1. Nicholas Young Case Study #5 4/3/16
KEEPING THE APPLE FRESH
Executive Summary
In the competitive environment that Apple is in, listening to customers is crucial.
Staying ahead of the times is even more crucial for Apple, becauseit’s entire
business model is based on differentiation and innovation. Apple has been
growing in recent years, but competition is still attacking relentlessly with
products of their own, and contracts with other companies. Apple needs to
continue to makemoves in the right direction for it to maintain and grow its
position in the industry.
Introduction
Apple, the multi-billion dollar company that started in a garagein California has
seen its ups and its downs. Thefounder was fired fromhis own company, only to
be broughtback to saveit. They introduced iconic products into an emerging
market and amassed a fan base that would kill to get its hands on the latest
products. Now that the original founder is passed, currentCEO Tim Cook is
responsiblefor this massivecorporation. Applehas always prided itself on its
innovative design and fresh look. Is the apple rotting? Or is the tree still growing
strong?

2. Nicholas Young Case Study #5 4/3/16
The Problem
As the apparent leader of the industry, Apple’s competitors are constantly looking
for ways to knock the leader off its throne. With Steve Jobs gone, Tim Cook is
scrambling to find ways to keep Apple fresh and innovativeas it claims to be.
Foreign market pursuitseems to be a no-brainer, but how to seize it is the
question. In the long term, Cook also needs to try and figureout how to grow
here in the states. Can the iPhone and iPad be improved upon, or is it time for a
new productaltogether?
The History
Apple Computer, Inc. began in 1976 thanks to the iconic Steve Jobs, only 21 at the
time, and his partner Steve Wozniak who was 26. With as much money as the
boys could muster, they began building personalcomputers in Jobs’ garage. In
1978, only two years later, they sold their firstcomputer, the Apple II, and went
public in December. By 1980, the two weremillionaires. However, IBMbecame
Apple’s firstthreat, and a formidable one, thanks to its association with Microsoft
and Intel. In an attempt to fight back, Apple releases the “Macintosh,” a personal
computer with focus on design and style. Although it was unique, it wasn’tas fast
or compatible as the PC fromIBM. To help compete, Jobs soughtout the help of
John Sculley, the marketing expert who helped Pepsi surpass Coca-Cola, butin a
twist of fate, Sculley convinced Apple’s board of directors to fire Steve Jobs in
1985. After Jobs’ departure, things only got worsefor Apple. Microsoftmade big
moves in the industry that essentially eradicated Apple’s ability to turn a profit. It
wasn’tuntil Jobs returned 12 years later that Apple finally started to get things
right. By making the operating systemopen sourcefor developers, and an
enormous investmentfrom, and an alliance with, Microsoft, Apple’s stock went
from$6 in 2003 to $80 over the next 3 years. Another major key in Apple’s
historic success is the appointment of Jonathan Ive, theman credited with
designing the iMac, MacBook, iPod, iPhone, and iPad. All this, combined with
unique and appealing marketing campaigns, broughtAppletremendous growth,
and even after Steve Jobs death, and Tim Cook as new CEO, Apple’s stock price
climbed to $700 a sharein 2012, doubleits price the year before.

3. Nicholas Young Case Study #5 4/3/16
CEO’s
Steve Jobs
College drop-out, Steven Paul Jobs was born in San Francisco, California in 1955
and died at the age of 56 in 2011 dueto pancreatic cancer. He was the co-founder
of Apple, Inc. with Steve Wozniak, a member of The Walt Disney Company’s
board of directors, and the largest shareholder of Pixar. Jobs is known as the
pioneer of the PC revolution and the savior of Apple. Kicked out of his own
company, and broughtback to saveit. Steve Jobs is compared with Bill Gates, and
revered as an innovativegenius.
John Sculley
Broughtin to help market Apple in the beginning, a separation between Sculley
and Jobs led to Sculley having Jobs ousted fromthe company, and he took over as
CEO. Sculley focused on cost cutting and mass marketappeal which contrasted
Jobs’ focus on innovative and differentiated products. With Apple shrinking in the
face of its competition, Michael Spindler took over after 8 years of Sculley.
Michael Spindler
Successor to John Sculley, Spindler was similar, however, focused much more on
international growth. Unfortunately, Applewas not focused enough under his
leadership to gain any real ground and continued to lose money. As CEO for only 3
years, Spindler was replaced by Gilbert Amelio in 1996.
Gilbert Amelio
Jobs’ new company, NeXT, Inc. was purchased by Appleunder Amelio. This gave
Jobs back his company, or at least some controlof it, as he was made an adviser.
Amelio did a lot to try and saveApple, such as cancelling the alliance with IBM,
and laying off nearly 30 percent of the company’s labor force. However, Apple’s
market sharestill shrunk to a measly 3 percent. In the face of these failures,

4. Nicholas Young Case Study #5 4/3/16
Amelio was fired and Steve Jobs was broughtback as CEO until Tim Cook took
over amidst Jobs’ medical problems
Tim Cook
Tim Cook became CEO of Apple in 2011 and remains CEO to this day. Cook also
served on the boards of Nike and in 2014, becamethe firstCEO to publicly
identify as gay. He was COO beforebecoming CEO, and had a MBA from Dukeand
a BS fromAuburn University. Under Cook’s leadership, Apple stock doubled in a
single year.
Competition
Amazon.com
Amazon.comcompetes against Apple with its sales of music, videos, and books,
but mostly with its Kindle Fire, a direct competitor to the iPad. Rumors include
Amazon looking to introduce its own smartphone into the market, which directly
threatens Apples market share.
Blackberry
At first a fastgrowing competitor, Blackberry was oneof the firstof its kinds, but
when Apple released the iPhone, Blackberry began to phaseout and showed a 90
percent reduction in its stock value in 2012 becauseof reduced sales. However,
Blackberry is making changes to stay competitive.
Google
Google runs the Android operating systemused in nearly 80% of smartphones.
Although Google is bestknown for its advertising services and search engine, it
threatens Apple more than anyoneelse with its Android OS, Chromebook and
various partnerships with manufacturers Samsung, Acer, and HP.

5. Nicholas Young Case Study #5 4/3/16
Microsoft
Creator of the Windows operating system, Microsoftowned the desktop market
and continues to dominate it. Microsofthas a partnership with Nokia to bring
Windows phones to the market, and the MicrosoftSurfacecompetes with the
iPad heavily, being that it is a quasi-tablet with a detachable keyboard.
Internal/External Analysis
1990 - Earliest year available
1997 - Steve Jobs returns
2011 - Steve Jobs dies
2013 - Todays Date
ROA
1990-0.16
1997-(0.25)
2011-0.22
2013-0.18
EPS
1990-3.77
1997-(8.29)
2011-27.68
2013-39.75
Stock Price
1990-$35.25
1997-$21.13
2011-$325.64
2013-$553.82
Net Income
1990-$474,895,000
1997-$(1,045,000,000)
2011-$25,922,000,000
2013-$37,037,000,000

6. Nicholas Young Case Study #5 4/3/16
Apple’s net income is at all-time lows when Steve Job returns. Net Income begins
to grow and eventually skyrockets after his death in 2011.
EPS is considerably low despite Apple’s stock price fluctuations and finally shows
significant growth as Apple’s stock reaches off the charts with over $550 per
share.
-2000
500
3000
5500
8000
10500
13000
15500
18000
20500
23000
25500
28000
30500
33000
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Net Income of Apple, Inc.
Income in Millions
-25
0
25
50
75
100
125
150
175
200
225
250
Stock Price vs. EPS of AAPL
Stock Price
EPS

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Strengths
“Think Different” is the slogan behind Apple, and that’s exactly what their
strength is. Apple is an innovativecompany on the edge of future technology
breakthroughs. Thecompany focuses on its differentiation strategy and has a
loyal fan baseto supportit.
Weaknesses
Apple’s critics arguethat Apple products, although innovative initially, are falling
behind in terms of staying innovative. Without Steve Jobs, the company has lost
its flare for innovation.
Opportunities
Smartwatches and other wearable technology seem to be great avenues for
Apple to explore. Foreign markets also hold great opportunity for increasing
growth and seizing valuable market share.
Threats
Competitors Google and Microsoftare Apple’s biggest threats due to their low
cost and increasingly efficient devices. Microsoft’s Surfacethreatens the iPad, and
Google’s Android operating systemholds the largestshareof mobile devices.
Recommendation
Listen to your fans Apple. Ask anyoneabout Apple’s charging cables and you
would swear they were partof planned obsolescence. Also, take note of your
competitors. Waterproof technology and shatterproof screens would increasethe
value of an iPhone or iPad tremendously. Continue to be innovators in an ever-
changing industry by introducing wearabletechnology. Capturemarket sharein
foreign countries by giving products suited to their needs, whether it be lower
cost, or higher performance, you have to listen, and never be afraid to ask.

8. Nicholas Young Case Study #5 4/3/16
Conclusion
Apple is iconic, and it will remain as such for sometime, as long as it listens to its
customers and finds new ways to impress. Applehas shown investors its worth
with skyrocketing incomein recent years, and one of the most amazing
comebacks in history. If Applecan continue to focus on innovation, it will remain
a cut above the competition.