A presentation for the strategy class at IIML-NC.

1. A G10 Presentation

2. Lust

3. Knowledge

4. Hope

5. Anarchy

6. Forbidden

9. Genesis

10. In the beginning

11. Men

12. Computers

13. Big Blue

14. And men were taught about
computers

15. there was light

16. on one sunny day

17. A few crazy engineers

18. Think Different

19. Let’s teach computers about
people

20. Macintosh

21. The Computer for rest of us

22. Crazy

23. misfits

24. troublemakers

25. rebels

26. Round pegs in square holes

27. One’s who see things
differently

28. Not fond of rules

29. No respect for the Status quo

30. Praise them

31. Disagree with them

32. Quote them

33. disbelieve them

34. glorify them

35. Vilify them

36. The only thing you can’t do

37. Ignore them

38. They change things

39. They push the human race
forward

40. Crazy ones

41. Genius

42. the people who are crazy
enough

43. to think that they can

44. Are the ones who do

45. Think Different

46. Where is think different taking
Apple today?

47. Consumer Electronics

48. a risk worth taking

49. Another crazy gamble?

50. Distinctive Capabilities

51. Software

52. Hardware

53. Desktop Publishing

54. Education

55. Marketing

56. User Interface

57. insanely great

58. Core Competencies

59. 27%

60. 0.6%

61. Where did all the money go?

62. 1. Innovation

63. 10 years

64. 1300

65. 2. Branding

67. The Cult
of
The Cool

68. Microsoft
“Where do you want to go
today?”

69. Apple’s Mantra
“We know where do you want
to go today !!”

70. ultimate

71. Simplicity

72. 3. Industrial Design

73. But

74. Smart

75. Small

76. A dollar in 1992

77. Worth $0.79 in 2002

78. What went wrong?

79. Who killed Apple Computers?

80. Apple
In the PC Industry

81. PC Industry Evolution

82. Before 1981
Proprietary

84. 1981 - 1997
Open Structure

85. Attack of the clones

87. 1997
Rise of the Internet

89. PC Industry Value Chain

91. But its really a value network ..

93. Value in Software

94. Commoditization

95. 1976
Apple launched

96. Produced Microcomputers

97. $0.7 m to $76 m

98. IBM turns PC into
open structure

99. 1984
Macintosh is born

100. The computer
“for the rest of us”

101. Apple misreads the trend

102. Macintosh peaks

103. Apple keeps losing
market share

104. IBM, Dell,
Hewlett-Packard, & Others

105. high priced proprietary system

106. not compatible with IBM PC

107. adopted Motorola CPU
instead of Intel

108. focused on education &
printing niches

109. Perception Map during 1998

111. 1998: Defender

113. 2007
Apple Computers becomes Apple
Inc.

114. 1998 2007

115. has built a massive appeal

116. 2007
Category
1998
Presence

117. How Big is Apple

119. Market Share ?

120. Income Statement

122. Share Price

123. “Apple should shut down for the
sake of its shareholders.”
Dell - 1997

125. A successful turn-around

126. After slugging it out in the PC
Wars

127. How did it happen?

128. Consumer Electronics
Industry

129. Cell-phone
Portable AV
Makers
PDA &
handhelds
Analogue
Manufacturers

130. Trends

131. 1. Convergence

133. 2. Global Supply Chain

135. 3. DRM

136. 4. Short Life Cycles

137. Consumer Electronics
Competitive Landscape

138. Oldies
Sony
Samsung
Thomson
LG
Creative
Matsushita

139. Convergence - PC
manufacturers
Microsoft
Dell
HP
Apple

140. Convergence -
Telecom/Broadband Players
Nokia
Cisco
Motorola
Sony Ericsson
Samsung

141. Convergence - PDA Makers
RIM
Palm
HP

142. Porters 5 Forces Analysis

143. Threat of Entry
Low

144. Capital Intensive Industry

145. Economies of scale

146. Market power is needed

147. Lower Net Margin

148. Threat of Suppliers
Low

149. Large Number of suppliers

150. High Substitutability

151. Forward Integration is Difficult

152. Threat of Buyers
Moderate to High

153. High elasticity of demand

154. Illegal peer to peer file sharing is
possible

155. Big dealers can pressurize to
reduce cost

156. Threat of Substitutes
Moderate

157. Alternative means to acquire
music are available

158. Threat of Rivalry
High

159. Highly competitive market

160. Both price and feature based
competition is there

161. Various online music sources are
available

162. Small stylish MP3 players are
available

163. Profitability

164. 7%

165. What made Apple to move to the
CE Industry

166. 1990s

167. Losing Internal Culture

168. Losing customer base

169. Diversification

170. 1993: Newton (PDA)
1994: Quick Take
1996: Pippin

171. Could not handle 4 businesses
simultaneously

172. Don’t Diversify when things are
not going your way

173. 1997

175. Revive Old Culture

176. Enter new markets

177. Non First mover advantage

178. But Still….

179. Digital Players Market

180. AAPL DELL HPQ MSFT Industry
Market Cap: 82.15B 52.87B 107.73B 273.11B 1.85B
Employees: 17,787 65,200 156,000 71,000 1.70K
Qtrly Rev Growth 23.80% -5.10% 10.70% 6.00% 24.30%
(yoy):
Revenue (ttm): 20.68B 57.88B 94.08B 46.06B 3.98B
Gross Margin 30.35% 17.56% 24.51% 79.43% 30.35%
(ttm):
EBITDA (ttm): 3.44B 4.43B 10.16B 17.94B 133.86M
Oper Margins 14.63% 6.85% 7.62% 36.20% 4.62%
(ttm):
Net Income (ttm): 2.43B 2.95B 6.52B 11.91B 86.38M
EPS (ttm): 2.76 1.284 2.306 1.17 0.82
P/E (ttm): 34.53 18.47 17.45 23.84 33.88
PEG (5 yr 1.42 1.24 1.21 1.38 2.74
expected):
P/S (ttm): 3.99 0.91 1.15 6 1.2

181. SNE MC PHG AAPL Industry
Market 52.11B 44.76B 42.52B 82.15B 235.61M
Cap:
Employees 158,500 334,402 121,732 17,787 11.25K
:
Qtrly Rev 10.10% 1.60% -0.80% 23.80% 7.20%
Growth
(yoy):
Revenue 67.99B 76.77B 35.85B 20.68B 235.85M
(ttm):
Gross 23.47% 29.94% 32.82% 30.35% 38.91%
Margin
(ttm):
EBITDA 5.19B 6.31B 2.28B 3.44B 12.35M
(ttm):
Oper 2.44% 5.04% 4.04% 14.63% 6.99%
Margins
(ttm):
Net 1.07B 1.99B 1.22B 2.43B 5.73M
Income
(ttm):
EPS (ttm): 1.02 0.91 6.05 2.76 0.3
P/E (ttm): 51.02 22.65 6.35 34.53 25.12
PEG (5 yr 2.14 1.22 2.15 1.42 1.36
expected):
P/S (ttm): 0.77 0.59 1.19 3.99 1.58

182. How did they do it?

183. The first mover ‘who gets it
right

184. Profitability Drivers

185. Uniqueness

186. Blue oceans

188. But not forever

189. Product Innovation may or
may not succeed

190. But innovation in the business
model will succeed almost every
time

191. Opportunities

192. Growing consumers electronic
market

193. Strategic alliances with peripheral
component manufactures and
media transmission giants

194. Opportunity to extend new
products to existing loyal
customers

195. High potential music phone
market

196. Threats

197. Very high level of competition

198. High product substitution effect

199. Legal Risks

200. Imitation

201. Technology Obsolescence

202. CSR Risks

204. Strengths

205. Innovation

206. Ease of use

207. Financial vitality

208. Brand loyalty

210. Weakness

211. Sporadic Innovation

212. Perfect can be the enemy of
good

214. Icon

215. iCon

216. SWOT Internal Internal
Strengths Weakness
Matrix
External S-O W-O
Opportunities
External S-T W-T
Threats

217. S-O Strategies

218. Use Brand Loyalty for
Selective Expansion in CE

219. Come out with more
consumer electronics devices

220. S-T Strategies

221. Create new markets through
Product Innovation

222. W-O Strategies

223. Apple’s digital offerings

224. W-T Strategies

225. Build socially complex
relations among partners

226. Increase productivity and turn
around of high demand
products

227. CE Product Value Chain : 1990s
Highly Vertically Integrated

228. CE Product Value Chain : 2000s
Emergence of vertical specialization

229. Primary success factors

230. Innovation

231. Differentiation

232. System Integration capabilities

233. Cost Structure

234. Complimentary success
factors

235. Consumer Branding

236. Manufacturing and supply chain
efficiency

237. Time to market

238. Service Provision

239. Critical success factors

240. Recruiting talented people

241. Securing partnerships with
value added resellers

242. Capitalizing on market-specific
opportunities

243. Competitive Advantage

244. Not in the technology

246. Not in the patents

247. Value Transference

248. Distribution Strategy

250. Apple’s value creation process

251. Multiple Products
Customised Products
Apple I/II/III
Mac Segmenting
Targeting
Focus on
iTV Education
Value
Creation
iPhone
Music Strategy
(iTunes, iPod)
Lifestyle
Convergence
Strategy Adding
Video Strategy (iDVD,
Value
iMovie, IPhoto)
Digital
Hub
Internet Strategy
(iTools, iDisk)

252. what does Ansoff’s matrix say?

254. what does BCG matrix say?

256. lessons

258. Strategies Adopted

259. Thinking Out-of-the-Box

260. recommendations

261. 1. at the tipping point

262. fast in managing change

263. initiating it
understanding it
explaining & justifying it
planning & organizing it

264. driving & forcing it
timing & pacing it
containing it
financing it
selling it

265. the law of the few

266. stickiness

267. the power of context

268. 2. be adept in change
implementation

270. 3. transform technology into cash

271. major problem

272. successful choice,
bundling,
transformation
of new technologies

273. into
great new product
&
marketing strategies

274. answer lies in

275. Apple’s competence

276. re-conceptualize market focus

277. integrated management process
perspective

278. entered the highly competitive
mobile market

280. where nokia dominates all

282. encashing value contribution in a
mobile

283. Encashing Value Contribution in a Mobile
1992-97 1997-2002 2002-07
High-end &
Entry- Mid-tier
Level & smart new–to–market
phones phones phones
*Basic applications: Operating systems, micro-browsers, firewall, others

284. looking ahead in media

285. from punctual integration

286. to total integration

288. which means
more competitive markets

290. but, rules of competitive markets say

291. financial performance of generalists
improves with greater market share

292. while performance of specialists
drops off as market share increases

293. so,
adapt or die

295. to sustain

296. chalk out
relevant success factors

297. strategic
&
economic

299. challenges

300. 1. form strategic alliances

301. critical to the success of its core
business

302. Critical to development or
maintenance of its core
competency

303. which blocks a competitive threat

304. which creates or maintains
strategic choices for Apple

305. which mitigates a significant risk to
its business

306. 2. go on innovating

307. iPiano
iCar
iGuitar
iPottie

308. iGod iWatch
iPuff
iWash

309. finally

311. An Apple a day

312. Keeps Doctor away

313. Thank you
Chintan
Jasmer
Jyotsna
Qasim
Shalabh