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Università    Master          Corporate
della         of Science in   Communicaton
Svizzera      Communication   & Marketing
italiana      and Economics   SI 2005-2006




             Apple Computer 1999

             Re-Thinking different
             How, after ’90s slump and four CEOs,
             Steve Jobs’s ’98 strategy
             makes Apple “insanely great” again.

             by
             Vincenzo Cammarata, Veronika Kurucz, Valentina Maj,
             Aleksandra Pavlovic, Katherine Portmann
Università   Master             Corporate
della        of Science in      Communicaton
Svizzera     Communication      & Marketing
                                                                                      Apple Computer 1999
italiana     and Economics      SI 2005-2006
                                                                                      Re-Thinking different
             Apple’s History
             The founding of Apple 1976-1980
             In 1976 “The two Steves"
             Steve Jobs & Steve Wozniak

             - Apple I
             The Byte Shop ordered fifty units for $500/u

             - Apple II
              the first West Coast Computer Faire (April 1977)

             - Apple III
              (May 1980)     compete against IBM and Microsoft




              ©
               2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università    Master            Corporate
della         of Science in     Communicaton
Svizzera      Communication     & Marketing
                                                                                      Apple Computer 1999
italiana      and Economics     SI 2005-2006
                                                                                      Re-Thinking different

             Apple’s History
             The years of innovation 1981-1989
             - Lisa (1983)
               First Personal Computer with a Graphical User Interface (GUI)


             - Machintosh (1984)
              the first “User-friendly” PC, using GUI with the metaphor
              of “desktop” and Mouse.

             - Machintosh Portable (1989)
              (May 1980)   compete against IBM and Microsoft




              ©
               2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università    Master            Corporate
della         of Science in     Communicaton
Svizzera      Communication     & Marketing
                                                                                      Apple Computer 1999
italiana      and Economics     SI 2005-2006
                                                                                      Re-Thinking different
             Apple’s History
             Decline and resurrection 1990-1999
             Microsoft rolled out Windows 3.0, Apple was in trouble.
             - PowerBook (1991) - G3 - iMac (1998)




              ©
               2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different
             Apple’s management decisions
             Steve Jobs I era 1976-1984 …1/2
             Easy-to-use computer to every man, woman, and child
             Change the world through technology

             First differentiation strategy
             “IBM compatible” Vs Apple’s
             open system Vs proprietary design closed system - Apple II (1978) strait out of box

             Response to IBM new entry Graphical User Interface (GUI) - Lisa (1983)

             Macintosh 1984
             - Breakthrough in ease of use, industrial design and technical performance.
             - Slow performance and lack of compatible Mac software. - fall in net income -17%

             End of Steve Jobs I era
             The Apple board removed Jobs from the chief seat.


             ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different
              Apple’s management decisions
              John Sculley’s era 1985-1993 …1/2
              Leadership in DTP and Edu mkt

              Apple into the corporate world

              Division and further subdivision of market

              low-cost policy
              with distribution and development partners.

              Macintosh Plus
              (1986 - 10 times the memory of the original Mac )

              Evangelism among software developers

              Hi-quality software and peripherals


             ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different
             Apple’s management decisions
             John Sculley’s era 1985-1993 …2/2
             Apple global brand
             The most profitable PC company in the world.


             ‘90s PC-clones saturated mkt
             (MS Windows 3.0 > solution: Mac OS).

             Brand repositioning, cheaper and leader in technology

             Corporate alliances with IBM,
             - PowerPC– PowerBooks (fruit of 1991 IBM alleance).
             - New product category he called “Personal Digital Assistants”


             End of Scully’s era
             These actions were not enough to sustain Apple`s profitability.
             In 1993, The Apple board relieved Sculley of his position as CEO.



             ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different

              Apple’s management decisions
              Mike Spindler’s era 1993-1995 …1/2
              Leadership in PC selling and technology
              continuing Sculley’s strategy

              Expanding distribution and aggressive policy of prices.
              International expansion: he targeted China, fastest-growing computer mkts.

              Licensing the Mac OS ($ 50 per copy), to several companies
              (Eg. Power Computing)


              Newest computers based on the PowerPC chip
              PowerMac (1994); Newton Message Pad (Failure 1993)




             ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different
              Apple’s management decisions
              Mike Spindler’s era 1993-1995 …2/2
              1995, cut of prices > increase in units sold, become leader USA
                     - Lay off 2,500 employees (16% of its workforce worldwide),
                     - Reduction of the R&D budget to 6% of sales.
                     - Improved efficiency and cut development cycles from 24 months to nine

                      Spindler had hoped that a revolutionary new operating system would turn
                      the image around continuing to focus on improving the Mac OS.

                      “None of the Windows users would consider buying a Macintosh,
                       but more than half the Apple`s users expected to buy an Intel-based PC”
                                                                                           Computerworld


                      End of Spindler’s era
                      Apple`s worst problem was not selling computers.
                      In January 1996, Apple reported a $ 68 million dollar loss for the last quarter.
                      Two weeks later, Gilbert Amelio, an Apple director, replaced Spindler as CEO.




             ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different

              Apple’s management decisions
              Gilbert Amelio’s era 1995-1997
              When Gilbert became CEO, Apple was at its most desperate state.
              The stock price was at its lowest and Sun Micro systems and Oracle
              expressed interest in taking over Apple.

              Profitable and become a Premium Brand (within 17month)

              Premium price differentiation
              Lay off 6900 employees - reduce product line - rise cash flows.

              Cuts to R&D budget stopping new MacOS generation

              Instead choose to acquire Next software from former CEO Jobs.

              End of Amelio’s era
              Mkt share fell from 6% to 3% and from 41% to 27% in the education sector



             ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different

             Personal Computer Industry - end of ’90s
             Explosive growth since the mid-70’s with $170-billion global industry
             Two kinds of market players:

                 Assembled PCs                                        Apple Machintosh
                 Wintel based (Windows +Intel)                        based on own MacOS
                 standard, one time called                            Motorola or
                 «IBM-compatible»                                     IBM’s PowerPC chips
                 (perfect competition                                 (monopoly in technology)
                 in technology)




             ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different


             Personal Computer Industry - end of ’90s




             ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master              Corporate
della        of Science in       Communicaton
Svizzera     Communication       & Marketing
                                                                                          Apple Computer 1999
italiana     and Economics       SI 2005-2006
                                                                                          Re-Thinking different

             Personal Computer Industry - end of ’90s
             PC Vendors’ Ranking Within Customer Segments Worldwide

                                                                                                                                 1°
                                                                                                                                 2°
                                                                                                                                 3°
                                                                                                                                 4°
                                                                                                                                 5°
                                                                                                                                 6°
                                                                                                                                 7°
                                                                                                                                 8°
                                                                                                                                 9°
                                                                                                                                10°


                             Home           Small office         Small buz           Large buz         Government Educational

              Small Office: sites with fewer than 10 employees; Small Business: sites with 10 to 99 employees
              Note: Rankings are based on unit shipment data for the third quarter of 1998 – International Data Corp.

              ©
               2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different

             Assembled PC’s bites Apple… 1/2
             PC Manufacturing features, are the principal factors
             of ’90s Apple’s slump.

                                                  How to make an assembled PC (screwdriver apart!)

                                                  - Microprocessor, *
                                                    brain of PC, (Intel, AMD, Texas Instruments. …)

                                                  - Motherboard,
                                                     the main circuit board, where are allocated all components

                                                  - Memory storage, RAM, Hard disk,…
                                                  - Peripherals, like: monitor, keyboard, mouse
                                                                                                                    *cost driver


             ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università       Master             Corporate
 della            of Science in      Communicaton
 Svizzera         Communication      & Marketing
                                                                                          Apple Computer 1999
 italiana         and Economics      SI 2005-2006
                                                                                          Re-Thinking different

                  Assembled PC’s bites Apple… 2/2
                  Assembled PC’s competitive advantages
                  regards many aspects of the value chain: Eg.Dell

The R&D and design costs charged
                                                                                                  Low costs: Build-to-Order
to components and OS suppliers.
                                                                                                  or Configure-to-Order method


Technology Dev.
    HW/SW
                      Prod. design      Manufacturing           Marketing                        Distribution            Service




 Partially outsourced -                                                                                On-line Customer Services
 Only assembling activity internal.
                                                            Principal activity


                  ©
                   2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università              Master             Corporate
della                   of Science in      Communicaton
Svizzera                Communication      & Marketing
                                                                                                 Apple Computer 1999
italiana                and Economics      SI 2005-2006
                                                                                                 Re-Thinking different
                        Jobs’s SWOT for the turnaround … 1/2
                  Strengths                                                         Weaknesses
             Internal

                        S1- Strong brand,                                                 W1- Closed system
                        tradition and background of innovation.                           W2- OS out of market standard (few sw app.)
                        S2- Faithful customers.                                           W3- High switching costs.
                        S3- Quality (stable).                                             W4- High price.
                        S4- Rooted in Educational field.                                  W5- Few compatible peripherals.
                        S5- Widespread in professional field                              W6- Build-to-stock (problems with ending inventory).
                        (Graphics, Design, Ads, Publishing)                               W7- High R&D costs.
                                                                                          W8- Low design differentiation.



                  Opportunities                                                      Threats
             External




                        O1-The advent of the Internet.                                    T1- Windows ’98 by Microsoft.
                        O2- New conception of PC like a commodity.                        T2- Competitive market of Wintel standard.
                        O3- Multi-media generation.                                       T3- New build-to-order selling method
                                                                                          T4- Competitors’ R&D costs are lower




                        ©
                          2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università                     Master                    Corporate
della                          of Science in             Communicaton
Svizzera                       Communication             & Marketing
                                                                                                               Apple Computer 1999
italiana                       and Economics             SI 2005-2006
                                                                                                               Re-Thinking different
                        Jobs’s SWOT for the turnaround … 2/2
                                                     Internal
                                                     Strengths                                  Weaknesses
                                                       S1      S2      S3       S4      S5      W1      W2       W3      W4      W5       W6   W7   W8
             External
                        Threats Opportunities




                                                O1

                                                O2

                                                O3

                                                T1

                                                T2

                                                T3

                                                T4




                                 ©
                                        2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different

             Drivers of the new Apple strategy
             Differentiation
                   Perception of the product like a design object, status symbol
                   and a breakthrough towards the new millennium.
                   “To be the Sony of the computer business”.

             Diversification
                   Apple products able to satisfy different customers’ needs
                   (from old professional purposes to home ones)

             User-friendly philosophy
                   Plug & Play – Easy access to the Internet for the
                   “Internet-age computer for the rest of us”

             Competitive costs
                   Offer a product for the mass and play with “big numbers”
                   (economy of scale)

              ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different

              Apple’s management
              Steve Jobs II era 1997 …1/2
              Reposition Apple in the personal computer industry.
              Jobs understood the rapidity of change in the industry

              Cost leadership – Rise Apple image

              Alliance with Microsoft to produce “MSOffice for Mac”
              Gave Bill Gates an equity stake of 150 millions

              End of Macintosh licensing to clones – troubles of cannibalization

              Open to Asian Mkt through UMAX
              Consolidated product range reducing numbers of lines from 15 to 3.




             ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different

                                    Apple’s management
                                    Steve Jobs II era 1997 …2/2
                                    Increase innovation with G3 Power Mac
                                    This systems could also be used as network servers – Buz users
                                    G3 PowerBooks (1998)


                                    iMac boom! This fact sent Apple’s stock to a 52 weeks high!
                                    “The internet-age computer for the rest of us”
                                    A study showed that 32% purchaser were new user,
                                    whereas 13% were replacing wintel.

                                    “designed..to deliver the things consumer
                                    cared at most about: the excitement
                                    of the internet and simplicity of the Mac.”
                                    “Mass Attack”
                                    This was the first time Apple entered in the low-priced consumer market.

             ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different
              Apple’s turnaround
              The new “iDea”: iMac
                                         Easy access to Internet and “All Inclusive”

                                         It lacked the floppy disk, only a cd-rom incorporated.

                                         Marketing mix Promotion Budget $ 100 Mil.

                                         “iMac, therefore I am”
                                                                                             Sold at $ 1299

                                         Five fruit flavours iMac line People: Rollings stones. >>>

                                         278.000 iMac sold within 6 weeks
                                         (the best-selling computer in history)

                                         800’000 pc sold at the end of the year.


             ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different
              Apple’s turnaround
              iMac: the design object



                                                                                                 Alternative using
                                                                                                 an iMac




             ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different
              Apple’s turnaround
              Jokes on the cult object




             ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master            Corporate
della        of Science in     Communicaton
Svizzera     Communication     & Marketing
                                                                                     Apple Computer 1999
italiana     and Economics     SI 2005-2006
                                                                                     Re-Thinking different

              Apple’s turnaround
              Re-Think different



                 New iMac version in this years
                 New challenge
                 New alliances

             ©
              2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università   Master             Corporate
della        of Science in      Communicaton
Svizzera     Communication      & Marketing
                                                                                      Apple Computer 1999
italiana     and Economics      SI 2005-2006
                                                                                      Re-Thinking different


             Always faithful to the first claim:




                      Think different
              ©
               2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
Università    Master               Corporate
della         of Science in        Communicaton
Svizzera      Communication        & Marketing
                                                                                         Apple Computer 1999
italiana      and Economics        SI 2005-2006
                                                                                         Re-Thinking different


             Apple Computer 1999

             Re-Thinking different
             Thanks for your attention.
             by
             Vincenzo Cammarata, Veronika Kurucz, Valentina Maj,
             Aleksandra Pavlovic, Katherine Portmann




              ©
                  2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann

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Re-Think Different

  • 1. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing italiana and Economics SI 2005-2006 Apple Computer 1999 Re-Thinking different How, after ’90s slump and four CEOs, Steve Jobs’s ’98 strategy makes Apple “insanely great” again. by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 2. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple’s History The founding of Apple 1976-1980 In 1976 “The two Steves" Steve Jobs & Steve Wozniak - Apple I The Byte Shop ordered fifty units for $500/u - Apple II the first West Coast Computer Faire (April 1977) - Apple III (May 1980) compete against IBM and Microsoft © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 3. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple’s History The years of innovation 1981-1989 - Lisa (1983) First Personal Computer with a Graphical User Interface (GUI) - Machintosh (1984) the first “User-friendly” PC, using GUI with the metaphor of “desktop” and Mouse. - Machintosh Portable (1989) (May 1980) compete against IBM and Microsoft © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 4. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple’s History Decline and resurrection 1990-1999 Microsoft rolled out Windows 3.0, Apple was in trouble. - PowerBook (1991) - G3 - iMac (1998) © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 5. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple’s management decisions Steve Jobs I era 1976-1984 …1/2 Easy-to-use computer to every man, woman, and child Change the world through technology First differentiation strategy “IBM compatible” Vs Apple’s open system Vs proprietary design closed system - Apple II (1978) strait out of box Response to IBM new entry Graphical User Interface (GUI) - Lisa (1983) Macintosh 1984 - Breakthrough in ease of use, industrial design and technical performance. - Slow performance and lack of compatible Mac software. - fall in net income -17% End of Steve Jobs I era The Apple board removed Jobs from the chief seat. © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 6. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple’s management decisions John Sculley’s era 1985-1993 …1/2 Leadership in DTP and Edu mkt Apple into the corporate world Division and further subdivision of market low-cost policy with distribution and development partners. Macintosh Plus (1986 - 10 times the memory of the original Mac ) Evangelism among software developers Hi-quality software and peripherals © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 7. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple’s management decisions John Sculley’s era 1985-1993 …2/2 Apple global brand The most profitable PC company in the world. ‘90s PC-clones saturated mkt (MS Windows 3.0 > solution: Mac OS). Brand repositioning, cheaper and leader in technology Corporate alliances with IBM, - PowerPC– PowerBooks (fruit of 1991 IBM alleance). - New product category he called “Personal Digital Assistants” End of Scully’s era These actions were not enough to sustain Apple`s profitability. In 1993, The Apple board relieved Sculley of his position as CEO. © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 8. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple’s management decisions Mike Spindler’s era 1993-1995 …1/2 Leadership in PC selling and technology continuing Sculley’s strategy Expanding distribution and aggressive policy of prices. International expansion: he targeted China, fastest-growing computer mkts. Licensing the Mac OS ($ 50 per copy), to several companies (Eg. Power Computing) Newest computers based on the PowerPC chip PowerMac (1994); Newton Message Pad (Failure 1993) © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 9. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple’s management decisions Mike Spindler’s era 1993-1995 …2/2 1995, cut of prices > increase in units sold, become leader USA - Lay off 2,500 employees (16% of its workforce worldwide), - Reduction of the R&D budget to 6% of sales. - Improved efficiency and cut development cycles from 24 months to nine Spindler had hoped that a revolutionary new operating system would turn the image around continuing to focus on improving the Mac OS. “None of the Windows users would consider buying a Macintosh, but more than half the Apple`s users expected to buy an Intel-based PC” Computerworld End of Spindler’s era Apple`s worst problem was not selling computers. In January 1996, Apple reported a $ 68 million dollar loss for the last quarter. Two weeks later, Gilbert Amelio, an Apple director, replaced Spindler as CEO. © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 10. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple’s management decisions Gilbert Amelio’s era 1995-1997 When Gilbert became CEO, Apple was at its most desperate state. The stock price was at its lowest and Sun Micro systems and Oracle expressed interest in taking over Apple. Profitable and become a Premium Brand (within 17month) Premium price differentiation Lay off 6900 employees - reduce product line - rise cash flows. Cuts to R&D budget stopping new MacOS generation Instead choose to acquire Next software from former CEO Jobs. End of Amelio’s era Mkt share fell from 6% to 3% and from 41% to 27% in the education sector © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 11. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Personal Computer Industry - end of ’90s Explosive growth since the mid-70’s with $170-billion global industry Two kinds of market players: Assembled PCs Apple Machintosh Wintel based (Windows +Intel) based on own MacOS standard, one time called Motorola or «IBM-compatible» IBM’s PowerPC chips (perfect competition (monopoly in technology) in technology) © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 12. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Personal Computer Industry - end of ’90s © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 13. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Personal Computer Industry - end of ’90s PC Vendors’ Ranking Within Customer Segments Worldwide 1° 2° 3° 4° 5° 6° 7° 8° 9° 10° Home Small office Small buz Large buz Government Educational Small Office: sites with fewer than 10 employees; Small Business: sites with 10 to 99 employees Note: Rankings are based on unit shipment data for the third quarter of 1998 – International Data Corp. © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 14. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Assembled PC’s bites Apple… 1/2 PC Manufacturing features, are the principal factors of ’90s Apple’s slump. How to make an assembled PC (screwdriver apart!) - Microprocessor, * brain of PC, (Intel, AMD, Texas Instruments. …) - Motherboard, the main circuit board, where are allocated all components - Memory storage, RAM, Hard disk,… - Peripherals, like: monitor, keyboard, mouse *cost driver © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 15. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Assembled PC’s bites Apple… 2/2 Assembled PC’s competitive advantages regards many aspects of the value chain: Eg.Dell The R&D and design costs charged Low costs: Build-to-Order to components and OS suppliers. or Configure-to-Order method Technology Dev. HW/SW Prod. design Manufacturing Marketing Distribution Service Partially outsourced - On-line Customer Services Only assembling activity internal. Principal activity © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 16. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Jobs’s SWOT for the turnaround … 1/2 Strengths Weaknesses Internal S1- Strong brand, W1- Closed system tradition and background of innovation. W2- OS out of market standard (few sw app.) S2- Faithful customers. W3- High switching costs. S3- Quality (stable). W4- High price. S4- Rooted in Educational field. W5- Few compatible peripherals. S5- Widespread in professional field W6- Build-to-stock (problems with ending inventory). (Graphics, Design, Ads, Publishing) W7- High R&D costs. W8- Low design differentiation. Opportunities Threats External O1-The advent of the Internet. T1- Windows ’98 by Microsoft. O2- New conception of PC like a commodity. T2- Competitive market of Wintel standard. O3- Multi-media generation. T3- New build-to-order selling method T4- Competitors’ R&D costs are lower © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 17. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Jobs’s SWOT for the turnaround … 2/2 Internal Strengths Weaknesses S1 S2 S3 S4 S5 W1 W2 W3 W4 W5 W6 W7 W8 External Threats Opportunities O1 O2 O3 T1 T2 T3 T4 © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 18. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Drivers of the new Apple strategy Differentiation Perception of the product like a design object, status symbol and a breakthrough towards the new millennium. “To be the Sony of the computer business”. Diversification Apple products able to satisfy different customers’ needs (from old professional purposes to home ones) User-friendly philosophy Plug & Play – Easy access to the Internet for the “Internet-age computer for the rest of us” Competitive costs Offer a product for the mass and play with “big numbers” (economy of scale) © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 19. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple’s management Steve Jobs II era 1997 …1/2 Reposition Apple in the personal computer industry. Jobs understood the rapidity of change in the industry Cost leadership – Rise Apple image Alliance with Microsoft to produce “MSOffice for Mac” Gave Bill Gates an equity stake of 150 millions End of Macintosh licensing to clones – troubles of cannibalization Open to Asian Mkt through UMAX Consolidated product range reducing numbers of lines from 15 to 3. © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 20. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple’s management Steve Jobs II era 1997 …2/2 Increase innovation with G3 Power Mac This systems could also be used as network servers – Buz users G3 PowerBooks (1998) iMac boom! This fact sent Apple’s stock to a 52 weeks high! “The internet-age computer for the rest of us” A study showed that 32% purchaser were new user, whereas 13% were replacing wintel. “designed..to deliver the things consumer cared at most about: the excitement of the internet and simplicity of the Mac.” “Mass Attack” This was the first time Apple entered in the low-priced consumer market. © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 21. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple’s turnaround The new “iDea”: iMac Easy access to Internet and “All Inclusive” It lacked the floppy disk, only a cd-rom incorporated. Marketing mix Promotion Budget $ 100 Mil. “iMac, therefore I am” Sold at $ 1299 Five fruit flavours iMac line People: Rollings stones. >>> 278.000 iMac sold within 6 weeks (the best-selling computer in history) 800’000 pc sold at the end of the year. © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 22. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple’s turnaround iMac: the design object Alternative using an iMac © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 23. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple’s turnaround Jokes on the cult object © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 24. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple’s turnaround Re-Think different New iMac version in this years New challenge New alliances © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 25. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Always faithful to the first claim: Think different © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann
  • 26. Università Master Corporate della of Science in Communicaton Svizzera Communication & Marketing Apple Computer 1999 italiana and Economics SI 2005-2006 Re-Thinking different Apple Computer 1999 Re-Thinking different Thanks for your attention. by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann © 2005 by Vincenzo Cammarata, Veronika Kurucz, Valentina Maj, Aleksandra Pavlovic, Katherine Portmann