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Apple Computer

Team 4:Richmond Bautista, David Broggie, Scott McLaughlin, Michael Stewart, Austin Wakeman, Evan Wong

Team #4/Spring 2009

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Founding and Initial Products

• Apple’s Beginning• Established April 1, 1976 by Steve Jobs and Steve Wozniak

• Initial Products• The Apple I was first offered in July 1976 for $666.66

• The Apple II was introduced in 1977 for $1,200

Team #4/Spring 2009

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Development and Growth

• Apple is considered a trendsetter in innovation and creativity in personal computers

• Shifts in lines of business• The iPod was introduced on October 23, 2001

• The iPhone first became available on June 29, 2007

Team #4/Spring 2009

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Innovation Affecting Stock Price

Team #4/Spring 2009

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SWOT Analysis

• STRENGTHS• Apple has a great source of brand loyalty

• The favorable brand perception has increased sales of Macintosh computers

• Innovation is one of Apple’s key strengths• It is the first large personal computer company to develop

a graphical based computer

• Apple products are simple to use and appeal to a wide market

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SWOT Analysis

• STRENGTHS (Continued…)• Apple Company has complete control over its products

• Manufactures the products and the operating systems in which they process

• The invention of the iPod has given Apple a wider selection of market segments

• iTunes and the Apple On-line store has helped increase the company profits

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SWOT Analysis

• WEAKNESSES• Apple iPods were difficult to maintain

• Its sensitive screen leads to easy breakage• Faulty batteries

• There is pressure to increase the price of its music download files

• Many music companies make more money off of iTunes than from their original CD sales

• Predicting the demand and the ability to deliver enough machines to satisfy the demand in a short period of time

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SWOT Analysis

• WEAKNESSES (Continued…)• Apple has higher Research and Development costs than its

competitors

• In 2005, Apple ended its relationship with IBM as a chip supplier

• Switched to Intel

• The switch could potentially confuse Apple's consumers

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SWOT Analysis

• OPPORTUNITIES• Apple has constantly been able to create new and updated

products/software such as iPhones, Macbooks, iPod Touches, and iPod Nanos

• Has the opportunity to develop its iTunes and music player technology into a mobile phone format

• This enables its users to keep track what songs have been used and bought

• Podcasts are free to subscribe to, which enable its customers to listen to radio shows on their iPod

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SWOT Analysis

• THREATS• The continuing technology updates on other computer

companies• Sony, Dell, and HPs are constantly updating their computer

technologies

• The popularity of Apple Mac and iPod are subject to demand, and will be affected if economies begin to weaken and demand decreases for their products.

• Substitute products can lead to the replacement of Apple products because of pricing

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SWOT Analysis Conclusion

• Apple Company seems to have a stable positioning• The company’s strengths seem to outweigh its weaknesses

• The continuation of its updates and opportunities can easily increase its customer loyalty

• The threat of other competitors can push Apple to continue upgrading their products

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External Environment

• Opportunities• Businesses and Education were utilizing the use of computers,

so the Apple II line fulfilled this new customer set

• Apple sought out the music industry to allow them to make their music legally downloadable

• Apple created their own retail store to push their own products

Team #4/Spring 2009

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External Environment cont’d

• Threats• IBM, amongst other companies, began to seize market

leadership over Apple

• The high cost structure limited Apple’s ability to expand its market share

• The creation of the iPod led competitors to sell their own version of an MP3 player

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Porter’s Five Forces

• Substitute Products• Companies had the ability to create their own computers to

compete with Apple

• The iPod is constantly battling with other similar products to maintain superiority

• Differentiation has helped Apple hold its appeal to consumers

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Mission and Goals

• The goal of Apple “in a nutshell, is to obtain stellar products and services within tight timeframes, at a cost that represents the best possible value to our customers and shareholders.”

• Apple’s mission statement is closely tied to their main goal and makes it possible.

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Corporate-level Strategy

• The lines of business in Apple can be broken down into three categories:• Computer segment• Consumer electronics segment• Software segment

• Apple is a rarity in their line of business because they make both the hardware and software of their products.

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Corporate-level Strategy

• Subsidiaries and acquisitions of Apple• Mainly feed into parent company (Apple)• Acquisition of PA Semi ($278 million)• Is Apple simply a company that runs a portfolio of investments?

Team #4/Spring 2009

• Is Apple’s corporate strategy appropriate?• Yes, as the business environment of technology is constantly

evolving.

• Aggressive expansion and acquisitions of other companies that could provide a competitive edge are extremely important.

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Corporate-level Strategy

• Has Apple’s corporate strategy changed over time?• Yes. One must remember the humble beginnings of “Apple

Computer,” now known as Apple Inc.

• What products have contributed most to Apple’s competitive advantage?

• Before: iMac, iBook, original iPod and iTunes

• Now: iPod(s), iPhone, iTunes music store, application store for iPod touch and iPhone, bundled software such as iLife

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Competitive Advantage = High Sales

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Business-level Strategy

• Business model• Originally pursued focused differentiation• Currently pursues product differentiation

• Investment strategy• Growth strategy• Attempting to maintain their competitive position

• Functional strategies• Innovation• Quality

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Business-level Strategy

• R&D has successfully developed the proper distinctive competencies

• Biggest threats• Threat of substitutes• Intensity of rivalry among established firms

• Apple can deal with these threats

• Maintain brand loyalty• Continue being the leader in innovation

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Structure and Control System

• The Original Intention• Small business• Hired experience

• Decentralizing

• Michael Sculley • Apple goes public (1980)• Bringing the company closer

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Structure and Control System

• Focused Differentiation to Broad Differentiation• MS-DOS/Windows

• Steve Jobs • Refined the innovation after multiple CEOs failed

• Retail stores, iPod, iTunes, iPhone• No politics

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Recommendations

• Lower prices to reflect internal components after products (computers) are outdated, and/or update internal components more often

• Produce low-cost netbook to compete with current PC offerings

• Retail store expansion

• Continue innovation

• Continue updating iPod and iPhone

Team #4/Spring 2009