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Apple Computer’s 30-year history is full of highs and lows, which is what we would expect in a highly innovative company. They evolved throughout the years into an organization that is very much a representation of its leader, Steven Jobs. Apple made several hugely successful product introductions over the years. They have also completely fallen on their face on several occasions. They struggled mightily while Jobs was not a part of the organization. Apple reached a point where many thought they would not survive. When asked in late 1997 what Jobs should do as head of Apple, Dell Inc.'s (DELL) then-CEO Michael S. Dell said at an investor conference: "I'd shut it down and give the money back to the shareholders.” (Burrows, Grover, and Green). Well, times changed. Less than 10 years later, Business Week ranked Apple as the top performer in its 2008 Business Week 50. Apple attributes their recent success to robust sales of iPod music players (62 million in 2008). They are optimistic about the economies of scope with media giants, such as Disney and Pixar. Apple rarely introduces a new type of product. Thus, instead of being the pioneer, they are an expert “second mover” by refining existing products. Portable music players and notebook computers are examples. Apple increases the appeal of these products by making them stylish and more functional. They now appear poised to make significant strides in the home computer market and to creating a total digital lifestyle whereby the home is a multimedia hub.
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Steve Jobs and Steve Wozniak founded Apple on April 1, 1976. The two Steves, Jobs and Woz (as he is commonly referred to – see woz.org), have personalities that persist throughout Apple’s products, even today. Jobs was the consummate salesperson and visionary while Woz was the inquisitive technical genius. Woz developed his own homemade computer and Jobs saw its commercial potential. After selling 50 Apple I computer kits to Paul Terrell’s Byte Shop in Mountain View, CA, Jobs and Woz sought financing to sell their improved version, the Apple II. They found their financier in Mike Markkula, who in turn hired Michael Scott to be CEO. The company introduced the Apple II on April 17, 1977, at the same time Commodore released their PET computer. Once the Apple II came with Visicalc, the progenitor of the modern spreadsheet program, sales increased dramatically. In 1979, Apple initiated three projects in order to stay ahead of the competition: 1) the Apple III – their business oriented machine, 2) the Lisa – the planned successor to the Apple III, and 3) Macintosh. In 1980, the company released the Apple III to the public and was a commercial flop. It was too expensive and had several design flaws that made for less-thanstellar quality. One design flaw was a lack of cooling fans, which allowed chips to overheat. In late 1980, Apple went public, making the two Steves and Markkula wealthy – to the tune of nine figures. By 1981, the Apple III was not selling well and Scott infamously fired 40 people on Feb 25 (“Black Wednesday”). Scott’s direct management style conflicted with the culture Jobs and Markkula preferred, and Scott resigned in July. Markkula stepped into his position as CEO. In August 1981, IBM released their PC. Unimpressed and unafraid, Apple welcomed IBM to
the PC market with a slightly smug full-page ad in the Wall Street Journal. It would not be long before IBM’s PC dominated the market. The Xerox Alto was the inspiration for Apple’s Lisa. Apple employees were able to examine the Alto in exchange for allowing Xerox to invest in Apple before Apple’s initial public offering (IPO). Apple released the Lisa in January 1983 and was notable for being the first computer sold to the public that utilized a Graphic User Interface (GUI). Unfortunately, the Lisa was not compatible with existing computers, and therefore came bundled “with everything and a list price to match.” At $9,995 (over $21,000 in 2005 dollars), the Lisa missed its target market by a wide margin. Jobs attempted to control the Lisa project. Scott, unimpressed with the performance of Jobs on the Apple III project, had Jobs head up the dog-and-pony show for the pending IPO. Jobs, looking for a project to lead, inserted himself into the Macintosh development team. Using his considerable influence, Jobs was able to procure the resources to produce a computer that was faster than Lisa, used a GUI, had a mouse, and sold for ¼th of Lisa’s price. Apple introduced the Macintosh with great fanfare during the 1984 Super Bowl. The Orwellian-themed commercial (directed by Ridley Scott, of ‘Alien’ fame) portrayed IBM as Big Brother and embodied Macintosh and Apple as freedom-seeking individuals breaking away from this oppressive regime.The commercial was largely successful and sales for the Mac started strong. However, Mac sales later faded. John Sculley left PepsiCo to join Apple in April 1983. He was famous for engineering the “Pepsi Challenge”, in which blinded testers tasted both Coke and Pepsi to unveil the ‘truth’ of the taste of Pepsi. In response to lagging Mac sales, Sculley contrived the ‘Test Drive a Macintosh’ campaign. In this promotion, prospective users could take home a Macintosh with only a refundable deposit on their credit card. While lauded by the public and the advertising industry, this campaign was a
Apple was unable to meet the growing demand for its products due to supplier problems and faulty demand predictions. Spindler shopped Apple to Sun Microsystems. Sculley was under pressure to have Apple produce another breakout product. with the end goal of finding a buyer for Apple. One of Apple’s most pressing issues at the time was releasing their next generation operating system (code named “Copland”) to 4 .burden on dealers and significantly impeded the availability of Macs to serious buyers. Apple tried to have lightening strike twice with their ‘Lemmings’ commercial during the Super Bowl. and IBM.” Apple dominated the desktop publishing market for years to come. the board replaced Spindler with Dr. Under Sculley. Despite Sculley generating substantial demand for Newton. Amelio tried to bring Apple back to basics. this commercial insulted current PC users by portraying them as witless lemmings. Sculley resigned in 1993 and Michael Spindler replaced him. it did not live up to the hype due to it being severely underdeveloped. To add insult to injury. sales of the Mac “exploded when Apple’s LaserWriter met Aldus PageMaker. PC competition ate into Apple’s margins and earnings were falling. After Jobs left in 1985. Gil Amelio. the board backed Sculley. Apple grew from $600 million in annual sales to $8 billion in annual sales by 1993. simplifying the product lines and restructuring the company. CEO of National Semiconductor. AT&T. Over the next several years. Microsoft released Windows 95 with great fanfare in 1995. Apple introduced Mac Portables in 1989 and the first PowerBooks in 1991. unthinkingly doing harm to themselves. Spindler spent most of his time and energies on regaining profitability. In what was becoming Apple’s typical patronizing fashion. In 1985. Dr. Jobs left Apple to form NeXT computer. Eastman Kodak. By 1992. After significant quarterly losses in 1996. Meanwhile. He focused his energy on the Newton – Apple’s introduction of the Personal Digital Assistant (PDA). Although Jobs attempted to overthrow Sculley.
Amelio and his technology officers found that Copland was so behind schedule that they looked outside the company to purchase a new OS. Jobs simultaneously put an end to the fledgling clone licensing agreements (which created a few Mac clones) and entered into cross-licensing agreements with Microsoft.The new iPods (portable music players) were a tremendous success. Apple opened their first 25 retail stores (totaling 163 stores in 4 countries as of May 2006). On May 6. Naturally. Apple sold so many that Apple’s dependence on Mac sales was significantly less. Apple introduced the new iMac featuring a screen on a swivel. and ease of use. he cleaned house by revamping the board of directors and even replacing Mike Markkula (who had been with the company since the beginning). The new iMac was a runaway success with its translucent case. a product so secret that most Apple employees had never heard of it. The year 2001 was an important year for consumers of Apple products. Ultimately. all-inone architecture. Apple introduced the new iMac. Jobs eventually claimed the CEO position. The board became increasingly impatient with Amelio due to sales not rebounding quickly enough. Then. In September 2001. 1998. Jobs further simplified the product lines into four quadrants along two axes: Desktop and Portable on one. 5 .compete with Windows 95. It brought Apple to a new market of users – those who had never owned a computer before. they decided to purchase NeXT computer from Jobs. Professional and Consumer on the other. and somewhat ironically. Apple offered iTunes (a free application) to help their consumers organize music on iPods and Macs. Apple completed the matrix with the introduction of the consumer-based iBook in 1999. This was no small feat considering that the 2001 iMac became Apple’s best-selling product “by a long shot”. Apple bought out Amelio’s contract after just 1 ½ years on the job. Apple welcomed Jobs back into the fold.
albeit not simultaneously. This functionality allows users who may need both OSs to own just one machine to run both. Apple expanded iTunes by 1) opening the iTunes music store to allow Mac users to purchase music online and 2) expanding iTunes to Windows users.In 2003. Sales of iPods skyrocketed and currently provide the bulk of product sales to Apple. 6 . In 2005. In April 2006. which allows users of Intel-based Macs to boot either Mac or Windows OS. Apple announced that it would start using Intel-based chips to run Macintosh computers. Apple announced Boot Camp.
and ensured that the right marketing. software and internet offerings” 10 . and not subordinate to them." Explanation of vision Apple lives this vision through the technologies it develops for consumers and corporations. It has put systems in place to enable smooth customer interaction. educators. It lives it by ensuring that its employees understand the vision and strive to reach it. It strives to make its customers masters of the products they have bought. creative professionals and consumers around the world through its innovative hardware. It has put objectives in place to continuously move forward. As such he should be above systems and structures.Vision Statement "Man is the creator of change in this world. implemented strategies to fulfil these objectives. financial and operational structures are in place to apply the strategies. Mission Statement “Apple is committed to bringing the best personal computing experience to students. Apple doesn't simply make a statement.
The IBM PC and its clones became the standard due to the success of the open nature of the PC. as Wozniak and Jobs were starting Apple computer. Market share of Macintosh peaked at slightly more than 10% in the early 1990s and has since tapered to between 2-3%. because they were developing software for Apple and had much riding on the success of the company. Bill Gates and Microsoft were encouraging Apple to license their OS in the early 1980s. This allows product developers to offer vastly more products for the platform.The PC Industry We can glean Insight into the history and composition of the PC Industry from its eponymous title. the market share of the Apple II fell to 8% while the PC had 26%. PC Share of Market 100% 90% 80% Share of Market 70% 60% 50% 40% 30% 20% 10% 0% ar 76 80 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 78 Ye 19 19 19 19 19 82 IBM SOM Apple II SOM Mac SOM Amiga SOM C64 SOM TRS 80 SOM By 1983. 11 . personal computers were an emerging product. In the late 1970s. Some argue that not licensing the Mac OS was a mistake. The following chart (Reimer) gives an overall view of the major market players since the mid-1970s.
When Apple did not license. Portable music players competing with the iPod include those made by Creative. Apple vertically integrated both the operating system software and hardware completely under Apple. and illegitimate file-sharing services. Yahoo Music. Microsoft provides the Windows operating system to separate downstream hardware producers such as Dell. Although digital music sales are growing rapidly. The Future of Apple Personal Computers – A Shift in Strategy Apple has historically taken a far different path than the traditional Windows and Intel combination. A major point of contention between these services and player manufacturers is the control of a variety of incompatible Digital Rights Management (DRM) schemes. (Bruno) Apple is part to a suit alleging monopolistic practices concerning their market share dominance of players and downloads. iRiver. Samsung. the battle for domination is not over. The other players in the download market are (the revised) Napster. A consumer running Microsoft Windows can choose from a myriad of systems based on the Intel processor. Windows. Apple’s sales are between 66% and 75% of downloads and 80% of music players. (Borland) Analysts at Forrester (Bartiromo) and Gartner (Bruno) validate this. while a consumer running Apple’s OS X must purchase Apple hardware. Microsoft began developing their operating system. Rhapsody. The Online Music Industry While Apple clearly dominates the online music industry. 12 . the Recording Industry Association of America (RIAA) states that digital sales account for only 4% of all music sales. and Sony.
Analysts believe that the Intel-based Macintosh may be able to run Microsoft Windows applications by the end of 2006. (Burrows) In addition to switching processors.By allowing users to run Windows on an Intel Mac. Although such a move would cannibalize a portion of Apple’s own hardware sales. Apple reduced the switching costs for traditional PC users. (Sutherland). Apple cofounder Steve Wozniak criticizes this strategy. but to get it you had to buy our hardware at twice the price. Apple may steal away customers that are willing to pay a premium for a system that runs both Windows and Mac OS X. Apple positioned their computers as an immediate option for the traditional Microsoft Windows user. it would also provide royalty-based revenue that could approach $1 billion annually. Gateway. Past attempts at licensing Apple technology (to IBM.Apple is adjusting this strategy by migrating their microprocessors from IBM and Motorola PowerPC to Intel. That was a mistake. (Burrows) Jobs traditionally sided against licensing Apple technology. Many technology leaders (such as a 1985 letter by Bill Gates to Apple CEO John Sculley) criticized Apple for keeping a closed architecture. He referred to Mac clone producers as “leeches” and he personally killed Power Computing (a Mac clone producer) by terminating their license in 1997. With Apple Boot Camp. Apple in the Living Room 13 .”Whether Apple would be willing to pursue this reversal of vertical integration is unclear. “We had the most beautiful operating system. Apple continues to retain a strategic option to license its technology to clone makers such as Dell. and others) failed on accord of Apple’s rigid demands. users may now use Mac OS X or Windows on an Apple computer.
For example. This iPod (the iPod Hi-Fi) comes with a remote control. Apple increases the consumer demand for music from iTunes. 14 . there is more demand for iPods. (Burrows) Apple is clearly trying to develop a stronger core competency in the entertainment area. Apple just released a “boom box” portable version of the iPod. (Yoffie) Apple is shooting for the digital living room of the future. 124) By selling iPods. Apple engineered the iPod Hi-Fi and designed it with high-fidelity features. Apple had 70% of the legal music download market in early 2005. By placing more musical choices on iTunes (including less popular songs that appeal to niche audiences). (Barney. Instead of forming a strategic alliance.Apple’s iPod and iTunes are a powerful combination that fosters a network style of increasing returns.
Opportunities include combining the animated movie expertise of Disney and Pixar. In 1995. (Burrows.. There are fears that the personality and style of Jobs may conflict with Disney. Jobs went on to invest ¼ of his personal wealth into Pixar. as well as sharing the content of Disney’s ABC or ESPN networks over Apple’s digital offerings. There are concerns about whether these synergies will come to fruition. Later successes included Toy Story 2. Grover. Grover.Strategic Alliances and Entertainment Jobs had the early strategic vision to complement computing with movie entertainment. After founding NeXT. Apple. Jobs. 15 .driven out of office by Jobs in a manner similar to how Jobs drove Amelio out of the CEO post at Apple. Disney’s Desperate Housewives was one of the first television programs available for purchase and download to the newer video-enabled iPod. it became the 3rd-largest grossing animated movie in history. and Pixar. Monsters Inc. Jobs is the strategic link between Disney. and Finding Nemo. and technology is video on the iPod. Jobs took Pixar public and negotiated far better terms with Disney. Grossing $358 million worldwide. (Burrows. Apple. After this success. and that Disney CEO Iger could be “Amelioed” -. and Green) A current example of the fusion between Disney. and Green). As CEO of Apple and Disney’s largest shareholder. The alliance between Pixar and Disney has tremendous potential for economies of scope. Pixar solidified its position within animated movies with the debut of Toy Story. he personally acquired a majority interest in the young movie company Pixar in February 1986.
900 price tag that is nearly twice that of garden-variety rivals.000 threshold. Apple portrays this computer as “Small is Beautiful”.” Apple has only recently entered the low-end (below $500) consumer market with the Mac Mini. and Green) Apple positions its Macintosh computers as higher quality and higher price. it comes encased in a very small and distinctive package. “Apple is struggling to meet demand for its new MacBook Pro laptop despite a $1. HP. the iPod Shuffle was Apple’s first entry into the lower-end ($100 range) of flash-memory-based portable music players. Product differentiation with focused quality and style also extend to the Jobs Pixar – “Pixar's executives focus on making sure there are no ‘B teams. Apple retained designer Jonathan Ive to differentiate their computers from the typical beige box. After Jobs returned in 1997.’ that every movie gets the best efforts of Pixar's brainy staff of animators. storytellers.External Aanalysis Technological Environment Brand Awareness – Style at a Premium Apple’s products are trendy and stylish. Apple and Pixar limit the number of computer products and movies that they sell. and other PC manufacturers are pricing many systems under the $1. 16 . Although the Mac Mini is a base model with few features. and technologists. Dell. Grover. Apple’s iPod (with the trademark white ear buds and simple track wheel) commands a 15%-20% premium over other MP3 players. Ive’s design of the iMac included clear colorful cases that distinguished Apple computers.” (Burrows. (Apple) Likewise.
Microsoft) (US DOJ. Both federal and state governments assert that Microsoft’s dominance blocked fair 17 . This is from a strategic alliance Apple’s iTunes between Apple and Microsoft after Jobs returned in 1997.Microsoft has generally been the focus for government antitrust charges (such as U. the release of iTunes for Windows in 2002 was a key strategic move.S. 2006). Although versions of iTunes exist for both Apple and Microsoft operating systems. service has a technological hook (asset specificity) to Apple’s iPod. v. With “podcast” a household word. Technology and the Digital Lifestyle Apple not only dominates the music player market. Apple depends on Microsoft for a version of Microsoft Office. This decision expanded the potential customer base to nearly all personal computer owners. Macintosh users rely on Office to correspond with companies that standardized on Windows.Interoperability Although Apple competes directly with Microsoft for operating systems. even though Apple only has 2%-3% of all personal computer sales. its iLife suite provides consumers with easy-to-use software for music and video composition. Apple’s Garage Band application makes the recording of podcasts and music very easy. Conversely. there is a persistent threat of legal action by competitors. the iTune’s AAC file format prevents other portable music players (such as iRiver or Samsung) from playing purchased songs. As the most widely used office suite of applications. Regulatory Environment While introducing new technologies. For example. Apple sued Microsoft in 1988 (settled in 1997 for an undisclosed amount) for perceived similarities between Microsoft Windows and Macintosh audiovisual works.
This is an advantage for Apple. Furthermore. For example. of market monopoly and abuse. critical insider information could give Apple’s competitors a jump in producing 18 . Legal threats can surface from somewhat unusual sources. Microsoft’s continued support for Office for Macintosh reduces the perceived level Manufacturers will continue to trespass on Apple’s intellectual property. is the London-based company that owns the rights to the music of the Beatles.com have allegedly posted verbatim content from documents protected by employee non-disclosure agreements. Apple took legal action against tex9. Apple Corps Ltd. Research and development is a key component to Apple’s sustained competitive advantage.competition within the software industry. because its operating systems are a viable substitute for Windows. claiming that it violated Apple’s agreement not to produce music under an apple-based logo. Apple is currently taking legal action against several popular technical web sites for releasing proprietary product research. (McCullagh) rival products. the company tex9 released an open source music program called xtunes that was very similar to iTunes. Sites such as Release of appleinsider. In 2002. Paul McCartney and Ringo Starr recently sued Apple over the use of the Apple logo in iTunes. who then altered the programme and renamed it sumi.
it had had difficulty in sustaining its leadership position.Hardware and Software • Delivery of Entertainment and Media Apple has always been under intense competition within the computer.Every time that Apple had jumped into the lead in a product category during the past two decades.Industry Analysis Using Porter’s Five Forces Model Apple operates in two primary industries: • Computing . “Looking to 2005. software.. and entertainment industries.” We use Porter’s Five Forces Model to understand why Apple’s industries are so competitive. Figure : Porter’s Five Forces Model Threat of New Entrants Bargaini ng power of Supplier Level of Threat in an Industry Bargaining power of Buyers Threat of Substitutes 19 ..
Media and Music. Alternate sources for computer hardware. Google” Rivalry – Microsoft Windows Operating System. Samsung. Windows Media High Player for playing music and video. Various Internet Streaming Radio and Podcasts. Lenovo iRiver. Creative DreamWorks Animated movies. Alternative sources for video. Small. Substitutes XM. The “Next New entrants with disruptive technology.Figure : Summary of Industry Threats (Computer Equipment and Entertainment Distribution) Type and Organization Examples Severity of Threat Entry – Verizon Streaming audio and video with V CAST. HP. Alternative means to acquire music. Cable. Music CDs. YouTube. 20 . Sirius Satellite Radio for music. Threat Linux Competition to Mac OS X Operating System. Google They make everything. High Threat Amazon On demand online services to purchase music (similar to iTunes). Napster. DVD-Audio and SuperAudio CD Broadcast.com Online video. – Moderate Threat XBox. PS2 Entertainment Media. stylish MP3 Players. Dell. Online music sources – alternatives to iTunes Rhapsody Music Store.
” (Linzmayer. CBS. Threat Samsung Microsoft The Big Five BMG. Theatres Suppliers Motorola. EMI. “Apple reaps billions from selling its hit music player. TiVo. For example. Consumer Consumers and businesses may continue to use Refresh Cycles previous-model iPods and Macs rather than upgrade to current iPods. Universal. and Green) Suppliers of Television and Movies. NetFlix. Grover. Sony.” (Burrows. and Warner Disney. peer-to-peer Apple retailers may pressure for lower prices or better terms.Satellite. Will they raise prices and break the dollar per song model? Some in the record industry resent Apple’s distribution model. Strategic Alliance / Supplier of Office for Mac. Will they sign exclusive contracts with other online services? Note that this threat is reduced for Disney / Pixar. the release of the Apple Store in 2001 “infuriated longtime independent Apple retailers that didn’t appreciate Cupertino cannibalizing their sales. Consumers share music using networks without paying for music. or OS 21 . Pixar. Fox. but there are sparse profits from the songs being sold over the Net. Intel. 300) Consumer Consumers or businesses may reduce spending on Attitudes and personal computers or non-essential (potentially Behaviors high elasticity of demand) music players if they fear economic downturns. Sources of music. Sony Buyers – Consumers and Moderate Illegal peer-toThreat peer file sharing Distributors Suppliers of Processors and computer memory. NBC. – High IBM. ABC. iMacs.
free) cost of the software may allow it to overtake Apple and Microsoft. • Music Products: Major online retailers such as Amazon are considering entry into the online music market. especially in developing markets such as 22 . the style and ease-of-use of an iPod) and economies of scope (i. They would prefer to earn higher profits with “variable pricing”. With only two companies (Intel and AMD) producing IntelThe low (often.e. If the major record labels (Universal. there may be provisions that allow future changes in the pricing model. The major music labels dislike Apple’s dollar per song pricing. and Warner) negotiate better terms with new competitors to iTunes.The total industry threat for the industry space that Apple occupies (computer equipment and distribution of entertainment) is a high threat industry. Amazon could present a formidable challenge to Apple. Apple must continue to pursue product differentiation (i.e. offering ABC television shows on iTunes) to maintain their sustained competitive advantage in this industry. Apple may be unable to provide some of the music content that they currently offer. Sony BMG. the most popular songs would be greater than $1. EMI. Although the labels recently renewed their contracts with Apple. China. With a wide internet presence and a household name. (Wingfield) With variable pricing. Which External Threats are Most Significant • Computer Hardware and Software: Open Source software such as the Linux Operating System and Open Office applications threaten both Apple and Microsoft. and less popular songs would be less than $1. (Wingfield and Smith) • Suppliers: The recent shift to Intel processors could present a significant threat to Apple.
Apple should consider additional sources such as Advanced Micro Devices (AMD). Figure: CPU Market Share Additional External Threats Security Apple software. Apple purchasing must now directly compete with HP. Apple could face problems with obtaining raw materials. This would affect future 23 . there is a strong potential for tacit collusion and oligopoly power between these suppliers. A significant exploitation in the future could damage many businesses and households using Apple computers. and Dell. like all large software products. If shortages or exclusive agreements materialize. has security vulnerabilities that hackers may exploit.compatible processors. Lenovo.
24 . Vertical Integration of Competitors Sony is an example of a competitor with a unique position against Apple.customer purchasing decisions. Sony Music supplies Apple with many of the songs for iTunes. Apple’s perceived differentiation as the more secure platform may disappear. Sony also creates a version of the Walkman portable music player that is a direct competitor to the iPod. However. there was documentation of the first known Apple OS X worm. the increased use of Apple computers is prompting hackers to target the platform. because their OS X is mature and stable due to its basis on BSD Unix. If Mac OS X becomes as wide of a target as Windows. In February 2006. their service could present a formidable challenge to iTunes in additional markets. “computer security folks back at FBI HQ use Macs running OS X”. Sony integrated their music system (Mora) into the Sony Walkman. it spreads to other users and deletes files from their Mac computers. Apple enjoys a competitive advantage. By using iChat instant messaging. Sony is exclusively distributing certain songs on Mora. In fact. If Sony can gain additional momentum (such as collaborating with other record labels). (Hall) Mora currently targets Japanese consumers. Sony is attempting to vertically integrate forward directly to the music buyer.
integrated distinctive styling with the multicolored translucent iMac cases. Apple drives to be the best. Porter’s generic value chain model provides a systematic framework for identifying Apple’s utilization of resources. Production.Value Chain Analysis To determine where Apple developed distinctive capabilities. but very difficult to be better. Apple achieved unparalleled performance via 64-bit architecture. Apple’s history is rich with cutting-edge technology development. and redefined intuitive operation with the iPod. and Legal 25 . The Apple operating system is universally regarded as more stable and reliable than Windows. Sales and Marketing. From being the first platform to run an electronic spreadsheet (VisiCalc on the Apple II Plus) to the first to establish a “digital lifestyle” hub (the Macintosh product lines).” Production Because Apple had long refused to license its operating system to external entities. no simply the first. Ives best summarizes the entrepreneurial culture within Apple by saying that “it’s very easy to be different.) are the most comprehensive available to end users. while the desktop publishing software bundles (iMovie. etc. Primary activities for Apple include Technology and Product Design. iPhoto. Technology and Product Design This component represents the true core (no pun intended) of Apple’s capability. the bundled packages of Apple-developed hardware and software became the cornerstone of Apple’s production process. Customer Service. Services. iTunes.
and approves new product development guidelines. and aggressively pursuing hardware and software updates. 290) After years of unimpressive market share growth and cannibalization of a loyal consumer base. PCs. Customer Service How has Apple retained substantial cash reserves during the explosive growth and dominance of PCs worldwide? Apple created a virtual love affair with their customer base by delivering technically superior products (iPods vs.). etc. Jobs personally unveils all new product introductions. Macs vs. A perfect example of this is Apple’s willingness to develop software to run Windows XP on its new Intel-based iMac and then post it online free to iMac users.While every product introduction has not been a success (Lisa. Sales and Marketing We could simply title this section “Steve Jobs”.Although Apple employs many resources and capabilities to support their primary activities (human resources. (Wingfield) In such an environment. customer service merely becomes the realization of receiving a little more than expected. etc. 26 . etc.).). In a departure from their turbulent history. Jobs “entered into patent cross-licensing and technology agreements with Microsoft. Newton. Apple integrated their primary activities so well that it is transparent to the consumer where one activity begins and the other ends. reviews corresponding marketing campaigns. the door to the expansive PC market was now more accessible to Apple than ever before. Since his return as CEO in 1997. Apple continued to command a market premium for producing a “better mousetrap” throughout its history.” (Linzmayer. Apple treats component production as a natural extension of the design process. the most strategically relevant would be Legal Services. other MP3 players. supply procurement.
for example.Legal Services In a market climate of constant change and innovation.’’ 27 . There was a recent attempt to uncover the identities of internal “sources who leaked confidential information about an unreleased product to online media outlets in 2008. Intellectual property is sacred to Apple. in 1991. The dispute over the Apple logo on its iTunes Music Store. use of legal guidance to drive acquisition versus internal development strategies for such products as GarageBand and iMusic have proven highly valuable. continues despite a previously reached settlement with Beatles’ Apple Corps Ltd. (Dow Jones Newswires) While such litigation as Microsoft’s Windows infringement on Mac OS patents has been highly publicized. it is inevitable that the drive to expand product and service offerings will subject Apple to patent and copyright infringement claims.
and forming strategic alliances (i. entrepreneurial culture of Apple. Apple exploited this by resisting market pressures to reduce costs. Such brand loyalty is extremely costly and time-consuming to imitate. we can identify a firm’s strengths. almost cult-like. Brand loyalty – The only way that Apple could maintain the financial vitality described above is via a fanatical. Jobs proved to be a vital component to Apple’s success. rarity. Within this context. inimitability. During his absence (1985-1996). Strengths Technical savvy – Product lines are easy to use and stable. Financial vitality – Cash reserves remained robust and stable despite stagnant market share growth in the computer hardware and software arenas. and/or organization (VRIO) of an activity or resource determine its sustainability as a source of competitive advantage. would not be sustainable without a learning environment tolerant of mistakes.SWOT Analysis Although participation in such activities may add value. however. weaknesses. Apple experienced the 28 . securing the backing of all major music distributors in the support of iTunes). While the pure technical expertise alone is not a valuable or rare resource. opportunities. and threats (SWOT). Ultimately. it becomes very costly to imitate when it exists within the socially complex. Steve Jobs – As discussed earlier. (Mossberg) Such innovation. tightly integrating product packages. affair with its customer base. Recent integration with Microsoft products lines and Intel processors demonstrate ability and willingness to adapt to a diverse customer base. they may not be a source of competitive advantage. the value.e.
Verizon. rare. he is simultaneously a weakness. Weaknesses Market share – Apple has historically been strongest in the US geographical and educational vertical markets. or divesture. the door is now open to develop new and potentially profitable strategic alliances with peripheral component manufacturers (speaker. Jobs is certainly a valuable. Apple may need to burn cash more quickly and succumb to market cost pressures on its products without a strategic innovation. Apple entered the consumer electronics market. TBS. Immediately upon his return.) and media transmission giants (Disney. etc. and delivered seven consecutive quarters of positive earnings to shareholders. By expanding the iTunes concept to downloadable mobile phone features and movies (podcasts). Steve Jobs – For virtually the same reasons Jobs is a strength. The apparent absence of succession planning coupled with a lust for the limelight positioned Jobs as Apple’s single consciousness in the eyes of consumers and shareholders. Opportunities Consumer electronics – With the startling success of the iPod and iTunes. etc. home stereo. integration. he replaced most of the Board of Directors.most turbulent (financial and innovative) timeline in its history. 29 . With the educational market facing tightening budget constraints and the US approaching a PC saturation point. As such. and hard to imitate resource that Apple fully exploits. The aggressive drive to bring innovative visions to life was noticeably absent and painfully felt (especially by shareholders) during his departure.). pruned and focused the new product ideas.
An example is Japan’s Aozora Bank Ltd.. the threat of imitability (cloning. etc. who is replacing 2. (Wingfield) Apple must establish themselves as a credible player in business desktop applications to overcome the “desktop publishing” stereotype. Competition – This threat occurs primarily on two fronts: hardware/software and consumer electronics. etc.). They did this to gain a level of stability and reliability in their business applications that PCs failed to provide. pirating. The Apple records claim against iTunes remains unresolved. As relative newcomers to the consumer electronics arena. Apple entered the high-volume business environment traditionally dominated by Windows-based PCs. PC For the same reasons discussed in the opportunities section. As long as operating systems and support software packages continue to converge and remain relatively easy to imitate. PC hardware and software market growth – With cross-licensing of operating system platforms in place. home entertainment systems. present and future lawsuits are inevitable.) increases. The introduction of Intel-based processors prompted businesses to replace PCs with iMacs. patent and copyright infringement risks remain high. Threats Legal risks – In a market that literally changes at the speed of thought. 30 .300 PCs with iMacs. will Apple retain a competitive advantage as they diversify their offerings (speakers.
Calif.. Macintosh usage is rapidly growing in many large corporations. Macintoshes have wormed their way into many large corporations. our users are purchasing more Macintoshes than IBM microcomputers. Use of the computer has progressed well beyond the test phase and a few corporations have installed thousands of Macintoshes. Mass." said Michael Pearson. such as E.Influx of Apple’s Mac Challenges Mis to Cope In the heart of large companies. Northern Telecom Inc. data center managers are wearingly warding off a second band of corporate renegades. The renegades are trying to break down mainframe walls and build new applications replete with icons and pretty pictures. "Right now. have all blessed the Macintosh. and Electronic Data Systems Corp.Despite the tag. a corporate advertising department may have used the microcomputer to produce graphic presentations.. General Electric Co.When the machine was introduced in the mid-1980s. the director of technical operations at the New York Daily News in New York. "Macintoshes were initially purchased to address a specific niche.. Right now." he said."Once other department saw the machine's output. the Macintosh from Apple Computer Inc. John Wardley. a senior analyst at International Data Corp. Martin Marietta Corp. most managers viewed it as a small business system or a home computer.. a market research firm in Framingham. After finally coming to terms with the IBM microcomputer revolution.I.. Conglomerates.. du Pont de Nemours & Co. said. For example. of Cupertino. interest spread. 31 . MIS departments are now being asked to assimilate a second microcomputer standard.
in Bridgeport." Removing Barriers for Users Analysts reported that another reason for acceptance was aggressive Apple actions. Conn. "We spend much less time training Macintosh users than we do training IBM microcomputer users. Quickly.What is driving Macintosh acceptance? Supporters agree that it is the product's easy to use graphic interface. "Once a user sits down and works with a Macintosh. "Apple removed barriers that corporations erected to keep Macintoshes out of 32 . so other managers immediately want to produce the same quality output. "An employee will use a Macintosh to generate slides and charts for an important presentation. they never go back to an IBM Personal Computer." proclaimed Price Collins." GE's Collins explained. use of Macintoshes spreads through the company." noted Pearson at the New York Daily News.The ease of use features translate into substantial savings for many corporations. a programming manager at General Electric Co. A survey commissioned by Apple found the average cost of training an IBM user was $765 compared to $294 for a Macintosh user. Studies comparing Macintosh and IBM microcomputer training costs found that it takes twice as long for an IBM user to learn how to operate his machine and three times longer for the user to understand how to opeate a second application.The Macintosh's graphics capabilities also offer many middle managers their own strategic weapons in the battle for upper management's attention. "The output is far superior to anything generated on an IBM microcomputer.
a Wellesley. "Most users purchase a Macintosh to more efficiently do their own work. and Ashton-Tate of Torrance. CAlif. Application Preferences In a survey of 1. reported that word processing was the Macintosh's most widely used application--named by 54% of respondents. in San Jose. Microsoft Corp. word processing. Lotus Development Corp. Apple delivered hardware so users could run those applications.. the response was as follows: 65% used spreadsheets. such as spreadsheet and word processing. 57%. there are nuances in the types of applications employed by IBM PC and Macintosh users.users' hands. database management systems. Users are primarily working with traditional microcomputer applications. Calif.On the IBM Personal Computer." noted Michael Masterson. offers the three bestselling applications: Excel. Few of the companies that dominate the IBM microcomputer software market have had much success plying Macintosh wares. a microcomputer systems specialist at Arthur Young & Co. a market research firm in San Jose. Calif. Mass. Macintoshes have been relegated to personal productivity tools in most companies. and spreadsheets placed third with 38%. the director of marketing and technical services at The Support Group Inc. For example. Mass. However. Quickly. a spreadsheet.. 33 ." To date. have had little success in the market.. Graphics applications followed with 46%. Dataquest Corp. Wash. The most notable exception. microcomputer reseller. Redmond. "One of the initial concerns was the inability to run MS-DOS software on a Macintosh..216 large companies (each having more than 500 employees)... and 35%.. of Cambridge.." said Richard Kollmeyer.
"Thus.Word. more than 50% of recent customers buying Macs in Apple retail stores are first-time buyers. it's because Microsoft sucks. It turns out the success of the Mac in recent years isn't because of Mac OS X." Bachman says. a word processing package. "Thus far. and Works. and startup times for Vista have been known to be much slower than the Mac OS X." 34 . or Intel CPUs. user satisfaction ratings for Vista have been weak. or the iPod Halo Effect. word processing and database application. AppleInsider reports on a research note from BMO analyst Keith Bachman that could have been written for Crazy Apple Rumors—if they hadn't gone ghost-site on us. an integrated spreadsheet. rather.
In the near term. If so. or about twice the expected growth of PCs. there's nothing "recent" about half of Mac buyers in Apple Stores being new to the platform. are rating AAPL as "outperform" with a value in excess of $200. Further. but not in the way Bachman suggests. the surge in Mac sales started around the time Apple transitioned to Intel CPUs.5 million Macs sold for the quarter just ended. very slowly. is expecting the company to get a boost from the iPhone. well. Bachman. Apple could end up with as much as four percent worldwide market share if that happens. but you can only go so high in a down market. It's been that way since before Vista was released. no matter how bad Vista boot times are. Ironically. and others. Prior to the release of Leopard and the discontinuation of Boot Camp as a separate product. his rationale is.600 for a MacBook Air with SSD. Setting aside the image of some grandma dropping $2.4 to 2. zombie PALM is stumbling along. like just about every other analyst and Apple nerd on a message board.While it's great that the six-figure analyst projects 2. as the chart by the four-figure analyst clearly shows. 35 . one could argue that Mac sales are rising because of Vista. This is after the company reported record profits during the last quarter and a couple of million new subscribers. Bachman further expects Mac sales to jump around 25 percent in 2009. which is pretty good compared to some competitors in the smartphone market. Sure. but RIMM is down nearly 10 percent. AAPL is actually down about 5 percent. Maybe. Bachman. the real issue is the troubled economy. Since the unveiling of the iPhone 3G at WWDC. it hasn't happened yet. crazy. down 20 percent. While the problems of Apple's competitors can be partially blamed on fear of the iPhone 3G. Apple reported huge downloads of the program that let Mac users launch Windows Vista very.
"Apple is firing on all cylinders and we have some incredible new products in the pipeline for the coming year. Sales of PCs also rose to over a million (43% rise) following the success of the new Mac mini and new PowerBook notebook computers. Apple has been able to maintain a fast inventory turnover rate. Apple Beats Competitors at Inventory Turn Over Despite a weakening economy and a need to meet customer demand. according to data from UBS. which showed the popularity of the iPod in Europe and Asia. however.25bn. is averaging 15 days of inventory. at $28 per share as against $34 per share over the latest period and also expects revenues to remain largely flat at $3. more than five million iPod music players were sold. Steve Jobs was delighted with the figures for the first quarter.3 million iPods were sold over the period. Intel. The Mac and iPhone maker is sitting at five days worth of inventory on any given day. The firm's net income raised by a massive 530% to $290m compared to €46 over the same period in 2008. and HP is sitting at 32 days. and D-Link is sitting on a staggering 131 days worth of inventory. Apple said it expected earnings per share to be lower in the third quarter. is showing a much slower inventory turnover rate at 89 days.24bn after good growth in all product categories.Apple profit makes huge rise due to iPod success In the first quarter of 2007. 40% of the sales made were over seas." he said. A number of approximately 5. for example. Apple's quarterly income has increased six-fold largely due to the success of the device. Other PC makers are having even more trouble matching Apple's inventory efficiency. However. 36 . Lenovo. Revenues rose 70% to $3. beating Dell's seven days worth of inventory. which is an increase of 550% in the same period in 2008.
but it has transformed its parent company Apple into an entertainment giant. as well as pricing strategy across these segments. it looks like Apple is managing inventory better than its competition. Mac mini and Mac Pro updates. and we will take a deep look at several aspects of Apple’s marketing of this exciting new product. Last we’ll discuss communications. 37 . promotion and advertising.Apple's quick turnover rate may have been due in part to preparing for its just announced iMac. we’ll take a look at Apple’s ongoing efforts to make iPod synonymous with hip. While maintaining a higher inventory level can help a company cope with sudden increases in demand. we’ll tie back to the Apple brand to dig deep into the notion that iPod’s stunning success stems from it being specifically not an MP3 player. and how cool we all can be if we are part of that change. as well as an interesting shift in retailing that the iPod has enabled. the iPod is not merely an MP3 player. It is a symbol which encompasses many grand ideas. ideas that involve world change. Like Magritte’s surrealist painting of a pipe with the caption Ceci n’est pas une pipe (This is not a pipe). it has changed not only the way people listen to music. We’ll also discuss exactly what customers are buying when they buy an iPod. For now. Nearly ubiquitous. and keeping inventory low helped assure that there would be fewer of the previous model machines sitting on store shelves. it can also show a company's inability to adequately gauge market interest in their products. segmentation strategies that may have been employed and why. Throughout. possible research findings that supported their approach. In order to understand how this change came about. The company released new desktop computer models on March 3. Apple’s strategic planning. from the iPod itself. IPod: The Marketing of an Idea Project Apple’s iPod has taken the world by storm.
both for the company and the world. announced that the company which he founded would no longer be known as Apple Computer. Inc. and archrival Microsoft with its dubious counterclaims of having pioneered the concept of Windows. renowned CEO of Apple. Apple made a name for itself by being instrumental in ushering in the home PC revolution. Battles ensued over the years. let’s take a quick look at the history of Apple. comprising an entire marketing ecosystem which nurtures that idea will be the subject of this paper. This was at a time when Microsoft users were still struggling with text-based DOS commands. pull-down menus and simplified computer control via the mouse. transitioning itself from a computer company slugging it out for a meager share of an increasingly competitive hardware and software market. a company already firmly rooted in several notions that allowed this transition to make sense. and yet the commercial success of Microsoft has served to rewrite history to some degree. Inc. On January 9th. Its new name would just be Apple. Frustrating to anyone who owned a Mac back in the 1980’s is the knowledge that Apple did indeed pioneer the windows metaphor as a distinct feature of its operating system.Apple’s careful and deliberate exploitation of this concept. but no matter whose side you were on. Apple was single-handedly responsible for this revolution by virtue of the fact that it created radical new features such as windows-type graphical user interfaces. to a business that promoted an entirely new concept: the digital lifestyle. The history of the PC revolution is a history of war between Apple. Before we dig down into what this radical shift entailed. For millions of its aficionados. 2007. Steve Jobs.1 This seemingly trivial change represents a fundamental shift with deep implications that were the result of many changes Apple had engineered over the past six or seven years. a number of losers that no one remembers any more. by the late 90’s it was clear that Apple was not gaining any ground whatsoever as a 38 .
and members of the urban hip known as The Digerati. and part of a community of like-minded people. huge numbers of consumers. MP3 players were initially seen as an alternative to portable CD players. was about to leap ahead into a new Golden Age. Though the conference attendees may have nodded knowingly. Apple’s market share was relatively solid. and there were still technical glitches such as 39 . Apple posted a $200 million loss3. They knew they paid more for to breathe this rarified air. even if it was comparatively small. were still quite new. Apple’s market share was tiny compared to the Redmond behemoth2 however Apple users were an ardent group of graphic designers. Even so.computer and software manufacturer. creating digital movies and sharing photos through networks of computers—were not widely practiced. Undeterred. few understood what he was talking about. by the end of 2000. They only held a couple hours worth of music. in January 2001. He announced that personal computing. and no one yet knew exactly what to do with them. First. but they didn’t seem to mind. definitely cooler. except perhaps by the most innovative of consumers. particularly the business community. with a downturn in the worldwide demand for PCs. as MP3 technology. Any such habits were still in their domain. In fact due to many external events. college students. Jobs opened the annual Macworld conference in New York City with his usual brand of enthusiastic vision. Launched in 1998. This was a group of consumers who saw themselves as different from the mainstream. and MP3 players specifically. In these segments. clearly preferred Microsoft. and analysts were not optimistic about Apple’s future. Apple’s position was in clear threat. far from tailing off into irrelevance. To support his vision he introduced several new Apple products that were intended to align the Mac with this new “digital lifestyle”4. for at this point habits which would later be hallmarks of the digital lifestyle—listening to music online.
this company’s guiding principles have remained remarkably consistent. this type of thinking seems to miss exactly what it is that Apple has always sold. and consumers through its innovative hardware. the concepts and technology existed. Interestingly this is not too different from the situation that existed when Apple first entered the PC market. accepting and capitalizing on the fact that computer products enjoy a short product life cycle. The company’s commitment in 2006 differs from their commitment in 2000 only insofar as the addition of the words “portable digital music”: The Company is committed to bringing the best personal computing and portable digital music experience to students.transfer times and clumsy user interfaces that cast these new gadgets firmly into the realm of the geek. but they weren’t popular. services. software. and Internet offerings. peripherals.6 Many have criticized this approach. but it isn’t a good business strategy. 40 . educators. In 1998 as today. and characteristically they wrap it all up in a super-hip package that makes consumers of their products feel as if they belong to an exclusive community. but more to the point. irrespective of the fact that so much has changed. businesses. creative professionals. In this regard. Apple’s stroke of strategic genius was to create a way to simplify and popularize them through cool and innovative design. particularly the more conservative elements within the business community whose view is summed up by Business Week who wrote when iPod was first introduced that “a few might pay a premium for good design.”7 Those same people may today wish they had at least bought a few shares of stock as a hedge against possible shortsightedness. and it can still be seen today. Apple popularizes difficult technology by making it fun and intuitive. Apple’s strategy has been to release cool new products frequently5. This approach became foundational to their business strategy as well as their corporate culture. government agencies.
Norway. buyers have strengthened Apple’s competitive position because at sales of over 100 million units. Any competing product will certainly be judged against the gold standard of iPod. As it stands there is simply no substitute for an iPod. Not coincidentally. buyers have shown that they will pay a premium. promotion. advertising. Apple continues to mitigate these risks by keeping it hard to substitute. and this gets to the heart of the matter. most notably mobile phone manufacturers. Denmark and Sweden challenged Apple in court over this limitation of their product. iPod is the industry standard for MP3 players. and 70% of the market15. and that for the most part. In this sense. there are no ready substitutes. MP3 players from today through forever won’t be strictly judged by their technical merits. and accessory ecosystem. Nokia has announced that it is setting up a rival to iTunes in its purchase of the American digital music service Loudeye. This causes a significant problem for competitors when the global conversation about MP3 players invariably leads to all things iPod. and because of Apple’s early entry and subsequent early lead. then iPod’s halo effect will help Apple outmaneuver such threats. but rather on their value as a style accessory.Consider that last year. handsets are one of the explosive new growth areas for portable digital music. 41 . a case which Apple’s competitors are following with great interest14. that iPod symbolizes more than just another MP3 player. which are being developed now in response to the competitive onslaught. In order to be part of the phenomena. Songs downloaded from the new Nokia subscription service will play on any digital music player. Apple helps consumers judge the efforts of its competition against a standard they themselves invented. This is reinforced consistently across the technology. In a mesmerizing feat of mental acuity. Whole industries want a piece of Apple’s pie. will gain a critical head start. If Apple wins all the chips. and future product offerings such as iPhone. including iPod.
and they didn’t get there by accident. and e. the Web revolution. too. which amused Bill Gates. impressing your friends. but they knew from the beginning where they were going. iPod was only compatible with Macs. From that we can backwards-engineer possible research findings. Looking at the Christmas retail season of 2001.Digital Corp. We can reasonably infer that Apple did plenty of primary and secondary research about the types of people who would be interested in iPod. which retailed for less than $100. conclusions. we see a story that practically draws for us a perceptual map whose axes are price and technical capability. they positioned the product’s physical attributes in a way that was secondary to its contribution toward bettering the consumer’s world. and continued to do so even as late as 2005 when USA today quoted him as saying: I think you can draw parallels here with the computer — here. Creative's Nomad Jukebox was selling its recently introduced 6GB hard drive for about $250. three months after iPod's release. they charge for this love. that by the way happens to be beautifully designed and technically superior to the competition. at this time. Apple was once 42 . iPod’s $399 price tag for a mere 5 GB of storage doesn’t seem to make sense16. was touting its walloping 10GB palm-size Treo 10 for $ 249 Treo. What’s not to love? Of course. and recommendations. any potential entrant has to now offer an augmented product that delivers an entire package of benefits far and above the simple core attributes most tech companies specialize in. Undoubtedly they owned mountains of data from their over twenty years being at the epicenter of the PC revolution as well as their relevance birthing its child. A tool for building high self-esteem. Against these contenders. The leading device at the time was Sonicblue RioVolt MP3 CD Player.Thanks to iPod. Accordingly. and crafted their message accordingly. Using laddering in interviews perhaps revealed that this new breed of high tech consumer had desires far and above the technical. Also. and being part of a semi-exclusive club.
which as noted was practically laughed at. in all its facets. the Nano which is midrange and a shuffle which is inexpensive and small. the lack of a product didn’t cause the alarm bells to go off among key stakeholders in the distribution chain. To go back to that time is to recall that Apple faced numerous legal issues relating to copyright infringement. Building these findings into a psychographic profile and consistently speaking to that profile as an individual would comprise the remainder of the marketing effort. whose future position was in grave threat. so there’s no doubt that the entire iPod strategy and product development were well into their final phases. did releasing different products risk dividing the total market. In other words. since the market is heterogeneous. like with the iPod today. But. and then lost its position.17 It is our contention that the initial release of iTunes 1. was a Trojan Horse that delivered quite a bit of business intelligence to Apple.extremely strong with its Macintosh and graphic user interface. the segments are identifiable and they are divisible. or did it create new opportunities for sales? Greg 43 . and who would have certainly put the brakes on if they had seen what was coming down the tracks. iTunes usage in that first year may have served as the final checkpoint. Finally. This segmentation strategy appears to make sense. but how many psychographics were there? What factors did Apple take into account when deciding whether there were viable segments out there? It is clear today that Apple is marketing different products to different groups of people: the flagship iPod video which is expensive. validating Apple’s contention that a successful MP3 player—one that would truly leverage the potential of the technology—would need to find a way around the clunky process of buying and ripping CDs. Releasing iTunes before there was a correlating MP3 player gave Apple a window to negotiate Digital rights Management agreements without the success of iPod hanging over their head. We know that they released it about one year before iPod was released.0.
Apple’s VP of hardware marketing in 2005 noted in reference to the Nano that "This is a different product and it will take the iPod to a different market. operations manager for Mac systems engineering at the U."20 By the following year. it 44 . Also being upgraded right alongside the product was its life-giving infrastructure iTunes.Joswiak. Extreme iPod published a report at about the same time that suggested that the strongest demand for the iPod shuffle was likely to come from new users. and the iPod shuffle. simply because of its ubiquitous presence. An Apple for your enterprise? Macs have made their way out of the art department and into the offices of accountants. “We’re seeing more requests outside of creative services to switch to Macs from PCs. New-to-iPod users tell us the price points and ease of use are attractive. iPod had moved into its sixth generation. which makes for good market segmentation on Apple's part. salespeople. one which couldn't afford the price of the normal iPod 18. which must now be characterized as having a broad scope. We believe that in the beginning Apple’s segmentation strategy focused on narrow markets and a unique niche because in 2001 it was early adopters who might be interested in MP3 players. manufacturing planners and top executives. and may be in short supply until next quarter” 19." That it was a good move was lauded by Merrill Lynch’s analysts at the time when they concluded. an iPod Nano with a color screen.” notes David Plavin. now able to offer and organize different types of media. However iPod also created a whole industry.S. It may be a unique niche—it certainly was at the time— because they intentionally did not go for cost leadership. with a line that featured the iPod video player. “The iPod shuffle is likely to outsell all Apple's other iPod models combined. "Existing iPod owners may prefer the larger capacity and display of existing iPods.
For it managers across all industries — even those with a well established and stalwart Windows user base — the question is no longer whether you’ll need to design and support a Mac computing strategy.3% of the operating systems powering the machines that accessed Net Applications’ metric network. Coming through the door in those backpacks are a slew of consumer technologies and wireless personal productivity tools — think iPhone.division of Public Group SA.. (AWC) in tacoma. Mac OS X’s share has increased by 3 percentage points. Wash.’s Windows.2% of the computers that accessed the 40. the biggest one-month gain since May. according to data collected by net Applications. business adoption of Macs tripled last year. continued to slip in market share last month. You may already be a little late to the game. Overall. Windows accounted for 90. 2008. Apple’s operating system ran on 8. What’s more. Auto Warehousing Co. Microsoft Corp. when the operating system fell by nearly the same amount from July.000 sites monitored for clients by Net Applications. this will surely accelerate as companies hire more Gen Y workers. a drop of 0. In september. According to Forrester. Some users are finding that switching to Macs can even save money — lots of it. That month was the last time that Windows maintained or grew its 45 . the only question is how quickly. Apple Inc.’s Mac Os X market share passed the 8% mark for the first time. The Mac’s share of the operating system market was up over August’s by nearly four-tenths of a percentage point. In the last two years.4 percentage points from August. a gain of 58%. meanwhile. a global advertising conglomerate. is pulling the plug on all Windows-based PCs and powering up Macs to execute virtually all of its revenuegenerating operations.
which for the most part are platform-agnostic.5 million cars a year. Indeed. “this is more of a strategic choice for the future.” he adds. Switching to Macs will save the company $1. we pick up additional functionality that we don’t have today. that’s what it would have cost to upgrade software licenses if the company had stayed on PCs. in contrast. Since the beginning of this year.” he says.82 million over three years.S. the total cost of switching to Macs was $335.” For all the details. As the largest full-service auto processing company in North America. and the trend toward cloud computing is reducing the importance of the client platform to access both internal and external resources. and Canada and handles 5.5 percentage points in market share. the rise of virtualization. AWC has 23 sites across the U.share. has also cleared the way for greater corporate Mac use. Frantz also says Macs are ready for business prime time. 46 .” says Frantz. “By investing in the Apple platform. see AWC Switches to Mac and The Mac Switch Revisited. We’re at a point where we can deploy it companywide. according to Cio Dale Frantz. “what we’re finding is this stuff just works. experts say the Mac fits much better than it ever has before in the enterprise. “on the whole. as well as Apple inc’s shift toward standardized PC components. Windows has lost 1. other key factors driving Mac adoption include the rise of Web based computing via software-as-eservice applications.000.
sales more than doubled since (see graph below). representing a 61% increase over the 5. 47 . This dramatic shift in performance is primarily due to the increase in sales from the iPod product line. Net income increased by 41% to $410 million.2 to $4. In the most recent earnings announcement.3 million units sold in the 2nd quarter of the prior year. For the 3rd quarter. Apple sold 8. “…we expect revenue of about $4. The iPod product line continues to drive the financial performance of the company. which is a 34% increase over 2 nd quarter 2007 results.Financial Analysis 2nd Quarter 2008 Apple’s financial performance continued to strengthen over the last several quarters.5 million iPods.4 billion” which will push total sales above last term’s annual numbers. Net sales for the 2nd quarter grew to $4. Apple’s year-to-date revenues total just over $10 billion and earnings total just under $1 billion.36 billion. Historical Performance Although sales remained stagnant during 1998-2002. CFO Peter Oppenheimer stated. In the 2nd quarter alone. Mac sales showed slight growth of only 4%. Apple reported significant growth in net revenues driven by the strong performance of its iPod product line.
As we see from the chart above. performance 48 . However. Apple’s performance has been inconsistent over the last 20 years compared to the S&P 500.Apple Revenue Growth 16000 14000 Net Sales 12000 10000 8000 6000 4000 2000 0 1998 1999 2000 2001 2002 2003 2004 2005 Stock Price Performance Another interesting way to consider the financial performance is to evaluate how Apple’s stock price performed against the market and against its main competitors. It also has not performed at the same level as its main competitors. Dell and Microsoft. improved since 2003.
44 % 3.89 22.88 28.75% Dell '08 15.63 Microso ft '08 19.56 % 17.43 % 5. Liquidity and Leverage Measures Apple historically held very little long-term debt.13% 36. The table below compares Apple’s liquidity measures to their competitors.51 Indust S&P ry '08 500 11. In terms of return on assets.63 % 1.11 % 3. Apple attributes this decline primarily to price pressures.98% 8.61% 6. (1st Quarter 10Q) This will continue to affect performance over time.09 In reviewing Apple’s 1st and 2nd quarter 2008 earnings releases.56% % 9. especially in the iPod product line. their industry.75% 22. During the period of strong financial performance. Apple’s ability to maintain the momentum it built in the marketplace will control the speed with which erosion will occur. 2006 2007 2008 Return on Assets Return on Equity Profit Margin P/E Ratio 1.33 % 11. return on equity and profit margin.39 % 18.31 % 6.36% 26.57% % 33.42 % 67. Apple strengthened financially and now has similar ratios to that of its competitors and the overall computer hardware industry .61% 19. and the general market.01 % 1. 49 .32 13. Apple accumulated cash. gross margins dropped slightly. However.58 31.Profitability Measures Apple substantially improved in its key measures of profitability in the last few fiscal years. This strengthens Apple’s position should they choose to access the capital markets.
5 2 007 2.85 1. there have been dramatic changes to Apple’s product sales by category.31 In the last several years.88 1. remained stable.6 2 008 3 2. dropping from 79% to 45% of sales. and peripherals.82 1.59 Ratio Product Unit Sales 2 006 2. not their global computer market share (which remains stable in the 2-3% range). The combined sales of computers (desktop/notebook) lost share. iPods. This drop merely represents a shift in Apple’s product mix.5% compared to 2.81 1. you see dramatic differences in the product mix for Apple. notebooks.11 2. Meanwhile. (Hoover’s) 50 .08 Industry '08 1.9 Microsoft Dell '08 '08 2.5% for 2002. Apple breaks its unit sales into four primary categories: desktops. The graph below shows the product mix for Apple in 2002. Note the domination by desktops and notebooks and the small contribution by iPods. sales of peripherals (including wireless connectivity and networking solutions).Current Ratio Quick 2. 2002 Product Sales Desktops Notebooks iPod Peripherals 2005 Product Sales Desktops Notebooks iPod Peripherals When you compare the same graph for 2005.47 2. The iPod sales now account for 32.45 S&P 500 1.
In the 1 st quarter 2006. On a percentage basis. Sales by Region Segment 16000 Total Sales 14000 12000 10000 8000 6000 4000 2000 0 2002 2003 2004 2005 Other Retail Japan Europe America's Year Net sales in the retail segment grew to $2. we developed a pro-forma income statement and extracted free cash flow. respectively.35 billion in 2005. all of the segments had solid growth. (1st Quarter 10Q) Although the retail segment was the only segment to realize growth as a percentage of total sales. In the Americas. Sales in Japan and Europe grew by 92% and 47%. sales growth continued in the retail segment to $1. (1 st Quarter 10Q) Market Value Analysis We used Discounted Cash Flow (DCF) analysis to assess the appropriate equity value of Apple.Operating Segments Apple breaks its sales into five “operating segments”.1 billion (a 91% increase over the same period last year). sales increased 65% and continued to represent approximately 47% of total worldwide sales. We then discounted these cash flows using 51 . only the retail segment appears to be outperforming the others. The chart below shows the sales by segment for each year 2002-2005. This increase was due to growth in the number of stores (from 101 to 135) and to a 41% same-store sales growth. To complete this analysis.
84 10. 20%.96 Pro-Forma Income Statement We made several key assumptions in compiling a pro-forma income statement. We do not believe that the growth in iPods is sustainable for the long-term.a calculated Weighted Average Cost of Capital (WACC). respectively.46. First. and 10%.46 5. We then projected a declining rate of growth in sales for the next four fiscal terms of 30%. We also used the percent-of-sales method to calculate cost of goods sold. The below chart summarizes Apple’s cost of equity. We used the Capital Asset Pricing Model (CAPM) to calculate the cost of equity. to complete the estimate for the 2006 data. 15%. projected to be 1. Cost of Equity/WACC Risk Free Rate Market Risk Premium Beta Adjusted Apple Risk Premium Cost of Equity/WACC Note 10 Yr Treasury (Analysis) From Google Value 5. CAPM consists of a risk-free rate. we merely annualized the earnings for the first two quarters. The yield on the 10-year Treasury is the standard for a risk-free rate.12 4 1. research & 52 . and a company Beta. Apple’s WACC equaled their cost of equity since they carry no long-term debt. we used the average return that an investor would require for an investment with average risk. We used data available online to determine Apple’s Beta. To determine the market risk premium. a market risk premium.
5 0 25750 1451 4715 4352 430 1265 3517 4.25 28325 1596 5186 4787 473 1391 3869 4.A Operating Income Interest Income Taxes Net Income EPS Shares Out (000's) 2005 13931 9888 534 1859 1650 165 480 1335 1. we are able to discount cash flows back using half-year PV factors (we are through the first half of 2009). which is slightly above the industry growth rate of 5. Given WACC.61 2 2006 20216 14353 809 2628 2426 239 705 1960 2. Net Sales Cost Of Sales R&D S.14 848.612 2010P 39894.56 848. 53 . Thus. free cash flow will equal net income plus depreciation. SG&A. 8 18659 1051 3417 3154 311 916 2548 3. and interest.60 848.57 848.6%.31 848.G.00 848.612 2009P 36267. As the table below shows. the mid-term earnings growth is positive. We applied the 2005 tax rate for all future periods.61 2 2007 26280.61 2 2008 31536. We also assume that there will be no significant changes in capital expenditures and net working capital.development.612 Projected Free Cash Flow and Equity Valuation We assume that Apple will continue without long-term debt. We calculated our terminal value using a perpetual annual growth rate of 7%.9 6 22391 1261 4100 3784 374 1100 3058 3.
00 239. Given their particular market condition.7 8 10.86 3945.0 0 428.0 0 372.96 0.3 6 2008 3058.89 3430.96 0. In each of these strategies.96 0.7715 2359.96 0.3 2 2010P 3869.9 9 Terminal 0.6 68619.89 54 .0 0 310.96 0.4 2 FMV of Invested Capital 79890.3 2 Given intrinsic equity value.626 109615.9505 1862. we examine what Apple did historically and then discuss alternatives for Apple’s future.626 2421.42 11270.00 2199.Free Cash Flows Net Income Depreciation Free Cash Flows WACC PV Factor Terminal Value PV FCF Sum of PV of CF PV of Terminal Value 2006 1960. Equity Value Total Shares (000's) Value (000's) Value/Share Current Price (5/5/06) Strategy We can describe Apple’s strategy in terms of product differentiation and strategic alliances.0 0 471. we estimate the per share stock price.2 5 2009P 3517. 848612 71629000 $84 $71.90 68619.3 2 Less Existing Cash 8261 Balance Intrinsic Value of Equity 71629.98 2007 2548.8 9 10.8 6 10.78 4340.70 2858. Apple appears undervalued.695 2444.8565 2182.7 0 10.00 10.
Apple pioneered the PDA market by introducing the Newton in 1993. VP of Worldwide Product Marketing for Apple. When reviewing the history of Apple. This marked the beginning of Apple’s new strategy of making the Mac the hub for the “digital lifestyle”. “We are going to do for 55 . iMovie. In reference to Apple’s recent advancements. The matrix is as follows: Professional Segment Desktop G3 Portable PowerBook Consumer Segment iMac iBook In 2001. Philip W. Jobs said. Schiller. Later. and iTunes. For instance. a simplified product mix strategy formulated by Jobs. In 2003. it is evident that this attitude permeated the company during its peaks of success. in spite of protests by independent Apple retailers voicing cannibalization concerns. Apple hit another important historical point by launching iTunes. Apple continued their innovative streak with advancements in flat-panel LCDs for desktops in 2002 and improved notebooks in 2003. and updates following 1999. “iPod is going to change the way people listen to music.” He was right. Apple then opened its own stores. iPhoto. stated. This completed their “product matrix”. central to the “digital lifestyle” strategy. It released a highly stable operating system in 1999. Apple had one of its critical points in history in 1999 when it introduced the iBook.Product Differentiation Apple prides itself on its innovation. and updates following 1998. Apple introduced the easy-to-use iMac in 1998. Apple released the iLife package. This move allowed Apple to have a desktop and a portable computer in both the professional and the consumer segments. containing improved versions of iDVD. Then Apple introduced the iPod.
The cost of product differentiation acts as a barrier to entry. Product differentiation is a viable strategy. there is a reduced threat of rivalry among industry competitors. Sony Entertainment. This allowed iTunes Music Store online to offer over 200. as we will discuss in the next section on strategic alliances. Time will tell whether that happens. Universal. Apple released the world’s fastest PC (Mac G5). thus reducing the threat of new entrants. which had dual 2. and reputation.000 songs at introduction. links with other firms. there is a reduced 56 . EMI. it also must bear the costs associated with overcoming the differentiation inherent in the incumbent. There is economic value in product differentiation. thus reducing the threat of substitutes. A company’s differentiated product will appear more attractive relative to substitutes. Apple established a reputation as an innovator by offering an array of easy-to-use products that cover a broad range of segments. a company with a differentiated product can pass that cost to its customers. Those that are relevant to Apple are product features. especially in the case of monopolistic competition.digital creation what Microsoft did for the office suite productivity. The primary economic value of product differentiation comes from reducing environmental threats. product mix. Apple continued its digital lifestyle strategy by launching iTunes Music Store online in 2003. In 2003. its links with other firms have been limited. obtaining cooperation from “The Big 5” Music companies—BMG.” That is indeed a bold statement. Warner. thus reducing the threat of suppliers. Since a company with a differentiated product competes as a quasi-monopoly in its market segment.0GHz PowerPC G5 processors. Not only does a company have to bear the cost of standard business. Since companies pursue niche markets. especially if the company exploits the conceptual distinctions for product differentiation. However. If suppliers increase their prices.
the strategy is rare. They are as depicted below. 57 . Managerial freedom within broad decision-making guidelines will resolve the institutional control dilemma. With all of Porter’s Five Forces lower. a company may see economic value from a product differentiation strategy. There are four primary organizing dilemmas when considering product differentiation as a strategy. there must be an appropriate organization structure. A company attempts to make its strategy a sustained competitive advantage. a product differentiation strategy that is economically valuable must also be rare. and the company must have the organization to exploit this. A U-Form organization resolves the inter-functional collaboration dilemma if there are product development and product management teams. Combining the old with the new resolves the connection to the past dilemma. If there is no direct. Organizing Dilemmas Too Little (No Collaboration) No learning makes implementation difficult Too Little (No History) Lack of Direction in Innovation Too Little (No Sight) Fail to Exploit Historical Advantage Too Little (Chaos) Lack of Direction in Innovation Inter-Functional Collaboration Too Much (Lockstep) Slows Innovation Connection to the Past Too Much (History as Constraint) Stifles Innovation Commitment to Market Vision Too Much (Foresight) No Innovation Can Take Place Institutional Control Too Much (Bureaucracy) Lack of Flexibility in Uncertain Market To resolve these dilemmas.threat of buyers. For this to occur. difficult to imitate. Having a policy of experimentation and a tolerance for failure resolves the commitment to market vision dilemma. easy duplication and there are no easy substitutes. the strategy is difficult to imitate. If there are fewer firms differentiating than the number required for perfect competition dynamics.
it would require a bisexual. The sponsor procures. Sponsor. “Apple is a company that still has opportunity written all over it. The only person who’s qualified to run this company was crucified 2. Jean-Louis Gassée (then-CEO of Be. listing companies and contacts such as AT&T. leader and politician. Critic.Five leadership roles will facilitate the innovation process: Institutional Leader. On June 25.000 years ago. Apple must continue its appropriate management of innovation dilemmas and maintain the five leadership roles that facilitate the innovation process. To continue a product differentiation strategy.” Since Jobs took over as CEO in 1997. when Apple was seeking a CEO acceptable to Jobs. and progress. then-CEO of Western Digital. stated. blond Japanese who is 25 years old and has 15 years’ experience!” Charles Haggerty.” Michael Murphy. Apple seems to have resolved the innovation dilemmas. Strategic Alliances Apple has a history of shunning strategic alliances. The mentor coaches. advocates. and . But you’d need to recruit God to get it done. In 1997. counsels. “Right now the job is so difficult. and Mentor. goals. This role also resolves disputes. Bill Gates sent a memo to John Sculley (then-CEO of Apple) and Jean-Louis Gassée (thenProducts President). 1985. “Apple desperately needs a great day-to-day manager. then-editor of California Technology Stock Letter. The institutional leader creates the organizational infrastructure necessary for innovation. The critic challenges investments. evidenced by their numerous innovations. and champions. said. Apple had issues within its organization. visionary. ex-Products President at Apple) commented. particularly among the other leaders. Entrepreneur. advises. 58 The entrepreneur manages the innovative unit(s). Gates recommended that Apple license Macintosh technology to 3-5 significant manufacturers.
Then. essentially killing its largest licensee (Power Computing). Under Amelio. Texas Instruments. In 1987. Sculley and Michael Spindler (COO) partnered Apple with IBM and Motorola on the PowerPC chip. Sculley refused to sign licensing He felt that up-and-coming rival Sun Microsystems would overtake Apollo Computer. Spindler nixed Gateway in 1995 due to cannibalization fears. which did happen. That never came to fruition. Xerox. an avid supporter of licensing. Apple subsequently acquired Power Computing’s customer database. The business was worth $400 million. because Apple (with Spindler as the CEO) seemed contradictory and was extraordinarily difficult in business dealings. and Motorola. A massive reversal occurred in 1997 and 1998. In 1996. Please give me a call. calling cloners “leeches”. In 1998. “I want to help in any way I can with the licensing. He pulled the plug.DEC. Jobs overhauled the board of directors and then entered Apple into patent cross-licensing and technology agreements with Microsoft. Apple announced the $427 million purchase of NeXT Software. and key employees for $100 million of Apple stock and $10 million to cover debt and closing costs. Spindler begrudgingly licensed the Mac to Power Computing in 1993 and to Radius (who made Mac monitors) in 1995. Sculley and Spindler were hoping IBM would buy Apple and put them in charge of the PC business. Amelio suddenly resigned in 1997. took over as CEO in 1996.” contracts with Apollo Computer. Jobs stated that Apple’s strategy is to “focus all of our software development resources on extending the Macintosh operating 59 . Gates wrote another memo on July 29. Gil Amelio. Jobs despised licensing. Apple licensed to Motorola and IBM. marking the return of Steve Jobs.Apple turned the corner in 1993. and the stage was set for Jobs to resume power. 2458) After not receiving a response. Hewlett-Packard. Mac OS license. In 1997. However. naming three other companies and stating. (Linzmayer.
system. It would have been applicable to the industries in which Apple operated. Tacit collusion is a valid source of economic value in network industries. In the case of Apple. and sharing costs are sources of economic value in any industry.”—Ian W. in order to protect our hardware profits. we would be the Microsoft of today. Diery. and manage uncertainty.” This statement was in the wake of Apple divesting significant software holdings (Claris/FileMaker and Newton). Apple saw itself as a hardware company. Be CEO and ex-CEO of Apple. There is economic value in strategic alliances. “If Apple had licensed the Mac OS when it first came out. To realize our ambitious plans we must focus all of our efforts in one direction. We were just fat cats living off a business that had no competition. which the computer industry is. But my approach was stupid.”—Steve Wozniak. “The computer was never the problem. Although Apple eventually realized the economic value of strategic alliances. We were also naïve to think that the best technology would prevail. admitting he made a strategic mistake 60 . managing risk. Apple cofounder “If we had licensed earlier. What we should have done was calculate an appropriate price to license the operating system.”—Jean-Louis Gassée. The following are some comments about Apple’s no-licensing policy. we didn’t license our operating system.”—Jon van Bronkhorst. but to get it you had to buy our hardware at twice the price. Managing uncertainty. Apple Executive VP. That was a mistake. I just did not see how it would make sense. The company’s strategy was. there was the opportunity to manage risk and share costs facilitate tacit collusion . I am aware that I am known as the Great Satan on licensing… I was never for or against licensing. it should have occurred earlier. Window wouldn’t exist today. We had the most beautiful operating system. It often doesn’t.
the strategy is difficult to imitate. However.” 61 . the strategy is rare. such as internal development and acquisitions. coordination. If the number of competing firms implementing a similar strategic alliance is relatively few. and trust are all important determinants of alliance success. If there are socially complex relations among partners and there is no direct duplication. It is vital to remember. a firm must consider whether the alliance is non-equity or equity. A non-equity alliance should have explicit contracts and legal sanctions.When organizing for strategic alliances. and the company has an organization to exploit it. difficult to imitate.A strategic alliance can be a sustained competitive advantage if it is rare. There are some substitutes for an equity alliance. the difficulties with these drive the formation of strategic alliances. “Commitment. An equity alliance should have contracts describing the equity investment.
Recommendations For Company Lowering the cost of products and maintaining the same quality standards. Knowledge Management. Be unique and different. 62 . Continuous innovation to expand. More number of retail stores for easy access. Choose the products based on individual needs. Can form joint – ventures. For Others Do not compromise on price for quality.
Based on the actions of the organization. Macintosh computers were 39% of Apple’s sales in 2005. They must continue a stable commitment to licensing. push for economies of scope between media and computers. they will need to continue innovating to expand the boundaries of both media and computers. and become a learning organization.Apple should continue pushing the new line of media-centric products. 63 . This will allow the company to withstand a departure by Jobs. Although it should continue. He is both synonymous with Apple’s success and has a large equity interest in Apple and Disney. If he were to divest his leadership position. Apple should not lose focus on its computers. (Burrows) This very innovative company exploits its second-mover position. the reaction of both the market and consumers would be uncertain. Given his position within the organization as well as the history of the company when he was gone. An equity strategic alliance may offer Apple the opportunity to obtain additional competencies. In the future. An effective way for a company like Apple to accomplish this would be in the form of a joint venture. we feel that the mid-term performance of Apple will be strong. Apple may want to consider other forms of strategic alliances. For this reason.Conclusion We feel that Apple must focus on several key aspects to continue to grow and succeed.One persistent element of both competitive advantage and risk is Steve Jobs. Apple apparently made a commitment to licensing. we feel that they will continue to succeed and will continue to outperform their peers. Apple must find a way to learn as an organization. Meanwhile. This period allows Apple time to overcome their challenges if they move swiftly.
or bundling clout. or try to use legal means. are poised to ship products that would take Apple out of the hardware business.Apple avoids competition If you look at the history of Apple. The same old strategy The cloners. there's no reason Apple couldn't have learned the same lessons. a poor Java implementation on the Mac. the strategy of avoiding competition has been disastrous for Apple. Apple struggled against it instead of embracing it. And when dealing with smaller competitors. A wasted lead in content development. or declaring that they will bundle a competitive offering. These are the computers that Mac users want and are. Power Computing. UMAX. Apple routinely and often unconsciously forced them out of business by bundling. IBM and others. faster. you'll see that instead of rising to competition. Motorola. bigger. as with the IBM PC and its clones in the early 80s. in my opinion. preferring to invest in technologies that eventually ended up on the scrap heap. 95 and then NT 4. But they want to do it again. 64 . they often ignore it. to erase it. ways to make their products stronger by participating in markets that others develop. The bottom line. entitled to. When challenged by a larger market force.0. but they didn't. developers going to Windows. more powerful machines than Apple's new products. When the Internet happened. because they're cheaper. and with Windows 3. they miss obvious marketing opportunities. This is an art that Microsoft has mastered.0 in the 90s.
and eventually (as now for Apple) your interests become out of synch with the interests of your customers. it appears that Apple has the contractual right to forbid them to ship the computers. Where's the cheap sub-notebook Mac? Where's the handheld Mac? The Mac built into the dashboard of my car? Apple wouldn't let the cloners make these products. you focus inward. 65 . Apple's complaint that the cloners weren't growing the market can be explained by Apple's licensing policy that kept them from making fundamentally different products than Apple. I despise companies that use hardball tactics to put their competitors out of business. I admire companies that rise to competition. They want Mac users to put all their eggs in Apple's crumbling basket. so they exercise that right. A company whose interests are against their customers. Is that a nice business? Does it have much of a future? Is it legal? The customer's interest here is clearly served by competition. Is it a nice business? If you don't have anyone to compare with. for any reason at all. I happily buy new products when I have a choice. more diversity. I don't like to buy products that I'm forced to buy. Focus on that for a moment.lower prices. if you aren't subject to customer choice.Even though we haven't seen the license agreements with the cloners. The usual benefits apply -. more realistic configurations. Apple is an economic disaster area. your product loses direction. Apple wants to keep their hardware business.
A STRATEGIC ANALYSIS OF APPLE COPRORATION A Major Project Report Submitted in partial fulfillment of the requirements for BBA(General) Semester VI Programme of G.S.Semester-VI Enroll. : 0741221706 Delhi College of Advanced Studies Shankar Garden.G. Delhi. Submitted by Anurag Sinha BBA (Gen) . Indraprastha University. Vikaspuri New Delhi-110018 66 . No.
entitled “A Strategic Analysis of Apple Corporation”. Place Candidate’s Signature Date Name: Anurag Sinha Enroll. The work of other author(s).Declaration I hereby declare that the major project report. has been acknowledged at appropriate place(s). wherever used.: 0741221706 Countersigned Name Supervisor: Shikha Makkar Delhi College of Advanced Studies 67 . No. is based on my original study and has not been submitted earlier for any degree or diploma of any institution/ university.
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