Project Apple Computers


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Project Apple Computers

  2. 2. AB S T R A C T . The need for this project is to explore the strategies of world’s top companies like Apple Inc. and to discover the methods and ideologies of companies like this. Project-based learning offers a wide range of benefits to both students and teachers. A growing body of academic research supports the use of project-based learning in school/college to engage students, cut absenteeism, boost cooperative learning skills, and improve academic performance.This project has helped me a lot to gather a lot of knowlwdge and growth in self-reliance, and improved attitudes toward learning . It has also provided me Opportunities to develop complex skills, such as higher-order thinking, problem-solving, collaborating, and communicating. The main outcome of this project is to learn the Marketing skills and various strategies which are applied by the large companies for their success.It also helps in developing own skills and using the gathered knowledge in future projects and studies. 2
  3. 3. PREFA C E. Apple Inc. is an American multinational corporation that designs and manufactures consumer electronics, computer software, and personal computers. The company's best-known hardware products include Macintosh computers, the iPod, the iPhone and the iPad. Apple software includes the Mac OS X operating system; the iTunes media browser; the iLife suite of multimedia and creativity software; the iWork suite of productivity software; Aperture, a professional photography package; Final Cut Studio, a suite of professional audio and film-industry software products; and Logic Studio, a suite of audio tools. As of January 2010 the company operates 284 retail stores in ten countries, and an online store where hardware and software products are sold. Established in Cupertino, California on April 1, 1976 and incorporated January 3, 1977, the company was called Apple Computer, Inc. for its first 30 years, but dropped the word "Computer" on January 9, 2007 to reflect the company's ongoing expansion into the consumer electronics market in addition to its traditional focus on personal computers.Apple has about 35,000 employees worldwide and had worldwide annual sales of US$42.91 billion in its fiscal year ending September 26, 2009. For reasons as various as its philosophy of comprehensive aesthetic design to its distinctive advertising campaigns, Apple has established a unique reputation in the consumer electronics industry. This includes a customer base that is devoted to the company and its brand, particularly in the United States. Fortune magazine named Apple the most admired company in the United States in 2008 and in the world in 2008, 2009, and 2010. 3
  4. 4. AP PL E PR O D U C T S . 4
  5. 5. A D V A N T A G E S A N D DI S A D V A N T A G E S OF AP P L E PR O D U C T S . . MA C .. Advantages: Easy to use Virus free With boot camp you can run XP or Vista on your machine, and with Parallels you can run windows programs in OS X Disadvantages: Small software base compared to Windows (without using bootcamp/parallels) Not nearly as customizable Missing some features that are pretty basic with Windows( my biggest hate is no page up/down key, no real backspace key, and you have to use the control key to right click) Any more I would say that about any operating system you pick will work, I still prefer Windows Xp over everything, but Linux, OS X, and Windows are all great choices. I POD.. 5
  6. 6. It’s a fact like no other- iPod has catapulted Apple into unbelievable fame and fortune, but are iPod’s really that fabulous and everything Apple would like us to believe? Is always important to give due consideration to iPod Advantages and disadvantages before you jump into an actual investment. At first glance, the iPod’s appearance is dashing and the sound of high quality. Question is however, is it really the best-looking mp3 player available? Well, the answer will depend entirely upon your individual taste. The other question you should ask yourself is- is it the best sounding one? Mmm!! the answer will also depend on what your standards of quality are. One thing that’s sure is with competitors out there like Sony and Creative, you really have to pull up your socks and ensure you have excellent sound quality ratings when compared to the competition, which have been in the sound business for years. Is this another one of Apple’s gimmicks? Have a look at my list of iPod advantages and disadvantages and judge for yourself… Program access- The addition of the iTunes program is a great feature, there is not two ways about that. There is however also a disadvantage to iTunes and it comes in the form of being the only way to interact with iPod. Other mp3 players are easily accessed directly from your computer’s “My Computer” folder, just as if you were accessing your flash, C or D drives. This fact alones makes iPod extremely limited in terms of what it can do. This also makes the use of Apple an essential intermediary for media transferring to and from their product. Only play iTunes purchases- The greatest disadvantage to Apple iPod’s is most probably its FairPlay DRM protection. The program only allows songs purchased trough iTunes to be played on the device, or on a specific computer if purchase of the songs were made from a computer. Should you decide to invest in another brand mp3 player, all your iTune-purchased songs will be unplayable and thus of absolute no value. It’s just Apple’s way of keeping you loyal to their product. If any other large technology company tried this stunt, it would get trashed and probably crucified by public opinion. iTunes incompatibility with other mp3 player software- Prefer to use Windows Media Player or Winamp? Well, it’s a fact they are a lot quicker and less tiring than iTunes! Unfortunately you can’t! FairPlay DRM protection on downloaded songs only allows for songs to be played in iTunes or on your iPod. Non-replaceable battery- Your iPod purchase comes standard with a non-replaceable battery in other words an internal rechargeable battery. As we all know- rechargeable batteries do not last forever; eventually they will stop holding their charge and should your iPod still be under warranty you have the option to send it to Apple. This will result in you receiving a refurbished iPod with the possibility of not being your, if you are out of warranty, you can just through your US Dollar 300 iPod into the garbage can. Replacement by Apple for an additional US Dollars 100 is another option you have but that is probably what your second-hand iPod will be worth by the time the battery’s fully charged. Its also important to not that should the battery get depleted you can’t spare change it, this should be kept in mind if functionality is essential for long periods of time. No FM radio function- There are tons of MP3 players that have FM radio functionality with option to save radio recordings in mp3 format, but not Apple ipod! A separate adaptor need to be purchased for this feature and to top it all, the adapter will only work with newer iPod versions and will not allow records. No storage space- Urgently need to store information but don’t have a flash drive or a blank CD with you? Chances are very good that you most likely have your mp3 player. IPod has absolutely no storage space for an emergency transfer of media you’ve created for example in MS Word. Again, iTunes interaction with the iPod, is to blame for this. 6
  7. 7. No voice recording function- Have an unexpected voice recording? Many mp3 players will be able to assist in an instant, iPod unfortunately not. No WMA format playback- WMA is a fantastic playback format that gives companies the capability of using DRM and producing files a lot smaller than mp3 format. It’s mainly for these reasons that WMA is the preferred choice for ebook publishers. IPod has however chosen to ignore its existence. WMA conversion is a possibility but can be an immense hassle if you have an extensive music collection, to convert each and every song. Expense- In general iPod’s are more expensive when compared to other mp3 players that offer a lot more value for your money in terms of function, quality and overall appearance. By just giving consideration to all the reasons previously stated, you will agree with me that iPods has way more disadvantages than advantages. You will just be paying for the Apple name, and getting less. Health concerns- iPod also comes with a couple of health concerns. A study recently showed that iPods can potentially interfere with pacemakers resulting in malfunctions when placed near the heart monitoring device. Is actually scary to think that an iPod could pose a risk to your health. In all fairness however, no other player have probably been tested for this and might have same effect. IPods selection may have been biased for the study due to its extreme popularity. Wait just a second before you start sending me hate mail, its important to bear in mind that I’ve mainly given consideration to iPod’s disadvantages and not its advantages. I am sure there are tons of positive aspects about iPod including battery charge duration and its incredible selection of accessories. When compared to other mp3’s players, iPod most certainly has more accessories than any other mp3 players on the market. IP H O N E . . iPhone Advantages. Brand Elevation. The iPhone home page establishes one central on-device portal for accessing all of Apple’s rich content and standalone widgets. By establishing a consistent look-and-feel across all of the iPhone widgets, Apple elevates its brand. No matter which widget they use, users get the same user experience, navigation, and look and feel. The on-device portal approach enables Apple to “own” the end-to-end user experience on the phone. Fewer Keystrokes. By letting users drag-and-drop-and-touch, Apple eliminated as many keystrokes as possible to discover and access rich content. This, I believe, is a smart move, considering a simple music download from a carrier portal can take 18 to 39 clicks to execute. That’s a huge usability hindrance as most people abandon such activities after six clicks. To further ease data entry, iPhone widgets also connect with the Personal Information Manager (PIM) software on the phone. This enables users to quickly email or text content to a friend. They can grab addresses from their contacts and use them inside widgets to reduce data entry – a key feature of any on-device portal application. 7
  8. 8. Requests Remembered. The iPhone also remembers recent requests. Search for stocks using the stock widget, and the requests will be stored, eliminating the need to reenter the same information later. Similarly, by offering personalization features in the widgets, Apple prevents repeat data entry. Encourage Action. When the iPhone displays content, an “action bar” at the bottom of the screen provides further options for using the content. (e.g., find an address for a restaurant, then map door- to-door directions to the restaurant, then get current traffic conditions.) Okay, maybe it’s not called an “action bar” – that’s what we call ours – but it’s cool. Nice job Apple! Multimedia Content. iPhone will offer music, streaming video, podcasts, movies, YouTube, and more. Nobody does multimedia better than Apple, and dedicated applications are the best way to deliver these services. iPhone Mobile Gotcha’s Despite its engineering and design capabilities, Apple still needs to address a number of key issues: Cellular Internet Trap. Sure, the Safari mobile browser may be the best mobile browser ever. But unless users are near a WiFi hotspot, Safari doesn’t solve the fundamental problem facing Apple – and everyone else – namely, every click is a connection over the cellular Internet. Worse, the iPhone uses AT&T’s slower EDGE network rather than a 3G network. While the slow speeds are not Apple’s fault, they reflect poorly on Apple’s brand – making the quick-click widgets an even more important part of the iPhone experience. Keypad Data Entry. Apple’s gone out of its way to simplify data entry, but users browsing the Web on an iPhone will still wind up tapping in URLs on the touch screen keypad. Related concerns are the screen’s user-friendliness and scratch resistance. Touch screens have, historically, proved to be good in concept but often flawed in execution. Limited Widget Integration. Beyond its PIM integration, widget integration on the iPhone is limited. For example, after looking up a city’s weather in the weather widget, that city should appear for mapping in the map widget. It should, but it doesn’t. Similarly, the widgets could be beefed up with more offline content options, letting consumers narrow down their search criteria offline rather than connecting to the network every step of the way. Third-Party Apathy? Apple may limit third-party developers to building browser-based applications. Why not offer a Software Development Kit, or SDK, and encourage third parties to contribute to the users’ experience? Obviously, Apple has been paying attention to third-party developers to see what was and wasn’t working in mobile. Shutting them out now is clearly a mistake. I PA D.. It was impressive the expectation that Apple has lifted the world with its new iPad. Furthermore, I believe that neither the iPhone was so often the day of submission. Something perfect, helpful and necessary. It's like its creators describe the iPad. And being a bit subjective, I think undoubtedly it's the most beautiful electronic device ever created 8
  9. 9. so far. Its design, finish, materials used, the taste of Apple in creating a product is undisputed, but like everything else, find a face that subtracts a few points to this Tablet. Today we see the advantages and disadvantages that this product offers: The iPad combines each and every one of the most common tasks in regard to digital entertainment: it can play videos, photos, allows us to access and view changes in social networks, read eBooks, throwing million applications, games, play music, keep up to date our agenda, make notes, access to Google maps and many more things that very few devices offer, and best of all is that the same taste and style used in the product, apply it to each of these tasks. It is lightweight, compact and offers a unique work flow. Its 9.7 inches screen is ideal for these tasks, although some aspects are not as interesting. So we found some points that may create some reluctance on the consumer, is that the lack of USB ports to connect external devices or a Web camera that allows us to make video calls, have questioned the iPad. Among the drawbacks that have created more excitement in the network, find the iPad incompatibility with the Flash platform, which means that accessing web pages with these elements, we find a physical vacuum in each of the regions containing these elements. And if there is to be objective, we refer also to the lack of a multitasking environment, because being a leisure device and media player, not the simple inability to play music while surfing the Internet, is worthy of having her very account before considering purchasing the product. INT E R N A T I O N A L A N D D O M E S T I C S C E N A R I O O F AP P L E. India: Why Apple Walked Away Plans for an Indian tech support center have been scrapped. A cautionary tale Apple CEO Steve Jobs has long had a thing for India. After working at game developer Atari (ATAR ) in the mid-'70s, Jobs took a break and backpacked around the subcontinent in search of spiritual enlightenment. Upon his return to the U.S., his more capitalistic instincts took over, and he and Steve Wozniak launched Apple. Today, of course, the seeker-turned- billionaire enjoys a reputation as one of the most successful entrepreneurs and savviest marketing minds on the planet. Yet he is also a tough-minded executive who knows when to cut and run. That's why Apple Computer Inc. has shelved plans to build a sprawling technical support center in Bangalore, even as IBM (IBM ) and other tech powers are ramping up. Just three months back, Apple appeared to be on the same trajectory, and there was talk of the company hiring 3,000 workers by 2007 to handle support for Macintosh computers and other Apple gear. Many in India even speculated that Jobs 9
  10. 10. might travel there this year to publicize Apple's commitment to the country. It wasn't meant to be. In late May, Apple dismissed most of the 30 new hires at its subsidiary in Bangalore. (A handful working in sales and marketing will stay on.) Spokesman Steve Dowling would say only that Apple had "reevaluated our plans" and decided to provide support from other countries. Another source familiar with the situation, though, says the decision was cost-driven. "India isn't as inexpensive as it used to be," the source says. "The turnover is high, and the competition for good people is strong." Apple feels it "can do [such work] more efficiently elsewhere." The shutdown highlights concerns about the sustainability of India's fast-track economy. True, India grew 9.3% last quarter and is still home to the world's largest and fastest-growing offshore outsourcing sector, which last year generated some $17.3 billion in revenues and employed nearly 700,000 people, according to the McKinsey Global Institute. Yet India's benchmark Sensitive index, or Sensex, has dropped by 20% in the past month as global investors have fled emerging-market stocks. And the outsourcing sector is now plagued by concerns about rising wages. Entry-level pay at tech and outsourcing companies climbed by as much as 13% annually from 2000 to 2004, while salaries for midlevel managers jumped 30% a year during the same period, to a median of $31,131, according to McKinsey and Nasscom, India's software industry association. INTERNATIONAL SCENARIO OF APPLE COMPUTERS. Advertise. Webster defines it to “make publicly and generally known: to call public attention to especially by emphasizing desirable qualities so as to arouse a desire to buy or patronize.” The advertisement business has reached extreme highs in the last decade thanks to the extended communication we now have through technology. It has now become so simple, even to the average individual to promote what ever is desired. If this task has become so effortless for a single person, then why would a huge corporation not be able to do this? Apple Computer, a competitor in today’s world of PC’s, has not succeeded in advertising their product as well as their opponents such as Gateway, Hewlett Packard and their oldest rival, IBM. Despite disastrous losses in the 80s and 90s to their main competitor, IBM, Apple recently re- vamped the entire company. They have focused on marketing and product development. They even introduced the iMac in 1998, which turned out to be the most successful personal computer launch ever. Despite this success, the rapid rate of development within the computer industry indicated that Apple must analyze their previous marketing techniques in order to maintain the high level of success and to keep up with the competition. In order for a product to be successful, especially on the scale of PC’s, people around the world must have it on their mind. People need to be exposed to the idea in many different ways. There are several methods to accomplishing this. The internet, television, movies, radio, billboards, ads and 10
  11. 11. countless other ways are all roads into the advertisement world. Compaq, HP, Gateway and Dell have dominated these fields for years, and Apple has just now in the last couple of years been able to scrape the surface of these ideas. In the last year, cable has been able to televise the first successful set of Apple commercials which showed them to be better and more efficient than their competitors. Capitalizing on major opportunities, Apple stepped up and took over the movie world too. In any movie coming from Hollywood, the only PC logo that is now seen is Apple, whether it is on a laptop or desktop computer, software, iPod or even a sticker. By doing this they have successfully promoted high level of graphics and “easy use.” Apple strove for beauty this year and they achieved this through the iMac and iPod. The iMac is an affordable, hassle free, plug and surf, personal computer that competes with other firms in the market. Another part of the marketing technique Apple used for the iMac was through the individuality of people. They produced the computer in different colors. People were able to customize their personal computers for the first time in any way they wanted. They extended this idea to the iPod products. Once again, this method of reaching out to the people’s individuality caused a boom in sales across the world. Their updated software has been another step in the business world for Apple. MacOS and MacOSX has been a wonderful transition for people use to using the Windows operating system. It has proven to be much faster and easier to use. Tthe new MacOS is equipped with one feature that no other operating system has, and that is speech recognition. An addition to the great new technologies being introduced and supported is the continued excellence for the graphics in the industry. These Apple produced computers are the fastest personal computers on the market today, beating other computers such as the Gateway 550-MHz Pentium III PC. Finally, the new Macintosh operating systems are showing great support for the futurist programming language of Java. This is a wireless networking system that lets you travel up to 150 feet away from the base station. Apple’s ad campaign is based on the two words of “Think Different”, and I believe they are beginning to take their own advice. Apple has always supported graphical software and hardware but the continued vision of where the industry is going with software titles like Adobe PhotoShop and Apple’s new FinalCut Pro surpasses anything the rest of the other computer and software makers have to offer. With this, I believe Apple is likely to become a major player, again, in the industry of personal computing. I personally have only used an Apple computer, such as the iMac, for small assignments before, but enjoyed what I saw. The graphics that were produced were very clear and crisp. The iPod on the other hand, I have been able to use for several things. It is capable to hold thousands of songs, pictures and other data. It is very convenient. I do believe though that in order for Apple to continue to produce such products they will have to step it up even more to get their name out. I’m sure that the computers produced by this company are worth the price people pay for them, which can range from $800 to over $3000, but they may be more successful in advertisement if they offered a low- end computer that would be able to compete with Dell’s low-end computer of $299. In past years, Apple was on a downward spiral, but now the Mac is back on the right track. The interim CEO Steve Jobs has brought them from expected quarterly loses to now, first quarter net income of some 150 millions dollars. The question still remains, is Apple back to stay? With the Windows driven world of today, can Apple assert them self to claim market share? Apple’s stunning new hardware, user-friendly operating system, and drive for incredible new technology, will not only compare Apple to traditional PC and software maker but will stun the rest of the computer world along the way. 11
  12. 12. CO M P A N Y PR O FILE AN D BA C K G R O U N D HI S T O R Y . . Company Perspectives: Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings. Key Dates: 1976: With $1,300, Steve Jobs and Steve Wozniak found Apple Computer, Inc. 1980: Apple converts to public ownership. 1982: Apple becomes the first personal computer company to reach $1 billion in annual sales. 12
  13. 13. 1985: John Sculley assumes the helm after a management shakeup that causes the departure of Jobs and several other Apple executives. 1991: PowerBook line of notebook computers is released. 1994: Power Macintosh line is released. 1996: Acquisition of NeXT brings Steve Jobs back to Apple as a special advisor. 1997: Steve Jobs is named interim chief executive officer. 1998: The all-in-one iMac is released. 2000: Jobs, now firmly in command as CEO, oversees a leaner, more tightly focused Apple. Company History: Apple Computer, Inc. is largely responsible for the enormous growth of the personal computer industry in the 20th century. The introduction of the Macintosh line of personal computers in 1984 established the company as an innovator in industrial design whose products became renowned for their intuitive ease of use. Though battered by bad decision-making during the 1990s, Apple continues to exude the same enviable characteristics in the 21st century that catapulted the company toward fame during the 1980s. The company designs, manufactures, and markets personal computers, software, and peripherals, concentrating on lower-cost, uniquely designed computers such as iMAC and Power Macintosh models. Origins: Apple was founded in April 1976 by Steve Wozniak, then 26 years old, and Steve Jobs, 21, both college dropouts. Their partnership began several years earlier when Wozniak, a talented, self-taught electronics engineer, began building boxes that allowed him to make long-distance phone calls for free. The pair sold several hundred such boxes. In 1976 Wozniak was working on another box--the Apple I computer, without keyboard or power supply--for a computer hobbyist club. Jobs and Wozniak sold their most valuable possessions, a van and two calculators, raising $1,300 with which to start a company. A local retailer ordered 50 of the computers, which were built in Jobs's garage. They eventually sold 200 to computer hobbyists in the San Francisco Bay area for $666 each. Later that summer, Wozniak began work on the Apple II, designed to appeal to a greater market than computer hobbyists. Jobs hired local computer enthusiasts, many of them still in high school, to assemble circuit boards and design software. Early microcomputers had usually been housed in metal boxes. With the general consumer in mind, Jobs planned to house the Apple II in a more attractive modular beige plastic container. Jobs wanted to create a large company and consulted with Mike Markkula, a retired electronics engineer who had managed marketing for Intel Corporation and Fairchild Semiconductor. Chairman Markkula bought one-third of the company for $250,000, helped Jobs with the business plan, and in 1977 hired Mike Scott as president. Wozniak worked for Apple full time in his engineering capacity. Jobs recruited Regis McKenna, owner of one of the most successful advertising and public relations firms in Silicon Valley, to devise an advertising strategy for the company. McKenna designed the Apple logo and began advertising personal computers in consumer magazines. Apple's professional marketing team placed the Apple II in retail stores, and by June 1977, annual sales reached $1 million. It was the first microcomputer to use color graphics, with a television set as the screen. In addition, the Apple II expansion slot made it more versatile than competing computers. The earliest Apple IIs read and stored information on cassette tapes, which were unreliable and slow. By 1978 Wozniak had invented the Apple Disk II, at the time the fastest and cheapest disk drive offered by any computer manufacturer. The Disk II made possible the development of software for the Apple II. The introduction of Apple II, with a user manual, at a consumer electronics show 13
  14. 14. signaled that Apple was expanding beyond the hobbyist market to make its computers consumer items. By the end of 1978, Apple was one of the fastest-growing companies in the United States, with its products carried by over 100 dealers. In 1979 Apple introduced the Apple II+ with far more memory than the Apple II and an easier startup system, and the Silentype, the company's first printer. VisiCalc, the first spreadsheet for microcomputers, was also released that year. Its popularity helped to sell many Apple IIs. By the end of the year sales were up 400 percent from 1978, at over 35,000 computers. Apple Fortran, introduced in March 1980, led to the further development of software, particularly technical and educational applications. In December 1980, Apple went public. Its offering of 4.6 million shares at $22 each sold out within minutes. A second offering of 2.6 million shares quickly sold out in May 1981. Meanwhile Apple was working on the Apple II's successor, which was intended to feature expanded memory and graphics capabilities and run the software already designed for the Apple II. The company, fearful that the Apple II would soon be outdated, put time pressures on the designers of the Apple III, despite the fact that sales of the Apple II more than doubled to 78,000 in 1980. The Apple III was well received when it was released in September 1980 at $3,495, and many predicted it would achieve its goal of breaking into the office market dominated by IBM. However, the Apple III was released without adequate testing, and many units proved to be defective. Production was halted and the problems were fixed, but the Apple III never sold as well as the Apple II. It was discontinued in April 1984. The problems with the Apple III prompted Mike Scott to lay off employees in February 1981, a move with which Jobs disagreed. As a result, Mike Markkula became president and Jobs chairman. Scott was named vice-chairman shortly before leaving the firm. Despite the problems with Apple III, the company forged ahead, tripling its 1981 research and development budget to $21 million, releasing 40 new software programs, opening European offices, and putting out its first hard disk. By January 1982, 650,000 Apple computers had been sold worldwide. In December 1982, Apple became the first personal computer company to reach $1 billion in annual sales. The next year, Apple lost its position as chief supplier of personal computers in Europe to IBM, and tried to challenge IBM in the business market with the Lisa computer. Lisa introduced the mouse, a hand-controlled pointer, and displayed pictures on the computer screen that substituted for keyboard commands. These innovations come out of Jobs's determination to design an unintimidating computer that anyone could use. Unfortunately, the Lisa did not sell as well as Apple had hoped. Apple was having difficulty designing the elaborate software to link together a number of Lisas and was finding it hard to break IBM's hold on the business market. Apple's earnings went down and its stock plummeted to $35, half of its sale price in 1982. Mike Markkula had viewed his presidency as a temporary position, and in April 1983, Jobs brought in John Sculley, formerly president of Pepsi-Cola, as the new president of Apple. Jobs felt the company needed Sculley's marketing expertise. 1984 Debut of the Macintosh The production division for Lisa had been vying with Jobs's Macintosh division. The Macintosh personal computer offered Lisa's innovations at a fraction of the price. Jobs saw the Macintosh as the 'people's computer'--designed for people with little technical knowledge. With the failure of the Lisa, the Macintosh was seen as the future of the company. Launched with a television commercial in January 1984, the Macintosh was unveiled soon after, with a price tag of $2,495 and a new 3-inch disk drive that was faster than the 5-inch drives used in other machines, including the Apple II. Apple sold 70,000 Macintosh computers in the first 100 days. In September 1984 a new Macintosh was released with more memory and two disk drives. Jobs was convinced that anyone who tried the 14
  15. 15. Macintosh would buy it. A national advertisement offered people the chance to take a Macintosh home for 24 hours, and over 200,000 people did so. At the same time, Apple sold its two millionth Apple II. Over the next six months Apple released numerous products for the Macintosh, including a laser printer and a hard drive. Despite these successes, Macintosh sales temporarily fell off after a promising start, and the company was troubled by internal problems. Infighting between divisions continued, and poor inventory tracking led to overproduction. Although Jobs had originally been a strong supporter of Sculley, Jobs eventually decided to oust Sculley; Jobs, however, lost the ensuing showdown. Sculley reorganized Apple in June 1985 to end the infighting caused by the product-line divisions, and Jobs, along with several other Apple executives, left the company in September. They founded a new computer company, NeXT Incorporated , which would later emerge as a rival to Apple in the business computer market. The Macintosh personal computer finally moved Apple into the business office market. Corporations saw its ease of use as a distinct advantage. It was far cheaper than the Lisa and had the necessary software to link office computers. In 1986 and 1987 Apple produced three new Macintosh personal computers with improved memory and power. By 1988, over one million Macintosh computers had been sold, with 70 percent of sales to corporations. Software was created that allowed the Macintosh to be connected to IBM-based systems. Apple grew rapidly; income for 1988 topped $400 million on sales of $4.07 billion, up from income of $217 million on sales of $1.9 billion in 1986. Apple had 5,500 employees in 1986 and over 14,600 by the early 1990s. In 1988, Apple management had expected a worldwide shortage of memory chips to worsen. They bought millions when prices were high, only to have the shortage end and prices fall soon after. Apple ordered sharp price increases for the Macintosh line just before the Christmas buying season, and consumers bought the less expensive Apple line or other brands. In early 1989, Apple released significantly enhanced versions of the two upper-end Macintosh computers, the SE and the Macintosh II, primarily to compete for the office market. At the same time IBM marketed a new operating system that mimicked the Macintosh's ease of use. In May 1989 Apple announced plans for its new operating system, System 7, which would be available to users the next year and allow Macintoshes to run tasks on more than one program simultaneously. Apple was reorganized in August 1988 into four operating divisions: Apple USA, Apple Europe, Apple Pacific, and Apple Products. Dissatisfied with the changes, many longtime Apple executives left. In July 1990, Robert Puette, former head of Hewlett-Packard's personal computer business, became head of the Apple USA division. Sculley saw the reorganization as an attempt to create fewer layers of management within Apple, thus encouraging innovation among staff. Analysts credit Sculley with expanding Apple from a consumer and education computer company to a business computer company, one of the biggest and fastest-growing corporations in the United States. Competition in the industry of information technology involved Apple in a number of lawsuits. In December 1989 for instance, the Xerox Corporation, in a $150 million lawsuit, charged Apple with unlawfully using Xerox technology for the Macintosh software. Apple did not deny borrowing from Xerox technology but explained that the company had spent millions to refine that technology and had used other sources as well. In 1990 the court found in favor of Apple in the Xerox case. Earlier, in March 1988, Apple had brought suits against Microsoft and Hewlett-Packard, charging copyright infringement. Four years later, in the spring of 1992, Apple's case was dealt a severe blow in a surprise ruling: copyright protection cannot be based on 'look and feel' (appearance) alone; rather, 'specific' features of an original program must be detailed by developers for protection. Mismanagement--Crippling an Industry Giant: 1990s 15
  16. 16. Apple entered the 1990s well aware that the conditions that made the company an industry giant in the previous decade had changed dramatically. Management recognized that for Apple to succeed in the future, corporate strategies would have to be reexamined. Apple had soared through the 1980s on the backs of its large, expensive computers, which earned the company a committed, yet relatively small following. Sculley and his team saw that competitors were relying increasingly on the user-friendly graphics that had become the Macintosh signature and recognized that Apple needed to introduce smaller, cheaper models, such as the Classic and LC, which were instant hits. At a time when the industry was seeing slow unit sales, the numbers at Apple were skyrocketing. In 1990, desktop Macs accounted for 11 percent of the PCs sold through American computer dealers. In mid-1992, the figure was 19 percent. But these modestly priced models had a considerably smaller profit margin than their larger cousins. So even if sales took off, as they did, profits were threatened. In a severe austerity move, Apple laid off nearly ten percent of its workforce, consolidated facilities, moved production plants to areas where it was cheaper to operate, and drastically altered its corporate organizational chart. The bill for such forward-looking surgery was great, however, and in 1991 profits were off 35 percent. But analysts said that such pitfalls were expected, indeed necessary, if the company intended to position itself as a leaner, better-conditioned fighter in the years ahead. Looking ahead is what analysts say saved Apple from foundering. In 1992, after the core of the suit that Apple had brought against Microsoft and Hewlett-Packard was dismissed, industry observers pointed out that although the loss was a disappointment for Apple, the company wisely had not banked on a victory. They credited Apple's ambitious plans for the future with quickly turning the lawsuit into yesterday's news. In addition to remaining faithful to its central business of computer making--the notebook PowerBook series, released in 1991, garnered a 21 percent market share in less than six months-- Apple intended to ride a digital wave into the next century. The company geared itself to participate in a revolution in the consumer electronics industry, in which products that were limited by a slow, restrictive analog system would be replaced by faster, digital gadgets on the cutting edge of telecommunications technology. Apple also experimented with the interweaving of sound and visuals in the operations of its computers. For Apple, the most pressing issue of the 1990s was not related to technology, but concerned capable and consistent management. The company endured tortuous failures throughout much of the decade, as one chief executive officer after another faltered miserably. Scully was forced out of his leadership position by Apple's board of directors in 1993. His replacement, Michael Spindler, broke tradition by licensing Apple technology to outside firms, paving the way for ill-fated Apple clones that ultimately eroded Apple's profits. Spindler also oversaw the introduction of the Power Macintosh line in 1994, an episode in Apple's history that typified the perception that the company had the right products but not the right people to deliver the products to the market. Power Macintosh computers were highly sought after, but after overestimating demand for the earlier release of its PowerBook laptops, the company grossly underestimated demand for the Power Macintosh line. By 1995, Apple had $1 billion worth of unfilled orders, and investors took note of the embarrassing miscue. In a two-day period, Apple's stock value plunged 15 percent. After Spindler's much-publicized mistake of 1995, Apple's directors were ready to hand the leadership reins to someone new. Gil Amelio, credited with spearheading the recovery of National Semiconductor, was named chief executive officer in February 1996, beginning another notorious era of leadership for the beleaguered Cupertino company. Amelio cut Apple's payroll by a third and slashed operating costs, but drew a hail of criticism for his compensation package and his inability to relate to Apple's unique corporate culture. Apple's financial losses, meanwhile, mounted, reaching $816 million in 1996 and a staggering $1 billion in 1997. The company' stock, which had traded at more than $70 per share in 1991, fell to $14 per share. Its market share, 16 percent in the late 1980s, 16
  17. 17. stood at less than four percent. Fortune magazine offered its analysis, referring to Apple in its March 3, 1997 issue as 'Silicon Valley's paragon of dysfunctional management.' Amelio was ousted from the company in July 1997, but before his departure a significant deal was concluded that brought Apple's savior to Cupertino. In December 1996, Apple paid $377 million for NeXT, a small, $50-million-in-sales company founded and led by Steve Jobs. Concurrent with the acquisition, Amelio hired Jobs as his special advisor, marking the return of Apple's visionary 12 years after he had left. In September 1997, two months after Amelio's exit, Apple's board of directors named Jobs interim chief executive officer. Apple's recovery occurred during the ensuing months. Jobs assumed his responsibilities with the same passion and understanding that had made Apple one of the greatest success stories in business history. He immediately discontinued the licensing agreement that spawned Apple clones. He eliminated 15 of the company's 19 products, withdrawing Apple's involvement in making printers, scanners, portable digital assistants, and other peripherals. From 1997 forward, Apple would focus exclusively on desktop and portable Macintoshes for professional and consumer customers. Jobs closed plants, laid off thousands of workers, and sold stock to rival Microsoft Corporation, receiving a cash infusion of $150 million in exchange. Apple's organizational hierarchy underwent sweeping reorganization as well, but the most visible indication of Jobs's return was unveiled in August 1998. Distressed by his company's lack of popular computers that retailed for less than $2,000, Jobs tapped Apple's resources and, ten months after the project began, unveiled the massively successful iMAC, a sleek and colorful computer that embodied Apple's skill in design and functionality. Because of Jobs's restorative efforts, Apple exited the 1990s as a pared-down version of its former self, but, importantly, a profitable company once again. Annual sales, which totaled $11.5 billion in 1995, stood at $5.9 billion in 1998, from which the company recorded a profit of $309 million. In 1999, sales grew a modest 3.2 percent, but the newfound health of the company was evident in a 94 percent gain in net income, as Apple's profits swelled to $601 million. Further, Apples' stock mustered a remarkable rebound, climbing 140 percent to $99 per share in 1999. By the decade's end, 'interim' was dropped from Jobs's corporate title, signaling Jobs's return on a permanent basis and fueling optimism that Apple could look forward to a decade of vibrant and consistent growth. In July 1999, Steve Jobs filled the final quadrant in the "Apple Product Matrix"--The consumer portable--when he introduced the iBook. Based on the same principles that had made iMac such a hot sell a year earlier, the iBook brought style to the low-end portable market. Several months later, Jobs announced the PowerMac G4, a significant new professional desktop machine. Apple's stock had risen all summer, and by mid-September was trading at an all-time high, in the high 70s. In a dramatic Keynote at MacWorld Expo SF in January 2000, Jobs unveiled Apple's new Internet strategy: a suite of mac-only internet-based applications called "iTools" and an exclusive partnership with Earthlink as Apple's recommended ISP. Jobs also announced that he would be dropping the "interim" from his title, becoming the permanent CEO of Apple. Apple's sales continued to rise, as did the stock price, which had climbed to 130 by early March. In July 2000, Apple announced a slew of new machines, including the PowerMac G4 Cube, which added a fifth category to Apple's four-corner product strategy. The Cube was Apple's answer to those who wanted an iMac without a monitor, as well as challenge to the computing industry to continue to minimize the size of computers while increasing their visual appeal. The Cube was the biggest gamble Jobs had made since the release of the iMac. It would turn out to be a resounding failure. The second half of 2000 was rocky for Apple. Slower sales (both for Apple and the industry as a whole), combined with a misunderstanding of the consumer market resulted in the first unprofitable 17
  18. 18. quarter in three years. One factor in this decline was the G4 Cube, which sold poorly due primarily to its high price compared to Apple's other products. Another factor was Apple's decision to include DVD-ROM drives in their consumer and professional machines instead of CD-RW drives. As a result, Apple missed sales opportunities to customers who wanted to burn their own CDs. Apple began to rectify these problems in late 2000, when it cut prices on the entire PowerMac line. Apple took the next step in January of 2001, when it announced a new line of PowerMacs, with either CD- RW drives or a new "SuperDrive" which could read and write both CDs and DVDs. Apple also announced two new application: iDVD, a DVD-authoring program, and iTunes, which allowed users to encode and listen to MP3 songs, and then burn them to CDs. All this was part of Apple's new corporate strategy, developed in the face of a massive slow down in the Technology industry: Apple would take advantage of the explosion of personal electronic devices--CD-players, MP3 players, digital cameras, DVD-players, etc.--by building Mac-only applications that added value to those devices. Just as iMovie had added tremendous value to Digital Cameras, iDVD would add value to Digital Cameras and to DVD-players, and iTunes would add value to CD and MP3 players. It was Apple's hope that making the Mac the "Digital Hub" of the new "Digital Lifestyle" would revitalize Apple's sales and guarantee the long-term security of the company. In May 2001, Steve Jobs announced that Apple would be opening a number of retail stores across America, selling not only Apple computers, but various third-party "digital lifestyle" products, such as mp3 players, digital still and video cameras, and PDAs. Apple also announced a major update to the iBook line, a smaller and lighter design that borrowed heavily from the PowerBook G4. In July, Apple refreshed iMacs and G4, and "suspended production" of the G4 Cube, ending months of speculation as to how Apple would deal with the Cube's resounding failure in the marketplace. The Fall of 2001 brought new revisions to the PowerBook G4 and iBook lines, the latter of which had sold extremely well during the summer. In late October, Apple announced its first non-computer product in several years, the iPod. The iPod was a small hard-drive-based digital music player, and represented Apple's first hardware addition to its "digital hub" strategy. At $399, the iPod faced a similar challenge to the woeful G4 Cube: it favored style and form-factor over price. Apple was taking another gamble by charging a premium for the iPod's superior design and small size. In January 2002, Apple reinvented the consumer desktop, again, when it released its flat panel iMac. It also announced iPhoto, a new software package aimed at improving the digital camera user experience. Apple rolled through the first half of 2002, showing profits through the first two quarters. Apple stumbled in the second half of 2002, however, largely due to macroeconomic conditions. With fewer PC purchases being made, Apple scrambled to keep itself fresh in a shrinking marketplace. In June, Apple introduced its "Switchers" ad campain, which would grow to be one of the most popular and successfull of Apple's history. Based on non-scripted monologues of real people, the Switchers campain made the strongest case yet for Macs in a PC world. In July 2002, Steve Jobs announced that the free iTools service would be rolled into a new subscription-based "dotMac" service. Combined with the newly announced iCal and iSync, dotMac was aimed at futher centralizing the Mac in the high-tech lifestyle. In January 2003, Apple released iLife, a bundled software package that included iTunes, iPhoto, iMovie and iDVD, for $50. (all but iDVD could be freely downloaded from Apple's site), in a play to further push the digital-hub concept into the consumer space. 18
  19. 19. Apple's financial troubles continued throughout 2002. In October, it announced a quarterly loss of $45 million, due to weak PowerBook and PowerMac sales. In 2003, however, Apple began to recover, and to build for the future. In January, Apple announced two new PowerBook G4 models, a 12" model similar to existing 12" iBooks, and a giant, wide-screen 17" model, aimed squarely at the graphic design market. Apple also announced that it would be shipping its own Web Browser, Safari, in an apparent attempt to depend less on Microsoft for what was widely believed to be an inferior product. The new PowerBooks sold well, and sales of flat panel iMacs remained steady, but Apple was still in trouble in the professional desktop market. Motorola's development and production of the G4-family of processors continued to lag well behind Apple's expectations. It appeared that the G4 processor had hit a dead end. Apple worked to remedy the situation by developing a new processor with IBM, and in June 2003 came to fruition with the release of the PowerMac G5. The G5 chip, based on IBM's Power4 chip, was a 64-bit processor, meaning it could address more memory and process larger numbers than its 32-bit G4 cousin. The PowerMac G5 represented a hugh shift for Apple, who redesigned the motherboard and case from scratch. Unlike the PowerMac G4, which was based strongly on existing G3 hardware, the G5 was all new, and fast. Though supplies were constrained, the G5 sold well and did much to improve Apple's bottom line. Meanwhile, the iPod was beginning to take off. In April of 2003, Apple unveiled the iTunes Music Store, which would sell individual songs through the iTunes application, for 99 cents each. These songs could be played only on Macs or iPods, but Apple felt that by offering an easy to use, no- nonsense music service, it could make significant inroads to the digital music market. Apple did their homework: when announced, the iTunes Music Store already had the backing of the five major record labels, and a catalog of more than 200,000 songs. In October 2003, Apple released iTunes for Windows. While the iPod had been available for Windows for some time, it had used third-party software which failed to provide the unique user experience that iTunes/iPod integration allowed. With the release of a stable, user-friendly Windows version of iTunes, which included both iPod and Music Store integration, Apple was poised to take the digital music industry by storm. Apple cemented its position with the January 2004 release of the iPod mini, which while smaller in capacity than the original iPod, was smaller than many cellphones. In the first year alone, the iTunes Music Store sold more than 70 million songs, and by July this number had increased to more than 100 million. The iTunes Music Store had a 70% market share among all legal online music download services. iPods had moved from expensive toys to must-have Christmas presents, and Apple found itself in the position of having a monopoly for the first time in several decades. Principal Subsidiaries: Apple Computer, Inc. Limited (Ireland); Apple Computer Limited (Ireland); Apple Computer U.K. Limited (U.K.); Apple Computer International (Ireland); FileMaker Inc.; Apple Japan, LLC; Apple Computer B.V. (Netherlands); A C Real Properties, Inc. Principal Competitors: Compaq Computer Corporation; Dell Computer Corporation; International Business Machines Corporation; Microsoft Corporation; Sun Microsystems, Inc. 19
  20. 20. AP P L E ’ S PHIL O S O P H Y AN D MET H O D O L O G Y . . What makes Apple golden!! The creator of the iPod and iPhone sets a dazzling new standard for innovation and mass appeal, driven by an obsessive CEO who wants his products to be practically perfect in every way. By Betsy Morris, senior editor 20
  21. 21. Full list NEW YORK (Fortune) -- The mass market is supposed to be dead, but you would never know it from Apple. In February the iTunes Store became the second-largest music retailer in the U.S., right behind Wal-Mart. The iPod is to music players what Kleenex is to tissue or Xerox is to copiers. Almost everything Apple makes transcends gender, geography, age, and race. An Apple Store is a demographic melting pot, with computer games for kids and a Genius Bar for their parents and so much cool stuff to touch that it's a magnet for teens and twentysomethings. Apple scoffs at the notion of a target market. It doesn't even conduct focus groups. "You can't ask people what they want if it's around the next corner," says Steve Jobs, Apple's CEO and cofounder. At Apple (AAPL, Fortune 500), new-product development starts in the gut and gets hatched in rolling conversations that go something like this: What do we hate? (Our cellphones.) What do we have the technology to make? (A cellphone with a Mac inside.) What would we like to own? (You guessed it, an iPhone.) "One of the keys to Apple is that we build products that really turn us on," says Jobs. With that simple formula, Apple not only has upstaged the likes of Microsoft (MSFT, Fortune 500) but has set the gold standard for corporate America with an entirely new business model: creating a brand, morphing it, and reincarnating it to thrive in a disruptive age. Now, just seven years after it unveiled the first iPod, fully half of Apple's revenues come from music and iPods. Interest in the iPod and iPhone has rubbed off on the Mac, whose sales growth outpaces the industry's. Apple has demonstrated how to create real, breathtaking growth by dreaming up products so new and ingenious that they have upended one industry after another: consumer electronics, the record industry, the movie industry, video and music production. In the process the company that ranks as the new No. 1 among America's Most Admired Companies has become a roaring financial success. In the five years ended last September, sales tripled to $24 billion and profits surged to $3.5 billion, up from $42 million. While Apple's stock is slumping along with the market, tumbling 40% this year on worries about less-than-stratospheric sales growth, it doesn't usually stay down for long. Apple ranks No. 1 among Fortune 500 companies for total return to shareholders over both the past five years (94%) and the past ten (51%). The decade coincides exactly with the return of Jobs as Apple's maestro, bringing his particular mix of genius and obsession, as well as a tendency to play by his own rules. His utter dedication to discovery and excellence has created a culture that has made Apple a symbol of innovation. You won't find that word on a placard or a piece of propaganda at One Infinite Loop, Apple's headquarters in Cupertino, Calif. There innovation is a way of life. But it isn't like creating new variations on Crest toothpaste. At Apple, every endeavor is a moon shot. Sometimes the company misses, but the successes are huge. Apple's goal for iPhone sales this year is ten million units, up from 3.7 million during its six months on sale in 2007. Apple requires a special kind of workforce. The place is divided by product but also by function along what COO Tim Cook calls "very faint lines." Collaboration is key. So is a degree of perfectionism. Apple hires people who are never satisfied. A designer has to be a borderline fanatic to care about the curve of a screw on the underside of a MacBook Air or the apparent weightlessness of the tiny door that hides its connectors. You don't get a foot in the door here unless your eyes light up when you talk about your Mac. (Head designer Jonathan Ive referred to a new MacBook Air as "this guy" as he pointed out 21
  22. 22. features in a recent interview.) The place is loaded with engineers, but it's not just the skills that are important, it's the ability to emote. ("Emotive" is a big word here.) The passion is what provides the push to overcome design and engineering obstacles, to bring projects in on time -- and a peer pressure so great it sometimes causes a team to eject a weak link or revolt against an underperforming boss. "Apple," says Cook, "is not for the faint of heart." Here there is no such thing as hedging your bets. "One traditional management philosophy that's taught in many business schools is diversification. Well, that's not us," says Cook. "We are the anti-business school." Apple's philosophy goes like this: Too many companies spread themselves thin, making a profusion of products to defuse risk, so they get mired in the mediocre. Apple's approach is to put every resource it has behind just a few products and make them exceedingly well. Apple is brutal about culling past hits: The company dropped its most popular iPod, the Mini, on the day it introduced the Nano (a better product, higher marginsµ why dilute your resources?). Apple might look like a high-wire act. But while success is never guaranteed, it's not random either. Ownership of its operating system gives Apple an unusual degree of control over its ability to design, change, and adapt. That allows Apple to follow the product - with no preconceptions about where it will end up. The iPod has evolved from a device the size of a deck of cards to a Nano to a Shuffle and now to a Touch. The Touch, says Cook, "has another roadmap in front of it" if it becomes, as he predicts, the first mainstream Wi-Fi mobile device. "Apple's DNA has always been to try to democratize technology," says Jobs, in the belief that if you make something "really great, then everybody will want to use it." Who would have thought that a cult brand like Apple would be resuscitating a mass market? Jobs and his true believers have proved that if you're bold enough to build it, they will come. Apple Computer Inc. AND THE TWO: Global Gap Analysis And Labor Productivity Benchmarks Published SAN DIEGO, CA -- – ICON Group International Ltd. today released two of the most comprehensive studies to date on vertical gap analysis and labor productivity benchmarks for Apple Computer Inc. (NAS: AAPL). The methodologist for this unique study is Philip Parker, Eli Lilly Chair Professor of Innovation, Business and Society at INSEAD (Fontainebleau, France and Singapore). According to Professor Parker “We created these reports in response to two inescapable trends: a return to fundamentals and globalization.” The goal of these reports is to assist consultants, financial managers, strategic planners, and corporate officers in gauging indicators of Apple Computer Inc.’s financial and human resource structure. The Report has benchmarked Apple Computer Inc. against competing firms in the Electronic Computers industry worldwide—going beyond traditional methods of company benchmarking. The results are two specialized reports: (1) global financial benchmarks using common-size statement ratios (vertical analysis), and (2) labor-productivity and utilization measures collected across borders. Parker notes, “With the globalization of markets, greater foreign competition, and the reduction of barriers to entry, it becomes all the more important to benchmark a company’s financial indicators on a worldwide basis.” 22
  23. 23. Professor Parker states, "We are intrigued by the wide variations in basic financial and productivity measures between Apple Computer Inc. and other Electronic Computerscompanies. The Earnings Before Interest And Taxes (EBIT), for example, varied from -2.79 to 20.67. We see this type of variation in the hundreds of ratios that we estimate.” What? : The Coverage of the Reports: Two reports, financial ratios and labor productivity ratios, are available for Apple Computer Inc.. Each report reveals productivity and industry ranks for companies in the Electronic Computersindustry. Reports for 24 of Apple Computer Inc.’s competitors in Electronic Computersare also available including: Apple Computer Inc. Compal Electronics Inc. Dell Computer Corporation D-Link Corporation Ergodata SA First International Computer Inc. Fujitsu Limited Gateway Incorporated GVC Corporation Hewlett-Packard Company Interland, Inc. Japan Digital Laboratory Co., Ltd. Kontron embedded computers AG Lintec Computer AG Maxdata AG Microtek International Inc. Mitac International Corporation NCR Japan, Ltd. Onex Corpn OPTIMUS SA Psion Plc Quanta Computer, Inc. Sun Microsystems Incorporated Synnex Technology Internationsl Corporation The reports answer such questions as: How has Apple Computer Inc.’s asset structure varied compared to global benchmarks for the Electronic Computersindustry? Does it generally hold more cash and other short-term assets, or does it tend to concentrate its assets in physical plant and equipment? On the liability side, does Apple Computer Inc. typically have a higher percent of payables compared to the benchmarks, or does it hold a higher concentration of long-term debt? Does Apple Computer Inc. have a relatively higher cost of goods sold, operating costs, or income taxes compared to global benchmarks? Have Apple Computer Inc.’s returns on equity been higher or its profit margins greater? What has been the ratio of short-term and long-term assets to employee? What are typical capital-labor ratios? What are the average sales and net profits per employee compared to global benchmarks? 23
  24. 24. How? : The Methodology: Most vertical analyses merely focus on benchmarking against domestic ratios, often published by government agencies or commercial sources. In contrast, the report calculates thousands of industry norms by looking at firms at the global level, pooling statistics on tens of thousands of companies across over 40 countries, and applying a seven-stage methodology: (1) identification of industry classifications, (2) firm-level data collection and aggregation, (3) standardization of raw statistics, (4) filtering outliers, (5) calculation of global norms, (6) projection of deviations and gaps, and (7) projection of ranks and percentiles. For each part of the financial statement, the larger structural differences and gaps between Apple Computer Inc. and the global benchmarks are provided with summary tables of ranks and percentiles. SW O T ANALY S I S OF AP P L E C O.. 24
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  26. 26. AP P L E ’ S MA R K E T I N G S T R A T E G Y . . Apple has been so successful in these last year’s thanks to his fresh, imaginative way to think and do its business: a winning combination of exceptional products, great style and design, great strategy, innovative marketing, sleek and enticing communications. Apple owes its overwhelming success in the last years to the iPhone and to the smart iPod and iTunes product combination, a combination of a great hardware piece with great style, great software, great performance, user friendly interface, with a good e-business service. The iPod + iTunes halo effect and new great Mac computers and Mac OS software did the rest in increasing Apple revenue stream. In the 5 years between 2003 to 2008 the Apple share value increased 25 times, from $7.5 to $180 per share. At july 2008 prices, before the US Financial Crisis, Apple stock market capitalization was $160 billion. In January 2010 Apple shares topped the $210 mark. But even the best companies with the best products have bottleneck factors which often avoid full exploitation of the opportunities. 26
  27. 27. The iPad. The new Apple Tablet, the iPad - an unnecessary product? - iPad Marketing Strategy Steve Jobs claims the iPad gives the best way to experience the web. Yet, the iPad does not have Flash Player, Flash is essential on the web and is used everywhere. Surfing the Web without Flash gives you big empty boxes in the middle of a page. Video on the web is mostly implemented in Flash. No Flash, no video. So, what Steve Jobs says is untrue. Actually the iPad gives one of the worst web experiences you can imagine. Besides, the iPad does not have USB ports. The iPod. Few people are aware - and few market analysts too - that for the first 3 years the iPod was an absolute flop. The iPod was launched in october 2001, and between 2001 and 2004 iPod sales were between 100-200 thousand units per quarter, very far from today's 10-20 million units per quarter, and the iPod sales were not even covering the product research & development costs. Then, in June-Aug 2004 something happened, and iPod sales began to grow strongly, quarter after quarter. Today, we all know where the iPod stands, and what a remarkable success it is. The iPod made the fortune of Apple, and it stands out as the major turning point in the company growth. Few people know that the iPod + iTunes business idea was not conceived inside Apple, but was proposed to Apple by an outside source, a music lover and Engineer named Tony Fadell. More on Tony Fadell and on the iPod marketing on iPod Marketing Strategy The iPod marks another outstanding result in marketing: the annihilation of competitors. To know more see the analysis on The iPod competitors It should be noted that, since the second generation of iPods in 2002, the iPods were made compatible not only with the Mac operating systems but with Microsoft Windows operating systems as well. We should ask ourselves (and to Steve Jobs): how many iPods would have been sold if the iPods would had been compatible only with Mac operating systems? Where the iPod is manufactured and assembled 27
  28. 28. The iPhone. The pipeline of new products which came out from Apple in the last years is impressive, and overwhelming. In 2007, with the successful launch of the iPhone, Apple has marked another milestone in its development and growth. And moreover, the iPhone enters a market - the market of mobile phones - a market which is mature, and saturated. Nonetheless, Apple has been able to develop a revolutionary product, and to change the paradigm in the mobile phone market. The iPhone is 5 years ahead of all its competitors. A wonderful product, amazing user interface, great design. It is not only a mobile phone, it is a product between a mobile phone and a laptop computer. Even calling it a smartphone is not enough. In July 2008 Apple launched the second generation iPhone, the iPhone 3G. The iPhone 3GS. In June 2009 Apple launched its third generation iPhone: the iPhone 3GS. The iPhone 3GS has a 3 megapixel autofocus camera, video recording and editing capabilities, voice control, longer battery life, 7.2 Mbps HSDPA internet connection. iPhone 3GS is twice faster than the iPhone 3G. The iPhone 3GS prices: $199 for the 16GB model, $299 for the 32GB model. more on the new iPhone 3GS on the iPhone 3GS page. More on iPhone Marketing on the iPhone Marketing Strategy page. Apple did great. no doubt. However Apple has done some serious mistakes. The most serious mistakes Apple has done concern marketing and distribution strategies in Europe. Apple has overlooked the European markets, and missing big numbers in unexploited sales. With better marketing strategy, better communication and distribution, Apple could have made 300% more revenues in Europe in the last 4 years. Apple Marketing in Europe We met with with Erik Stannow, Apple Vice President of Marketing for Europe & EMEA. We have been talking with Erik Stannow about the marketing and distribution issues of Apple in the European markets and we gave some valuable suggestions to improve the Apple marketing strategy and distribution in Europe. Well, it seems that in Cupertino they don't care so much about Europe. 28
  29. 29. APPLE’S DISTRIBUTION POLICY.. If you build it, will they come? When they come, will it be in stock? Apple (AAPL) resellers have said that the computer maker's distribution system improved during its fiscal first quarter, helping them meet strong demand for the company's new PowerPC 750 series and boosting Apple's sales into the channel and profitability. In a move that surprised Wall Street, Apple yesterday announced that it expected to post a profit of $45 million for the fiscal first quarter that ended in December. Analysts expected the troubled computer maker to post a loss for the quarter, and the latest news marks the first time the company has posted a profit since its 1996 fiscal fourth quarter. Apple pointed to its cost-cutting initiatives and to demand for its new 750, or G3 series, as major contributors to its anticipated profitability. Unlike the last time Apple posted a profit--in part due to 29
  30. 30. stuffing the channel with computers, a move that the company paid for in the following quarter-- resellers say the G3s are flying off the shelves. "Historically, Apple would come out with a computer and you would order 50, but only get five," said Ken McNeill, chief executive of reseller ClubMac. "But the this time they had clear lines of distribution. When you wanted more, they had more." Under Apple's recent changes to its distribution system, MacCenter last month began buying its computers directly from Apple, rather than from a distributor. "Now that we deal with Apple, we get our products much faster," said MacCenter's Carol Frame. Mac resellers, along with Creative Computers, the company that operates MacMall, all report strong sales of the G3 products. "Demand for the G3s is brisk," said Dan DeVries, executive vice president of marketing and purchasing for Creative. ClubMac generated $5.5 million in Apple sales in December, of which 40 percent came from the G3 computers, McNeill said. Frame noted that MacCenter sold about 75 percent more G3 computers than expected during the last 45 days. Apple declined to discuss its distribution into the channel pending the formal release of its first- quarter results on January 14. Although the latest events bode well for the Apple, analysts are taking a wait-and-see approach. Eight analysts today reconfirmed their "hold" ratings on the company, and one upped the rating to a "weak buy" from "hold," said Chuck Hill, a spokesman for First Call. Earnings estimates, which stood at a loss of 6 cents for the quarter before Apple's preliminary announcement yesterday, were upped to an average of 35 cents based on seven analysts who changed their estimates today.Apple's rosy profitability picture is being helped by the fact that the G3, like any new product, carries a higher price tag and fatter profit margin than older products. MA R K E TI N G O B J E C T I V E S OF AP P L E .. Marketing Objectives : The various marketing objectives that will assist in the achievement in the overall product goal are: • To be the leading supplier of MP3 players in all markets in which the company operates • Increase in sales by 20% • Increase in revenue by 20% • Progressively increase market share by at least 15% within the year. • Expanding distribution to department stores by 10% • Increasing brand awareness to 60% of potential customers • To expand existing markets by 10% in the next quarter. A promotion campaign will be introduced to encourage present buyer to increase the use of the product. 30
  31. 31. PRO D U C T MIX .. One of the main reasons that I have chosen Apple computers as my topic is that in my opinion, Steve Jobs (founder of Apple Computer Inc.) is undoubtedly a genius in the marketing sector. Apple Computers Inc started with the production of 2 computers in the garage at the side of Steve’s house. With very limited education Job’s has managed to build his empire to be what it is today. His marketing strategies are well thought out and always up to date, Job’s has expanded his marketing techniques to reach a wide market (something some companies would consider insane, having to take a risk that no one has took before). He has used his persuasiveness and clever marketing techniques to build an ideal world of white, abstract, shiny , arty and most importantly expensive surroundings that everyone wants. Luckily for the consumer, Steve Job’s loves to sell you his premium priced electronics, which, are of course “superior” to that of the competitor. Job’s ability to sell products, market them successfully and always come up with something new and unique is reflected in the company logo To cut a long story short Apple is a huge success story from the point of marketing. Now, on to the product. THE PRODUCT I will be focusing on a selection of Apple’s products. I have chosen the most successful from a marketing point of view. Here they are: THE POWERMAC The Powermac is Apple’s flagship desktop “Power PC”. The Powermac is aimed at professional users and is used worldwide as industry standard in web design, graphic design, movie production, music production, print and art (the list goes on). Apple’s marketing technique places strong emphasis on the importance of design, packaging and atmosphere. I could list the specifications of the computer, how big the hard drive is, how fast it is…. But wouldn’t this be pointless? These computers have been designed to sell on looks alone. The consumer wants the computer once they see it, before they even know anything about it. For a long time Apple have looked at what the competition is doing and then thinking…. How could we improve this? A fine example of this is the Powermac. Other computers boast up to a “jaw-dropping 20inch monitor” as an extra bonus. Apple have taken this idea and included a slightly bigger 40inch widescreen monitor as standard. Apple ask why should the consumer use any product that doesn’t have the Apple logo on it? Let’s make it work as a TV and a DVD player and copier at the same time, why should you need a TV? And, seeing as this is an unbelievable, out of this world product we’ll charge the consumer eight times what it costs to make, that’s right 8,000euro. The idea of the high “Premium pricing strategy” leads the consumer to believe that it is better. But is it really? As a result the Powermac has played a huge role in helping Apple up the ladder to success. THE iBOOK and the iMAC. 31
  32. 32. The iBook is a laptop designed by Apple. Again, a lot of time and consideration have gone in to the design and the eye-pleasing factor of the iBook. Why should we make a laptop like all others ? Why not create something new and unusual, drop the price, sell more and make another fortune? Here is an extract from Apple’s website about the iBook: “Surf the Web, chat with friends, do homework, play games, even burn DVDs and CDs to create your own video or musical masterpiece. In your favorite café. At 2 a.m. With built-in wireless capability and 512MB of memory standard, the iBook G4 delivers today’s digital lifestyle to your backpack, starting at $999.” On the website apple boasts “Rave-worthy performance”, “Durable space age construction” and conclude by saying “Its your life” and then “Live wirelessly, spend wisely”. They also mention that it is the smallest consumer laptop available on today’s market. The iBook is aimed at College students, Apple’s marketing strategy takes advantage of travel and college life. “The iBook is small enough to bring to your lectures to take notes”, “Store all of your photos in one place”, “Ultimate portability for students” The iMac is basically the desktop equivalent of the iBook and is based on the same slim-line, abstract design. Of course this only comes in white (Something Apple is well known for). For simplicity, the iMac incorporates all parts of the computer into the 20inch monitor. This would encourage to consumer to buy it – As Apple put it a powerful, inexpensive computer, which saves desk-space and will do anything a PC will do only better. APPLE’S DISTRIBUTION STRUCTURE 32
  33. 33. 33
  34. 34. AP P L E ’ S MA R K E T S H A R E . . 34
  35. 35. They are not dramatic changes, but they are steady and heartening to the Apple universe of users and developers. The trend continues from December numbers, and for Apple, all the trends are good. Net Applications, a company that tracks operating system and market share by looking at results from search engines, reports that Apple has a 9.93% share of OS users for January of 2009, up from 9.63% the previous month. Windows OS market share measured 88.26% in January, dropping slightly from 88.7% in December. If you add in iPhone users (0.48%) to the Mac OS X data, the Apple market share is 10.41%, which again, is higher that last month. Browser shares are also an interesting data point. Net Applications says Microsoft's Internet Explorer has the lowest market share since they began tracking browsers in 2005. IE users now comprise 67.6% of the browsers online. In the last 12 months, IE has dropped about 8%. For the third month in a row, Mozilla's Firefox, Apple's Safari, and Google Chrome all gained market share at the expense of Microsoft. Safari's share of 8.3% is a record for Apple. These numbers continue to be good news for Apple, a company trying to buck a nasty recession along with the rest of the industry. This report shows Apple’s U.S. market share in fourth place among computer manufactures at 7.4%, down slightly from 8.0% in Q4 of 2008. It’s difficult to compare the busy holiday (Q4) quarter next 35
  36. 36. to the slower post-holiday quarter (Q1) so for better comparison the first quarter of 2008 had Apple holding 7.5% of the U.S. market share, again comparing that to Q1 of 2008. Apple’s U.S. computer shipments declined 1.1% compared to the year-ago quarter. This is higher than the overall U.S. industry decline of 0.3%.It is beleived that the entire computer industry performed better than expected due to the serge in popularity of the netbook market. This is a wedge of the computer market that Apple has no showing, thus may be a reason for the decline in market share. Experts also goes on to say that the average selling price of computers sold in Q1 of 2009 may have dropped as much as 20%, again due the decrease in sales of other more expensive machines, but the increase sales of the relatively inexpensive netbooks. Although Apple’s market share has slipped, its gross revenue and profits appear as if they are going to be largely unaffected. I’m not going to lie, this sounds about right. Companies are losing money because of the economic climate, and Apple is, at least according to this data, losing money by not being in the netbook arena. That said, they also believe the reason (or at least one of them) for the popularity of the netbook is the economic crisis. 36
  38. 38. Company Symbol Price Change Market Cap P/E International Business Machines Corp. IBM 128.25 0.00% 166.60B 12.81 Hewlett-Packard Company HPQ 53.24 0.17% 124.85B 16.05 Dell Inc. DELL 15.05 0.20% 29.46B 20.62 Cisco Systems, Inc. CSCO 25.83 -0.77% 147.89B 24.86 Xerox Corp. XRX 9.99 2.46% 8.69B 18.07 Sun Microsystems, Inc. Private - View Profile 38
  39. 39. AP P L E ’ S SAL E ’ S FOR E C A S T FOR 20 01- 20 0 9 . 39
  40. 40. Yearly Results 40
  41. 41. 2001 2002 2003 2004 2005 sales - all segments $5.373 billion $5.742 billion $6.207 billion $8.279 billion $13.93 billion profit (loss) - all segments ($25 million) $65 million $69 million $266 million $1.328 billion sales - Retail segment $19 million $283 million $621 million $1.185 billion $2.350 billion profit (loss) - Retail segment not reported ($22 million) ($5 million) $39 million $151 million total store visitors 2.25 million 13.9 million 25.2 million 50.7 million stores during year * 27 13 25 21 41
  42. 42. AP P L E ’ S FUT U R E PLA N S AN D PRO D U C T S . Apple Future Products: What Comes After The iPad Recently Apple unveiled iPad. Same design like iphone. It is believed that Mr Genius Steve Jobs is expected to launch the next iBoard in 2012 and iMate in 2014. Apple reveals future plans at the Macworld Conference and Expo 2009. Here's where Apple is likely headed. - It is going to the movies, likely announcing Tuesday the addition of movies for rent at its online iTunes Store for $3.99 apiece for 24 hours, the common window Hollywood has imposed on other digital movie rental services. Apple has reportedly secured deals with 20th Century Fox and Disney studios, and may be close to signing deals with Warner Bros. and Paramount. The movie rental component on iTunes and a product upgrade are expected to also boost the anemic sales of Apple TV, the set-top box launched at last year's Macworld that delivers video and other multimedia content from your PC to a television. Munster estimates about 1.8 million Apple TV devices were sold through 2007 and expects another 2.9 million units to ship this year. - It's going on a diet. A prevailing theory is that Jobs will unveil an ultra-portable notebook, weighing somewhere between 2 and 4 pounds, that would fill a hole in Apple's computer 42
  43. 43. lineup. American Technology Research analyst Shaw Wu predicts the slim "MacBook Mini" could be priced at $1,500 to $2,000 and could feature a flash memory drive instead of a standard hard drive to reduce the weight, boost battery life, and make it more rugged and reliable. Apple revealed that after the success of i phone in 2008 it is planning to launch iPad in 2010,followed by i board in 2012 and i Mat in 2014. PRO B L E M S FA C E D B Y A P P L E . I N C . The problems, in the order he delivered them: 1. Steve Jobs. It can be argued, that Steve Jobs' most important product — the thing he's spent the better part of his energy building since he returned to Apple — is not the Mac, the iPod, the iPhone or even the iPad. It's Apple Inc., the company. The pessimistic dig on Apple, is that it's a supremely well-organized company organized around one irreplaceable guy. The optimistic view is that Jobs has structured it to run like his other company, Pixar, which manages to turn out hit after hit, year after year, without a charismatic celebrity leader. 2. AT&T. Apple is a company that clearly believes in the adage that if you want it done right, you have to do it yourself . Which is why it must stick in Cupertino's craw that they are dependent on a carrier whose service in cities like San Francisco is almost comically bad. Has it reached the point where Apple turns to AT&T (T) and says, Darth Vader-style, "You have failed me for the last time"? I think not, if only because AT&T so desperately needs the iPhone that Apple can extract far better terms from them than it ever could from Verizon (VZ). So he takes Tim Cook at his word when Apple's COO tells analysts that the company has reviewed AT&T's plans and is going to give it time to work out the kinks. Meanwhile, however, AT&T's service problems are draining Apple's good will. 3. Computers. iPad. "It's really, really good, I believe. If you are sitting on a couch and you need a computer, most people are going to reach for the iPad, not the MacBook Pro. And that puts Apple into uncharted territory. For the first time since the original Mac replaced the Apple II, it has two overlapping computer products. And although it took a few years for the corpse to grow cold, the Apple II basically died the day the Mac arrived. 4. The App Store. There are two schools of criticism about the iPhone App Store: The most vocal critics say that it is totally going in the wrong direction and should be doing what Google (GOOG) does with the Android Marketplace — offer users the option of downloading apps that aren't vetted and approved. The other school says that Apple is going in the right direction, but is hurtling at great speed a few degrees off course. Gruber fears that the shouting from the first school is so loud that Apple may be ignoring the second as well. There are game consoles — like Nintendo's — whose apps are as tightly controlled as Apple's. And there are computer systems with app libraries nearly as large as the iPhone's. But there's never before been a tightly controlled system with 150,000 apps. "If it proves unsustainable,"!! "what are they going to do?" 5. Security. Microsoft (MSFT) put a lot of effort into building strong malware protection into Windows 7 because its operating system is under constant attack. Apple users don't fret nearly as much about Mac OS X malware because there is so little of it. I doesn't care which OS is intrinsically more secure, but I ‘m increasingly worried about Apple's sluggish 43
  44. 44. response to its own publicly disclosed vulnerabilities. For example, it took Apple 75 days to respond to a hole in Open SSL — the open-source encryption system that is supposed to protect credit card data from getting loose on the Internet — even though the vulnerability was made public last September. "It happens again and again,". Apple is the last vendor to respond, when it ought to be the first. Of the companies that use Open SSL — and Microsoft pointedly does not — Apple is the biggest. 6. Mobile Me. It's great for syncing your iPhone to your Mac, but what's the point of Mobile Me's Web apps? If you're at your computer, you use Mail and Calendar. If you're out and about, you're supposed to use the iPhone. I have a sneaking suspicion Apple put apps up on the Web because "that's what the kids were talking about." It's like the lounge singer, he says, who grows long sideburns after Elvis Presley arrives. 7. Back Ups. Data loss is a tragedy, and Apple is particularly vulnerable because — unlike Google — the primary storage on their systems is local. Time Capsule is the right idea, but it's not really a solution for all those people who don't even know they're supposed sync their iPhones to their Macs. "Ultimately the long-term solution is to be in the cloud," says Gruber, but that puts Apple on poor footing compared with Google. Given how badly Apple handled Mobile Me, he's skeptical of Apple's ability to do cloud back-ups well. 8. Apple TV. I am not one of those who talks about Apple TV as Steve Jobs' one did. I like Apple TV, but s it has a fundamental problem: it's primarily about watching movies and TV shows through the iTunes store, with the result that there's a worse selection on Apple TV than there is at any local video store. Hulu is a wonderful solution but when Boxee figured out a way to put it on TV, the Hulu guys freaked out. They have "this crazy brick wall in their heads," Gruber explains, that perceives computers and TVs and two fundamentally different things. They worry about ad-supported Hulu getting on TVs when they should be worried about people bootlegging their content for free and watching it with no ads. "I don't see,"!! "how Apple can get from where they are to where they need to be when they are negotiating with people that stupid." 9. Arch Rivals. A company needs direct rivals to stay hungry, but when they get big enough they tend to run out of them. Case in point: Microsoft. "They were something to see," in the old days, "because they were relentless, they were fearless." Its no coincidence, according to me, that since they got busted for beating Netscape — Jake La Motta-style — into a bloody pulp, the only new thing they've done is the one product that has serious rivals: Xbox. Apple's closest rival in smartphones, is not Google (which will rake in the Web ad riches whether Android succeeds or fails), but Palm, whose WebOS he admires. 10. About Box Credits. This one is a bit obscure, but if you look at the "About This ….." under the Apple menu for any Apple-made software, you get the same gray box with the name and version number of the program but little else. And, most significantly, none of the names of the people who created the program. This is a holdover of the dotcom boom, when Jobs got it into his head that the Silicon Valley headhunters who were poaching Apple employees were getting their names from the about boxes. Movies and TV shows may list the names of all the people who helped make their shows because union rules insist on it, but it's also the right thing to do. If software is a form of art, as Apple insists it is, "artists should get to sign their work." 44
  45. 45. SCO PE OF ST U D Y . . The scope of the study is very vast Scope of Marketing is to influence buyer's decision directly or indirectly for generating business to make the flow of goods from producer to consume or user. Marketing is a philosophy that leads to the process by which organizations,groups and individuals obtain what they need and want by identifying value,providing it, communicating it and delivering it to others. The core concepts of marketing are customers’ needs, wants and values; products, exchange, communications and relationships. Marketing is strategically concerned with the direction and scope of the long-term activities performed by the organization to obtain a competitive advantage. The organization applies its resources within a changing environment to satisfy customer needs while meeting stakeholder expectations. Implied in this view of strategic marketing is the requirement to develop a strategy to cope with competitors, identify market opportunities, develop and commercialize new products and services, allocate resources among marketing activities and design an appropriate organizational structure to ensure the performance desired is achieved.There is no unique strategy that succeeds for all organizations in all situations. In thinking strategically about marketing many factors must be considered: the extent of product diversity and geographic coverage in the organization; the number of market segments served, marketing channels used, the role of branding, the level of marketing effort, and the role of quality. It is also necessary to consider the organization’s approach to new product development, in particular, its position as a technology leader or follower, the extent of innovation, the organization’s cost position and pricing policy, and its relationship to customers, competitors, suppliers and partners.The challenge of strategic marketing is, therefore, to manage marketing complexity, customer and stakeholder expectations and to reconcile the influences of a changing environment in the context of a set of resource capabilities.It is also necessary to create strategic opportunities and to managethe concomitant changes required within the organization. In this world of marketing, organizations seek to maximize returns to shareholders by creating a competitive advantage in identifying, providing, communicating and delivering value to customers, broadly defined, and in the process developing long-term mutually satisfying relationships with those customers. The diversity and innovation of new products in the world of technology play an important role in the growth and success of the Gizmo Giants in the world of advanced technology.The scope of this study is to know how the techy master minds like Steve Jobs continue to provide us with lot of their beautiful innovations and help us to know their marketing strategies in this competitive scenario. The objective of the study is to draw out lessons for current and future leaders from the analysis of 45