Abrea, Rhea May E.

Entrep 2C
Innovation Management

Midterm Exam
(Case Study)

•Point of View (Apple)•

This case study examines how Apple builds everything around simplicity. In 1996 ,
the Apple brand bordered on bankruptcy. It was just another computer company without
any real point of difference . Steve Job have been gone for over a decade . Years of
overlooked opportunities, flip-flop strategies and a mind -boggling disregard for market
realities caught up with the company. The Windows 95 launched by the Microsoft had
severely eroded Mac’s technology edge. Apple was rapidly becoming a minor player n
the computer business with shrinking market shares, price cuts , and declining profits.
And Apple is American manufacturer of personal computers, computer peripherals, and
computer software. It was the first successful personal computer company and the
popularizer of the of graphical users interface.

• Presentation of the facts surrounding the case•

The patent battle started in 2011 and initially resulted in a $1 billion ruling in
Apple’s favor. But it didn’t end there. A series of appeals pushed the dispute to the
Supreme Court and back, as the companies continually rehashed which patents were
infringed and, more recently, exactly how much Samsung owes Apple because of the
infringement. The case revolved around a number of design and utility patents for basic
functions of a smartphone, like tap to zoom and the home screen app grid. But while the
fight was hashed out using specific patents, the battle was ultimately about whether
Samsung copied Apple in the early days of smartphones to gain an edge. The jury
decided that, in many ways, it had. Most recently, the verdict had been whittled down to
$539 million for Apple. Samsung filed to appeal that earlier this month. But the two
companies were able to reach an agreement before it could be litigated again.
•Identification of the key issues•
Its claims are, in comparison, pretty simple to figure out. Did Apple use the
UMTS/3G patents without a licence? It certainly used them, because the codes are part
of the 3G standard. But Apple says that by using Intel chips which had licensed the
patents from Samsung, it is protected by “patent exhaustion” (you can’t charge
someone twice for using the same patent); and that Samsung’s pricing, of about 2.75%
of the device’s price, is unreasonable use of its monopoly. Samsung says that although
the Intel chips do use its 3G technology, they’re designed and built in Germany and
shipped to China – and the law requires that they be sold in the first place in the US for
“patent exhaustion” to apply. So, is the meaning of “sold” where they’re incorporated
into an iPad or iPhone – or where Intel and Apple sign the contract for their inclusion in
the devices? Apple’s lawyer says the receipt lists “California [Apple’s HQ] and Chicago”.
Decide, jurors. Samsung also says that Apple infringed three other patents: the use of
email in a camera-equipped phone; bookmarking a photo in a camera-equipped
phone’s image gallery; multitasking on a mobile device so you can listen to music in the
background. Apple says these are either invalid or not infringed. Samsung says they’re
valid, and infringed, and it deserves a payment (of about $200m).Apple says that it
patented a number of elements used in the iPhone and iPad – the “rubber band” effect
when you try to scroll past the end of a list, the “double-tap to zoom” effect on the
screen, the “pinch and squeeze to zoom”, and the general shape of the iPad (the
“D’889” patent). It says Samsung infringed them all with a number of phones and
tablets. Samsung says they were either obvious, or that it didn’t infringe them, or that
there was already existing “prior art” that incorporated them. Samsung says they were
either obvious, or that it didn’t infringe them, or that there was already existing “prior art”
that incorporated them. Decide, jurors – based on the many objects and prototypes that
have been (in at least one case literally) wheeled into the courtroom. Apple or
Samsung? And if you decide in Apple’s favour, there’s always the question of whether
Apple actually suffered financial harm as a result. Did it lose sales? Oddly, one of the
strongest pieces of evidence for both sides is a study Apple carried out, looking at why
people bought a Samsung smartphone rather than an iPhone. It was a small study, with
fewer than 100 respondents, but the most common reason was because people were
on the wrong carrier – the iPhone was only sold on AT&T’s network until January last
year – and so couldn’t get an iPhone. So, jurors, did they get the Samsung because it
looked a bit like, and behaved quite like, an iPhone? Or because they liked the phone?
Samsung says they were either obvious, or that it didn’t infringe them, or that there was
already existing “prior art” that incorporated them. Apple is claiming that Samsung
attempted to fool the public (not the specialist public, but just the general, undiscerning
public) by making a number of its smartphones look like the iPhone 3G and 3GS, and
some of its tablets like the iPad. Were people confused by the appearance of the device
in a shop to the extent that they bought one thinking it was the other? That would be
proof absolute of trade dress confusion – but Apple doesn’t even have to show that;
only that people might in general have been confused about which is which. That is
“trade dress dilution”, and another 10 of the 33 questions relate to this.
•Listing of Alternative Courses of Action that could be taken

8 Alternative courses of action The Apple Inc.'s identified markets are: PC

market (Macintosh), phone market (iPhone) and other digital device markets (iPod
Touch and iPad). The first alternative course of action is international expansion like
looking into the China and other developing countries.

•Evaluation of Alternative Courses of Action

Based on Apple Inc’s financial health, large cash reserves, high growth
rates, and global brand recognition, it would appear the immediate marketing and
competitive threats to the company are relatively minor Exhibit F). However a long-term
horizon view of the company reveals emerging threats, potential loss of market share,
and missed business opportunities (Exhibit G). The following is an overview of the
marketing arenas Apple should consider focusing on to mitigate competitive threats and
increase its product and service market share. Reintroduce Mac Products to the
Business Market. Most companies prefer to use traditional PC technology due to its
broad compatibility with business software, customer familiarity, and competitive pricing.
Apple needs to focus on creating an opening for businesses that would be interested in
switching to a more user-friendly and elite Mac, but currently worry about Apple’s
premium pricing and the difficulty of conversion to a new system. Education. Apple
should move to reestablish its position in the educational arena to market product
bundles to school systems. By adding user support and adapting familiar educational
software for Mac use, Apple could reinvigorate the stale education technology world.
Apple can safely rely on its existing brand equity with the younger generation of
students who are already familiar with Apple’s other products, such as the iPod and
iPhone making a jump back into education viable.
•Recommendation of the best course of action

The internal and external factors discussed in this SWOT analysis

indicate that Apple Inc. possesses major strengths to effectively address organizational
weaknesses. The company can also use these strengths to exploit opportunities, such
as the expansion of its consumer electronics distribution network. Moreover, the
company can use its strong brand image and rapid innovation processes to successfully
develop and launch new technology product lines. However, Apple faces the threats of
aggressive competition and imitation, which are challenges affecting players in the
global market for consumer electronics, computer hardware and software, and online
digital content distribution services. Based on the strategic issues highlighted in this
SWOT analysis of Apple Inc., a recommendation is to continue the aggressive and rapid
innovation in developing the company’s products. Technological innovation reduces the
adverse effects of imitation. Also, it is recommended that Apple further enhance the
automation of its production processes, and support the automation of its contract
manufacturers, as a way of addressing rising labor costs. Another recommendation is to
establish partnerships with more distributors to improve the overall market reach of the
company’s consumer electronic products.