moved quickly to reshape Apple. and download applications 11 . Apple became the fourth largest PC vendor in the US with 8% market share in 2009. Apple subsequently revamped its product line to offer machines that could tightly integrated user experience. In September 1997 Steve Jobs became the company’s interim CEO. followed by iPhone in 2007 and iPad in 2010.3 billion which accounted for about 33% of total net sales. Apple broke away from its tired and tarnished image by coming up with creative marketing campaigns. In April 2003 Apple launched the iTunes desktop software and iTunes Music Store. Jobs introduced the iMac in 1998. In 1996 Apple acquired Next software which was stated by Jobs after he left Apple. Within two years iPhone went from zero to 30% of Apple’s total revenue. With the 3G model the iPhone revenues exploded to $13 billion by the end of 2009 fiscal year. Wider international distribution also fueled iPhone sales. Jobs presented his vision for the Macintosh in what he called the “digital hub”. Macintosh sales however continued to dwindle and Amelio eventually turned to Steve Jobs to revive Apple. A third version of iPhone 3GS went on sale in June 2009. Apple wanted Macintosh to become the centre of consumer’s digital lifestyle. Jobs abruptly halted the Mac licensing program as this arrangement was cannibalizing Apple’s profits. (Exhibit 1b) In 2007 Apple launched the iPhone which revolutionized the mobile phone industry. access. The iMac had a unique design and it supported peripherals which were designed for Windows based machines. Apple slashed its product lines to just four categories. A key factor behind the success of the iPhone was the launch of Apple App Store in 2008. Apple’s shift towards digital hub strategy was initiated by the debut of iPod in 2001. Jobs returned to Apple as a part time adviser.6 billion under Amelio and its worldwide market share tumbled to 3%. 2008. Apple lost $1. The two in combination completed Apple’s vision of and entertainment hub. Apple announced that Microsoft would invest $150 million in Apple and develop core products like Microsoft Office for the Mac for 5 years.9 billion.Amelio proclaimed that Apple would return to its premium price differentiation strategy. d. Apple pared down its inventory and increased its R&D spending. The iPhone went on to capture 14% of the smartphone market. The iTunes was the first legal site that allowed music downloads on a pay per song basis. The App store made it easy to distribute. From 1997 to 2007 Apple’s profits increased almost six times and its market value rose to $72. iPhone revenues exploded to $13 billion by 2009. With the launch of iPhone in 2007. In 2007 iPod sales amounted to $8.Present: Apple released the second model of iPhone in 2008. Falling component costs and design improvements helped to reduce iPhone’s cost structure. (Exhibit 1a) e. In 2001. This version ran on a faster 3G network. Apple computers became Apple inc. In 2006 Apple introduced the first Mac computer to run on Intel chip. The launch of iTunes dramatically increased the sales of iPod. This enabled Apple to build faster and less power consuming computers. In August 1997. The App Store which was launched by Apple in 2008 further boosted the sales of the iPhone. In 1998 Apple posted a $309 million profit reversing its losing trend.

As on fourth quarter ended September 24. In January 2011 jobs announced that he would be taking an indefinite leave of absence to allow him to focus on his health. It will be difficult for Apple to thrive without Steve Jobs. photos. Apple has continued to grow at a rapid pace even after Jobs’ demise on the back of new product launches and strong sales of its existing products. 2011 Jobs stepped down as the CEO of Apple Inc. both in terms of its physical attributes and technological capabilities. as he was a leader with a strong vision. In October 2010 Apple shares hit an all time high eclipsing $300. Jobs claimed that iPad would be the netbook killer and drive new consumer behavior. and he could combine altogether in blockbuster products. Android phones command a 43 percent market share. Apple’s radical innovation machine seems to be running out of steam.62 billion. mainly the iPhone and the iPad. Samsung. 2011. Apple has faced a serious challenge to two of its blockbuster products. and he had the charisma to develop and spread the message to Apple followers. files. and Tim Cook took over. 2011 Apple posted quarterly revenue of $28. however. 12 . In fact. Apple generated $1 billion in app sales. The launch of iPad in 2010 was another bold move to redefine the industry. compared to 28 percent for iPhones. Current and Future Challenges: Apple is facing four immediate challenges that may slow-down its buzz and momentum: a. LG etc. On August Last week. using Android OS are posing a serious challenge to the iPhone. b. It was positioned between a smartphone and a laptop computer. especially if Google manages to integrate Motorola Mobility successfully to its organization. Jobs surprisingly took stage to launch the iCloud in June 2011 which is an online storage and syncing service for music. c. which some analysts expect to be a serious challenge to Apple’s iPad. Steve Jobs passed away on October 5.directly onto the mobile phone. 2011. Other phone manufacturers like HTC. the market.27 billion and quarterly net profit of $6. In recent months. The new phone is a marginal rather than a radical improvement over its predecessor. Leadership challenge: The company is in the middle of a leadership transition that casts a cloud of uncertainty over its future. the company is expected to announce the release of its new version of the Kindle reader. and any company — from Nokia to Research in Motion to Hewlett-Packard that has tried to challenge Apple has not succeeded. In May 2010 Apple’s market cap surpassed that of competitor Microsoft for the first time since 1989. Apple faces a new challenge from Google’s Android phones. On the tablet market. On the iPhone side. a man who knew the technology. and software. according to a Nielsen Survey. Technology challenge: Judging from the features of iPhone 4S. iPhone 4S was officially released on October 14. Competition challenge: So far. marking an end of an era at Apple Inc.000 iPads were sold during the first week on the market. Third party developers welcomed App store as it made it easier for them to reach the customers. and the art. the iPad and the iPhone. Apple contends with an unlikely challenger: online seller Amazon. More than 450. Apple’s barriers to competitors and innovation magic have been formidable. creating efficient and effective word of mouth and buzz campaigns.

Rather than searching for the supplier of lowest cost. Developing and brand image that separates the firm from the competitive rat race will reduce the effect of destructive competition and pad margins. h. which erodes firm profitability. Continue the expansion of Apple stores: The stores represent an important source of revenue for Apple and serve as an interactive advertisement for the Apple brand. developing close relationships with suppliers is of utmost importance. 8. Economy challenge: Though Apple enjoys a strong brand among consumers that makes demand for its products inelastic. maintaining a collaborative and exclusive business relationship will help mitigate the power of suppliers and help to lock in attractive component prices. This will help Apple to mitigate the risk of slowdown due to economic downturn in US and European markets. 13 . its sales are sensitive to an impending down turn.d. Emphasize the integrated system in advertisements: Apple’s integrated system holds a significant advantage over other industry systems relying on Microsoft Windows. e. b. especially in Europe. Expand Apple store locations: Providing more points of direct contact with buyers will enable Apple to provide better service to customers and bring the Apple experience to more people. d. c. Apple has successfully developed a differentiated lifestyle brand and must continue to build on this foundation while resisting pressure to move to the middle to directly compete with Dell and HP. What are your recommendations regarding these challenges and why? a. Develop close relationships with suppliers: Because there are few suppliers of key components required in consumer electronics industry. Seek exclusivity arrangements with OEM partners: Continue to build relationships with the closed Asian OEM partners and enter into exclusivity arrangements to lock out competitors and gain favorable business deals. Supplier relationship based on trust and cooperation will enable Apple to come out with innovative products at a faster rate as compared to its competitors and also at lower prices. Create a differentiation strategy: The commodity PC market presents a perpetual downward pressure on prices. Design innovation: Put additional emphasis on design development with internal resource allocation to continue to lead the industry in design. yet some customers have not experienced the seamless interoperability of all Apple products. Diversification: Apple must look at emerging markets to drive the growth of its current and new products. This marketing angle will result in cross selling of more products to new and existing customers. g. Their success has been unmatched by any other industry player. f.

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