The members of Group 4


1. Trần Thị Hoàng Phượng 2. Lai Kim Thuận 3. Nguyễn Thị Thanh Lê 4. Võ Thỵ Kiều 5. Nguyễn Thị Xưa

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 Foreword
If there’s one company that is the envy of the high-tech community these days, it’s Apple. Steve Jobs is hailed as a genius CEO and lauded for a string of hit products. Apple Inc is an American multinational corporation that designs and markets consumer electronics, computer software, and personal computers. Apple’s market capitalization is over $200 billion dollars currently, easily ranking it in the top 10 companies in the world by market cap, and just shy of Microsoft for biggest technology company. Apple has once again been named the most admired company by Fortune magazine, and it did so with the highest margin of victory the magazine has ever recorded for a number one - Apple scored a 7.95 on the index system used by the magazine, while number two Google scored a 7.70. To get its list of the Top 50 Most Admired Companies, Fortune's survey asked businesspeople to vote for the companies that they admired most, from any industry. Apple was voted #1 for the third year in a row in a poll of executives, industry analysts and company directors. Apple is delivering an experience that makes customers happy to spend as much money as they can afford to spend. With 250 million iPods, 43 million iPhones, and 32 million iPod touches sold to date, plus the promise of a gamechanging iPad, Apple won this year's vote by the highest margin ever for a No.1. ." While so many companies are struggling to break even in the current recession Apple is getting stronger day by day. The last three years has seen Apple's profits soar, take a look at these figures: a profit of 8.2 Billion in 2007 followed by a profit of 11.2 Billion in 2008 and most recently a profit of 17.2 Billion in 2009. That is more than a 100% growth in profit from 2007 to 2009- Incredible! "What makes Apple so successful? Product, product, product," the magazine wrote about Apple ". This is the company that changed the way we do everything. Its track record for innovation and fierce consumer loyalty translates into tremendous respect across business' highest ranks." Everyone wants to understand the secrets of Apple’s success. This essay help us find what Apple’s secrecy and CEO Steve Jobs’s leadership.


 Table of content: Foreword ......................................................................................................................................1 I. History of the Apple company corporation..................................................................................4 1. Operating History...................................................................................................................4 2. Product History......................................................................................................................6 3. Steve Jobs.............................................................................................................................13 II. Organizational Architecture......................................................................................................18 1. Organization structure..........................................................................................................18 1.1. The history of Apple management structure...............................................................18 1.2. The early in 1980s and John Sculley..........................................................................18 1.3. The change in structure...............................................................................................18 1.4. The new organization wthout Tobs.............................................................................22 1.5. The present Apple’s structure.....................................................................................24 2. Incentive system...................................................................................................................30 2.1. Reward........................................................................................................................30 2.2. Promotion....................................................................................................................30 3. Organizational culture..........................................................................................................30 3.1. Apple corporate...........................................................................................................30 3.2. Culture secrecy............................................................................................................31 3.3. Culture of Innovation..................................................................................................33 III. Apple’s environment................................................................................................................33 1. General.................................................................................................................................33 1.1. PC industry..................................................................................................................33 1.2. Apple international......................................................................................................34 1.3. Interbational growth....................................................................................................34 1.4. Analysis of environment change.................................................................................34 1.5. Apple response to the environment change................................................................35 2. Apple’s Competitor..............................................................................................................37 3. External analysis..................................................................................................................39 4. Internal analysis...................................................................................................................42 IV. Business strategy.....................................................................................................................43 1. The change of strategy.........................................................................................................43 1.1. Beginning....................................................................................................................43 1.2. Sculley with strategy of low cost in 1990...................................................................43 1.3. 1990-1995: Apple vs Microsoft..................................................................................44 1.4. 1997-Steve Jobs: Matrix product................................................................................47 1.5. Apple’s present strategy: Product Differentiation......................................................47 2. Apple’s competition.............................................................................................................48 2.1. Apple’s competitive advantage...................................................................................48 2.2. Apple’s weakness........................................................................................................49 2.3. Creation & sustainning of competitive advantage......................................................49 2.4. 11 Effective strategy Apple uses to create loyal customers........................................49 3. Branding strategy.................................................................................................................51 3

4. Apple’s alliance...................................................................................................................52 4.1. AIM alliance...............................................................................................................53 4.2. Apple – Microsoft alliance..........................................................................................53 4.3. Apple – Nike alliance..................................................................................................56 5. List of mergers & acquisitions by Apple.............................................................................58 V. R&D and Marketing..................................................................................................................60 1. Marketing strategy...............................................................................................................60 1.1. The marketing tactic...................................................................................................60 1.2. Ipod marketing plan....................................................................................................61 1.3. Apple Iphone marketing plan......................................................................................62 1.4. SWOT analysis...........................................................................................................64 1.5. Marketing objectives...................................................................................................65 1.6. Marketing Mix strategy...............................................................................................65 1.7. The real secret of Apple’s successful marketing strategy...........................................66 2. R&D.....................................................................................................................................66 2.1. Apple’s R&D..............................................................................................................66 2.2. Marketing research......................................................................................................68 2.3. 4 Innovation secret......................................................................................................68 3. Apple’s advertising..............................................................................................................69 VI. Apple’s financial analysis........................................................................................................73 VII. Reference................................................................................................................................78


Steve Wozniak begins work on the Apple II. California. with 48KB memory. codenamed Lisa. including Apple II. Today. one of the first computer stores. but faced revenue and market share in recent years low stone 1990. He was denied. and Power Mac line.2. • 1978: Apple Computer begins work on an enhanced Apple II with custom chips.Apple Computer moves from 'Jobs' garage to an office in Cupertino.Wozniak remains at HP. on April Fool's Day.Steve Jobs and Steve Wozniak formed Apple Computer Company. which they call the Apple I computer. $ 1195.Steve Wozniak and Steve Jobs finish work on a computer circuit board.Apple I computer board is sold as a kit. provides the first system of the Apple II. Operating History:  1973-1984: Jobs and Wizniak: • 1973: Steve Wozniak joined HP.S. 1976. and Macintosh computers. in Cupertino. With the introduction of successful iPod music player in 2001. Apple Computer has been primarily a manufacturer of personal computers. 50. but was soon convinced that he should leave and join Apple Computer. is a multinational corporation that creates consumer electronics.Apple Computer sold 35.000 Apple II computers for the financial year. • 1977: March . Apple is the largest technology companies in the world.000 units were sold. • 1976: July . • 1979: September . For over two decades. • 1976: March . for U. and the combined company on January 3.10 months after its introduction. computer software.5 years after the introduction of the Apple II.Apple Computer introduced the Apple II Plus. 1. with the release of the Apple I. • 1976: April .I. 175 Apple I kits have sold. 1977. • 1976: October . Macintosh.66. opened in California. Price: U. and sent to the shop of Steve Jobs and Steve Wozniak. formerly Apple Computer Inc. with "computer" from its name and continue to release the iPhone and iPad.. HISTORY OF THE APPLE COMPANY CORPORATION Apple Inc.S. • 1976: Wozniak proposes that HP create a personal computer. for $ 1295. • 1976: December . who was ousted from the company in 1985. • 1975:The Byte Shop. • 1978: Apple Computer begins work on a supercomputer with a bit-state architecture.Steve Wozniak and Randy Wigginton demonstrate the first prototype of the Apple II at a Homebrew Computer Club meeting.Apple Computer. $ 666. • 1977: May . returned to become chief executive of Apple in 1996. code named Annie. • 1979: October . 5 . and commercial servers. • 1979: June . Co-founder Steve Jobs and Steve Wozniak created Apple Computer into effect April 1. and brought a new philosophy of the company's products are recognized and simple design . • 1977: April . iPod music player. Apple's core product lines are the iPhone. • 1976: August . Apple established itself as a leader in the consumer electronics industry. Jobs.

$ 1400.Unitronics shows Sonic. for U. with only 65.Apple Computer announced that 70.Apple Computer officially begins marketing the Lisa computer. • 1984: January .000 units were produced. $ 2200. • 1985: March . • 1982: Franklin Computer Corp.000 made).S.Apple Computer released the Apple IIc. • 1984: May .Apple Computer introduces the design of the Apple III Apple III +. Steve Jobs introduced the Apple Macintosh. and Macintosh operating systems. • 1983: June . which will become the Apple IIe. $ 4. • 1984: April . • 1982: Sales of all Apple II systems to date: 750. an Apple II computer workalike.000 th Macintosh system.Video Technology introduces the Laser 3000. • 1983: December . • 1984: September .The Macintosh XL (formerly called Lisa) is dropped from the line of Apple computer products. for U. • 1986: April .Apple Computer introduces the Apple IIe for U. $ 3200. • 1980: September .500 to $ 8.Apple Computer Macintosh XL abandoned. • 1983: July . with improved software and a hard disk. • 1983: June . Prices range from U. • 1980: Apple Computer begins project "Diana".Apple Computer.000.S. $ 1300.• 1979: Apple Computer begins work on "Sara". announced the Franklin Ace 1000. Lisa 2.Apple Computer introduced its first hard drive.Apple introduces the Macintosh 512K enhanced.S. $ 2000. its original price is $ 10. Amelio: • 1985: January . to U. • 1982: Apple Computer becomes the first personal computer company to reach $ 1 billion in annual sales. • 1981: September .Apple Computer introduces the Apple IIe enhanced. • 1985: April . • 1986: April .S. • 1984: November .Apple introduced the Macintosh Plus. • 1983: January . Spindler. • 1986: July .The 2 millionth Apple II computer is sold. • 1981: Apple Computer officially reintroduces the Apple III.Apple introduces the Macintosh 512K for U. • 1986: January . • 1980: May .retirement Apple Computer and Apple III Apple III +.000 units sold in total (90.000 Apple II computers in the fiscal year.Apple Computer begins shipping the Lisa.000 Macintosh computers have been shipped in the first days after notification of 100. priced U.• 1984: Apple sells 250.  1985-1997:Sculley.000. the first legal (at) Apple II clone. During its lifetime.Apple Computer has officially launched Lisa computer.000. 5MB file. • 1983: June .Apple Computer sells over 78. • 1984: January .Apple released a new version of the Lisa computer.Apple Macintosh Computers and abandon the original Macintosh 512K.Apple launches new Macintosh to the press.S. an Apple II computer workalike. Price is $ 2600. • 1984: April . • 1983: June .S. the codename for what would be the Apple III. $ 3499. • 1980: Apple ships the first Apple III units with limited numbers. • 1983: December .Apple Computer officially renamed Lisa Macintosh XL. • 1982: Sales of Apple II Plus to date: 45.one millionth Apple II was made. 100. • 1983: Franklin shows an operating Franklin Ace 1200 Apple II compatible for U.000. $ 3000. It uses all new software.S. • 1983: January .S.Apple Computer introduced the Apple III. 6 .

• 1987: March .S. using the G4 processor. • 1987: March . Centris. Next and its Next step operating system. for U. • 1990: Apple's response to the PC threat from IBM was a profusion of new Macintosh lines including Quadra.5 drive.4 "Tiger" to the general public. • 2007: January . based on IBM's G5 processor. • 2001: Apple introduced Mac OS X.Apple announced the opening of a line of Apple retail stores.Apple Computer makes its first million Macintosh PCs.Apple Computer. 7 .S.• 1986: September . $ 3900.Apple Computer announces the Macintosh Portable.Apple introduced iPhone 3G. • 1994: Apple started the Power Macintosh line Apple purchased Steve Jobs' company.Apple Computer introduces the Apple IIe Platinum.The phone carries the iOS4.The first Intel-based machines. an operating system based on Next's Nextstep and the FreeBSD kernel. • 2010: January .S.S. • 1997: July-The returns of Jobs • 1997 :November . • 2008: July .A new iMac based on the G5 processor was unveiled and was made available in mid-September. • 2005: June .Apple released Mac OS X v10. for about U. NeXT • 1996: December . • 1987: January .Eric Schmidt left Apple of board.Apple Computer introduces the Apple IIGS. • 1987: Apple Computer begins shipping the Macintosh II. • 1987: March . • 2004: December . $ 8700. • 1997: Entering into partnership with Microsoft.S. the iMac and MacBook Pro.Apple Computer introduces the open architecture of the Macintosh II.S.Apple introduced its first iPod portable digital audio player. their newest mobile operating system.Apple -Motorola alliance. • In mid-2003: Steve Jobs launched the Power Mac G5.Apple introduced the Apple Store. • 1993: Apple released the Newton. for U. • 1991: Apple partnered with long-time competitor IBM to form the AIM alliance. $ 6500.Apple Computer announces the Macintosh IIci.  1998-2001: Apple of renaissance: • 1999: Apple introduced the Power Mac G4. • 2001: May . • 2006: January . were introduced. $ 6500 • 1989: September . • 2001: October .Apple introduced the Macintosh SE for $ 2900 U. Open. shortened its name to simply Apple Inc. Inc. U.  2002-present: • In early 2002: Apple unveiled a redesigned iMac. • 1989: January .Apple Computer introduces the Macintosh SE/30. were introduced. with the Apple 3. an early PDA. • 2010: April . and Performa. • 1987: March . $ 1000. • 2009: August .Apple purchased Steve Jobs' company.Steve Jobs officially announced that Apple will begin producing Intel-based Macintosh computers beginning in 2006.Apple Computer Macintosh 512K enhanced to give up. U. • 2002: Apple also released the Xserve 1U rack mounted server. • 1989: September .The Apple iPad was announced. • 2005: April . • 2004: August .

• 2010: June - Apple introduced the iPhone 4, which they call "the biggest leap since the original iPhone". 2. Product History: 1976 Apple I 1977 Apple II 1979 Apple II+ 1980 Apple III & III+ 1983 Apple ][e Lisa/Lisa 2/Mac XL 1984 1984 Commercial Graphical User Interface (GUI) Macintosh 128k Apple IIc & IIc+ Macintosh 512K 1985 Apple IIe Enhanced/Platinum 1986 Macintosh Plus Macintosh Plus ED Macintosh 512Ke Macintosh ED Apple IIgs 1987 Macintosh II Macintosh SE 1988 Macintosh IIx 1989 Macintosh SE/30 Macintosh IIcx Macintosh SE FDHD Macintosh IIci Macintosh Portable 1990 Macintosh IIfx Macintosh Classic Macintosh IIsi Macintosh LC 1991 Macintosh Classic II Macintosh Quadra 700 Macintosh Quadra 900 8

PowerBook 100 PowerBook 140 PowerBook 170 1992 Macintosh LC II Macintosh Quadra 950 PowerBook 145 Macintosh IIvi Macintosh IIvx PowerBook 160 PowerBook 180 PowerBook Duo 210 PowerBook Duo 230 PowerBook Duo 270c PowerBook DuoDock 1993 Macintosh Centris 610 Macintosh Centris 650 Macintosh Color Classic Macintosh LC III Macintosh Quadra 800 PowerBook 165c Workgroup Server 80 Workgroup Server 95 Macintosh LC 520 PowerBook 180c Macintosh Quadra 660av Macintosh Quadra 840av PowerBook 145B Workgroup Server 60 Newton Message Pad (OMP) PowerBook 165 Macintosh Centris 660av Macintosh Color Classic II Macintosh LC 475 Macintosh LC III+ Macintosh Quadra 605 Macintosh Quadra 610 Macintosh Quadra 650 Macintosh TV PowerBook Duo 250 1994 Macintosh LC 550 Macintosh LC 575 Newton Message Pad 100 Newton Message Pad 110 Power Macintosh 6100 Power Macintosh 7100 Power Macintosh 8100 9

PowerBook Duo 280 PowerBook Duo 280c PowerBook DuoDock Plus/II Workgroup Server 6150 Workgroup Server 8150 Workgroup Server 9150 PowerBook 520 PowerBook 520c PowerBook 540 PowerBook 540c Macintosh LC 630 Macintosh Quadra 630 PowerBook 150 Newton Message Pad 120 1995 Macintosh LC 580 Power Macintosh 5200 LC PowerBook 550c Power Macintosh 6200 Power Macintosh 7200 Power Macintosh 7500 Power Macintosh 8500 Power Macintosh 9500 PowerBook 190 PowerBook 190cs PowerBook 5300 PowerBook 5300c PowerBook 5300ce PowerBook 5300cs PowerBook Duo 2300c Power Macintosh 5300 LC 1996 Network Server 500/700 Workgroup Server 7250 Workgroup Server 8550 Newton Message Pad 130 Power Macintosh 5260 LC Power Macintosh 5400 LC Power Macintosh 7600 Power Macintosh 8200 Power Macintosh 6400 PowerBook 1400c/cs Power Macintosh 4400 Power Macintosh 7220 Power Macintosh 6300/120 1997 PowerBook 3400 Power Macintosh 5500 Power Macintosh 6500 10

Power Macintosh 7300 Power Macintosh 8600 Power Macintosh 9600 eMate 300 Newton Message Pad 2000 Workgroup Server 7350 Workgroup Server 9650 20th Anniversary Macintosh PowerBook 2400 Newton Message Pad 2100 PowerBook G3 Power Macintosh G3 1998 Macintosh Server G3 Power Macintosh G3 All-in-one PowerBook G3 Series iMac PowerBook G3 Series (rev. 2) 1999 iMac (Rev. C) Power Macintosh G3 (Blue & White) iMac (Rev. D) PowerBook G3 (Bronze Keyboard) iBook Power Macintosh G4 (AGP Graphics) Power Macintosh G4 (PCI Graphics) iMac (Slot Loading) iMac DV/SE 2000 iBook SE PowerBook G3 (FireWire) iMac (Summer 2000) iMac DV (Summer 2000) iMac DV+ iMac DV SE (Summer 2000) Power Macintosh G4 (Gigabit Ethernet) Power Macintosh G4 Cube iBook/iBook SE (FireWire) 2001 PowerBook G4 Power Macintosh G4 (Digital Audio) iMac (Early 2001) iMac SE (early 2001) iBook (Dual USB) iMac (Summer 2001) Power Macintosh G4 (Quicksilver) iBook (Late 2001) iPod PowerBook G4 (Gigabit Ethernet) 11

1") iMac (Flat Panel) Power Macintosh G4 (Quicksilver 2002) eMac PowerBook G4 (DVI) iBook (Mid 2002) Xserve iMac (17") Power Macintosh G4 (Mirrored Drive Doors) iBook (Late 2002) PowerBook G4 (1 GHz/867 MHz) 2003 PowerBook G4 (12.33 GHz) iBook G4 2004 iPod mini Xserve G5 Xserve G5 (Cluster Node) eMac (USB 2.1" DVI) PowerBook G4 (15" FireWire 800) PowerBook G4 (17" 1.1.0) PowerBook G4 (12.1") PowerBook G4 (17") Power Macintosh G4 (FireWire 800) iMac (Early 2003) Xserve (Cluster Node) Xserve (Slot Load) / Xserve RAID iBook (Early 2003) iPod (Dock Connector) eMac (ATI Graphics) Power Macintosh G5 iMac (USB 2.67 GHz) iPod mini (2nd gen) Power Macintosh G5 (Early 2005) eMac (2005) iMac G5 (Ambient Light Sensor) 12 .5 .2002 iBook (14.0) iBook G4 (Early 2004) PowerBook G4 Family Power Macintosh G5 (June 2004) iPod (Click Wheel) iMac G5 iBook G4 (Late 2004) iPod (U2 Special Edition) iPod photo 2005 iPod shuffle Mac mini PowerBook G4 (1.

iPod (color) iPod (color U2 SE) iBook G4 (Mid 2005) iPod nano iMac G5 (iSight) iPod (with video) PowerBook G4 (Dual Layer SD) Power Macintosh G5 (Late 2005) 2006 iMac (Early 2006) MacBook Pro Mac mini (Early 2006) MacBook Pro (17-inch) MacBook iPod (with video. Late 2008) 13 . U2 SE) iMac (Mid 2006) Mac Pro iMac (Late 2006) iPod nano (2nd Generation) iPod shuffle (2nd Generation) Mac mini (Late 2006) MacBook Pro (Late 2006) MacBook (Late 2006) Xserve (Late 2006) 2007 Apple TV MacBook (Mid 2007) iPhone MacBook Pro (Mid 2007) iMac (Mid 2007) Mac mini (Mid 2007) iPod classic iPod nano (3rd Generation) iPod touch MacBook (Late 2007) 2008 MacBook Air Mac Pro (Early 2008) Xserve (Early 2008) MacBook (Early 2008) MacBook Pro (Early 2008) iMac (Early 2008) iPhone 3G iPod classic (120 GB) iPod nano (4th Generation) iPod touch (2nd Generation) MacBook (13-inch. Late 2008) MacBook Air (Late 2008) MacBook Pro (15-inch. Aluminum.

2009 MacBook (Early 2009) MacBook Pro (17-inch. He took a job as a technician at Atari. Jobs then traveled to India with a Reed College friend. Mid 2010) MacBook Pro (17-inch. He is well known for being the co-founder and chief executive officer of Apple. He came back a Buddhist. and frequented after-school lectures at the Hewlett-Packard Company in Palo Alto. 14 . Mid 2009) MacBook Pro (15-inch. in search of spiritual enlightenment. 1955) is an American business magnate and inventor. In 1972. Mid 2009) MacBook Pro (15-inch. Mid 2009) MacBook Pro (17-inch. Jobs returned to California and began attending meetings of the Homebrew Computer Club with Wozniak. 3. Jobs experimented with psychedelics. Jobs graduated from high school and enrolled in Reed College in Portland. Early 2009) iMac (Early 2009) iPod shuffle (3rd Generation) Mac mini (Early 2009) Mac Pro (Early 2009) Xserve (Early 2009) iPhone 3GS MacBook (Mid 2009) MacBook Air (Mid 2009) MacBook Pro (13-inch. Late 2009) 2010 iPad MacBook Pro (13-inch. calling his LSD experiences "one of the two or three most important things [he had] done in [his] life". Steve Jobs Steven Paul Jobs (born February 24. Mid 2009) iPod classic (Late 2009) iPod nano (5th Generation) iPod touch (3rd generation) iMac (Late 2009) MacBook (Late 2009) Mac mini (Late 2009) Mac mini (Server. He was soon hired there and worked with Steve Wozniak as a summer employee. a manufacturer of popular video games.1. Jobs attended Cupertino Junior High School and Homestead High School in Cupertino. Jobs' biological parents – Abdulfattah Jandali and Joanne Simpson. Early years Jobs was born in San Francisco and was adopted by Paul and Clara Jobs who named him Steven Paul. Mid 2010) MacBook (Mid 2010) iPhone 4 3. California. In the autumn of 1974. Jobs returned to his previous job at Atari and was given the task of creating a circuit board for the game Breakout. California. Daniel Kottke. During this time. Oregon.

The following year. Once the deal closed. Jobs and Disney chief executive Michael Eisner tried but failed to negotiate a new partnership. Like the Apple Lisa. Jobs and Iger announced that Disney had agreed to purchase Pixar in an all-stock transaction worth $7. after having sold only 50. 3.000 machines. In the years 2003 and 2004. On January 24. 3. 1984. brought fame and critical acclaim to the studio when it was released in 1995. 2006. an emotional Jobs introduced the Macintosh to a wildly enthusiastic audience. Jobs bought The Graphics Group (later renamed Pixar) from Lucasfilm. Jobs and Wozniak had been friends for several years. it was largely dismissed by industry as cost-prohibitive. Jobs became The Walt Disney Company's largest single shareholder with approximately 7% of the company's stock. As Apple continued to expand.2. California. The development of the Mac was started by Jef Raskin. In 1983. The first film produced by the partnership. and in early 2004 Jobs announced that Pixar would seek a new partner to distribute its films once its contract with Disney expired. During a time when e-mail for most people was plain text. which he believed was the next step after "personal" computing. NeXT Computer. Jobs loved to demo the NeXT's e-mail system.3.The new company. NeXT transitioned fully to software development with the release of NeXTSTEP/Intel. and at the end of May 1985 – following an internal power struggle and an announcement of significant layoffs – Sculley relieved Jobs of his duties as head of the Macintosh division. and in 1993. however. the NeXT workstation was technologically advanced. was initially intended to be a high-end graphics hardware developer. The NeXTcube was described by Jobs as an "interpersonal" computer. Apple recruited Mike Scott from National Semiconductor to serve as CEO for what turned out to be several turbulent years. but has since relocated to Emeryville.3 Pixar and Disney In 1986. Toy Story.2 NeXT Computer Around the same time. Prior to cofounding Apple. as evidenced by such things as the NeXTcube's magnesium case. Career 3. An industry-wide sales slump towards the end of 1984 caused a deterioration in Jobs's working relationship with Sculley. the company began looking for an experienced executive to help manage its expansion. Wozniak was an electronics hacker. Jobs founded another computer company. and Iger quickly worked to patch up relations with Jobs and Pixar.4 billion.1 Beginnings of Apple Computer In 1976. In October 2005.2. Bob Iger replaced Eisner at Disney. and eventually taken over by Jobs. After years of unprofitability selling the Pixar Image Computer.2. it contracted with Disney to produce a number of computer-animated feature films." At Apple's annual shareholders meeting on January 24. Apple aired a Super Bowl television commercial titled "1984. Jobs ran NeXT with an obsession for aesthetic perfection. 15 . This put considerable strain on NeXT's hardware division. In 1978. which was originally based at Lucasfilm's Kerner Studios in San Rafael. Steve Jobs managed to interest Wozniak in assembling a computer and selling it. having met in 1971. Steve Jobs. Steve Wozniak and Ronald Wayne founded Apple. as Pixar's contract with Disney was running out. California. Steve Jobs lured John Sculley away from Pepsi-Cola to serve as Apple's CEO.2.

Jobs immediately terminated a number of projects such as Newton.1 Wealth As of October 2009. With the purchase of NeXT. a multi-touch display cell phone. While stimulating innovation. Apple announced that it would buy NeXT for $429 million. Jobs has not reinstated a philanthropic division at Apple.S.1 billion in 2009. most notably NeXTSTEP. iTunes digital music software.2. the company made forays into consumer electronics and music distribution. which also included the features of an iPod and. This indicated backdating. some have doubted this assumption.10. Jobs also changed the licensing program for Macintosh clones. much of the company's technology found its way into Apple products. with its own mobile browser.3.Business life 3. Cyberdog. by which he means that delivering working products on time is as important as innovation and attractive design. Apple announced it would take back iPods for free at its retail stores.000. as compiled by Indiana University's Center on Philanthropy. by lashing out at environmental and other advocates at Apple's Annual Meeting in Cupertino in April. Although he may well have donated significant sums anonymously. a few weeks later. Steve Jobs was granted stock options in the amount of 7.30. bringing Jobs back to the company he co-founded. In March 1998. Apple entered the cellular phone business with the introduction of the iPhone. which evolved into Mac OS X. Forbes estimated his net wealth at $5. In 2006. after resuming control of Apple in 1997. he further expanded Apple's recycling programs to any U. the company has branched out. In 2007. given Jobs' equally poor track record on corporate philanthropy. and the iTunes Store. The investigation is focusing on false dating of the options resulting in a retroactive $20 million increase in the exercise price. As of 2006. Jobs officially dropped the "interim" modifier from his title at Apple and became permanent CEO. Jobs responded to criticism of Apple's poor recycling programs for e-waste in the U. most of which was granted in 2003 when Jobs was given 10 million shares. With the introduction of the iPod portable music player. to concentrate Apple's efforts on returning to profitability.5 million shares of Apple with an exercise price of $18. Jobs also reminds his employees that "real artists ship". which he received in exchange for Disney's acquisition of Pixar. introducing and improving upon other digital appliances. Jobs eliminated all corporate philanthropy programs as a temporary cost-cutting measure until profitability improved.426 million shares of Apple. making him the 43rd wealthiest American. The deal was finalized in late 1996. customer who buys a new Mac. Despite the company's record-breaking profits and $40 billion cash on hand. However.3.Jobs also helps oversee Disney and Pixar's combined animation businesses with a seat on a special six-man steering committee.S. thereby incurring taxable income of $20.000 that he did not report as income. At the 2000 Macworld Expo. In recent years. 3. In 2005. Jobs had not appeared on national tallies of charitable donations totaling $1 million or more. He also owned 138 million shares of Disney. which allegedly should have been $21.2 Stock options backdating issue In 2001. He soon became Apple's interim CEO after the directors lost confidence in and ousted then-CEO Gil Amelio in a boardroom coup. Jobs owned 5.4 Return to Apple In 1996. 3. 3. making it too costly for the manufacturers to continue making machines. revolutionized the mobile browsing scene.3. and OpenDoc. The case is the subject of active criminal and civil 16 .

000-square-foot (1. Steve. 3. The email read: Team. 3. starting when Jobs first criticized Dell for making "un-innovative beige boxes. Although it reportedly remained in an almost unfurnished state.and two other children. Steve Jobs banned all books published by John Wiley & Sons from Apple Stores in response to their publishing an unauthorized biography.The couple have a son. ran the company." alluding to Jobs' compelling and larger-than-life personal. In 1984. but I thought it was worth a moment of reflection today. Health concerns In mid-2004. Jobs is also a Beatles fan. There's an old Wayne Gretzky quote that I love.government investigations found that Jobs was unaware of these issues and that the options granted to him were returned without being exercised in 2003. the Woodside Town Council gave Jobs approval to demolish the mansion. an apartment building in New York City with a politically progressive reputation. Stocks go up and down. Cook. 3. In January 2007 Jobs was denied the right to demolish the property. Presiding over the wedding was the Zen Buddhist monk Kobun Chino Otogowa. on the condition that he advertise the property for a year to see if someone would move it to another location and restore it. 2008. Floyd Norman said that at Pixar.' And we've always tried to do that at Apple. at least in innovation and style. In 1982.3. Fortune wrote that he "is considered one of Silicon Valley's leading egomaniacs. During Jobs' absence. not where it has been.3 Management style Much has been made of Jobs' aggressive and demanding personality. 17 . Jobs was a "mature. 14 bedroom Spanish Colonial mansion. Steve Jobs sent an email to all employees when Apple's market capitalization rose above Dell's. iCon: Steve Jobs. once said that Jobs "would have made an excellent king of France. he said "I'd shut it down and give the money back to the shareholders. Jobs has always aspired to position Apple and its products at the forefront of the information technology industry by foreseeing and setting trends.6. on March 18. when Michael Dell was asked what he would do if he owned thentroubled Apple Computer." Jef Raskin. He has referenced them on more than one occasion at Keynotes and also was interviewed on a showing of a Paul McCartney concert. from his relationship with Bay Area painter Chrisann Brennan. 1991.4."On October 6. Jobs announced to his employees that he had been diagnosed with a cancerous tumor in his pancreas. Jobs purchased a 17. a former colleague. Reed Paul Jobs. and things may be different tomorrow. Jobs bought an apartment in The San Remo.600 m2). In 2005. by a court decision. mellow individual" and never interfered with the creative process of the filmmakers. in a Gartner Symposium. it turned out that Michael Dell wasn't perfect at predicting the future. 1997. In June 2004.Personal life Jobs married Laurene Powell. Apple is worth more than Dell. a $7 billion class action suit was filed against several members of the Apple Board of Directors for revenue lost due to the alleged securities fraud. Jobs had a public war of words with Dell Computer CEO Michael Dell. Since thevery beginning. On July 1. Jobs also has a daughter. Based on today's stock market close. Timothy D. 'I skate to where the puck is going to be. Lisa Brennan-Jobs (born 1978). head of worldwide sales and operations at Apple." In 2006. Jobs lived in the mansion for almost ten years.

On January 14. Jobs delivered the keynote for Apple's annual Worldwide Developers Conference. many news carriers and blogs reported on it.a 1999 docudrama which chronicles the rise of Apple and Microsoft. participants responded to repeated questions about Steve Jobs' health by insisting that it was a "private matter. Although the error was promptly rectified. • Pirates of Silicon Valley . similar concerns followed Jobs' 2008 WWDC keynote address. Jobs underwent a liver transplant at Methodist University Hospital Transplant Institute in Memphis. about the rise of the home computer/personal computer. In August 2009. opined that shareholders had a right to know more. Tennessee. Bloomberg mistakenly published a 2500-word obituary of Jobs in its corporate news service." In April 2009. 2009 on Apple.1 .com. Apple officials stated Jobs was victim to a "common bug" and that he was taking antibiotics. He was portrayed by Noah Wyle." Others.In early August 2006. stating he would not address further questions about his health.7. Jobs was named the most powerful person in business by Fortune Magazine. 2009. 2007. intensifying rumors concerning Jobs' health. located at The California Museum for History. Tim Cook. Jobs was named the CEO of the decade by Fortune Magazine. • Nerds 2. however. (and sequel to Triumph of the Nerds) which chronicles the development of the Internet. 2008. Jobs concluded his presentation with a slide reading "110 / 70".Honors He was awarded the National Medal of Technology from President Ronald Reagan in 1985 with Steve Wozniak and a Jefferson Award for Public Service in the category "Greatest Public Service by an Individual 35 Years or Under" in 1987. referring to his blood pressure. 2007.8. Jobs was selected the most admired entrepreneur among teenagers on a survey by Junior Achievement. 2008. 3. During a July conference call discussing Apple earnings. In a statement given on January 5. Apple announced that marketing vice-president Phil Schiller would deliver the company's final keynote address at the Macworld Conference and Expo 2009. On December 16. given Jobs' hands-on approach to running his company. 2009. On August 28. On November 27. Jobs responded at Apple's September 2008 Let's Rock keynote by quoting Mark Twain. who had previously acted as CEO in Jobs' 2004 absence. containing blank spaces for his age and cause of death.a 1998 three-part documentary for PBS. became acting CEO of Apple. Jobs wrote that in the previous week he had "learned that my health-related issues are more complex than I originally thought" and announced a six-month leave of absence until the end of June 2009 to allow him to better focus on his health. California Governor Arnold Schwarzenegger and First Lady Maria Shriver inducted Jobs into the California Hall of Fame. In popular culture Jobs was prominently featured in three films about the history of the personal computing industry: • Triumph of the Nerds .0. Jobs' prognosis was "excellent". In November 2009 Jobs was ranked #57 on Forbes: The World's Most Powerful People. Jobs said that he had been suffering from a "hormone imbalance" for several months. On December 5. Two years later. Jobs has also been frequently parodied: 18 . On November 5. again reviving questions about Jobs' health. with Jobs still involved with "major strategic decisions.a 1996 three-part documentary for PBS. Women and the Arts. 3. in an internal Apple memo.

a 2008 The Simpsons episode which features an adventure into the 'world' of Mapple. The Early 1980s and John Sculley Since 1981. turtleneck and all in the episode "Cutbacks". and "Steve Mobbs". In May of 1983. who visualized a personal computer that could be used easily by anyone. starring Steve in the role of Hobbes and his attempts to explain to Calvin his job. Apple’s mission was to change the world by bringing computers to the masses. • Jobs was also parodied in "Mypods and Boomsticks".a feature called Calvin and Jobs. Sculley was hired for both his executive and marketing expertise.2. • II. They routinely referred to the Apple II people 19 . Markkula was recruited as the company’s first professional manager. In the same year. Jobs hired John Sculley from PepsiCo. Apple attempted to enter the business market with its new Lisa and Apple III computers.Mad Magazine . The Macintosh and Lisa teams were not getting along. Organization Structure: 1. 1977. As cofounder of Apple. Setting up shop in Jobs’ garage. • Jobs was also parodied on Mad TV and Saturday Night Live. He was the visionary responsible for Apple’s reputation for innovation. • 30 Rock parodied Jobs's keynote presentation style. they soon experienced sales beyond the garage’s capacity.C. and Steve’s Macintosh team. 1. Jobs’ notion of “one person-one computer” became a central tenet of the Apple belief system. vice president of marketing. they created the Apple I. a parody of Calvin and Hobbes. which hadn’t yet introduced a product. he had the following reaction: As a member of the executive staff. Markkula retired from his posts as CEO and president but remained as director and consultant. In fact. where he had been the president of domestic operations and. there were many. before that. choosing Sculley with his corporate experience as the company’s new president was considered by Jobs to be “one of the most important decisions in Apple’s history”. With financing from Markkula and a group of venture capitalists. A. Apple Computer was incorporated on January 3. Apple’s market share relative to its industry competitor had steadily declined. There was the Lisa computer division. ORGANIZATIONAL ARCHITECTURE OF APPLE 1. A group called PCDS (Personal Computer Systems Division) was responsible for the development and marketing of the Apple II. Within that division was a smaller splinter group in charge of the Apple III. competitive fiefdoms. Once Sculley joined the company. I came away with a clear impression that there wasn’t a common understanding of the company we were trying to build. Jobs’ focus was on creating new and different products. The history of Apple management structure: Apple Computer was formed in 1976 by Steven Jobs and Stephen Wozniak. Together. but the products failed to win acceptance and could not compete successfully with the IBM PC. Considering Apple’s new competitive pressures. MyPods.1. The Macintosh people believed that once on the market their product would be better than Lisa and any other Apple product.

“Now there was a distinct hierarchy.14 He wanted many people reporting to him. another for the Lisa product and the development and production of the Macintosh. for example. They also resented that they had been moved to a building that was two and a half miles from the Apple campus.” Sculley also installed tighter control policies and increased the market focus and level of discipline of Apple’s managers. Yocam. corporate finance. Sculley recalls. existed. so he could “assess all the pieces. The Apple II group resented this favoritism. Sculley hoped that the new structure would eliminate most of the overlap without causing massive layoffs. each reporting to Sculley and his staff. Three or four home-marketing groups. His main change was to reduce the number of Apple product divisions to three: a division for Apple II products. and human resources--in essence. a six-year Apple veteran. both line and staff people. Also.” 1. and an accessory products group. and finance and a small central organization for sales. Everyone had great ideas. there was duplication of activities and resources within the company. Each division was responsible for its own functions and could be managed as “independent profit-and-loss centers. as was the case when he arrived. marketing.3. No longer did he have more than a dozen vice presidents reporting to him. Furthermore. with two powerful product divisions responsible for their own manufacturing. I found people all over the organization doing the same thing. each competing with the other.” Exhibit 2 presents the organizational chart 20 . But some structure was needed if people were to feel a greater sense of accountability.”.as “bozos” and were given perks such as free fruit juice and a masseuse to work the tense backs of the Mac engineers. “When I arrived. he did not want to be insulated from the organization. distribution. two companies. The Change in Structure In December of 1983. Sculley reorganized management.”12 He later gave this position to Del W. Sculley placed himself in charge of the Apple II group to “learn how a product division worked. Jobs was placed in charge of Macintosh division but maintained his position as chairman of the board of directors.

Jobs and his director of engineering were missing schedules for crucial parts 21 .Internal Problems Disappointing market performance was attributed to internal problems.

I saw Apple in PepsiCo terms.with its own independent operations. Macintosh. Apple had no salesforce with direct access to corporations. They were “months behind with a large disk drive that would help Mac run sophisticated software programs for business and make it easier for users to share information. avocado machine for yuppies and their kids. especially since their division was producing more than twice the revenues as the Macintosh division. Jobs. Sculley thought the focus should be on customer needs. These representatives also sold the products of other manufacturers. In the early 1980s.What I didn’t realize was that it wasn’t working. couldn’t abide the success of the venerable Apple II.” and the internal competition was self-defeating. “elbowing” them out of markets.000 direct salespeople. The direct salespeople were accused of selling Macintoshes at lower prices than dealers. led by Del Yocam. getting close to the market was of fundamental importance. However. The two groups became too competitive with each other. targeted the university and business markets. People were getting burned out. were frustrated by Job’s favoring the Macintosh product group. He once addressed the Apple II marketing staff as members of the “dull and boring product division. the staff began to experience conflict with the independent dealers who still provided most of Apple’s revenue.resigned. Jobs believed that Apple should focus on technology. Apple had become “two different warring companies. A former Macintosh employee stated. The company failed to communicate a business image for the Macintosh to the market. The Apple II group could have its own factories and sales organization for the K-12 (kindergarten through 12th grade) education and consumer markets. Customer needs should determine the product. There were also marketing problems. Jobs complained that Sculley didn’t understand the nuts and bolts of the business or how products were developed and questioned Sculley’s competence.of the system. The Apple group considered this intolerable favoritism. Frito-Lay and Pepsi-Cola could comfortably and successfully exist as separate entities under Pepsi-Co. Apple established a 60person direct sales staff. These problems were heightened by conflicts between the Apple II and Macintosh Divisions. which had 6. Unlike IBM. The members of the Apple product group.000 to 7. Nor did he hide his feelings. In February 1985. According to several insiders. designer of the Apple I and an engineer in Yocam’s group. Apple relied on 300 manufacturers representatives over whom they had no direct control. a devout believer that new technology should supersede the old. Stephen Wozniak.Sculley was losing confidence in Jobs’ 22 . “Mac was being perceived as a cutesy. which would be the motivating force behind purchases of computers. soon after. Sculley described his own perspective of the organization: Initially. This image problem was compounded by the fact that Jobs and Sculley disagreed over marketing strategy.” In addition. not as an office machine or as the technology leader that it is”.” Jobs’ intense involvement with the Macintosh project had a demoralizing effect on Apple’s other divisions. Therefore.

manufacturing. Sculley felt that he was losing control: It was nearly impossible to get the right information quickly when I needed it most. 1985. Campbell became responsible for U. The direct sales force was dismissed except for those on established accounts. marketing and sales.4 The New Organization without Jobs In May of 1985. On September 17. he resigned from Apple. 60% of whom were in manufacturing. head of Apple France. not what was best for the company as a whole. The company was downsized in an effort to reduce operating costs. When Jobs failed to order necessary parts for the Macintosh XL. The management inexperience of many of Apple’s key players as well as my own lack of experience in the personal computer industry should have been early warning signs that a decentralized organization wasn’t suited for our volatile marketplace. As Sculley explained. Sculley imported two top-level executives to headquarters in California from Europe. largely a financial organization. Yocam was placed in charge of engineering.S. Apple became one 23 . I was constantly surprised by new and disturbing findings. was promoted to head all of Apple’s international operations. Advertising was reduced.ability to manage the Mac division. and William V. a German national. The other part of the reorganization called for bringing in a new general manager of the Macintosh Division to replace Jobs. and the Lisa computer and some development efforts were eliminated. Steve was over me.44 The board was also unhappy with the way Jobs was running the Macintosh division. and Michael Spindler. 1. It set up a system under which people would fight for what was best for their groups. They had all the power. Jobs operating role in the company as chairman was taken away. Sculley announced another reorganization. he was under me. The organization created two power bases and removed me from day-to-day operating decisions. Jobs was making all the decisions and was being favored over all the other vice presidents.200 employees were laid off. The corporate staff basically became an impotent group. Also. Sculley was in Jobs’ shadow.46 Other cutbacks were made across the organization except for R&D. According to middle managers at Apple.The organizational structure contributed to these management problems. As chairman. I became more remote from the business. who had been running European marketing and sales. They encouraged Sculley to exercise his authority as CEO and hire a new general manager to improve the Macintosh’s sales. and distribution. He was not taking the action he needed to run the company. The three product divisions were consolidated into one called Product Operations. Jean-Louis Gassee. He really had more knowledge about what was going on in the business than I did because all the information was coming up through the product divisions. was promoted to replace Jobs as head of product development. including the failure to order parts for the Macintosh XL. A total of 1. factories were closed. and Apple had to discontinue the product after having introduced it only three months earlier. Sculley became concerned. And as head of a product division.

key mangers and I have met almost daily over the past several weeks to develop a new organization. Apple has been a divisionalized company with several highly autonomous profit centers which have acted almost like stand-alone companies: I am please to announce a new structure which is vastly simplified and organized around functions: 24 .of few companies to have two Europeans at the highest levels of senior management. As you know. Exhibit 3 is an interoffice memo from Sculley introducing the new organizational structure to Apple’s employees The executive staff.

management information systems. The present Apple’s structure In recent speech. In the process of moving to this new organization. In addition to the greater effectiveness of the organization it should also be more efficient making us more profitable on lower sales than would have been the case with the former organization. (As shown in the organization chart. Steve Jobs said that: “One of the keys to Apple is that Apple is an incredibly collaborative company. manufacturing. 1. We’re great at figuring out how to divide things up into great teams. You know how many committees we have at Apple? Zero. and we talk to each other.5. We meet for three hours every morning and talk about all the business. I get to come in and work with some of the most brilliant people in the world. We play in the best sandbox?” Apple organizational structure is a solid foundation.) The new organization would be more effective at providing products the marketplace wants and at providing them in a more timely manner. (Updated in 24/11/2010) 25 . this streamlining will allow us to eliminate unnecessary job duplication in the divisional structure. The reorganization will be costly in the short run. We’re the biggest start up on the planet. each division has had its own product development. Let we find out about how Apple organized? This is Apple’s organizational structure chart.The new organization will reduce our breakeven point. finance. It should also simplify internal communication of company objectives and allow for greater consistency in their implementation. we will reduce the number of jobs at Apple by 1200. We’re organized like a startup. about what’s going on everywhere. We take such a strong step only because it is clear that the new organization and management team will vastly improve Apple's profitability for success as an industry leader. However. So what I do all day is meet with teams of people… I have one of the best jobs in the world.We have selected leaders of each functional area who have had considerable experience in their specialty and in managing people. This is a painful and difficult decision. and human resource staffs.

directors are expected to take a proactive. focused approach to their positions.Apple’s Executive Board According to the above link. iOS software. Apple's Board of Directors oversees the Chief Executive Officer and other senior management in the competent and ethical operation of Apple on a day-to-day basis and assures that the long-term interests of shareholders are being served. and set standards to ensure that Apple is committed to business success through the maintenance of high standards of responsibility and ethics. Hardware Engineering. Retail and General Counsel. These executives lead over 35. 26 . Industrial Design. under CEO Steve Jobs there are 10 Senior Vice Presidents: CFO.000 employees. Operations. To satisfy the Board's duties. COO. The management duties will be separated out but they will ultimately report to the few at the top. Software Engineering. Worldwide Product Marketing.

the Finance Department). each with his own idea of what Apple should be. North American Sales Division). Thanks to the influence of its founders. this trait had become a key way the company attempts to differentiate itself from its competitors. software.. Apple Computer had five product divisions responsible for the development.g. in conjunction with Apple’s articles of incorporation and bylaws. form the governance framework for Apple. Macintosh). a significantly enhanced version of the Apple II. Apple II most recently introduced the Apple IIe.. there were a number of administrative departments in charge of overseeing Apple’s day-to-day corporate activities (e. evaluation and manufacture of computer systems.g. distribution and post-sale product support (e. As the company has grown and been led by a series of chief executives. By the time of the “1984” TV ad. The governance structure is designed to foster principled actions. and peripheral devices (e. evaluation and manufacture of computer systems. Description of Apple divisions: There are two major types of divisions within Apple: +Product Division: esponsible for the development. Numerous employees of Apple have cited that projects without Jobs' involvement often take longer than projects with his involvement. software. asking random people 'do you work on MobileMe” Apple management: To manage its products and marketing.g. peripheral devices includes includes: Personal Computer Systems Division (DCSD): is responsible for Apple II and Apple III computer system and is constantly working to refine and improve them. Personal Office Systems Division (POSD): design and manufactures mass-storage devices for Apple computer systems 27 . In addition. Another presents the image of Jobs "wandering the hall with a flamer thrower in hand. It also had four product support divisions which handled marketing.The Board has adopted the following committee charters and governance guidelines that. effective decisionmaking and appropriate monitoring of both compliance and performance. The important role of CEO Steve Jobs: CEO Steve Jobs Jobs-an Apple co-founder who is considered the company's creative leader is key factor of Apple’s success. Steve Jobs often walked around the office barefoot even after Apple was a Fortune 500 company.

business. and marketing accessory products. +Product Support Divisions: which handle marketing. It is all responsible for developing. conducts market research. Sales and marketing for the Far East. Texas. In addition to handling counseling. and others parties interested in Apple receive whatever information they need. Operations Division: is responsible for most of the Apple’s manufacturing activity. and manages employee. The division also handles direct sales to volume user and is responsible for the identification and penetration of major markets. investor. Exhibit 1 represents what such an organization probably would have looked like. compensation. service and support. which track all sales and inventories. The group also coordinates all proposed marketing activities to ensure that Apple’s messages to each segment are clear. Administrative Departments: Many activities at Apple fall outside the neatly structured division. supporting the efforts of original equipment manufacturers (OEMs) and assisting others divisions in tailoring Apple Products to European markets. The division handles advertising and public relations activities.Accessory Product Division (APD): produces all keyboards for Apple computers. It provides accounting and cash management services to the company as a whole. its people. manufacturing. Such operations include the following: Financial department monitors Apple’s financial well-being. Human Resources safeguard and helps develop Apple’s most valuable asset. and press communications. APD designs and markets a variety of monitors. and Singapore. South Africa Central and South America and handled by Intercontinental Sales. investor. they are intimately associated with daily operations of the company. Products ready for high-volume production are then transferred to the Operations Division. Ireland. European Division manage field scales and distribution activities throughout European. Finance also oversee Apple’s Management Information Services (MIS) computers. It also represents the company in legal disputes with individuals. Cork. in addition. modems and plotters Macintosh Division (MAC) is pursuing product line that promises to become the hightest volume personal computer system of the ‘80s. just as the divisions do. 28 . printers. and the government. Human Resources also provides the resources to assist employee in reaching personal and professions goals. and benefit programs the department is responsible for staffing and training to ensure that Apple has the people it needs to reach its goals. which manufactures in Dallas. Legal Services make certain that Apple complies that the law in all business operations. In addition. Other product division manufacture the initial pilot units and establish process procedures. a number of administrative departments in charge of overseeing Apple day to day corporate activities includes: North American Scale Channels Apple’s products to customers through field sales groups which service a larger dealer network. and are lumped together under “ Administration”. Its highly successful National Accounts Program furnishes Fortune 1000 corporations with direct sales. distribution and both-scale product support. at the same time working with each division to help project and manage expenses. Market Marketing group identifies and defines target markets for Apple and develops strategies for approaching them. facilities and the Apple Education Foundation both now report to Legal Services. Communications Division sees that sales prospects. There are. In addition. installation. The activities report to Vice Presidents.

9 1985 1918 .3 1986 1901 . net income. The table shows net sales.9 million in 1986 to $2.4 1989 5284. 0 29 .901.661.9 1987 2661 .Growth Business market expansion resulted in a 30% increase in Apple’s sales from $1. 1 1983 982. predicting a more than doubling of revenue to $10 billion annually by the early 1990s. 8 1984 1515 . Apple expected this rapid growth to continue.1 million in 1987. and the total number of employees for years 1982-1989 YEAR Net sales (millions USD) 1982 583.1 1988 4071 .

Sweden. 0 217. Major European companies. Apple had established strong markets in France. Apple’s European revenues grew by 55%.” said Spindler. Holland. and Japan. there was less time available for Sculley to devote to day-to-day operations. marketing. and engineering departments. Apple gained 6% of the overall European market. developed in 1985. International growth spurred Apple to expand its European headquarters in Paris.Net Income 61. Apple’s foreign operations now consisted of three manufacturing facilities in Ireland and Singapore and distribution facilities in Europe.66 “We can’t do everything from the U.S. the marketing department was disorganized. Canada.67 A new corporate “account management” program was established. Also. The proportion of Europeanmade components used in Apple’s Irish production plant was increased and Apple opened a $10 million R&D center in Paris that employed 50 engineers.1 61. In October of 1988. Germany’s Bayer and BASF. As the “bureaucracy continues to grow. and Australia.” “The technical people didn’t respect the marketing department. The staff was increased by over 150 people. 3 454. valuable things are happening in Europe. Sculley created a new position of Chief Operation Officer to which Yocam was appointed.0 As the number of employees increased. Upper managers were “not all lined up facing in the same direction. such as France’s Aerospatiale and Renault.3 (millions USD) 76. These problems required even more of Sculley’s time. In an effort to centralize operations and involve Apple’s senior management in day-to-day decisions. and there was little possibility that we could afford all the projects it was working on”. faster than revenue growth for the entire company. An International Business Market Structure By 1988. Canada. anymore. New high-level management positions included vice president of advanced technology and vice president of U.2 154. which included several hundred corporate account specialists fanning out across the Continent. Sculley doubled the size of Apple’s field force and the number of employees grew to 10.836. sales and marketing.…there is a limit to how many engineers can walk directly into Sculley’s office to pitch their ideas”.and Britain’s Plessey purchased a significant number of Macintosh machines.7 64.S. and Australia. European sales alone made up nearly one-third of total revenues for Apple. Sculley hoped that this change would free up more of his own time to spend on long-term planning. captured 15% of the business market in 1988. Sales in Japan also took off as localized products were developed. 30 . 5 400. Belgium. Apple experienced the same success in new markets such as Spain. Its Swedish subsidiary. there were constant battles between Apple’s sales.

In my next post I'm going to talk about the core processes of strategy and operations and their impact on execution. Apple Products and Apple USA. "Seeing as last year we all received additional vacation time. autonomous Pacific and European units and creating the Apple USA division from what was formally known as U. But if you have talent and devote to the company really. Sales and Marketing. important. and marketing operations for primarily France. Apple retail stores that meet weekly quotes often hold weekly raffles. To date the player has been met with favorable reviews from both the main stream media and Wall Street analysts. AppleInsider has confirmed that certain stores in New York. California." one employee said. and demand regular progress. Michael Spindler was placed in charge of Apple Europe responsible for sales. 2. The four functional divisions were replaced by two. Each division was headed by a president who reported directly to Sculley. Reward: Apple is handing out free iPod shuffles to many of its retail employees. Promotion: No one can deny that Apple are quite strict in managing their staff. and the role of Chief Operating Office was removed.S. and attention to detail around these goals will have a huge impact on whether this becomes just another exercise or truly becomes central to the culture. where lucky employees can walk away with cool gadgets such as the iPod photo. or maybe even a 'thank you' for recent prosperity. West market opportunities in Pacific Rim and Latin American nations. So far. Several Apple employees at the company's retail stores have been told to expect a free 1GB iPod shuffle sometime in the next three weeks. and Missouri are awaiting arrival of the complimentary players. and Apple’s internal information systems operations were incorporated into Apple USA. service and support. do not work on commission. Apple’s International Division was split into Apple Europe and Apple Pacific. Exhibits 7 and 8 show the old and new Apple structures. however. Apple has offered promotional items to retail staff of stores that meet weekly or monthly sales targets. manufacturing operations and marketing. In the past. 2. service.S. Keep it simple. an iPod shuffle is a small investment for a company to reward its employees for the best quarter in our history. Apple announced the iPod shuffle just over a week ago. you still can receive the appropriate promotion. Jean-Louis Gassee was placed in charge of Apple Products. U. Incentive system: 2. responsible for all product development. According to sources. and is already in tight supply with Apple's online store quoting backlog of up to 4 weeks. Sources says that the freebies may be an incentive to increase the work ethic amongst Apple sales reps.This growth was accompanied by a realization that Apple’s various markets were distinct and required different expertise. Apple's retail employees. sales and marketing. The CEO's level of passion. Sculley segmented this division’s operations into business and education market units and a marketing support unit.2.1. 31 . You do not need a gigantic process or staff to do these things. Apple responded by splitting its International Division into separate. ability to mentor.

but also for product development capability and capacity to unite union the collective enterprise becomes prosperous. innovate beyond all expectations. 3. who was leaving Apple in the wake of the iPhone 4 antenna troubles. that belief in Jobs can go too far. increasing employee engagement with business and improving business efficiency.1.1.1. Apple really gets design. The work is shaped by processes and organizational designs that reflect the values. He joined Apple in 1999 and oversees the team that has delivered dozens of breakthrough Mac products including the MacBook Air and the all-in-one iMac line. but for the most part. the construction of corporate culture is an essential job but not less difficult. and developing people who fit those beliefs Corporate culture is the intangible assets of each business. He always tries his best to complete all of work and receive the appreciation. It’s not always easy. So. This approach of enterprises not only work to promote your business done business methods "people are center". Organizational Culture: 3. It understands what consumers want.For example: Bob Mansfield who was senior vice president of Macintosh Hardware Engineering. Apple does everything differently. Focus on design The first thing that every employee must remember about Apple is that the company cares more about the design of products than any other firm in the market. Sometimes. Bob has taken over the devices hardware management as well from Mark Papermaster. and sets out to beat any and all expectations. it knows how to meet those desires. they might end up with another company sooner than they think. One of the most important things it expects is for both stakeholders to believe in Steve Jobs. Along with the development of market economy.3. In August 2010. 3. as evidenced by the most recent iPhone antenna debacle. and ways of working that define how people behave in an organization. which has historically done a poor job of creating aesthetically pleasing products. If an employee doesn’t help the company do that. Bob is a deligent employee. Culture is a powerful force in attracting. it also expects from its customers. but Apple seems to get it right every time. or 32 . 3. Believe in Jobs Apple is an interesting firm. Over the past decade. Unlike Microsoft. retaining. Bob plays more important role in the team of Apple employees. how it goes about devising ideas for new products.2. Apple should pay more attention to human factors by Corporate culture is to create a code of conduct for businesses without having to create direct effects. He has helped the company revive its aging business model.1. what it expects from its employees. Here is what makes Apple’s corporate culture so unique: 3. Apple Corperate Culture is the collective norms.3. they are expected to immediately do one thing: forget everything they ever knew about the technology world. Forget everything that came before it When employees come to Apple. Steve Jobs has been the Apple’s savior. believing in Steve Jobs has been good for Apple and good for both employees and consumers. Now. Its corporate culture extends beyond its employees to its consumers. behaviors. and deliver some of the better products on the market. He was even considered one of the candidates to replace Steve Jobs in the future. Powerful cultures are reinforced by leaders who embody those beliefs. Whether it’s the design of products.

Whereas Microsoft always believes that the other shoe is about to drop. but it has become a call to arms for all of the company’s lovers and employees. All areas within the company's headquarters are monitored by security cameras. and then must enter a separate password for each new person can walk in their office. Apple then tries to track down the source of news reports that include the incorrect details. This company has rejected chatting with the world through blogs and dropping tidbits of information about its inner workings. and the company has been known to spread disinformation about product plans to its own workers. A senior staff currently working for Apple refused to answer when asked about his health status jobs. Some Apple workers in the most critical product-testing rooms must cover up devices with black cloaks when they are working on them. And one member of Apple said that: Philip Schiller. He believes that his company is the best in the world and it should carry itself that way. Employees who work in secret project to go through a series of security doors. Edward Eigerman who spent four years as a systems engineer at Apple and now runs his own technology consulting firm was fired from Apple in 2005 when he was implicated in an incident in which a co-worker leaked a preview of some new software to a business customer as a favor. The secret is not only a "strategic" relation with the media but also has become a cultural characteristic of Apple. But it’s very difficult to understand the reason why Apple always keeps distant to their clients. and turn on a red warning light when devices are unmasked so that everyone knows to be extra-careful. Employees working on top-secret projects must pass through a maze of security doors. Five years ago. He said Apple routinely tries to find and fire leakers. their bags were checked and searched. and the company had to pay $700. A California appeals court ruled for the bloggers.simply the way it carries itself. Culture of Secrecy Apple is one of the most mysterious companies in the world. Secrecy at Apple is not just the prevailing communications strategy. has held internal meetings about new products and provided incorrect information about a product’s price or features. No one can deny that it is the intriguing technology company in the world. Part of that is due to Steve Jobs’ ego.1. Work spaces are typically monitored by security cameras.4. To pretend like something is similar to a past employer is a mistake that could cause more trouble than it’s worth. Employees have been fired for leaking news tidbits to outsiders. everything is different at Apple. 3. Believe Apple is better than all others Apple has an ego unlike any other company in the space. arguing that they had violated trade-secret laws and were not entitled to First Amendment protections. Apple’s senior vice president for marketing. Apple is different. Mr. Apple believes that it can stop the shoe from ever falling.2. It sued several bloggers who had covered the company. 33 . Secrecy is part of their culture and there are times at which one can’t really grasp the big picture.000 in legal fees." the manager said. Apple haters can’t stand that. Apple took its obsession with secrecy to the courts. according to a former employee who signed an agreement not to discuss internal matters. "Do not talk about that. It is baked into the corporate culture. Few companies are more secretive than Apple. this issue is too sensitive. even when that information has been published in the newspaper last week. or as punitive to those who dare violate the company’s rules on keeping tight control over information. swiping their badges again and again and finally entering a numeric code to reach their offices. even with their own shareholders. "Law silent" Apple's harsh that even the senior managers also felt very scared when facing or just "walk" through Steve Jobs. 3.

If Apple has it. but thrive. beliefs. which competitors like Microsoft and Sony knew about before it was unveiled. once again Apple stole the limelight by introducing the innovative new iPhone . the more information you give the marketplace the better.” Apple’s “culture of innovation” allowed itself to reinvent its business processes and products. The culture is the collective personality that embodies the values. though the innovative product is widely acclaimed. Against powerful major competitors . Some believe Apple did not need to disclose Mr. Apple’s decision to severely limit communication with the news media. an analyst at Piper Jaffray who has covered Apple for the last five years. and perhaps federal regulators. attitudes and operating norms. It boils down to “how we do things around here. “They don’t communicate.the name is in dispute. it must be useful. it’s a little odd that they are getting a reputation for lack of transparency. It's not following the classic 'market-led' innovation path that inevitably leads to incrementalism and 'me-too' innovation. Jobs’ approach has led to violating laws that cover what companies must disclose to the public about the well-being of their chief executive. In January 2007.the likes of Motorola and Nokia . its handling of news about the health of its chief executive and co-founder. But even by Apple’s standards. Innovation does not depend on just one person. Steven P. Every organization has a unique ethos that drives its success or failure in the face of accelerating change. and expanding markets and sales channels . For corporate governance experts. It’s a total black box. “In this environment.Apple introduced a new design that is expected to capture significant market share. where transparency is critical. On that key issue.it stems from a culture that encourages and breeds innovative thinking. or even a few . the biggest question is whether Mr. director of the John L. innovation is the key element that helps a company not only to survive. Jobs was on a leave of absence and had passed responsibility for the day-to-day operations of the company to the chief operating officer. Beyond CEO Steve Jobs’ charisma. and build entirely new markets that meet untapped customer needs. the experts are divided. who has battled pancreatic cancer and recently had a liver transplant while on a leave of absence. Apple is telling its customers what's next. Weinberg Center for Corporate Governance at the University of Delaware. which are embracing online outlets like blogs and Twitter and generally trying to be more open with shareholders and more responsive to customers. a well-known Silicon Valley marketing veteran who advised Apple on its media strategy in its early days.Apple also sued a blog called Think Secret and settled the case for an undisclosed amount. said the culture of secrecy had its origin in the release of the first Macintosh. several new features generated spontaneous applause with what I term the “Wow factor. but as part of the settlement that blog shut down.3. Jobs. Customers trust Apple and view it as a lighthouse guiding them on what to adopt next.” said Charles Elson. The statements about Apple quoted in the article was "every single person in the company contributes to Apple's innovation success every day. philosophies. Apple had a rank as the most innovative company. agile business processes.” said Gene Munster. Success comes from new products with innovative differentiation. is unparalleled. shareholders and the public is at odds with the approach taken by many other companies.all of which are vital for achieving competitive advantage. Regis McKenna. “For a technology company that views itself as innovative. Culture of Innovation In today’s fast-paced business environment. Apple is very focused on the user experience and how design impacts that experience. 3. Its competitive 34 . Timothy Cook. Jobs’ liver transplant because Mr.” In Boston Consulting Group released their Innovation 2006 study.

Acer. Sony.”58 Sculley turned to Michael Spindler. Since Wintel personal computer is the same kind of product with Apple. The European market for PCs was expanding faster than the U. consumer market. Strong bargaining power of suppliers creates high cost of computer components. there are no pure substitutions for Apple personal PC. Apple managed its international operations from California. At the other side. In order to appeal to these consumers. Spindler’s strategy involved focusing more closely on the needs of corporate and other markets rather than on those of home users. where Apple products were most popular. and. APPLE’S ENVIRONMENT 1. Still. the bargaining power of supplier is high to the Apple. 1. III.g. Both Gassee and Spindler tried to convince Apple to pay more attention to growing markets abroad. Apple International Apple was an early market leader in Europe. Intel. HP. He brought more experienced computer industry professionals into Apple’s older European subsidiaries and stressed a professional. head of Apple’s international division. Gateway. International Growth In 1987. Wintel platform is not produced by single firm rather than combination of firms. Fujitsu. to develop a strategy for growth in the European market. ECS. international growth became a priority at Apple. it is considered as rivalry instead of product substitution. 35 .S. under his strong leadership. which meant sales growth in the international area would be important because otherwise people could feel Apple was failing. Sculley said. This limits the ability for Apple set price too high. Apple was not as successful in Britain and Germany. This condition made the price of processor component is high.S. PC Industry A large number of competitors especially from Wintel (Windows Intel) family create a ‘red ocean’ for Apple. In Germany.3. General 1. corporate image from the start in newer ones. the company expanded sales into Britain.1. “We were going to reduce our dependency in the U. Cyrix. This drew criticism from the European computer industry. the great number of competitors with similar product specification and the birth of Internet are also strengthening the bargaining power of final consumers. and IBM) and only small of them has capability and willingness to provide the best for Apple. Apple achieved a high profile and a critical mass of buyers. the home market of hobbyists.S. similar to the one Apple developed in the U. Spindler developed a businesslike approach to the European market. Besides Wintel personal computer. Several Apple competitors are IBM. Apple depended on growth in markets abroad to cover up declining U. Compaq.S. market. Low threats of substitute product also characterize the industry. AMD. sales. However. Gassee led a successful marketing effort in France.advantage went beyond productivity and efficiency to rewiring itself for creativity and growth. Toshiba. Dell.2. Competitors in the British education market shut out Apple. These competitors offer similar product to apple with only little different in features. Lenovo. Its drive for innovation also led it to think creatively about how to develop and incentivize its people. never took off with the same popularity that it had elsewhere. and France. the company established a European headquarters in Paris with a staff of 45 people and built a production plant in Ireland. 1. brand and design. Germany. etc. As there is only small number of processor suppliers (e. Before 1983.

Thus. “We made a decision to take the distribution network down.” Spindler also championed a new “multilocal” approach to international subsidiaries. We put more emphasis on adding value. this made Apple strategy have to be adapted continuously as a response of the dynamics of environment. it made environment situation in the future more turbulent and complex for Apple.S. yet you are within the network of the mother company back home. a multilocal approach meant “you have a network model that adapts to local markets. He cut back the network and upgraded the remaining distributors to lure large corporate dealers who were accustomed to dealing with IBM. and build it back up in quality rather than quantity. so do strategy. Figure 12. operations overseas. Since the return of Steve Jobs as Apple CEO. Apple response to the environmental change shows improvement to the company revenue. competition due to low entry barrier lead to the more and saturated and fragmentation of market. changing customer need.4. You behave and act like a local company. Analysis of how environmental change (future) will influence the strategy The environmental change trend in current and past can depict the future.Spindler reorganized Apple’s European distribution network.” 1.5. As environment change. According to Spindler. Apple selling on MacBook shows increasing trend which represent the successfulness of Apple strategy (Figure 13). As Spindler explained. The rapid increasing of technological innovation. Most American multinationals simply cloned their U. Mac unit sales 1. Strategy has to be reshaped based on internal and external environmental analysis. Thus. selling the same products as were successful in the United States. Apple response to the environmental change 36 . The whole world can thus become one big shopping cart for ideas and capital. which was geared more to individuals and small business buyers. rather than just moving boxes.

Apple responded by adapting its business model and strategy in order to struggle for survive. The mp3 players had existed for some time without being a big success. Apple conducts differentiation strategy. To gather back its market share in personal computer and mobile computer. Figure 13 Apple perception map Apple also reduces product category to ease consumers. Apples business model for the iPod generates money in many different levels. which in 2005 reported $1. as compared to 400 million from the previous year.25 on each sold song. 37 . Since Apple was keep losing market share in personal computer industry. easy to use and large storage. Soon Apple was making big money both on the iPod and the music – a dream scenario for most companies. iPod and iTunes are successful due to its innovative design. Apple quickly saw a new market and created an inferior music player with a great design. Apple creates very distinctive and innovative design that simplifies the size of computer. Money is being made both on the hardware. as he did previously with home computers. Through its research and development. With this innovative approach. increase the artistic look of its products. software and on the accessories. Apple has been tried to create new business model to create new source of income. When Apple introduced the iPod it was not a new product. As a result. Songs bought at the Apple music store can only be played on iPods but this has not affected the sales so far. Jobs has developed a new market: that of legal digital music.As environmental change dynamically. Apple improves design to create differentiation and offer with premium price (figure 13). by creating innovative design iPod and iTunes. At the end of 2004 Apple has sold 10 million iPods and 250 million songs. Apples most decisive move was to create a web shop with hundreds of thousands of licensed songs. Apple decided to enter digital media sector. Apples margins on the iPod Mini is on average about 35% and $0. but customer preferences were changing rapidly. Currently Apple no longer creates too many product variations in order to ease consumer choosing products.1 billion in sales to the record companies.

and IT consulting corporation headquartered in Armonk. Apple’s move to Intel is thought to have come about because of IBM’s reluctance to expand the number and range of PowerPC chips it makes. USA. Inc is a multinational public corporation invested in Internet search. This strategy gives benefit to Apple as it is allowing Microsoft Windows to run above it in turn it reduces the risk. Google hosts and develops a number of Internet-based services and products. Apple’s competitors: Google. operating in nearly every country. with the entire product line switching by the end of 2007. IBM manufactures and sells computer hardware and software (with a focus on the latter). As a result the cash it gets from making chips for Apple has become a very small slice of its revenue. By 2010. and is now one of the world's largest information technology companies.nearly 30% of the product weight we sold seven years earlier. New York. California.5% of the weight of all products Apple sold seven years earlier. Furthermore IBM has yet to produce a version of the G5 chip that would be suitable for use in Apple laptops. designing software and delivering services. HP specializes in developing and manufacturing computing. as both of the company can create mutual benefit to compete AMD for Intel and MS Windows for Apple. and consulting services in areas ranging from mainframe computers to nanotechnology. Apple moves and does alliance with Intel. is an American multinational information technology corporation headquartered in Palo Alto. The Mac Mini is expected to be the first Apple computer to use Intel chips. Apple leaves IBM and does alliance with Intel as a response of rapid innovation of processor. International Business Machines Corporation (IBM) is an American multinational computer.Apple also transforms its marketing channel by using exclusive delivery channel. business consulting. The company was founded by Larry Page and Sergey Brin. IBM is one of the few information technology companies with a continuous history dating back to the 19th century. hosting services. technology. and offers infrastructure services. which is equal to 9.. Apple currently uses Intel processor for its new computer and laptops for the next five years. Sony’s forthcoming PlayStation 3 and Nintendo’s future game-playing machine. The company was founded in a one-car garage in Palo Alto by Bill Hewlett and Dave Packard. Major product lines include 38 . and networking hardware. To respond with dynamic of innovation and create competitive advantage. Hewlett-Packard Company: commonly referred to as HP. data storage. We expect this percentage to grow to 13% in 2007. After IBM cannot afford Apple to provide processor that is faster to Intel. Apple recycled 13 million pounds of e-waste in 2006. Apple has no other source that capable providing high-speed processor. cost and barrier for customer to switch from Microsoft to Apple platform. The openings of Apple Stores are in order to extend the reach of the external distribution channel. In responding social pressure on environmental issues. In order to manage its brand as high class and high quality product. United States. and generates profit primarily from advertising through its AdWords program. 2. cloud computing. IBM is the world's fourth largest technology company and the second most valuable global brand (after Coca-Cola). IBM has the contract to make PowerPC chips for Microsoft’s imminent Xbox 360 console. and to 20% in 2008. and advertising technologies. we forecast recycling 19 million pounds of e-waste per year . Apple chose to transform its retail channel into exclusive store.

Xerox announced the intended acquisition of Affiliated Computer Services for $6. Xerox is headquartered in Norwalk. On September 28. Established on April 4. EMC is headquartered in Hopkinton. The company has diversified in recent years into the video game industry with the Xbox and its successor. headquartered in Tokyo. electronic components and materials. Toshiba was the world's fifth largest personal computer vendor. travel.personal computing devices. Internet-based solutions and services. In 2009. The deal closed on February 8th. Bearing the name of its founder. Xerox Corporation is a Fortune 500 global document management company (founded in 1906) that manufactures and sells a range of color and black-and-white printers. check processing systems. 2009. Japan. sells and supports computers and related products and services. 1975 to develop and sell BASIC interpreters for the Altair 8800. electronic devices and components.. New York. and is also included in the S&P 500 Index the Russell 1000 Index. and services. after Hewlett-Packard of the U. power systems. Microsoft Corporation is a public multinational corporation headquartered in Redmond. enterprise servers. food service. spanning information & communications equipment and systems. Microsoft rose to dominate the home computer operating system (OS) market with MS-DOS in the mid-1980s. industrial and social infrastructure systems. Inc is an American-based multinational corporation that designs and sells consumer electronics. as well as a diverse range of printers and other imaging products. Dell of the U. develops. multifunction systems. 2009. networking and communications technology and services. the area in which the company was founded. and supports a wide range of products and services predominantly related to computing through its various product divisions. gaming and public sector industries.4 billion. USA. 39 .. point-of-sale terminals. Cisco Systems. the Xbox 360 as well as into the consumer electronics market with Zune and the Windows Phone OS. Toshiba Corporation is a Japanese multinational conglomerate corporation. 2010. Texas. Cisco is one of the world's biggest technology corporations. and business consumables. automated teller machines. and Lenovo of China. licenses. California. consumer products. and related consulting services and supplies. Fortune 500 and S&P 500 company. software. The company's main business is in infrastructure. digital production printing presses.S. related storage devices. manufactures. Washington. NASDAQ100 Index and the Russell 1000 Growth Stock Index. Connecticut though its largest population of employees is based in and around Rochester. Xerox holds a Royal Warrant from HM Queen Elizabeth II and the Prince of Wales. The ensuing rise of stock in the company's 1986 initial public offering (IPO) made an estimated four billionaires and 12.000 millionaires from Microsoft employees. Its main products are self-service kiosks. is headquartered in San Jose. financial. and household appliances. The stock was added to the Dow Jones Industrial Average on June 8. followed by the Microsoft Windows line of OSs. They also are one of the largest providers of IT maintenance support services. Michael Dell.S. Acer of Taiwan. United States. EMC Corporation: (EMC) a Financial Times Global 500. USA that develops. healthcare. entertainment. the company is one of the largest technological corporations in the world. NCR Corporation is an American technology company specializing in products for the retail. delivers and supports information infrastructure and virtual infrastructure hardware. Massachusetts. photo copiers. Dell Inc is a American multinational information technology corporation based in Round Rock. barcode scanners. Microsoft would also come to dominate the office suite market with Microsoft Office. Toshiba is a diversified manufacturer and marketer of electrical products. that develops.

Ltd commonly referred to as OKI. Acer Group has its headquarters in Xizhi. Tokyo. government. NEC Semiconductors is among the worldwide top 20 semiconductor sales leaders. Headquartered in Suwa. under the Infotec brand. Japan. Monroe. information and imaging related equipment. including cameras. Gestetner. Ricoh Company Ltd or Ricoh. education. These operations continue as a stand alone business unit. Japan. Tokyo. dot matrix and laser printers. but the company and its subsidiaries also offer a diversity of products and services in the areas of personal computing. In 2006. As a chip maker. Ricoh acquired the European operations of Danka for $210 million. multimedia and home theatre projectors. and Nashuatec. Chiyoda. the company grew to become the largest copier manufacturer in the world. Japan OKI manufactured the first telephone in Japan in 1881. is a Japanese company that was established on February 6. desktop computers. displays. It still goes by the full name in Japan. It is headquartered in the Ricoh Building in Chūō. and home users. business. Rex-Rotary. photocopiers. The company is the parent of the Hitachi Group as part of the larger DKB Group companies. integrated circuits. is a Japanese multinational corporation that specialises in the manufacture of imaging and optical products. smartphones and peripherals. is a Japanese technology company and one of the world's largest manufacturers of computer printers. Lanier. OKI Electric or the OKI Group. storage devices. laptops. steppers and computer printers. photocopiers. is a Japanese multinational corporation specializing in high-technology and services headquartered in Marunouchi Itchome. and offers Software as a Service (SaaS) document management solutions such as Document Mall. Ricoh produces electronic products. During this time. Taipei County. Ricoh acquired Savin. primarily cameras and office equipment such as printers. LCD components and other associated electronic components. Tokyo. is headquartered in Tokyo. Tokyo. 1936 as Riken Sensitized Paper a company in the RIKEN zaibatsu. point of sale docket printers and cash registers. Japan. has its headquarters in Minato. telecommunications and advanced microelectronics. In the late 1990s through early 2000s. part of the Sumitomo Group. Hitachi is the third largest technological company by revenue as of 2009. after more than 120 years the company specializes not only in developing and manufacturing telecommunication equipment but also in information products and 40 . large home theatre televisions. is a Japanese company manufacturing and selling info-telecom and printer products. the company has numerous subsidiaries worldwide and manufactures inkjet. Hitachi Ltd. Fujitsu's central focus is on providing IT-driven business solutions. products continue to be marketed worldwide under the rest of these brand names. Oki Electric Industry Co. NEC Corporation is a Japanese multinational IT company. provides information technology (IT) and network solutions to business enterprises. Nagano. and now.Canon Inc. Fujitsu is the world's third largest IT services provider and the largest in Japan. fax machines. The Seiko Epson Corporation: known around the world as Epson. a name traditionally known for manufacturing Seiko timepieces since its founding. Fujitsu Limited is a Japanese multinational computer hardware and IT services company headquartered in the Shiodome City Center complex in Minato. Its headquarters are located in Ōta. scanners. The company used the name Nippon Electric Company. Japan. Acer Incorporated is a Taiwan-based multinational computer technology and electronics corporation that manufactures desktop and laptop PCs. servers. communications services providers and government. Limited before re-branding in 1983. Tokyo. personal digital assistants (PDAs). Although the Monroe brand was discontinued. robots and industrial automation equipment. Acer provides e-business services for business. NEC. It is one of three core companies of the Seiko Group.

3. Threat of Entry: Barriers to entry: The cost of entry is relatively low. HTC Corporation. Motorola. formerly Hong-Ta Corporation. the larger the batches the cheaper the costs. such as Automated teller machine(ATMs) and printers. However. Company’s can only be successful when there is perceived value from the customers point of view. Inc. Canada and is a sponsor of RIM Park in the northeast of the city. HTC is also a member of the Open Handset Alliance. government agencies. It was founded by Mike Lazaridis. Product Differentiation: The most difficult part of trying to enter the MP3 market would be overcoming Apple’s reputation. Proprietary Technology: Apple didn’t patent the iPod interface. It is a manufacturer of wireless telephone handsets. who currently serves as its co-CEO along with Jim Balsillie. Threat of Substitutes: The threat of substitutes is always a concern for successful industries. OKI provides products to telecom carriers. Apple doesn’t have any patents on the actual MP3 technology and others are free to use the technology. The company initially made smartphones based primarily on Microsoft's Windows Mobile software. Some of the substitutes to Apple. Both of these substitutes are older technologies developed prior to the iPod. large corporation as well as SMBs both directly and via distributors and dealers. 41 . multinational. The HTC Dream. 3. Its business and government customers consist mainly of wireless voice and broadband systems used to build private networks and public safety communications systems like Astro and Dimetra. a group of handset manufacturers and mobile network operators dedicated to the advancement of the Android mobile device platform. Realistically there are not many new and innovative substitutes available on the market. The higher the profits the larger number of firms want and will try to enter the marketi. 2009 as the Motorola Droid. External Analysis: 5 Forces 3. computer telephony.1. Apple has been making high profits and been very successful in the MP3 industry. telecommunications company based in Schaumburg. RIM is headquartered in Waterloo. and high-definition television. Illinois. Research In Motion Limited (RIM) is a Canadian telecommunication and wireless device company best known as the developer of the BlackBerry smartphone. No real technological barriers to enter the market. marketed by T-Mobile in many countries as the T-Mobile G1. Inc is an American-based. The first phone to use the newest version of Google's open source OS. they are welcome to try and sell their product on the open market. Economies of scale: Ideally. the biggest concern seems to be the rivalries who are trying to gain market share against the iPod. was the first phone to the market that used the Android mobile device platform.2. Android 2. and network equipment used to enable video broadcasting. Another way to increase the profit margin is charging a higher price to the consumer.0. Motorola's handset division is now focusing on smartphones using Google's open-source Android mobile operating system. If competitors can create an MP3 player. financial institutions. Motorola's home and broadcast network products include set-top boxes. and also designs and sells wireless network infrastructure equipment such as cellular transmission base stations and signal amplifiers. iPod mp3 player are portable compact disc players and portable radios. was released on November 2. is a Taiwan-based manufacturer of smartphones. but in 2009 it began to shift its core focus away from Windows Mobile devices to devices based on the Android operating system. There aren’t any legal barriers. For new entrants the initial start up costs are high but not unbearable.mechatronics products. digital video recorders. There are many consumers whom have brand loyalty with Apple and wouldn’t easily switch. The new product would have to be cheaper and have a better design and a completely new look for the MP3 industry. Apple did however patent the touch interface. Ontario.

One of the iPod’s largest competitors is the Windows version called the “Zuneii”. Sony “Bluetooth Walkman” and the Sandisk “Sansa Fuze”. the “Touch” and the “Classic”. 3. The Threat of Suppliers: The number of suppliers can increase the price and can reduce quality. Apple has differentiated themselves by providing multiple choices allowing consumers to choose their preference of iPod. versions with more or less memory capabilities. The “Sansa Fuze” is available with limited memory capabilities. The Zune is available in single size with multiple options for memory capabilities. supplier’s industry dominated Low High Consumer Consumer 42 iRiver Preference Preference Bluetooth Sansa Walkman Cost Fuze High . 2001. There are multiple Apple indicators in an industry to help foresee the threat of suppliers. Threat of Rivalry: Since the birth of the iPod on October 23. such as the “Nano”. Apple’s position has allowed them to influence the industry and created innovation throughout the entire industry.4. Apple has been able to formulate a strategy to set them apart from the rest of the industry. the “Shuffle”.3. Apple has been able to sustain the market share and has continued to develop the original iPod. many have tried to imitate the innovative design. supplier’s selling unique or differentiated are. Many of these rivals have aimed at competing with one specific version of iPod. into smaller and larger physical sizes. Some other alternatives not as commonly known are the “iRiver”. The most common indicators Zune by few firms.3. Through the innovation of the iPod. Apple’s strategy has allowed them to position themselves and create product differentiation.

Apple isn’t threatened by their suppliers mostly due to the large amount of market control. Apple’s iPod’s are one of a Conclusion: Initially Apple was the price setter. I wouldn’t recommend trying to enter the consumer electronics market. buyers aren’t earning high economic profits. small number of buyers.1 Brand Name Product Design Compatibility with Multiple Programs Adapt to Market Change V X X X X X X R X X I X O X X X X Competitive Implications Sustained Temporary Advantage Parity Sustained 43 . Overall. A few options to retain customers could be. In Apple’s case consumers are willing to pay a higher price for their products because they believe it carries a higher value. and firms are not important customers of supplies. there was no other comparable technology. and buyers are threatened by backward integration. Apple would respond and most likely switch suppliers to another company who was interested in their business. Threat of Buyers: There isn’t an overwhelming concern with the threat of buyers. products are a significant percentage of buyer’s final costs. The one concern Apple might have with their suppliers is there isn’t a threat of substitute product currently available on the market.products. 3. Though Apple is making high profits. Apple could increase the length of the warranty. maybe fifteen percent on the next purchase of the iPod. Some leading indicators Apple could look for within the industry to foresee this threat are. Internal Analysis:  VRIO Analysis Table 1. they control significant market share. suppliers aren’t threatened by substitutes. products sold are undifferentiated and standard. offering customers ten percent off the purchase of next apple item. it is beginning to shift and become a buyers market and Apple with have to work harder to maintain customers and guaranteed those repeat sales. These are just some of the options Apple could look into. with an emphasis in MP3 players. It would not be in the best interest of Apple’s suppliers to increase their cost because of the amount of volume Apple would provide their supplier. Overall. Apple’s suppliers sell similar products that could be easily purchased from other suppliers.5. There are many suppliers Apple could choose from. offer a deal if price drops within 30 days of the original purchase and Apple could refund customers the difference. suppliers threaten forward vertical integration. 4. if their suppliers were to increase costs to Apple. Now with the changing MP3 market. Apple needs to maintain a high level of customer satisfaction to ensure they don’t switch to competitors products.

Apple. energy efficiency. The iPod began as a single size. shapes. which features fast processing. and lavish color graphics and sells for more than 44 . customer service. Apple. the company sought out to make the personal computer an accessible and affordable device to the mass market.Environmental Health and Safety X X X X Sustained Apple. Through Apple’s use of recycling and conscious efforts to be more efficient gives Apple a sustained competitive advantage. but iPod users are limited to the products offered through Apple. Since iPod’s are only compatible with Apple products. Apple iTunes and Music Store offer a wide range of products for many different consumers. Sculley had focused on building ever more powerful and expensive Macs. and shuffle. and color. colors. Inc. Since Apple. The limitations of the iPod make the iPod’s compatibility with other programs a competitive parity. Inc. The brand name and logo alone allow Apple. Inc. Apple. Inc. capacious memory. The Apple iPod is compatible with any Apple product including iTunes and The Apple Music Store. The creative logo.” More specifically. in an attempt to shed the company's hobbyist image and tap into the lucrative market for office computers. Inc. or buy music from any online music store besides The Apple Music Store. has been able to establish their brand name through innovation and sustainability. Inc. advertisements.iii Apple has eliminated the use of polyvinyl chloride and brominated flame retardants in its products. The crucial point not to be overlooked is that the company’s mission did not guide Apple into this differentiating strategy. iPod users are not able to transport music from their windows media player. touch. These four areas are product and packaging design. The change of strategy 1. Beginning Apple began with the mission to “change the world through technology. has proven their ability to adapt to market change and demand. Apple has also created energy efficient tools in their products allowing customers to monitor their energy consumption. Apple. many other companies provide customers with MP3 players that are affordable and comparable in memory size and use. Inc. has developed many different styles of iPod’s that meet customer demands. The proliferation of new software and hardware technology drastically changed the landscape of the industry and Apple evolved into a leader in desktop publishing. ranging up to the Macintosh II FX. and product design bring additional value to the Apple brand name. nano. The Apple symbol is unmistakable and impossible to imitate.1. All of the different iPod’s vary in colors and memory space. to adapt to change through creative advertisements and product design. Now. BUSINESS STRATEGY 1. and recycling. Since 1986. responsible manufacturing. is committed to serving both the customer demands and the environments demands. Apple. shape. Although Apple. Inc. Inc. Rapidly changing industry dynamics dictated Apple’s competitive strategy. has been able to develop their iPod product design by creating different sizes. IV. thus the iPod product design is temporarily competitive. has taken the opportunity to add value to both the product and environment through four areas of manufacturing and service. and memory. The line now includes six models. does not have a patent on their iPod product design other companies within the industry are able to create similar products that are affordable. designs and sells an iPod classic.

At the same time. Says he: ''We have to prove we can walk and chew gum at the same time. Europe. and hard disk cost $5. In Sculley's new arrangement. and Apple's worldwide market share declined from 9. Right away the two laid off 400 employees. who has been at Apple longer than any other top executive: ''The low-cost machines are creating a whole new ball game for Apple. short of cash for research and development. with sales flat and profits lagging 11%.'' Sculley’s last try. profits will drop precipitously. 60.3 billion in the fiscal year ended September 1989. Sculley with strategy of low-cost in 1990: Sculley has devised a two-pronged counterattack. he hopes that the anticipated 45 . Windows machines aren't Mac clones. Says senior vice president Albert Eisenstat. to below 6%. Apple will continue to produce costly. By cutting Apple's notoriously fat and forgiving operating margins. which account for nearly 90% of the global market. He immediately accelerated the schedules of Gassee's low-cost Macs and ordered up the budget model that will replace the best-selling Mac SE. Among the IBM compatibles. Sales in the U. in fall 1988. This high-end. video circuitry.'' Besides making Macs affordable to more customers and more attractive to businesses. Microsoft also released Windows 3. The company's problem: a dramatic change in the PC industry. Apple's first firings in four years. in which Apple holds a 20% stake. and Apple.000.3%. and a division to handle product development and manufacturing. could end up an also-ran in the industry it invented. Sculley also restructured the product development teams to remedy a problem that has nagged Apple from the beginning: its inability to execute simultaneously the development of more than one major product. Apple.S. engineers reported to the heads of their particular technology units disk drives. products bogged down in the lab.5% in 1988 to 7. The reorganization helped the European and Pacific operations thrive.'' In the old setup. which lists for $2. and the company began to splinter as marketers and product developers blamed each other. its manager had to get all the technology sachems to agree.$10. had problems. and the Pacific. but ''the low-cost Mac strategy is the first. however. It calls for new disciplines and permanent changes that go to the core of the company. Those same business customers who had clamored for more powerful Apple machines now complained that Macs were simply too expensive. to $454 million Unit sales of Macs started to slip. He broke Apple into three sales and marketing divisions covering the U. the company had a poor quarter. engineers report directly to the product's manager. which had no cloners to fend off. If it works.000 the price of two comparably equipped IBM clones. high-margin approach transformed Apple into one of the fastestgrowing and most profitable makers of PCs. The other two divisions. large memory.2. In the last three months of 1989. The emphasis on low-cost Macs is just the outward manifestation of a whirlwind of change.295. the strategy will profoundly alter the company's way of doing business. kept churning out premium Macs. most immediate priority.S. If it doesn't work. cutthroat prices became the main selling point. As Sculley explains it. slowed as Apple lost ground to IBM and its clones. called General Magic. or system software. was a wholesale decentralization. Apple will open up new markets for the aging Macintosh line and buy itself time to discover the breakthrough technologies necessary to remain a PC leader. Revenue growth for fiscal 1990 is expected to sag alarmingly. By last Christmas the company seemed totally out of step: A Mac with a color monitor.0.. high-powered machines. Profits nearly tripled as well. but they come close enough to make Apple sweat 1.9 billion in 1986 to $5. Sales swelled from $1. in which he hopes lower prices and a broader product line will jump-start unit sales. He wound up canceling several projects and spinning out another into a company. a program that gives IBM compatibles a snazzier screen that rivals the famously friendly Mac. For a product to be born.

1990-1995: Apple vs Microsoft Apple's distant lead in graphical computing began eroding quickly in the early 1990's. ''miniaturization and mobility. are the keys to the next paradigm in computing. high value client machines.higher unit sales will assuage software developers. an advanced operating system from IBM. 46 . Microsoft has sold one million copies. Priority No. Apple and Microsoft each developed very different solutions for this need. Apple's business model revolved around selling hardware. PowerTalk mirrored the rest of the elegant and richly engineered point-and-click Mac desktop environment.0 while it also made incremental progress in developing the entirely new Windows NT operating system. and interacting with various things. The company has been struggling to bring out System 7. After file sharing. Apple seemed content to rely on its existing. so their plans and motivations for messaging centered on sophisticated. Microsoft's Exchange Server was intended to be based on open industry standards: X. During The Rise of Windows.500 directory services. the emergence of Local Area Networks began to cultivate new applications for computers. where we are obviously behind the power curve. In the mid 90's. both PowerTalk and Exchange were designed prior to the arrival of the now standard SMTP email system. Microsoft worked to improve its DOS based Window 3. whenever they found each other online. Even Apple's software subsidiary. established share of specific niche markets that offered large profit margins. who lately had begun shifting programming resources to Windows projects. and the software that makes it all work. sending. Since the commercial Internet had not yet arrived. messaging was the next obvious new application for LANs.000. Along those lines. mail. fax machines. In contrast. that can read and manipulate handwriting and plug into computer networks. The second priority. Hence. 3: pumping up Apple's software prowess. 1. Apple didn't think the world was ready for dedicated servers to handle email.3. and promised to be the next great Mac advantage. sounding like a computer nerd. a powerful new version of the operating system that will help Apple beat back the challenges of Windows and OS/2. Macintosh sales for all of 1989 were about 650.400 messaging and X.'' Indeed. or even a paperback book. The Mac's operating system software is what gives the machine the distinctive look and ease of use that are its main selling points. Claris. PowerTalk was conceived as a client side system for choosing. he goes on. Since Sculley took over R&D. local Macs on a network were intended to exchange messages at regular intervals. While Microsoft looked for new markets and targeted business users in particular. Windows' allure is compelling in the five months since the software was introduced. and printers. is developing products for Windows. particularly within the company's own core markets of education users and graphic designers working in small workgroups. Sculley believes that in a few years portable computers will be as ubiquitous as calculators. System 7's debut has been postponed twice as programmers iron out bugs. says Sculley. The delays have convinced him that Apple needs to rethink how it manages software development.'' This concept bears the stamp of Alan Kay. Apple's PowerTalk was an entirely proprietary system based upon AppleTalk. and that's where we're concentrating much of our research. Rather than just delivering text messages. who'd like to see Apple build what he calls ''intimate computers'' portable devices the size of a notebook. is to come up with ''innovative laptop and notebook computers. PowerTalk didn't require a dedicated server. including files. Apple merely entrenched in a rut of announced initiatives that failed to decisively deliver real progress or marketable products.

systems would dial expensive circuits at regular intervals to attempt deliveries to remote PowerTalk clients. a suite of messaging technologies that picked up features as it rolled downhill: extensive foreign language support. they created fiefdoms of control over various projects.) Apple eventually dropped PowerTalk. and an extensible information cataloging system. finished products do. Apple was shipping it in 1993 as part of System 7 Pro. a classic problem for Apple's out of control software initiatives. the world was aligning behind a different set of goals and expectations for email. digital signatures and encryption features. a centralized address book with a universal addressing system. by the early 90's. Apple's middle managers sought to prevent their pet projects from getting canceled. Even for users with enough disk space and RAM to install PowerTalk. and then tied them together to create essential packages of functionality that would be hard to veto. QuickDraw GX. While software had been straining to keep up with hardware advancements in the late 80's.) The PowerTalk Disaster: PowerTalk was one of those snowballing disasters.) Apple's ability to deliver products was increasingly being hampered by a lack of productoriented discipline. and a protocol stack designed to accommodate virtually every existing messaging protocol and any others still to arrive. particularly when paired up with Apple's other gigantic snowball project. Apple gravitated into the position of a research lab full of engineers working on various projects that never seemed to materialize. got started with PowerTalk in 1989. theory and practice are the same. Networking capacity was another problem for PowerTalk.Apple had already pioneered the concept of automatic network configuration and presence discovery services with AppleTalk networking and AppleShare file sharing. the lead engineer of Apple's networking efforts in the AppleTalk era. (Notable platform lesson: raw technologies don’t sell. (Notable platform lesson: in theory. without any regard for the potential marketability of those products. Apple was delivering overarchitected software which was simply too much for the hardware of the time. these features were reintroduced for modern IP networks under the name Bonjour a decade later. Rather than creating insanely great products designed to sell and enrich the company in ways that would foster further great developments. such as a system wide keychain and address book. although a few of its associated ideas. were salvaged and are still in use today in Mac OS X. By the time hardware was available to run PowerTalk and the rest of AOCE. simply getting mail became a problem because individual mail items quickly ate up any remaining disk space. The resulting suite of software was simply too much to run on existing Mac hardware. It grew into the Apple Open Collaboration Environment. (Notable platform lesson: undeliverable zombie projects have to be put down or they will simply eat up all the brains in a company. That made them impossible to deliver but difficult to kill. its attempt to sell a premium version of the Mac system software. in practice. it failed to ever become lean and refined. These projects snowballed into horrific disasters that were so complex they could never be completed. Gursharan Sidhu. In the typical fashion of corporate cube politics. they are not. Since PowerTalk saw only marginal use. The polling required to find other networked systems became a liability when working remotely over dial-up networks. but which also contributed highly touted features that were tightly woven into Apple's increasingly widening strategies. 47 .

The matrix is as follows: 48 .After failing to make any progress in getting AOCE adopted by Mac users. but again ran into significant legacy problems: the Mac system software was never designed to accommodate the needs and requirements of a dedicated server. 1. The company also slipped in the education sector during this time by as much as 14% per year. Apple had one of its critical points in history in 1999 when it introduced the iBook. but was running out of time. Apple introduced the easy-to-use iMac in 1998. Apple: Not Down To Business Apart from A/UX. the company concentrated its efforts on selling to its existing customer base: education and individuals Apple managed to lose a large amount of profit.4. the failure of PowerTalk left Apple without any Enterprise products.4% from 1995 . Once a platform becomes commonly established. and updates following 1999. Apple gave up on PowerTalk in 1996 and turned their attention toward the emerging commercial Internet with Cyberdog. and its market share dwindled from 8% to 3.1998. Apple tried to build workgroup server products on top of Mac System 7. or even any serious workgroup server strategy. 1997-Steve Jobs: Matrix product Apple pioneered the PDA market by introducing the Newton in 1993. This completed their “product matrix”. a simplified product mix strategy formulated by Jobs. and updates following 1998. it is often very difficult to unseat. Because Apple didn't have a lot to offer larger businesses. It released a highly stable operating system in 1999. This move allowed Apple to have a desktop and a portable computer in both the professional and the consumer segments. Apple desperately needed a better underlying platform to built upon. Later.

5. and style. engineering skills. durability. which the other manufacturers use. Apple’s mission is to deliver a highly innovative and superior solution to a customer’s personal computing needs. Universal. in this case. 49 . iMovie. In reference to Apple’s recent advancements. and ease of integration of these complements affect the “utility” consumers will gain from an Apple PC. Apple released the iLife package. Then Apple introduced the iPod. and quality. “iPod is going to change the way people listen to music. “We are going to do for digital creation what Microsoft did for the office suite productivity. creativity. features. branding through advertising. PDA’s. Key elements to this strategy are an emphasis on design. Warner. and wireless devices. functionality. iPhoto. meaning that even though they sell less volume they are still extremely profitable. a personal computer. differentiation encompasses tangible and intangible dimensions. EMI.” He was right.” That is indeed a bold statement. and R&D. Jobs said. which could be out sourced this Includes the operating system called Mac OSX instead of Windows. Apple hit another important historical point by launching iTunes. For Apple. Apple continued its digital lifestyle strategy by launching iTunes Music Store online in 2003. Apple adopted a competitive strategy that vertically integrates these complementary products that include the iPod. Physical characteristics include form. Sony Entertainment. Tangible differentiation is concerned with the physical characteristics and performance of a product.0GHz PowerPC G5 processors. 1. VP of Worldwide Product Marketing for Apple. Apple’s present strategy: Product differentiation Apple has pursued a Differentiation strategy. This allowed iTunes Music Store online to offer over 200. in spite of protests by independent Apple retailers voicing cannibalization concerns. Apple released the world’s fastest PC (Mac G5). In 2003. which had dual 2.Desktop Portable Professional Segment G3 PowerBook Consumer Segment iMac iBook In 2001. and iTunes.000 songs at introduction. In 2003. reliability. brand image (For example placing retail stores on premium high streets) trying to differentiate themselves from the competition by creating a “Mac” experience or way of life. This allows them to charge high premiums for their product. They invest a lot of money in design. Apple then opened its own stores. performance quality. Time will tell whether that happens. central to the “digital lifestyle” strategy. obtaining cooperation from “The Big 5” Music companies—BMG. containing improved versions of iDVD. Philip W. Apple continued their innovative streak with advancements in flat-panel LCDs for desktops in 2002 and improved notebooks in 2003. The scope. Schiller. Drivers needed to attain these objectives are through the firm’s unique marketing abilities. They manufacture almost all the components their selves even if there is a cheaper alternative. service. digital cameras. Apple’s present day competitive strategy is a return to differentiation. stated. Products that are enhancements or complements to the personal computer are also vital in pursuing this differentiation strategy. This marked the beginning of Apple’s new strategy of making the Mac the hub for the “digital lifestyle”.

long a stronghold for Apple. If Apple had maintained its 3 year growth rate. In 1999 and 2000. and that. Motorola's R&D efforts simply can't match the money and muscle Intel devotes to its products. often set the aesthetic and technical standards for what a PC should be. Apple competitive advantages: A loyal customer base. Motorola. Apple’s competition 2. Creation & Sustaining of Competitive Advantage 50 . 2. Although differentiation adds costs by way of higher quality inputs. Apple’ offerings have no difficulty integrating.It is also important to note that adopting a differentiation strategy by no means insinuates that a company is not concerned with cost. The education market. is under pressure to abandon the company because of relatively low initial cost PCs. yet Apple has been able to surpass their arch rival in terms of inventory turnover. despite Apple's small market share. Apple products have poor network compatibility. Apple's computers don't mix well with Windows servers. This however. However. This feat has significant implications. Apple's engineering and software skills could make it a force to be reckoned with in the consumer electronics business long dominated by Sony and Matsushita. Apple's own engineers design much of the hardware and virtually all the key software for Macintosh computers. 2. Apple’s weakness: Apple is lagging behind in providing the kind of interoperability that corporate and educational buyers are concerned about: the network. Apple has one of the best management teams in place.2. Dell’s core competency is in their direct model that leverages JIT inventory. They streamlined operations to the point where they now have the highest inventory turnover in the industry. Long term. Apple is the only vertically integrated computer company and thus can manage all aspects of the customer experience. The result is a distinctive line of comp uters that are more stylish and reliable and easier to use than their Wintel PC counterparts. 2.3. Apple’s operating and profit margins exceeded industry averages. this was more due to industry wide demand contraction as industry sales declined by over 5%. going to the Intel platform may be a correct strategy. these costs need to be continually assessed an evaluated so that they can be improved. Compaq. skilled labor. Regular technological breakthroughs by Apple's component suppliers has helped it keep pace in terms of performance with Windows PCs. "The economies of scale behind Intel’s new Itanium products are going to eclipse Apple. Apple made significant progress in this arena. Dell for instance has been courting the education market very aggressively. higher advertising. They pioneered this method and had a first mover advantage for quite some time. their operating and profit margins would have been competitive with Dell.has finally managed to improve the performance of its chips to exceed the processing speed and power of Intel's Pentiums. Although 2001 was a dismal year.1. is due to Microsoft co-opting backend standards with their suite of server and application software – Outlook mail for instance. and HP. on open standard networks such as the internet. and increased vertical integration. which makes the PowerPC microprocessor for the Mac – a RISC chip which technically delivers faster performance for less complex design .

Once you've become smooth. Apple users generally don't have to stray to find products and solutions they want. However. up-to-the-minute and smart. the company has not only eliminated this problem but has made an excellent customer-loyalty move. Apple stores are a friendly place where Mac and PC users alike are encouraged to play with and explore the technology that the company offers. By creating this space. Apple encourages current and new customers to get excited about what it has to offer. Apple has done an excellent job proving to customers their product is the highest quality and is incomparable to rivals’ products. Buy an iPod. This approach has also allowed Apple to market the iPod to many different ages and ethnicities. strengthens customer loyalty. it's part of a well-thoughtout plan to deliver strong products and to create an Apple culture. If these users enjoy their gadgets. would you want to go back to uptight? Varied Products: Many consumers may not be ready to buy an Apple computer. it's obvious that Apple Inc. 2. from hardware to software. they're more likely to consider buying an Apple computer in the future. 51 . this brand success is not a result of dumb luck or forces beyond Apple's control. since then they have developed numerous sizes. By creating a store strictly devoted to Apple products. but they're willing to give gadgets like the iPod or iPhone a try. Apple is a hip brand. With the many different iPod versions and personalizing options.Apple has been able to maintain a competitive advantage while creating innovative. high quality products. while PC appears uptight and old. and capabilities that have been able to adapt with the changing market and still meet the consumer demand for MP3s. Apple has done a phenomenal job creating products that complement already existing successful products to retain customers.4. most Mac programs are produced by Apple. a problem that made it difficult for Apple to set its very different products apart from the rest of the computing crowd. Complete Solutions: Apple's products complement and complete each other. Consider Apple's I'm a Mac campaign. is a company that enjoys fanatical brand loyalty. The Mac guy is smooth and confident. and you can download music via iTunes. This sort of control over the entire user process. styles. Apple has been able to establish a brand name and an image that lead customers to live a certain lifestyle. they have allowed consumers to create a product that meets their specific needs and lifestyles choices. Apple established the original iPod in October 2001. Find out more about these and other strategies that Apple employs to achieve its tremendous customer loyalty. This is what sets Apple apart from other competing companies and will continue to help them maintain their competitive advantage. Apple needs to maintain repeat customers and still provide the highest quality innovative products to ensure they will continue to purchase products. By selling products with lower entry costs. Apple has created products that have become a lifestyle for consumers. For the average user. we will study 11 effective strategies Apple uses: A Store Just for Apple: Apple has historically been troubled by big-box sales staffers who are ill-informed about its products. This is a space where Macheads can not only get service but also hang out with others who enjoy Apple products just as much as they do. 11 Effective strategies apple uses to create loyal customer When shoppers sleep outside of stores just to be one of the first to buy an iPhone. It pushes a strong identification with everything young. Are You a Mac?: Let's face it. it creates an opportunity for new users to be introduced to Apple.

its very own expo and mysterious shutdowns of its online store. especially bloggers. This meticulous planning is a large contributor to Apple's high customer-satisfaction rates. a smiling icon and slick-looking hardware remind customers every time they use Apple products that what Apple offers is appealing. pockets and offices. and this makes them more open to making a repeat purchase. With a phone. Products That Deliver: Apple carefully considers what consumers are looking for. They know that it will be easy to adapt to new hardware. Apple turns classrooms into showrooms. Apple makes it easy to stay loyal to a brand they already like. Apple keeps its customers excited about buying new Apple products now and in the future. Apple makes its products accessible and attractive. including the personal computer industry with its Macintosh line of computers and related software. Branding strategy Apple Inc uses the Apple brand to compete across several highly competitive markets. but also make them want to buy more products from you in the future. By perpetuating this cycle of media frenzy. Because of this consistency. so its products are a result of both extensive research and strong design. the consumer electronics industry with products such as the iPod. interaction becomes multifaceted. Education Sales: By selling its products to schools and universities. the iPhone presented an opportunity that could have made Apple much more involved. You have to consider billing errors. With leaked rumors about new developments. With the iPhone. Apple captures customers before they even know that they are customers. The company offers consumers a number of different ways to enjoy its products.Media Fodder: Media outlets. Bright colors. Outsourcing Unpleasantness: With Apple products. 52 . Apple gift wraps news stories that are just begging for speculation and hype. similar to administering iTunes for the iPod. New Innovations: Although the architecture of Apple products is consistent. its portfolio is not. the average consumer's interaction with the company is likely to be low. It's plain and simple: Robust and easy-to-use products not only make your customers happy. Of course. digital music distribution through its iTunes Music Store. and more recently in the smart phone market with the Apple iPhone. quality of wireless service. If students go through school using Apple products. contracts and a number of other factors that often lead to customer frustration. Consistency: All of Apple's products have the same basic architecture. 3. Unless something goes wrong. Apple was wise to stick with building a good product and letting AT&T handle the service. you don't have any reason to speak with an Apple customer-service representative. love to write about Apple. By giving customers an opportunity to employ Apple in their living rooms. they become comfortable with the interface and familiar with the superior performance the brand offers. By creating this early exposure. Why? Because Apple makes it so easy. customers who already own Apple products have a good idea of what they'll be getting before they make a purchase. Attractiveness: From packaging to aesthetic design to user-interface experience.

liberty regained. and Xserve). Apple hoped that the popularity of iPod and iTunes among these new groups of customers would cause these segments to be interested in Apple's computer products. Apple Brand Architecture From a brand architecture viewpoint. it is not used for a large number of Apple's consumer products (eg Mac mini. passion. While the "i" prefix is used only for consumer products. In this instance. Apple has not established an "i" brand. Apple's buzz marketing efforts in the first half of 2007 were truly superb.1. MacBook. Yet other product have been developed more for a professional market (eg Aperture.4. innovation. iTunes. and now iPhone to reinforce and re-invigorate the Apple brand personality.3. Airport Extreme. For example. the company maintains a "monolithic" brand identity everything being associated with the Apple name. people-driven product design. even when investing strongly in the Apple iPod and Apple iTunes products. dreams and aspirations. and Apple has achieved several "best ever" quarterly financial results during the past couple of years. iBook. By July 2008 the buzz about the 3G iPhone resulted in over 1 million units being sold in the first 3 days of its release in over 20 countries around the world. 3. Since the take-off of the iPod there has been a dramatic rise in Apple's computer sales and market share. iLife. and therefore more acceptable to Windows users. QuickTime. Products whose market includes Microsoft computer users (for example MobileMe. and then back into the consumer personal computer market. the company's sales and margins have been growing strongly since 2006. Apple launched the iPhone (released in July 07) to extend the brand even further. and about being a really humanistic company with a heartfelt connection with its customers. 53 . The predominant subbrand since the introduction of the Apple Macintosh in January 1984 has always been the Apple Mac. The iPod Halo Effect Though Apple's iPhone and iTunes music business is profitable in its own right. and now iPhone. these product initiatives are growing a highly relevant. However. The Apple Brand Personality Apple has a branding strategy that focuses on the emotions. 3. Apple is using iPod. Apple's venture into these product areas was based on a strategy of using the music business to help boost the appeal of Apple's computing business. hopes. Apple's current line-up of product families includes not just the iPod and iTunes. imagination. The Apple brand personality is about lifestyle. Leveraging the success of the iPod. In a so-called iPod halo effect. Apple reports that half of all computer sales through its retail channel are to people new to Macintosh. QuickTime. even though marketing investments around iPod are substantial. iWork. Apple TV. 3.having been built into a branding system that originates in the personal computer market. the Apple brand came full-circle . then leveraged into the consumer electronics market. This does seem to have happened. The Apple brand personality is also about simplicity and the removal of complexity from people's lives.and launching apple into a completely new market: mobile handsets. Apples' branding strategy is bearing fruit.2. but iMac. culminating in the release of one of the most highly anticipated products for many years . A couple of years ago. and power-to-the-people through technology. Safari. The list of Apple's Trademarks reflects something of a jumbled past.3. and Mighty Mouse). Bonjour. At the same time. Apple Brand Strength Now Creating Financial Success So far. the Final Cut family. appealing brand image in the minds of consumer segments that Apple has not previously reached. and Safari) have been named so they are somewhat neutral. Apple's aspirations for the iPod halo effect was was highlighted most strongly when it used the slogan "from the creators of iPod" in its promotion of iMac G5 computers.

Both IBM and Motorola would manufacture PowerPC chips for this new platform. and Taligent all failed to provide an operating system that could run on it and when Apple and IBM couldn't reach agreement on whether the reference design must or must not have a 54 . AIM alliance Historical Power Power1 Power2 Power3 Power4 PowerPC-AS PPC6xx Gekko Power Architecture Current PowerPC e200 e300 e500 e600 QorIQ PA6T POWER5 POWER6 POWER7 PPC4xx PowerPC 7xx 7xxx PPC970 Cell Xenon Broadway Titan Future PowerPC A2 e5500 The AIM alliance was an alliance formed on October 2. IBM. The computer architecture base was called PReP (for PowerPC Reference Platform). and later named CHRP (for Common Hardware Reference Platform). IBM used PReP and CHRP for PCI version of IBM's RS/6000 platform. Taligent was formed from a core team of Apple software engineers to create a nextgeneration operating system. from existing Micro Channel architecture models. and changed only to support the new 60x bus style of the PowerPC Apple and IBM created two new companies called Taligent and Kaleida Labs as part of the alliance. Kaleida was to create an object-oriented. to run on the platform. cross-platform multimedia scripting language which would enable developers to create entirely new kinds of applications that would harness the power of the platform Efforts on the part of Motorola and IBM to popularize PReP/CHRP failed when Apple. The CPU was the PowerPC. code-named "Pink". IBM. a single-chip version of IBM's POWER1 CPU. It was thought that the CISC processors from Intel were an evolutionary dead-end in microprocessor design. 1991. The stated goal of the alliance was to challenge the dominant Wintel computing platform with a new computer design and a next-generation operating system. Apple’s Alliance 4. and Motorola to create a new computing standard based on the PowerPC architecture. the next few years were a period of great opportunity.4. and that since RISC was the future. between Apple Inc (formerly Apple Computer).1.

Gil Amelio has had many attempts to improve Apple's losses in previous years. This time Apple and Microsoft were rivals in the market 20 years PC. Apple-Microsoft alliance: In Boston in 1997. Internet Explorer and some Microsoft tools to Apple's Macintosh platform. China. The best-selling products include the Microsoft family of operating systems in their Microsoft Windows and Office software suite Microsoft Office.2.2.parallel port. 4. due to disappointment with the direction and performance of PowerPC development. 55 . 12/1996. Taligent was absorbed into IBM in 1998. Apple bought Next-an American computer company founded by Steve Jobs and he came back . Name of listed securities in the market as New York and Nasdaq is MSFT.During the period 1997. your primary. Microsoft established in 1975 with the original name is Micro-soft. Japan. Apple has been deep crisis within 18 months.2.5 billion. ranked No. Some CHRP machines shipped in 1997 and 1998 to no fanfare. 18. and all three major seventh-generation video game consoles feature chipsets derived from the PowerPC architecture at their core.2 billion profit. The chips have also had success in the embedded market. USA. designed to run BeOS. This group is developing. The BeBox. The PowerPC program was the one success that came out of the AIM alliance. Because when Apple earned huge resources from the PC. when they transitioned all their models to Intel processors.2. the alliance with Apple in this difficult period as a form of investment and support for a potential customer. at that time CEO . 4. Almost every Mac featured a PowerPC processor from then until 2006.42 billion dollars. 4. The specific contents of the alliance as follows: Microsoft made the latest version of Microsoft Office.1. 44 in the largest corporations. Apple-Microsoft 4. these operating systems generally ran just as well on Intel-based hardware so there was little reason to use the PReP systems. Moreover they also earn a substantial gas price of Apple shares rise again. Redmond. lost up to $ 1. Steve Jobs announced Microsoft has agreed to an alliance with Apple: $ 150 million investment to buy shares of the company and the two sides have reached a license agreements to use inventions for 5 years. chaired by Bill Gates with headquarters located at 1 Microsoft Way. but for the sake of his apple has teamed with Microsoft to improve the situation. Microsoft is present in most countries and Microsoft branch is located more than 102 countries (2007) and classified into six regions: North America. Latin America. Number of employees is 79. Microsoft founders were Paul Allen and Bill Gates Gardner. Background to form alliance: In 1996. and licensing for software for your computer. Kaleida folded in 1995. used some PReP hardware but as a whole was not compatible with the standard. a browser. but surprisingly it was one of the biggest failures of Apple.2. Europe-Middle East-Africa. Microsoft also will make a profit through the no small contract signed with Apple about providing the software product. Toward Microsoft. Microsoft Corp: Microsoft Corporation is a multinational computer technology world-class corporation of America. Washington.000 in 102 countries and total sales in 2008 reached 60. Although the platform was eventually supported by several Unix flavours as well as Windows NT and OS/2 (OS/2 for PowerPC).3. Asia Pacific. Apple started using PowerPC chips in their Macintosh line starting in 1994. processing.

such as in 1998. Apple had successful beyond expectations. iMac. 4. Increasing competition in the market. $ 7 per share and later. Microsoft will invest $ 150 million in non voting shares of Apple.. the company has reported three consecutive quarters of profitability with total profits up to 101 million USD.5. Sony . Jobs continues to inform a more profitable quarter (57 million) and a surprise to most people about the strong recovery of Apple.. The alliance with Apple is saving a potential customer. the iMac has become the best selling PC across the country helped Apple sales greatly increased. In addition. 7 / 1998. Steve Jobs. the strategy in the near future. Microsoft also will gain more profit through the signing of this license with Apple and then Apple could become a major customer in providing integrated software and the Microsoft tools. Power Book.  Microsoft: Cooperating with Apple is an attractive investment opportunity: When purchasing 150 million shares with the price about $ 6. 4.. Alliance with a class companies like Microsoft at that time would be a positive sign giving a better view from the public. this strategic alliance will also help Microsoft to exploit the school market is still unanswered. of course.56 to $ 26. customers and so will also help contribute to Apple over the period crisis.2. Apple launched the iMac with a reasonable price and of course the iMac also integrate the Windows operating system or other software products of Microsoft. Results of the alliance: Can see a strategic alliance with Microsoft at that time has brought many benefits for Apple.Apple integrated into Internet Explorer and Mac OS and made it becomes the default browser in the operating system software in future.S. has announced that the company had $ 44 million profit in the first quarter. ..  General Benefits: Alliance is at a reasonable complement of Microsoft software and Apple hardware which offers customers the most products completed about quality and price and more options such as Power Mac. Apple and Microsoft had planned to collaborate on technology to ensure harmony between the Java computer programming language or the other.2. In fall of that 56 . When Apple's sales increase again. Strategic alliance with Microsoft has had a big impact on Apple's share price. The two companies have reached an agreement in using license patents for two products. Event of the cooperation gave Apple a new life. In San Francisco in January 1998. from $ 6. pushed it up nearly 35%.4.50 NASDAQ. In just over a week Applet Store website became the third largest trade in the U. To support more than a relationship with Apple. In 1998 Apple launched the iMac a PC. Benefits of the alliance:  Apple: An additional amount not less than 150 million shares was sold for Microsoft to promote its plans later Alliance with Microsoft will help bring the look. the share price will increase significantly and of course bring about a great bargain for Microsoft. In April 1998. better features for Apple and PC products to improve the competitive position of Apple's previous opponents in the market of personal computers AS IBM.. as Apple has overcome difficult times and grow back. improving product quality and providing better choices for consumers.

Umbro and Converse. It is the world's leading supplier of athletic shoes and apparel and a major manufacturer of sports equipment with revenue in excess of US $18. according to The Oregonian. The company was founded in January 1964 as Blue Ribbon Sports by Bill Bowerman and Philip Knight. and officially became Nike.3. with the highly recognized trademarks of "Just do it" and the Swoosh logo. Jobs announced a quarter continued to be profitable again and completed a very successful year for Apple.. Nike markets its products under its own brand as well as Nike Golf. so when the alliance launched Apple products to their customers exactly.year. cooperation in technology to ensure harmony between the Java computer language or other programming languages . the company operates retail stores under the Niketown name. Microsoft has increased the positive perception of customers using Internet software giant of a potential and further ensure the "survival" of a core customerApple.2. 4. Element to the success of the alliance: Understand partners: Apple has been looking at Microsoft's reputation as a corporation has a range of influencing public opinion as well as large and clear customer benefits that Microsoft gives them greater than what Apple is giving Microsoft. 4. Nike and Precision Castparts are the only Fortune 500 companies headquartered in the state of Oregon. Nike Skateboarding and subsidiaries including Cole Haan. and as Apple reached great success 1997-1998. 4. Inc is a major publicly traded sportswear and equipment supplier based in the United States. Nike+.6 billion in its fiscal year 2008 (ending May 31. The operating flexibility of the wise leadership which is headed by CEO Steve Jobs: he knows how to take full advantage of the strengths that alliances bring success to bring to the company consecutively from 1997 -1999. Air Jordan. 2008). thanks to this alliance. the Greek goddess of victory. Noticing on cooperation has pushed the stock price to rise 1/8 times. working with Apple gave them certain benefits.3. Oregon. Efforts to build coalitions from both the broad agreement on the use of patent licenses for the product of both sides. In addition to manufacturing sportswear and equipment. Inc.000 people worldwide.2. Nike sponsors many high profile athletes and sports teams around the world. Apple-Nike 4. The practical result of the 57 . In other words. Understand yourself: Apple has itself recognized his position at that time was very difficult to go for capital and direction for products. which is part of the Portland metropolitan area. The company is headquartered near Beaverton. Nike Pro. thereby creating a mutually beneficial alliance and strong cooperation within the two companies. the Microsoft bought shares of Apple or the agreement within five years mentioned above is a form of investment in Apple-a potential group..3. in 1978. The company takes its name from Nike. Microsoft also had great profit. By forming strategic alliances with Apple. Background to form alliance: Apple: For Steve Jobs . Nike also owned Bauer Hockey (later renamed Nike Bauer) between 1995 and 2008. Of course.6. Towards Microsoft Corporation. Nike Nike.CEO at Apple – the company decided to work with Nike in order to elevate together music and sport to a new level of performance. As of 2008. Mr.1. We are not hard to realize that the alliance with Microsoft Strategy not only save Apple from the brink of bankruptcy but also take home one of its heyday in the history of its development. Hurley International. Microsoft already has millions of customers who rely on Apple's Mac platform. it employed more than 30.

Once the receiver is connected to the player. adhering to a rigorous selection of strategic partners that aimed to establish a relationship leading to mutual benefits. (2007). Nike: According to Mike Parker – CEO. two forms of technology result: (i) a sensor for the trainers. This alliance raised expectations for the launch of innovative products with the campaign slogan of “Tune your run”. When the receiver is removed from the iPod and connected to a computer. This automatic sensor includes an accelerometer and a Nike+iPod patented technology. 4. rhythm and calories burned. which resulted in forming a competitive alliance of cobranding named Nike+iPod. more precisely through the iPod player.alliance was the launch of a personal trainer (or a training colleague). the strategic competition alliance analyzed can also be considered as an example of complementary competence co-branding. i. the Nike+iPod option appears on the screen and the user can make a selection from his personal training list or his Power Song4. of the win-win type. This community had its origins in the partnership established with Apple. giving instant feedback on the iPod screen about individual performance during training. which allows communication between both.com site. at an event in New York. as a global brand. Mike Parker. inasmuch as two global brands complement each other in developing 58 .3. to motivate and control each stage of exercise. from the joint R&D efforts of the two companies.3. allowing communication between the Nike+ trainers and the iPod. together with the athletes Lance Armstrong and Paula Radcliffe.e. time. Nike+iPod resulted from forming a partnership between two global brands that have a mutual passion. The co-branded product created through the competitive alliance analyzed is the ‘Nike+iPod Sport Kit’. i. announced a partnership between these two brands. Nike. which includes a sensor and a receiver for the iPod Nano player. the user is automatically connected to the nikeplus. Steve Jobs. The trainers have a pocket for the sensor which communicates with the receiver. and of Apple. Chang (2008) stresses the motivation associated with the practice of global branding. Bearing in mind the typology proposed by Blackett & Boad (1999). This product unites Nike trainers and the Apple iPod. claiming that the latter is characteristic of strategic cooperation between well-known global brands that are recognized internationally. The main motivation of global brands for forming a strategic cooperation alliance of cobranding lies in the possibility it gives to combine global insignia. which allows evaluation of information regarding foot movement and display according to different analysis variables. Nike+ consumers become members of this global community. Apple-Nike alliance (Competitive alliance): On 23 May 2006 the CEOs of Nike. Information about the progress of the run is supplied by headphones and the iPod screen. as well as an effective change in the way people perceive and do sport. Additionally. based on the supply of a highly differentiated and innovative product: the ‘Nike+iPod Sport Kit’. or from a list of pre-programmed exercises that can be acquired on iTunes Music.e. The strategic cooperation between Apple (iPod) and Nike is a co-branding alliance formed between two global brands. this is innovation-based co-branding. in which it is possible to accompany the result of their activities individually or together with other members all over the world. taking the typology proposed by Nunes et al. namely distance covered. and (ii) a receiver for the iPod. This fitness system operates on a wireless platform. creation of products or services that let the user enjoy new experiences full of innovation and design. Concerning the form analyzed. created the on-line Nike+ community to develop the cult associated with the brand and link consumers in any part of the world.

1988 when it purchased Network Innovations. contributed to increased individual brand values. and the iLife suite of multimedia and creativity software. Apple acquired Emagic and its professional music software. since both brands obtain benefits. increased market share and greater international recognition of the brand. now part of the iLife software suite. and Emagic. in which parts of the company are sold to another company. Apple purchased its only minority stake when it acquired 5% of Akamai Technologies. production of which is based on intensive incorporation of knowledge and technology. For example. the iPod line of portable media players. Apple made the most acquisitions in a single year in 2002. and the iPhone line of mobile phones.5% and the increase in the Nike brand value.5 percentage points. After signing the co-branding alliance. In the 1990s. in this way allowing the creation of a personal trainer with innovative characteristics. purchased a stake in two companies. Logic Pro. 4. For both global brands analyzed. through supply and transmission of a greater benefit to users of the co-branded product: ‘Nike+iPod Sport Kit’. The acquisition led to the creation of the digital audio workstation software. in individual terms. the iTunes media browser.a joint product that connects music and physical exercise. Setting out from theoretical suppositions. with five. the joint communication efforts. Apple's business philosophy is to acquire small companies that can be easily integrated into existing company projects. The strategic competition alliance between Nike and Apple is based on a relationship of the WinMin-WinMax type. GarageBand. It has also made five divestments. and made five divestments. on average.4 percentage points variation in its brand value. 18 were based in the United States. all in the 1990s. Acquisitions Date March 2.3. The company's largest acquisition was the purchase of NeXT in 1996 for US $400 million. The company has acquired twenty-one companies. On the one hand. although in unequal measure 5. Apple's software products include the Mac OS X operating system. has been on annual average 8%. there were increased sales. The company's hardware products include the Macintosh line of personal computers. Moreover. of 22. Apple provides its know-how and experience as a manufacturer and supplier of electronic equipment. a content delivery network company.4. when it acquired Nothing Real. List of mergers and acquisitions by Apple Apple Inc is an American multinational corporation with a focus on designing and manufacturing consumer electronics and software products. Apple obtained a greater increase in brand value than Nike. That union is based on the joining of products and core competences of the two companies involved in the alliance. and on the other hand Apple recorded a variation of 11. 1988 Company Network Business Software Country United Value(US $) 59 . Benefits of the alliance: Although this is a relationship of the win-win type. namely technology. players and digital music. there was an increased market penetration through sharing portfolios of loyal clients. On the other. Therefore. in 2002. benefits resulting from formation of the strategic competition alliance are unequal. and the exchange of specific means and resources. Nike provides the technology and ergonomic design of running shoes. Silicon Grail Corp-Chalice (from Silicon Grail). most of them were software companies. through co-branding. Of the companies that Apple has acquired. The value of Apple has recorded annual rates. Apple has not released the financial details for most of these mergers and acquisitions. Zayante. innovation and marketing. The company made its first acquisition on March 2. Propel Software. on one hand Nike recorded a 0. since 2006.

000 404.926.000.000 13.000 . 2001 Bluebuzz Internet service provider July 9.000 15.000 15.000. Power Clone 1997 Computin computers g-CloneMaking January 8.000 100.000.000. 1989 Coral Software Computer software February 7.June 7. Raycer Computer 1999 Graphics graphic chips January 7.000. 1988 Satellite communi cation Systems June 27. NeXT Computer 1997 programm ing services September 2. 2002 Silicon Grail CorpChalice Propel Software Digital effects software Software Innovatio ns Orion Network Systems States United States United States United States United States United States United States United Kingdom United States United States Germany United States United States United States United States United States United States United States 60 62. 2002 Zayante Software June 11. 1988 Nashoba Computer software January 3. 2000 Astarte-DVD Software Authorin g May 11. 2000 NetSelector Internet software April 11. 2001 Spruce Graphics Technolo software gies December 31. Nothing Real Special effects 2002 software April 4. 1988 Styleware Computer software July 11. PowerSchool Online info 2001 systems services February 1.000 4. 1999 Xemplar Software Educatio n November 3. 2002 June 20.000.

2010 Quattro Wireless Aril 27.000 Stakes Date June 1. 2006 December 4.000 Divestitures Date April 22.000 4.July 1. 2010 July 14.000 December 6.000. 2008 July 7.500. 2008 Company Akamai Technolo gies Imagination Technolo gies Business Web site support services Imagination Technolo gies Country United States United Kingdom Value(US $) 12.com 2009 January 5. 1999 December 18. Lala. 2006 April 24. 199 2 Acquirer Misys Comp uter Maint enanc Target com pany Sign Expr ess Grou p Target Acquirer country/ busines nationality s Maintenance United activitie Kingdom s Value(US $) 705. 2002 April 2005 Emagic FingerWorks October 16.000 61 .000 275.000.000. 2010 Intrinsity Siri Poly9 17.000.A. Semi Placebase Music productio n software Gesture recognitio n company Software Software Semiconductors Maps Music Streaming Mobile Advertisi ng Semiconductors Software Web-based mapping Germany United States United States Australia United States United States United States United States United States United States Canada 30. 2010 Aril 27.700.000. 2009 Silicon color Proximity P.000 278.000 121.

Acquired a 3% stake.000 V. 6. 7. with upgrades in memory.000 Series A shares.650. 199 6 April 2. When the iPod made its debut in 2001. design. the company’s focus was on music and putting a thousand songs in your pocket. the iPhone changed the way smartphones were made and used.00 0 60.000. or 150.1. 9. speed. Apple’s best clients know that most of Apple’s product line is “refreshed” every year to the month. They Train Their Customers. There are many forums and blogs tracking down rumors of new 62 . which made it easy and legal to download songs to your computer or iPod.6% stake. or 6. In 2007. Microsoft has since sold this stake. added features and overall ease-of-use.00 0 United States Mexico 150.000. 8. 199 7 August 6.79 million common shares SCI Syste ms Al-Waleed bin Talal Microsoft Grupo Carso Apple Com puter Apple Com puter Apple Com puter Apple Com puter Computers United States Personal comput ers Personal comput ers Personal comput ers Saudi Arabia 115. 199 7 August 7. Acquired from Power Computing Corporation Acquired from Astarte Acquired from Japan Information Processing Service Acquired from Silicon Grail Acquired a 5% stake Acquired a 3. R&D AND MARKETING 1. or 3. 4.2 million shares Acquired a 5% stake.25 million common shares Acquired a 5% stake. or 8. 3. Marketing tactic Here are five reasons why you should follow Apple’s marketing strategy: They Focus on One Thing and Make it Great. millions of the “magical” iPad sold in a matter of weeks. Marketing strategy 1. 2. Then they kicked off the iTunes store. This year. 199 7 Notes 1.e May 31. 5.

The 2nd answerer lists selling techniques for salespeople not marketing methods for manufacturers.products and release dates as fans wait in anticipation of the next great Apple product. people do. you can simply see and touch. The latest round of Apple MacBook Pro computers are billed as “The World’s Greenest Lineup of Notebooks. Ipod does not use a person to sell but the product instead.. You can find a decent PC notebook at Best Buy for about $600. desire. but Apple has no problem charging $999 for its least expensive notebook.2.2. Make your message memorable. pager. creatives. They’re Green. Check out these photos of the lines forming in Tokyo just to pre-order the new iPhone. Microsoft dominated the market and Apple ran a distant second. no person can sell it. and the all in one features. Visit Apple’s Environment page here. Even before the days of the ‘Think Different” ad campaign. One day. music. most mp3's etc have limited memory. your phone. need.” The marketing strategy behind the ipod and iphone is ease of use. 63 . Executive Summary: The focus of this report is on new Apple Ipod product that has created increasing demands in various outlets.1. are all considerations. They set their prices high and back them up with a stellar reputation for providing excellence in their products and in customer satisfaction. five of Apple's marketing principles:      1. Surprise and delight your customers iPod Marketing plan 1. you don't need anything else. and being the first to market something is often the key to the products success.” For a company that expects its best clients to upgrade their hardware annually. OK. and people don't buy products simply because they are surprised. Never be first to market. they also target the young adults although the 2nd answer has good points there are a few things that go against normal marketing methods.. Products don’t sell. and you can access the Internet from it also. price. being 1st and unique is easier than being 2nd and trying to compete with the first product. Apple was reaching out to college students and graduates. yes it's people that sell things. they buy for different reasons. Products do sell themselves if they are marketed right. Watch the “Get a Mac” commercials and you’ll see Apple’s attempt to paint PC users as well-meaning. while Mac people are young and carefree because their computers “just work. they have lots of memory so you won't run out. that’s not entirely true. Companies that promote eco-friendly products gain respect and garner positive press from “green” organizations that in turn encourage their followers to buy from these companies. but kind of dumb for sticking with bad computers. They have a one-day Black Friday sale that saves 5-10% off certain products. but if the product is bad. they’d better produce something that’s easily recycled. videos. They Don’t Have Sales. are all in one. They Know and Market to Their Customers. rebels. and the anti-establishment. But that’s it. Empower early adopters.

3.1. made and delivered. Apple Iphone marketing strategy 1. External Influences: Competitors: Competitors will regulate what. Apple was responsible for creating the desktop publishing market due to their innovative programmes. The Present – January 2007. Additionally this Ipod can be used in your car and in other mobile settings. when. as more people are made aware of the product. the CEO and Co-Founder of Apple. Executive Summery: The Past – Steve Jobs. how and why strategies will be adopted. portable CD players. Product Analysis: Product Lifecycle: X. In June 64 . In 2001. This report is for Apple to give a brief description of this product.e.3. Sufficient funds must be available when competitors unpredictably put forward their product in the market. however competition is increasing as competitors are more cognisant of the tactics of Apple Ipod i. monitoring and controlling. Situation Analysis: Market Analysis: Internal Influences: Management: Effective management is required for the training and development of employees for the continue innovation of Apple Ipod and for retraining sufficient funds during competitor introducing new product. Overseas Influences: The breaking down of barriers between countries can increase the sales of the new Apple Ipod. Demographic Patterns: Males and females from the age of 12years and over will be in favour of this product because of its new innovation to be able to not only play music but also books and other literature which would in fact appeal to them. Technological Adoption: Technology must be adopted to improve overall efficiency. It must be integrated directly into operations (to increase productivity). The product was phenomenally successful – over 100 million units were sold within 6 years. Between 1983 and 1996 Apple experimented with a number of failed consumer target products including digital cameras. marketing strategies that have been used and the forecasted strategies. announces that Apple Computer Incorporated would now be known as Apple Inc. which will result in higher sales. 1976 in order to sell the Apple 1 Computer Kit that was hand built by Steve Wozniak. Steve Wozniak and Ronald Wayne established Apple on April 1. The introduction of new products will greatly influence Apple Ipod. 1. a combination of an Internet-enabled smartphone and the iPod. Capital Availability: Competition may cause mishap in the cash flow. where more and more people are aware and purchasing the product.The stage that Apple Ipod is currently in: Apple Ipod is currently in the growth stage.This product allows consumers to download not only their favourite music but also books and other literature which can be read and listened to. increasing product demand. video consoles and TV appliances. PageMaker and LaserWriter. The Apple 1 was sold as a motherboard (with CPU. marketing objectives. Sales are growing rapidly and profits are rising quickly. Within this marketing report there is an insight of the situation analysis of this product. Market share and stock prices decreased. 1. as well stay on date with the amounts of Ipod’s ordered.2. Apple introduced the iPod portable digital audio player. speakers. RAM and basic textual video chips) – less than what is considered a personal computer today. He also reveals the long anticipated iPhone. During this stage there are also opportunities for wider distribution. using new features to market their product. Steve Jobs.2. the target market.

hospitals and other institutes are increasing and can be connected to cell phones. New technologies in the cell phones are increasing.  Socio-Cultural Situation Population growth leading to expansion of the sector needs for cell phones. The Future – Apple plans on focusing on satisfying personal consumer demands rather than merely fulfilling a demographic requirement as well as.Technology (online bidding. There is educational growth in the world. Literacy & illiteracy level is not affecting using cell phones but affecting high technological cell phones. universities. this newer version added support for 3G Networking and assisted GPS navigation. People depend more an more on mobile communication everywhere.2008.  Environmental Situation The global concern of the Global Warming issue & other pollution effects concerning the packaging material and radiation of the cell phones.2. so we should study each country case by case. Importing laws in the world with GATT are in favor of trading. The iPhone targets consumers who need to store information and communicate or people who want entertainment on the go. Countries are very variable in stability of. improving performance and stability rather than introducing new features when releasing new versions of any product. he announces that the iPhone 3G would be released in July 2008. Acceptance of imported products in some countries are less if there is local provider There are different social views that may affect product should be considered (e. entrepreneurs. and PDA features in one device because of the high price. Currently. Future plans for technological linkage between cities.  Competition Situation There are 19260 cell phone producer in the world. The smart phone market is still relatively small compared with general phone market. complaints. but there are more than 15 big companies competing at the world level Market. Few people want Internet. the market for high-end phones like the Apple iPhone is small. this fact needs to be considered. Situational Analysis:  Political Situation Taxation is something that governments put and Apple should be study this as country by country case to anticipate profitability. The market will rapidly increase in coming years due to lower prices and greater power. and pricing strategy. Level of usage of the E. Potentiality of the market is decreasing but it is higher than any others in the Telecom sector. colleges. Internet level of awareness & usage for individuals & industrial aspect are increasing worldwide Fixed phone lines capacity and development attempts. Apples target segments consist of professionals.: Boycotting American products in the Islamic world):  Technological Situation Level of technology in the world is increasing. corporate users.3.g. video. students. Culture’s perception of the technological devices is positive worldwide. and health care workers.  Economical Situation Economical growth world wide is in a big recession which need careful manipulation. blogging etc) are high and trendy. billing. 65 . 1. among other things.

Difficulty expanding into Asian market – There is less hype and interest in Asia since smart phones are better known and already widely used. The market is familiar with Palm products. After a short period of time. Opportunities: Increasing demand and expansion to a new target segment – As technology advances and smart phones get cheaper Apple will attract consumers and get iPod users to upgrade to iPhones. Compatibility –The phone will work with iTunes and with other Mac/Apple products and OS software tools which means limitless potential for upgradeability. and competitors or even Apple contractors can maneuver around patents to create similar devices. W/T Analysis: Weaknesses: Image – The Apple brand is not targeted towards business people and does not have a reputation as being compatible with the corporate world. Downward pricing pressure – The iPhone is marketed as a highend phone. significant switching costs are involved in going to an 66 . but phone prices are almost certainly going to fall when other companies undercut the price of iPhones. Quality – Scratch resistant screen – durable and light metallic finish . Upgradeable – iPhone software allows new exciting features to be brought in which take advantage of the touch screen ability. 1. SWOT Analysis: 1. and arm movement becomes painful and clumsy. Ease-of-Use – The all-new touch screen interface recognizes multi finger gestures. It also has many functions of other mobile products all in one device. Partnerships – Apple can collaborate with many powerful global mobile phone companies to flood the market with iPhones.The demand of the international environmental approvals is a must (if there is any). Existing software is well established and compatible with many products for this market.2. 1.4.) Increased competition – Smart phones are easier to make now more than ever. This is now considered a classic cautionary tale to human-factors designers. Brand awareness – Apple is well known for cool essential gadgets like the iPods along great technological innovations like the original Macintosh.4. cramp may begin to set in. Price – iPhone would be sold at a reasonable price for its value.software suite resistance to computer viruses.Palm has the longest history in PDA market and has experiencedeveloping software for mobile devices. Threats: Competition (Palm) . User Interface – Touch screen interfaces suffer from the problem of “gorilla arm”( Gorilla arm is a side-effect that humans face when using touch screens for long times as humans are not built to hold their arms at waist or head-height. making small and precise motions. Future versions will also be hardware upgradeable.  Sales Situation Cell phones industries are one of the most profitable industries everywhere and the Market is increasing.1.4. which reduces costs in marketing and increases revenue through long-term agreement deals. S/O Analysis: Strengths: Innovative – The iPhone has an innovative touch screen. It is also a well-known brand for businesspeople. More companies may enter the market. just as the human hand normally behaves. Price – Apple does not yet offer lower priced models for more cost conscious consumers.

Palm can add many similar capabilities to their products that match the iPhone and expand to a wider market through lower cost and higher-power products. •A more advanced model for $399. value added device for personal and professional use. 2.iPhone. Marketing Mix Strategy: -Product: •Full year warranty along with an optional three-year Apple Care warranty. Second-year Objectives . positioning the iPhone as the versatile. •All Apple Stores the Apple website will dedicate themselves to the iPhone.. PDA/Phone market through unit sales volume of 445. Positioning: Using product differentiation.000. •Generally lower our prices to ensure we establish market dominance in as short of time as possible. Measure the awareness and response in order to make adjustments to the marketing campaigns as necessary. Secondary consumer targets are high school. 67 . long battery life. lower weight. Extend on the Apple brand name and link to the established meaningful positioning. •Special limited edition Beatles iPhone for special prices. -Place: •Massive rollout worldwide at all reputable major retailers. convenient. •Same taste as all other Apple products. thinner device. 1. The iPhone will be promoted as both professional and hip.5.S and U. First-year Objectives .6. but also music. and full Internet access. 4G wireless.K. Verizon. AT&T. Showrooms and in all cell phone providers.We are aiming for a 2 percent share of the U. Focus on the convenience of having one device for communication. •Massive rollout Online. and video. •Special edition version to be launched (including the iPhone Beatles edition celebrating their 40th anniversary). Primary customer targets is the middle-upper income professional to coordinate their busy schedules and communicate with colleagues. -Price: •Set the base model at a cheap price of $349. Target Market: Differentiate the iPhone from other PDA’s on the market. Sprint and Cellular One. •Launching a cheaper version in 2008 with less advanced features along with a more advanced version for professional use.are to achieve a 10 percent share based on sales. Market segment will consist of companies with $10-$50 million in annual sales. •Adding the following features to the iphone (large disk storage capacity. and value. Marketing Objectives: Set an aggressive buy achievable objective for the first and second years of market : 1. pictures. GPS and improved camera). Secondary business target is mid-to mid-size corporations that want to help managers and employees stay in communication or access critical data on the go. 1. college and graduate students who need one portable multifunction device. friends and family. Primary business target is to partner with: -Large cell phone service providers. -Large enterprise software firms where information is critical to the end user. Extend on Apples image of innovation. quality.

they can create good product which are suitable with customer’s tastes. Apple’s R&D: Apple (AAPL) used their R&D budget very smartly. right? This can help customers find out product's information easily. Apple's R&D is 34% of operating income. •Emphasize Apple brand prominently and associate the iPhone with the iPod’s groundbreaking lineage. music. R&D 2. -Promotion: •Integrate Apple message of revolutionary communications and audio/visual experience together in all media advertisements. •Advertising will be appearing on a regular basis to maintain general public awareness. Their operating income has gone from -1 million dollars in 2003 to to 4409 million dollars in 2007.•Eye catching displays will be found at all physical stores featuring the iPhone to make the product stand out from the pack. Listen: They let customers use their products then invite them to speak their feelings. Due to various opinions. •Apple Stores will have the iPhone on display a full month before its worldwide release. And as Apple's operating income rises. That works out to an increase of 881% a year the last 5 years. iMac… They might not be perfect but all of them are easy to remember. •Original but tasteful advertisements at the same time. The Real Secret of Apple's Successful Marketing Strategy: Nice product: Everything in Apple's product line was almost perfect and eye-catching design. raise the bar whether it's in notebooks.7. 1. Simple message: The message is simple to understand. the percentage of R&D/operating income plummets. From 2003 to 2007. they may have self. They enter a market. cell phones. Create credibility and always one step ahead: About 5 years ago. They usually innovate their products. Creating consumer's interest: Their strategy is sharing the comments with the guest from others who are using and talking about their product. It will be objective and more reliable. iPhone. •Differentiate the iPhone against others is the touch screen functionality. take it over. after apple control MP3 market domination.1. But that's not what this company did. 2004 saw R&D/operating income at 68 . The names to remember: Look at the names of Apple products: iPod. So that The Apple's brand becomes more and more famous.confidence with their success. •A massive TV campaign is planned before launching the iPhone featuring a soon to be legendary ad to be the talk of the country. Apple spent 2991 million dollars while raking in 8818 million in operating income. even to put advertisements on television. easy to remember and easy to share. 2. research new products. They continued innovate.

Other tech companies seem to lack the same "vision" in allocating their R&D budget. Revenue rose from $44 to $58 billion. In 2009.6 billion over the last four years. Revenue in 2006 was $25 billion. Apple's R&D has risen 13% a year. now Q1 2008 it's dropped to 12%! On average. Apple hasn't skimped on its R&D. One wonders what new products come out of Apple's R&D in 2011 and beyond? 69 . In 2007. In contrast.036 billion (¥543. Its market cap. has tripled over the since the start of 2006. It's amazingly productive. Microsoft (MSFT) used $31 billion on research over the same period. Sony must spend significant resources on research and development to keep up with rapidly advancing technology and shifting consumer demand. It's been growing but its operating income has been growing far faster.156%.9 billion).  Compare the Research and Development strategy of Apple vs Microsoft and Sony: This graphic can help you conceptualize the revenue and R&D gap:  Analysises: Apple (AAPL) spent a total of $4. sales climbed to $43 billion. operating income 881% a year over the last 5 years. Sony spent a total of $ 5. Apple's R&D is extraordinarily cost efficient.

Microsoft spends about 17% of their revenue on R&D.Now. 25-45 years. To bring the iPhone to the front of the business world it is important to research different ways to grow the 15-25 year old group into business uses of the product. Not Products: “Steve Jobs doesn’t rely on focus groups.3. If he had. Yes. sometimes better than they know themselves!… Sure. period—about $9 billion last year in generalized research (that often doesn't lead to specific products). Asked why Apple doesn’t do focus groups. We will continuously scour the Apple fan websites to understand what the Mac faithful are saying. Apple does that all the time. High School and College aged people will demonstrate social uses. Steve Jobs and his team are the company’s best focus group. they may never have enjoyed iPods. We will ask for feedback on iPhone features. The 25-45 years group will be used to determine business application and social/personal use.” Sell Dreams." Apple customers should be glad Jobs doesn’t do focus groups. "listen" to your customers and ask them for feedback. Apple spends less than 4%. Apple's R&D has grown the most (nearly quadrupled) while Sony's has grown the least (not quite doubled).2. and implement those changes most important to the end user in the next generation iPhone. the iPhone. Microsoft just spends a lot of money in R&D. iTunes. iTunes and other on-line application developed for the iPhone) and interviews (in Apple stores) with the same age groups listed before.5 million per product while Apple would spend about $78. Brand awareness will be an important tool in taking the Apple brand from "social cool" -to "business cool”. "Steve Jobs avoids most focus groups like the plague. and 45 years and up. 20-25 years. Sony spends about 8%." says tech analyst Rob Enderle. Marketing Research: Four age groups will be targeted: 15-20 years. We will allow users themselves to design their own ideal iPhone online and use any useful ideas to further refine future iPhone models. Four Innovation secret of Apple Put a Dent in the Universe: “Innovation requires a team and you cannot inspire evangelists unless you offer a compelling vision…. But when it comes to breakthrough success at Apple. Jobs responded: "We figure out what we want. really well. This research will be done through surveys (via email campaign through portals such as. the iPad. Sony would spend about $11. or Apple Stores.5 million per product. In terms of percentage growth over the last decade. You can’t go out and ask people ‘what’s the next big thing?’ There’s a 70 . The 45 years and above will give us a plan to market to more senior well-refined group. "It comes down to the very real fact that most customers don’t know what they want in a new product. Jobs doesn’t need focus groups because he understands his customers really. If you were to break down the amount of R&D that goes purely to physical (non-software) products sold by Apple and Sony. 2. as they are our best customers 3.

Apple has been criticized for its sometimes questionable use of modern art as an inspiration for its marketing campaigns—at times re-creating a short film or music video shot-by-shot for its commercials. The most recent advertising strategy by Apple is the Get a Mac campaign. creatives — even geniuses — but no cashiers. special events have been used to announce products such as the Power Mac G5. Since the original Macintosh Super Bowl commercial in 1984.000 things. Apple has maintained a style of homage to contemporary visual art in many of its more famous ad campaigns. Apple's portable music player. For example. they generate more revenue per square foot than most other widely recognized brands. 2010) 3." In other words. and we’re going to show people exactly that…" (by George Ambler on Sunday. Although the Apple Stores have no commissioned sales staff.000 Things: “Steve Jobs once said the secret to innovation comes from "Saying no to 1.’"” Say No to 1.great quote by Henry Ford. and in 2002 the Switch campaign followed. Why? According to Jobs. several lawsuits have been filed against Apple by artists and corporations alike. the 1990s Think Different campaign. only to have Apple pull out of the discussions. These claims were later confirmed. Jobs is as proud of what Apple chooses not to do as he is about what Apple chooses to focus on. which are designed to reflect a plan of marketing their products to creative individuals. 71 . "If I’d have asked my customers what they wanted. The events typically draw a large gathering of media representatives and spectators. and the "iPod people" of the 2000s. Today. which mimicked imagery from George Orwell's 1984. They want to know what they can do with them. then use the artistic imagery anyway. the iPod. Advertising In the past two decades. This philosophy has helped Apple introduce products that wow consumers because of their elegance and simplicity…” Create Insanely Great Experiences: “There are no cashiers at an Apple Store. He said. "People don’t want to just buy personal computers anymore. As a result. Apple focuses much of its advertising efforts around “special events". Some artists have documented entering into rights-negotiations with Apple. such as visual artist Louie Psihoyos and shoe company Lugz. Apple Inc has become well known for its advertisements. they would have told me ‘A faster horse. has been showcased as a piece of contemporary art in New York's Museum of Modern Art. September 26. Their most significant ad campaigns include the "1984” Super Bowl commercial. There are specialists. and keynotes at conferences like the MacWorld Expo and the Apple Expo. In 1997 the “Think Different” campaign introduced Apple’s new slogan. the Think Different campaign linked Apple to famous social figures—including artist John Lennon and social activist Mahatma Gandhi. In the past.

Apple spent more than US $2. "1984" television commercial: launching the Macintosh "1984" (created by Ridley Scott) is the title of the television commercial that launched the Macintosh personal computer in the United States.000 participants.  1985–1990 In 1985 the “Lemmings” commercial aired at the Super Bowl. in which potential buyers with a credit card could try a Macintosh for 24 hours and return it to a dealer afterwards. However. 1990–1995 72 . Many more brochures for new models like the Macintosh Plus and the Performa followed. in January 1984. and many computers were returned in such a bad shape that they could no longer be sold. often remembered because Bill Gates was featured on page 11 For a special post-election edition of Newsweek in November 1984.1980–1985 A “Macintosh Introduction” 18-page brochure was included with various magazines in December 1983. dealers disliked the promotion and supply of computers was insufficient for demand. In 1988 Apple released a short film titled Pencil Test to showcase the Macintosh II's animation capabilities. Apple also ran a “Test Drive a Macintosh” promotion that year. It began to look like a success with 200.5 million to buy all of the advertising pages in the issue (a total of 39). It was a large failure and did not capture nearly as much attention as the 1984 commercial did. and Advertising Age magazine named this one of the 10 best promotions of 1984.

with a small Apple logo and the words "Think Different" in one corner. Television commercials Significantly shortened versions of the text were used in two television commercials titled "Crazy Ones" directed by TBWA's Jennifer Golub with a voiceover narrated by Richard Dreyfuss. Apple introduced the worlds first infomercial style sitcom named 'The Martinetti's Bring Home a Computer'. "The Switcher" was a term conjured by Apple. It was used in a famous television commercial and several print advertisements. 2002. 73 . In 1995. They featured a portrait of one of the historic figures shown in the television ad. with print ads and television commercials featuring celebrities describing how the PowerBook helps them in their businesses and everyday lives. with no reference to the company's products. "Think Different". however.In the 1990s Apple started the “What's on your PowerBook?” campaign. This commercial aired only once. Apple responded to the introduction of Windows 95 with both print ads and a television commercial. Sometimes these were traditional advertisements. During 1994. The television commercials were directed by Errol Morris. it refers to a person who changes from using the Microsoft Windows platform to the Mac. Even today. which atests to Apple's brand recognizition. The use of the phrase. has ceased. there was also another series of print ads which were more focused on brand image than specific products. prominently featuring the company's computers or consumer electronics along with the slogan. alongside flagship products like the iPod and iMac. An international television and print ad campaign directed users to a website where various myths about the Mac platform were dispelled. However. These ads featured what the company referred to as "real people" who had "switched". Think Different remains an intrinsic part of Apple's identity. during the series finale of Seinfeld. This can be viewed on this YouTube link. 2001–present "Switch" "Switch" was an advertising campaign launched by Apple on June 10. Print advertisements Print advertisements from the campaign were published in many mainstream magazines such as Newsweek and Time. 1995–2000 "Think Different" "Think Different" was an advertising slogan created by the New York branch office of advertising agency TBWA\Chiat\Day for Apple Computer during the late 1990s.

I'm a PC" advertisements as part of their "Get a Mac" campaign. Apple began advertising on FreeRice. John Hodgman) and a Mac (Justin Long). In 2006. the actors are specific to those countries. print ads.iPod Apple has promoted the iPod and iTunes with several advertising campaigns. and are unified by a distinctive. The campaign was officially ended in 2010. similar commercials have appeared in Japan and the UK. Sponsorships Apple is in talks with the New York Yacht Club to be a principal sponsor of an America's Cup challenge to be skippered by Paul Cayard. The silhouette commercials are a family of commercials in a similar style that form part of the advertising campaign to promote the iPod. Since the launch of the original ads. particularly with their silhouette commercials used both in print and on TV. 2007. The commercials include television commercials. a program to fight world hunger. on 7 October. 74 . Apple released a controversial series of twenty-four "I'm a Mac. "Get a Mac" The two characters from the ads who personify a PC (left. consistent style. Apple's portable digital music player. posters in public places and wrap advertising campaigns. While they use the same form and music as the American ads.

the Advertising Standards Authority (ASA) in the UK had banned one iPhone ad from further broadcast in its current form due to "misleading claims". Artist Christian Marclay denied Apple the rights to his 1995 short film "Telephones" to market their iPhone. we will report Apple's scores as measured by the GCFR financial gauges. The ASA took issue with the ads' claim that "all parts of the internet are on the iPhone". Debate continues about whether Apple's use of established visual art to sell its products is acceptable. which depict much faster network speeds than are realistically possible on current 3G network infrastructure. Apple earned $4. In August. Earnings per share were nearly 70 percent more than the $2.64 per diluted share in fiscal 2010's fourth quarter. 75 . but then decided against filing suit when Apple ran a similar ad during the 2007 Academy Awards broadcast. APPLE’S FINANCIAL ANALYSIS Income statement analysis for the September 2010 quarter: This post examines Apple's Income Statement for the latest quarter. However. More recently. 2008. Growth. VI. In a second article. Profitability and Value. Apple has been criticized for its iPhone ads. for example UK Advertising Standards Authority gave Apple a grilling for each slogan but eventually Apple was let off the hook because it was actually classing its computers as workstations rather than personal computers.77 Apple made in the same quarter of 2009. The follow-up post will also provide the latest figures for the various financial metrics we use to analyze Cash Management. In July 2007. but backed out and promptly used the imagery anyway. which ended on 25 September. the newer iPhone ads show a caption. when the device does not support Java or Flash.Criticism Advertising authorities in various countries took issue with these claims. 'Sequence Shortened' at their beginning. Colorado-based photographer Louie Psihoyos filed suit against Apple for ripping his "wall of videos" imagery to advertise for Apple TV. Apple had allegedly been negotiating with Psihoyos for rights to the imagery. although they do include a disclaimer explaining that fact.

Samsung (SEO: 005930) manufactures these chips. which ended one year ago.Apple sold 7. but the design was customized by Apple.S. The "A4" computer chips that run the iPhone. 76 . iPad. have always been marketed in conjunction with AT&T.5 million iPads in the six months after the product's launch date on 3 April 2010.2 billion on sales of $42.9 billion. as well as iPhone and iPad Apps stores.5 billion. Apple earned $8. Apple's products are sold online and through the company's chic retail stores. and some other products are based on the low-power ARM architecture. For fiscal 2009. iPhones in the U. News reports indicate that Apple in 2011 will start selling iPhones that will work on Verizon's network.1 billion and sales of $37. Digital content is made available through the iTunes Store. The comparable figures for fiscal 2008 were earnings of $6.

enables Apple to recognize "substantially all" iPhone and Apple TV Revenue in the period that sales to consumers took place. a record high Revenue figure for Apple. company. was 67 percent greater than Revenue of $12. making Apple the second-most valuable U.3 billion far surpassed Apple's $18. Apple revised how it accounts for sales of the iPhone (and the less important Apple TV). As has often been the case recently.S. when it made the change.0 billion guidance. which complies with the latest standards issued by the Financial Accounting Standards Board.2 billion in the September 2009 quarter. In the first quarter of fiscal 2010. The following table lists Apple's Revenue by product category. The reported amount. Apple. This change. Apple had been required to recognize Revenue from these products over each product's two-year estimated economic life. restated earlier results to conform to current accounting principles. 77 . The "subscription accounting" method resulted in substantial amounts of deferred Revenue and costs. Apple's Revenue of $20.A soaring stock price has elevated Apple's market value towards $300 billion.

566 $20.188 $667 $2.4% 91.235 $0.8% 22.343 Sept 2009 3.177 $154 $1." and "Software. The margin contracted nearly 5 percent (a hefty 490 basis points) from 41.8% -5.3% -3.4% 91.606 10.367 $625 $4.236 $3.980 7.051 $163 $1.7% "Other Music Related Products and Services" (e.207 % Change 27. the iTunes Store).2% 68..634 $1.061 $2.053 $1304 $3.041 $12.401 $2.822 9. "Peripherals and Other Hardware.5% 15.477 $2.7% The Cost of Goods Sold(COGS) was 63.186 $5. which translates into a Gross Margin of 36.885 $1254 $4.058 $12.7% 66.8 percent in the September 2009 quarter. 78 .870 4.343 Sept 2009 $5.1% 5.1 percent of Revenue in the September quarter.5% -11.Macintosh Units (m) ASP ($) Revenue ($B) iPad Units (m) ASP ($) Revenue ($B) iPhones Units (m) ASP ($) Revenue ($B) iPod Units (m) ASP ($) Revenue ($B) Other * Revenue ($B) Total Revenue ($B) Sept 2010 3.102 $626 $8.7% 121% 158% 74.563 $2." All Apple operating segments experienced torrid Revenue growth.458 $1.382 $20.g.7% 66.9 percent.207 % Change 37.792 14. Service and Other Sales.732 $3. Revenue ($B) Americas Europe Japan Asia Pacific Retail Total Sept 2010 $7.

4 percent of Revenue. General. the Gross Margin still surpassed the company's 35 percent guidance (made during July's conference call)." Research and Development and Sales. and SG&A dropped from 8.7 percent. R&D fell from 2.2 percent higher than the company's $2 billion guidance for these Operating Expenses.Although down. such as restructuring charges or asset impairments.9 to 2. Apple now says that "About two-thirds of [190 basis point better-than-expected Gross Margin] was driven by lower commodity and other costs. and Administrative expenses in the latest quarter summed to $2. and the remainder was mostly attributable to a better-than-planned mix of iPhone sales. 79 .7 percent of Revenue to 7. only 3. The quarter did not include any separately identified "Other" operating expenses. Because Revenue soared.065 billion.

Net interest and other non-operating items produced income of $14 million. The company sold 27 percent more Macs and 91 percent more iPhones.com http://www. but the average selling price expanded.1-percent effective income tax rate was significantly less burdensome than the previous September's 32. REFERENCE http://www. iPod unit sales were lower.itunes.com http://www.typepad.nytimes.wikinvest. Apple's guidance suggested earnings of around $3.wikipedia. which was 48 percent more than $3.apple.447 billion.biz 80 .apple. Apple's earnings also benefited from a falling tax rate. The 21.org http://rohitbhargava.8 billion. were records for Apple. we figure that Operating Income would have been about $4. as international sales outpaced those in the U.532 billion ($2. Both figures. Apple says that the lower-than-expected rate was due to a greater proportion of earnings realized overseas and some one-time tax benefits.684 billion in the September 2009 quarter. Apple had another exceptional quarter.77 per share).S. In summary.1-percent rate. brought in Revenue of nearly $2.Subtracting the various operating expenses from Revenue yields Operating Income of $5. If the quarter had played out as implied by the Apple's July guidance.informing-arts. but the difference is trivial when compared to the company's bottom line.com www.com http://en. The company's guidance was for the rate to equal 26. in its second quarter. compared to (restated) earnings in the year-earlier quarter of $2.64 per diluted share).44 per share in the September 2010 quarter. This figure was less than expected. The top and bottom lines of the Income Statement have continued to grow at year-on-year rates rarely seen at a large company.31 billion ($4.3 billion. Revenue and Net Income. The iPad.com http://www. VII.5 percent. Bottom-line Net Income rose by 70 percent to $4.

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