Apple Inc.

Apple Inc. 1
Apple Inc.
Vinodhini Guhesan
University of Maryland University College
Author Note
This paper was prepared for AMBA 640: Managing Projects, Operations, and
Information Systems, taught by Professor Marsh

VINODHINI GUHESAN – Apple Inc. 2
Executive Summary
Apple is one of the most valuable companies in the world worth almost $500
billion. It is a world leader in the consumer electronics market. Apple’s success is due
to the quality of its products and its focus on meeting and exceeding the customer’s
needs. Apple’s products including the iPod, iPhone, iPad, laptops and PCs were
created with the requirements and preferences of the consumer in mind. The
organization takes information from its customers and has incorporated them into its
products’ future editions to maintain sales. The iPhone, iPod and iPad have all had
several generational releases to improve the consumer’s experience with the products.
Baltzan (2013) in the text, Business Driven Information Systems, 4e., presents a
case about Apple and other companies that produce Apple product accessories and
Apps. Browne and Keeley’s critical thinking model is used to analyze the Apple case to
understand if Apple is profitable for companies producing Apple product accessories
and why Apple has a competitive advantage. One issue presented is whether other
companies have capitalized from Apple products with the conclusion that they did
indeed capitalize. The analysis reveals that the evidence the author provides of a
statement from an executive at Belkin is improper in that it is a use of deceptive
statistics to sway the reader to support the author’s ideas. In addition the evidence
presented from the Belkin executive is a fallacy of appeal to questionable authority as
the Belkin executive should only speak of the sales of his company and not other
companies of which he does not have concrete evidence.
An examination of the lessons learned by the information systems manager is
presented. The ISM should facilitate the transfer of data across functional units in order

for strategic decisions to be made on Apple products. In fact the ISM was successful in
providing customer data from the customer to the product development team about the
customers wanting more easy to use features. This was then implemented in the
iPhone’s later editions.
The ISM tools used by Apple are discussed to demonstrate that Apple
implements CRM, ERP, data mining, business intelligence and intelligent systems in its
business. Apple formulates business intelligence by having all the data about
customers from surveys to reviews all housed in data warehouses. The technique of
data mining is then applied to put together meaningful reports and allow functional units
to devise product enhancements as well as the organization’s management to formulate
business strategies. It is partly by proper utilization of the ISM tools that Apple has had
so much success.
Finally Porter’s five forces are examined with respect to Apple, Inc. In terms of
smart phones Apple does have to compete with other companies that offer similar
products as the iPhone. Apple has been able to successfully maintain a competitive
advantage and lower the forces of threat of substitutes, competitive rivalry and threat of
new entrants because its ability to listen to the customer and enhance products with
consideration of the customers’ needs and preferences. Since Apple has diversified
across industries with the iPhone in the mobile market, Mac in the laptop and PC
market, and iPod in the digital music player market it is able to thrive if entrants in one
market threaten its sales and market share.

Week 8 – Individual Assignment 3 – Apple Inc.
Introduction
Apple Inc. is a multi-billion dollar enterprise that creates profit for itself through
customer focused, high quality consumer electronics products and services. More than
a decade ago Apple was facing the risk of bankruptcy prior to the creation of the
revolutionary products such as the iPhone (Baltzan, 2013). Now with the success of the
iPod, iPhone and iPad, profits have soared and Apple has gained market share in the
digital music and mobile phone sectors. The Information Systems Managers at Apple
have learned the lessons to success by facilitating the transfer of data across business
units effectively. This has allowed data on customer preferences and needs to be
provided to the right functional business units so that future editions of Apple products
will be favorable to the consumer and therefore increase Apple product sales. Apple
uses extensive ISM tools such as business intelligence to pull together data from
various areas and formulate strategic business decisions. Analysis using Browne and
Keeley’s (2012) critical thinking model of one case about Apple demonstrated the
reasoning to why Apple is successful and has maintained a competitive advantage.
Finally analysis of Apple Inc., with respect to Porter’s five forces model demonstrates
that Apple has lowered some forces allowing it to gain a competitive advantage.
Apple Inc.’s History and Products
Apple Inc. is a consumer electronics producer established in 1976 by Steve Jobs,
Steve Wozniak and Ronald Wayne. The company began its foray in the technology
world by introducing the Apple I a personal computer (Wikipedia, n.d.). Apple
progressed in advancing the technology of its personal computer and its software in

direct competition to Microsoft and IBM. In the last thirteen years Apple increased the
scope of its business by introducing the iPod, iPhone, and iPad. These products are all
enormously profitable and have transformed the company into a multi-billion dollar
enterprise.
In order to keep the technology fresh, user-friendly and advanced, Apple has
delivered several editions of these products. The iPod was enhanced to include a touch
screen leading to the iPod Touch. The fourth generation of the iPhone introduced the
world to Siri, the voice-recognizing virtual assistant (Baltzan, 2013). In addition the
latest version of the iPhone has security access through fingerprint recognition (Apple
Inc., 2013). The iPad has been enhanced as well. The iPad Air was released in 2013
as a much lighter and faster version of the original iPad (Wikipedia, n.d.).
Apple has also extended its business into other industries such as the
automobile industry. Siri is being enhanced to be implemented in vehicles to improve
dashboard technology. Siri Eyes Free will allow use of Siri in the same way as in the
iPhone except that there will be a steering wheel button to use Siri in the car without
using the iPhone to access Siri (Edelstein, 2013).
Overall Apple has not released a revolutionary product since the iPad in 2010. It
is however working on the iTV, a television that will incorporate music, movies and
content from a computer (Hesseldahl, 2006) to “modernize TV watching” (Merson,
2013). This product is speculated to be released in 2014. If successfully launched
Apple would then be taking market share away from Samsung, LG and Panasonic in
the television sales arena (Merson, 2013).

Analysis of Apple Case Using the Critical Thinking Model
The Apple case presented by Baltzan (2013) can be analyzed using Browne &
Keeley’s (2012) critical thinking model to understand if Apple is profitable for companies
producing Apple product accessories and why Apple has a competitive advantage.
Browne and Keeley (2012) purport “an issue is a question or controversy responsible for
the conversation or discussion” (p.19). The issue in the Apple case is whether
companies other than Apple can capitalize on Apple products (Baltzan, 2013). We can
identify that one the conclusions of this case is that Apple is not only making a profit for
itself but for companies producing accessories and Apps to complement Apple
products. Information provided in the case identifies companies that produce and sell
accessories or Apps that complement Apple products. One example is that ”Altec
Lansing Technologies—[produces and sells] iPod speakers and recharger dock ($150)”
(Baltzan, p. 30). This demonstrates supporting evidence that a company other than
Apple itself is able to produce a product to complement an Apple product but is
misleading since it provides data on the price but not the number of sales.
Another example of evidence presented to support the conclusion is that “Eric
Tong, vice president at Belkin, a cable and peripheral manufacturer, believes that 75
percent of all iPod owners purchase at least one accessory—selling over 30 million
accessories to date” (Baltzan, p. 30). But how good is this evidence? The statement is
misleading in its lack of facts as it states that the individual referenced “believes that 75
percent of all iPod owners purchase at least one accessory” (Baltzan, p. 30). As this is
based on an individual’s belief and not facts or accurate statistical data of consumers
who purchased Apple accessories from other companies, we should not accept this as

good evidence. Furthermore this statement also demonstrates a fallacy of appeal to
questionable authority because although Mr. Tong may be able to give information on
Apple accessories his company has sold he cannot know how many accessories are
sold by other companies. The author is using one authority who can attest to sales at
his company to back up the statistics for all companies’ accessory sales. Additionally
this is also an example of deceptive statistics because Mr. Tong extrapolated data from
his company’s sales and is projecting those for the sales of other companies. This is not
accurate and so should be disregarded.
Another issue that the author presents in the Apple case is whether Apple is
ahead of its competitors. The conclusion presented in the case is that Apple has a
competitive advantage with respect to its peers as it focuses on the customer and
provides quality products (Baltzan, 2013). In the case this is proven with the reason that
Apple delivers new editions of its products that are less expensive and technologically
advanced. Apple is also very involved in listening to its customers. Apple even sells
products in the Apple Store that are made by its customers as stated in the phrase “the
company welcomes products created by consumers to sell to consumers” (Baltzan, p.
30).
Lessons Learned for Information Systems Managers
Business initiatives are supported by information and technology that is facilitated
by information systems management. The information systems manager (ISM) is
tasked with the responsibility of moving information about products, customers and
processes throughout the various departments in the organization in order for decisions
to be made. Since Apple is a company selling products and services that are

composed of technology that stores or carries information, the ISM has an integral role
in the organization. The ISM must ensure that the information about the customer
preferences is sent to the product development group in order for them to incorporate
the customer preferences into the appropriate product to create value for the customer.
The iPhone is a product that has been through several enhancements in technology
since its inception. The ISM clearly understood the importance of transferring the
knowledge of what customers want in their iPhone to the right department so the
enhancements to the next version could be implemented.
Apple took steps to increase its market share in the digital music arena by
enhancing the iPod. “The second-generation iPod, introduced in 2002, added support
for the Windows platform” (Linden, Kraemer & Dedrick, 2009, p.143). This clearly was
as a result of a lesson learned for Apple’s ISM. The data about moderate sales of the
iPod was linked to data about customer preferences and transferred to the product
development team to add enhancements to the future version of the iPod. The ISM’s
ability to facilitate the transfer of this information through the proper departments
allowed the enhancements to improve the value to the customer.
Apple’s iPhone technology is incompatible with software and devices from
companies. The Android operating system, created by Google, is on several
companies’ mobile phones (McKay, 2009, p.36). This can provide a great deal of
competition for Apple’s iPhone because Android is compatible with other software. If
customers prefer the Android system because of its compatibility to software and
devices from other companies that may cause Apple to lose market share in the future.
The ISM should transfer this information to be properly evaluated by the functional

departments at Apple. That would then allow Apple to devise a strategy to prevent loss
of customers whom dislike the incompatible nature of Apple products.
The success of the iPhone, iPad and iPod has provided exemplary data from
which to learn for an information systems manager. In Apple delivering several editions
of its products with incremental changes there is another lesson to learn. Delivering the
latest edition of its products caused the previous version of the same products to be
outdated. Customers feel cheated that they just bought an iPhone and a year later a
newer more enhanced version is released. The dilemma is in deciding on spending
more money to have the newer version or keep the now out-dated version. Obviously
the frustrated customers’ information should have been circulated through the functional
departments of Apple appropriately by the ISM to make it known that perhaps
customers didn’t want to spend so much money on the latest and greatest new version
of iPhone so soon.
Apple’s Use of ISM Tools
Apple uses several ISM tools to improve its business including business
intelligence, intelligent systems, customer relationship management, enterprise
resource management and data mining. Intelligent systems are systems used to
manage, process and interpret data into meaningful decisions. Apple introduced an
intelligent system when it implemented Siri the virtual assistant into its mobile and iPad
products. “Siri [is], a voice-activation system that is capable of recognizing voice
commands” (Baltzan, p.35). Siri is an example of artificial intelligence that takes verbal
requests from the user and responds with recommendations pulled from a set of web
services (Wikipedia, n.d.).

Customer relationship management (CRM) is the use of a software program to
manage the data about customers including purchases and product preferences.
CRM’s can also be used to manage and increase customer’s purchasing by pulling
together the data on customers who purchased a particular set of products and
rewarding them with discounts on similar or complementary products. At Apple CRM
software is used to keep track of all customers and their purchase behavior. Apple
gains business intelligence through the implementation of CRM by extracting and
analyzing customers’ data (Unknown Author, 2012). The organization has remained
profitable by focusing on the customer’s needs when designing or enhancing its
products. In fact Apple is so in touch with its customers that it even has product
accessories created by its own customers on its App Store (Baltzan, 2013).
Enterprise resource planning (ERP) is the pulling together of all the data across
all the business areas in the organization into one database and then accessing that
information through one software program that meets the needs of all the business
units’ functions (Baltzan, 2013). Apple is able to tie together all the data about products
and customers and feed it back into its Apple stores for store employees to access and
better serve customers. In this sense CRM and ERP are strategically utilized to
customize products for each customer (Ramirez, 2009).
Business intelligence is the data gathered from various sources which is then
used to devise a business strategy and/or decisions (Baltzan, 2013, p. 6). Data mining
is a technique to uncover business intelligence by analyzing information in different
angels and understanding the relationships between the data. “Apple’s Information

Services and Technology department operates a Teradata enterprise data warehouse,
along with Oracle databases” to store data (Kalakota, & Netke, n.d.). Software is used
to extract this data and formulate reports for the various departments in the
organization. Reports on customer data can then be utilized for improving products,
creating targeted advertisements and creating new products. Apple utilizes data mining
techniques to cull data collected from customer purchases, reviews and surveys to
forecast future sales of products and to customize advertising (Ramirez, 2009).
Porter’s Five Forces
“Porter’s Five Forces model analyzes the competitive forces within the
environment in which a company operates to assess the potential for profitability in an
industry” (Baltzan, 2013, p. 18). When the strength of the forces is high the competition
in the industry is high and vice versa (Baltzan, 2013). A company can focus its attention
on adjusting the forces to its own benefit allowing it to have a competitive advantage. In
analyzing Apple in terms of two of Porter’s five forces, threat of substitute products or
services and competitive rivalry, it can be demonstrated that the iPhone is high on both
forces (Baltzan, 2013). There are numerous companies manufacturing smart phones
with similar technology and functionality to that of the iPhone. Competitive rivalry is
high as these companies manipulate the quality of products, price and availability to
capture sales. Apple maintains a competitive advantage with the iPhone by using
customer information to implement technology with easy to use features. In addition,
Apple uses technology that allows a customer to use more than one function at the
same time. For instance a user can send text messages speedily while listening to
music without any interruption in the use of the phone. Since Apple has focused its

technology to meet and exceed customer needs, they have maintained their competitive
advantage over rivaling mobile companies. As a result Apple has lowered the forces of
competitive rivalry and threat of substitute products.
As stated above there are many competitors in the market for mobile phones.
Threat of new entrants is high because any company that can provide the technology
and usability that consumers want in a smart phone or tablet can enter the market with
competing products. Since Apple has diversified across industries with the iPhone in
the mobile market, Mac in the laptop and PC market and iPod in the digital music player
market it is able to thrive if technology and entrants in one market threaten its sales and
market share.
When Apple is attempting to achieve market share the force of buyer power is
key in its ability to be profitable. Buyer power is the ability of consumers to influence the
price and demand for the products (Baltzan, 2013). Buyer power for Apple products is
high because substitute products are available to consumers. Apple must be able to
capture sales by manipulating prices of its products to be competitive with substitute
products. In releasing newer editions of its products at lower prices and with
enhancements in technology appealing to the consumer, Apple has been able to
capture and maintain sales.
Suppliers of raw materials and components to Apple products can manipulate the
price and demand for their materials sold to Apple. Supplier power for Apple products is
moderate to low. The reason for this is that Apple often acquires the supplier company
once they see the benefits of the supplier materials or technology. For example the

company that supplied the technology of Siri was acquired by Apple in 2010 before that
technology could have become available to Blackberry to use (Wikipedia, n.d.).
Conclusion
Apple Inc. is a profoundly successful organization worth almost $500 billion. Its
focus on creating products using customer feedback and preferences has allowed
Apple to meet and exceed the needs of its consumers with high quality products.
Analyzing Baltzan’s (2013) case about Apple using the critical thinking model
demonstrated that not of all the reasoning presented was valid. The case exhibited
information to support the conclusion that Apple is ahead of its competitors because it is
customer focused. Apple would not be able to have been so enormously profitable
without proper information systems management. The information systems manager
has successfully facilitated the transfer of data from the customer to the product
development team to allow for implementation of enhancements to future product
editions. This success has assisted Apple in gaining market share. In addition, the
proper use of ISM tools such as business intelligence has allowed various departments
to pull reports to better understand how to create value for the customer. Apple has a
competitive advantage over its peers as it works to lower some of the forces such as
threat of substitutes and supplier power. Apple’s future will be prosperous if it maintains
its ability to create revolutionary products that exceed the needs and wants of the
consumer.

References
Apple Inc. (2013, September 10). Apple Announces iPhone 5s—The Most Forward-
Thinking Smartphone in the World. Retrieved from
http://www.apple.com/pr/library/2013/09/10Apple-Announces-iPhone-5s-The-
Most-Forward-Thinking-Smartphone-in-the-World.html
Baltzan, P. (2013). Business driven information systems, 4e. Chapter 1.
Browne, M. N., & Keeley, S.M. (2012). Asking the right questions: A guide to critical
thinking, 10th edition. Upper Saddle River, NJ: Pearson/Prentice Hall.
Edelstein, S. (2013, August 15). Will Apple’s quest for dashboard dominance change
in-car tech for the better. Retrieved from
http://www.digitaltrends.com/apple/apple-in-car-what-to-expect-from-siri-eyes-
free-and-ios-7/
Kalakota, R. and Netke, S. (n.d.). Analytics Basics 101 [Web log post]. Retrieved from
http://practicalanalytics.wordpress.com/bianalytics-basics/
Hesseldahl, A. (2006). Apple's Latest Fruits. Businessweek Online, 8.
Linden, G., Kraemer, K., and Dedrick, J. (2009). Who Captures Value in a Global
Innovation Network? The Case of Apple's iPod. Communications of the ACM,
52(3), 140-144.
McKay, L. (2009, March). CRM and the iPhone. CRM Magazine. pp. 32-37.

Merson, G. (2013, October 2). Apple’s iTV finally underway? The pieces are falling into
place. Retrieved from http://www.nbcnews.com/technology/apples-itv-finally-
underway-pieces-are-falling-place-8C11320133
Unknown Author. (2012, April 18). Apple’s business intelligence using CRM [Web log
post]. Retrieved from http://iloveapple1.wordpress.com/2012/04/18/apples-
business-intelligence-using-crm/
Ramirez, E. (2009, October 20). Apples Database Management [Web log post].
Retrieved from http://apple1inc.blogspot.com/
Wikipedia (n.d.). Apple Inc. Retrieved from http://en.wikipedia.org/wiki/Apple_Inc.

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