Yoffie suggested three different strategies in the 2004 "Where Does Apple Go from Here?" article.

The most drastic change was to "build their business off of the digital home, the iPod, iTunes, iPhoto, etc.," said Yoffie. He also suggested that Apple restructure from a computer manufacturer to a consumer electronics firm. He proposed to use Macintosh computer sales as a cash cow and build up the other products. Another suggestion was to once again start licensing the Macintosh operating system (OS), which was stopped after Jobs took over the CEO position. A window had opened into the software market, with Microsoft products becoming pricy for consumers. Lastly, Yoffie suggested out of self-interest (he held board membership in chipmaker Intel) to throw in the towel on its own OS, license Microsoft Windows and become a big-time computer manufacturer. Jobs, who assumed the CEO position in 1997, must have followed the Harvard discussions closely. Apple went innovative under his leadership, as it introduced the iMac, iPod, and iTunes. The OS X operating system and iPhone appeared and sourcing chips from Intel panned out. At the same time, to emphasize the new direction as a consumer electronics manufacturer, Apple ditched the word "Computer" from its official name. Customer Voices Apple's products are some of the most sought-after, and its retail stores are often crowded with customers. When the latest product, the iPhone, hit the market on June 29, media reported long lines in front of Apple stores of consumers waiting to buy the phone. The lines had formed a few days before the event and people had brought mattresses and food, just so they would be one of the first to get the iPhone. "Apple brings several things [to the market]: really sleek cool hardware, great software and a cool hip image," said Eric Clemens, professor at the University of Pennsylvania's Wharton Business School in a recent Wharton publication. Additionally, Apple is the current front-runner as a "technology leader of the digital living room," Clemens added.
In an effort to gain market share, Apple is pursuing several growth strategies. Obvious to this pursuit is international market expansion into the explosive Asian and European markets.

Domestically, Apple is focusing on three variables concerning its growth strategy. Firstly, it must convert nonusers before they choose a competitor. Secondly, they need to enter new markets such as server based and mainframe computers. Thirdly, they are trying to win their competitors customer base through aggressive advertising and promotion. Apple can also attain domestic growth though convincing users to use their products on more occasions as in entertainment, research, and communication. Apple can likewise convince customers to use more of each product on each occasion and use their products in new ways. Who would have thought that a computer can be used to watch movies, play songs, talk over the internet using voice over IP technology, and much more?

Corporate Strategy
In Corporate Strategy, Collis and Montgomery explain there are two kinds of diversification linked and constrained. Companies using linked diversification enter new businesses when it relates in some way to another business they are already in (it is linked to it), but does not necessarily have any connection to their other businesses. If they are using constrained diversification, however, they only enter a new business if it is based on their core resources or competencies. Companies based on linked diversification have little coherence to their overall corporate strategy, while companies using constrained diversification tend to be more focused. Constrained diversification allows companies to maximize the effect of their resources because they are shared (100). Apple uses constrained diversification. Apple is, inherently, a personal computer company (hardware and software), and their businesses utilize their competencies in developing hardware and software. The Macintosh, iPad, iPhone, iPod and AppleTV are all computers, which allows Apple to share resources between businesses. For example, the Macintosh, iPad, iPhone and AppleTV all run OS X, Apples operating system. This creates economies of scope, which, Collis and Montgomery point out, create cost savings for the company because their resources are shared across multiple businesses (72). Rather than just have related businesses, though, each business is a focused platform with no extraneous products or product types. The Macintosh, for example, consists of two kinds desktop and notebook. These separate product lines each share resources and complement each other. The iMac and MacBook Pro are both primarily constructed from aluminum and glass, so not only do they share the same materials (which reduces costs), but they resemble each other, creating unity between product lines. Each platform, too, complements the other. Apples Macintosh computers sync their media and personal data (calendar, contacts, email) seamlessly with the other platforms. Because they work so well together, owning products from each platform benefits users by creating an experience where their devices just work. The platform advantage does not apply just to Apples devices. Through iTunes, users can purchase music, movies and television shows that syncs across all of their devices, or even do so from their iPhone or iPad. The App Store allows users to download applications for their iPhones

and iPads wherever they are, and now the iBook Store, released in April, will allow them to do the same with books. Because Apple has chosen what businesses to enter carefully, these platforms reinforce the others and make them more powerful. The sum is greater than the parts. This creates a complete package for consumers to choose, and it is difficult for competitors to match. Their platform strategy makes each individual business more valuable than it would be as a separate entity. Their strategy can be improved, however. Currently, MobileMea service Apple offers that keeps contacts, calendar, and email in sync across multiple devices over the airis a premium service that costs $99 per year. This is the wrong approach. Rather than a premium service, MobileMe should be free and integrated into Apples platforms. MobileMe should act like the glue that integrates the platforms and as a draw for users. Apples goal should be to get as many MobileMe users as possible. Once someone is happily using MobileMe across their various devices, they are less likely to switch to a competitors product. The iBook Store, too, can be much more. At the moment, it is just thata book store. Instead, it should become a print media platform for books, text books, newspapers and magazines. The print industry is at a juncture in its history, where it is switching from print to digital. The digital print industry is in its infancy, but is vital for the future. This provides Apple a significant opportunity to establish its platform as the preeminent one. This fits Apples platform strategy well. With iTunes, Apples intent is to make the major forms of media used on their devices immediately and easily available, and the iPad is positioned as a reading device and is perfect for it. Establishing the best print media platform would strengthen their media offering and make the iPad much more convincing as a device.

Mobile Business Strategy

Apples goal for their mobile business should not be to take a Microsoft-like monopoly of the industry, but rather to take a sizable portiontwenty-five to thirty percent or so. Since Apple is fundamentally about innovation, differentiation, they can seek high profit margins, and thus do not need overwhelming market share. Strong profit margins allow them to have a high percentage of the industrys profit share without a corresponding market share. It should be asked, then, why they should seek a market share as high as twenty-five to thirty percent if they are targeting higher profit rather than market share. The reason is that some level of market share is necessary to attract developers, both in quantity and quality, to develop for the platform. Just like for the PC, a solid group of third-party developers is necessary for a mobile platforms success.2 Gaining market share, however, should not be Apples primary goalit is just a means. Market share today does not guarantee market share tomorrow. Rather, Apples goal should be to define what these devices are, again and again, so the competition responds to Apple. Peter Drucker wrote that What makes the future happen is always a businesss embodiment of an idea of a different economy, a different technology, a different society. It need not be a big idea; but it

must be one that differs from the norm of today (117). This means defining what the devices are (e.g., a pocket-sized device, or a tablet-sized device), and what they do. Apple must do this through constant innovation. By constantly defining what these devices are and what they do, Apple can secure for itself the role of industry innovator, and thus a position of strength. If they are constantly redefining the industry, they do not need overwhelming market share. The iPhones release in 2007 is a perfect example. Before the iPhone, no smartphones used touch as a primary means of input. After its release, however, most smartphones use large touch screens and even resemble the iPhone. The similarities extend to the software, too. They try to match the iPhones features specifically, its excellent web browser and the App Store. The iPhone defined what smartphone devices are (all screen, touch input) and what they do (browse the web, run user-downloadable applications). Competitors have tried to make incremental improvements, such as a higherresolution screen or a physical keyboard, but none have made serious changes to the basic definition laid out by Apple in 2007. There is an interesting parallel between the nascent mobile market and the personal computer market of the mid-1980s. Apple dominated the early personal computer market with integrated hardware and software (only Macintosh ran Mac OS, so consumers could only use the Mac OS by purchasing a Macintosh), but Microsoft licensed its operating system to any computer manufacture who wanted it. Microsoft ended up dominating the market. In the mobile market, Apple is following a similar path as it did with the Mac: hardware and software are integrated. With Android OS, however, Google is using Microsofts strategy (with a few differences). In an attempt to grab market share, Google allows any device manufactures to use Android on their smartphones. By giving away the operating system and taking a majority of the market, Google can ensure a place for the company in the mobile market, entice developers to their platform and commoditize their competitors main advantagethe operating system. They are grabbing significant market share in the smartphone market. In first quarter 2010, Androids market share grew to twenty-eight percent, up from twenty percent in fourth quarter 2009. Apples market share in the same period stood at twenty-one percent.3 Going forward, Androids success may come at the expense of Apples own market share, and thus could marginalize the platform. The question, then, is whether Apple should follow Googles strategy and license the iPhone OS to other companies in an attempt to negate Androids advantage. This is not the proper strategy. Apples basic business model is to sell hardware. Everything elsethe operating system, iTunes, the App Storeare used to make their products more valuable and thus to increase hardware sales. Apple enjoys high profit margins on their products not because the hardware is better than what others offer (although that is a part of it), but primarily because their software is better. At the 2007 All Things Digital conference, Steve Jobs said,

If you look at what a Mac is, its OS X, right? Its in a beautiful box, but its OS X. And if you look at what an iPhone will hopefully be, its software.

If Apple were to license the iPhone OS to other manufactures, this would give away their hardwares main advantage and thus significantly cut into their sales. Apple would have to find a different business model. In Leading the Revolution, though, Gary Hamel provides an even more compelling answer. Hamel wrote,
What is not different is not strategic. To the extent that strategy is the quest for above-average profits, it is entirely about varietynot just in one or two areas, but in all components of the business model (72).

If Apple merely follows Googles strategy, but plans just to do it better, they are playing on Googles terms, and that is a difficult game to win. Instead, Apple should differentiate the platform. Because the Android platform is spread over a large number of devices and manufactures, it is necessarily fragmented. Some devices have 3.5 inch screens while others are 4.3 inches; some have track balls; some have hardware keyboards while others do not. Worse, because Android devices are manufactured by different companies with unique versions of the operating system, and are dependent on them for software upgrades, some Android phones are stuck on older versions of the operating system that cannot take advantage of new features or applications. This is confusing for users and makes it difficult for developers to build applications that can run on the entire platform. Android may have twentyeight percent of the market in the last quarter, but developers can only build applications for a portion of those devices. This is terrible for users and developers. Apples hardware-software integration strategy eliminates this problem. Because Apple controls the iPhones hardware and software, they can guarantee that users can access operating system updates immediately and that the hardware characteristics are uniform across the entire platform. For developers, this means if their application is on the App Store, every iPhone user can use their application, and for users, this means if an application is available on the store, they can use it.4 They do not have to worry whether their iPhone is stuck with an outdated version of the operating system, or whether their hardware is incompatible with the application. They just use it. Their integration strategy provides other advantages as well. By controlling the hardware and software, Apple can guarantee a level of quality their competitors cannot. Moreover, they can build hardware and software features their competitors cannot access, and thus make their products more valuable. For example, the iPads battery lasts for ten hours of use. For its weight, thickness and price, this is an incredible advantage over competing devices, and it is due to Apples own battery and processor technology. Apple is doing this in software, too, with iPhone OS 4 (announced in April), and recent acquisitions like Siri, a natural speech recognition company.

Controlling the hardware and software together is the best way for Apple to differentiate their products, because they can guarantee the quality of their devices and create innovations and features exclusive to the platform. This not only is Apples best strategy for succeeding in the mobile market, but it serves their goal of constantly re-defining it. Controlling the hardware and software allows them to make substantial changes quicklythere are no other manufactures to deal with.
1. 2. Tablet computers released in 2003 were not tablets in the current sense of the term, but rather notebook computers with touch screens. They are very different devices and should be understood as such. It should be noted that while market share is important for this (developers do not want to build applications for insignificant platforms), excellent developer tools and environment is even more important. That is outside the scope of this paper, however. This is somewhat misleading, though, because it excludes iPod touch devices, and they are estimates. The trend it indicates is what matters, and other estimatessuch as Gartnersagree. Android is gaining significant market share. This is somewhat overstated. The iPhone platform has some fragmentation as well, due to improved processing speeds in newer iPhones and new hardware capabilities, but this fragmentation is immaterial compared to Androids.

3.

4.

Alternative strategies Summary My first SO strategy in the TOWS matrix was offer free computer classes for seniors in the new Apple computer stores. This would introduce apple computers to new customers and be good for the community. My second SO strategy in the TOWS matrix was to offer interest free financing to parents that have children in school that use Apple computers. The children are already familiar with Apple computers and the parents would be enticed by the interest free financing. My third strategy in the TOWS matrix is to market computers to consumers globally. There is a large untapped market that Apple could pursue more aggressively. My first ST strategy is to advertise on popular web sites. This would increase Internet sales. My second ST strategy is to offer free computer classes to displaced workers. The workers may purchase Apple computers when the get back to work and they will be more employable after completing the computer classes. My third ST strategy is to make computers that are harder to illegally clone. This would protect Apple from losing profits. My first WO strategy is to offer discounts to past customers that recommend new customers. They say word of mouth is the best advertising and who would know better than someone who already owns an Apple product. My second WO strategy is to offer discounts to AARP members. Older people usually have more disposable income to purchase discretionary items. My Third WO strategy is to develop a computer that is IBM compatible. IBM compatibility would make it more competitive

because customers would be compatible with the majority of pc users. My first WT strategy is to implement a just in time system. A just in time system would cut down on excess inventory and help the bottom line. My second WT strategy would be to merge with IBM and produce computers that are IBM compatible. Apple could produce IBM compatible computers or just work in its education and technical niche if it merged with IBM. The Grand matrix shows us that Apple is in a slow growth industry and has a weak competitive position. Apple should consider retrenchment, cocentric diversification, horizontal diversification, conglomerate diversification, divestiture, and liquidation as strategies. The space matrix confirms that Apple is has a weak competitive position and is in an industry that is technologically stable but decreasing in sales. Strategy Recommendation The two strategies I evaluate in the QSPM are to develop an IBM compatible PC and develop and Apple that is more competitive with the IBM compatible PCs. After completing the QSPM, developing an IBM compatible computer was the obvious choice. Developing an IBM compatible PC scored 5.60 on the QSPM and Improving the Apple PCs scored 4.46 on the QSPM. Apple is alienating itself from a large part of the market by not being IBM compatible. Apple would sell a lot more computers if it got rid of its operating system and used Microsofts operating system. I recommend developing an Apple computer that keeps the Apple operating system and it compatible. Implementation I recommend that Apple approach IBM, Microsoft, Compaq, or another company in the hardware or software industry and propose a merger. A company like IBM could supply Apple with the investment dollars, expertise, and licensing rights to make an IBM compatible computer. Although some die hard Apple fans may not like the idea of a merger, Apple would be more competitive in the end.

Case questions - What would you do next if you were responsible for Apple?

1. Having introduced Apple to the consumer as high end brand for New Media the strategy is to stay ahead with innovations to allow to collect premium prices and not get into price fights with competitors or due to shifting product life cycle that goes into maturity and reach later stagnation. 2. Extend the current product line and combine with other features such as Video etc. and maintain the brand position as fresh, different and innovative 3. Introducing new product line for Video, Books and Games to keep at the edge with the end consumer, revitalize the iPhone as netbook version 4. Finding alliance on video stream content 5. Finding alliance digital publishing (Adobe etc.) 6. Develop iTunes into a complete store for new media content and start to compete with Amazon on a web-based shop service, allowing iPhones users due this interface to get product advice while shopping 7. Diversification and M&A activities to exploit opportunities within the Game market (Xbox competition) 8. Use common hardware platform in combination with software for so called subscription based service to allow a subscription revenue flow.
Executive summary Apple Computers 30-year history is full of highs and lows, which is what we wouldexpect in a highly innovative company. They evolved throughout the years into an organizationt h a t i s v e r y m u c h a representation of its leader, Steven Jobs. Apple made several h u g e l y successful product introductions over the years. They have also completely fallen on their faceon several occasions. They struggled mightily while Jobs was not a part of the organization.Apple reached a point where many thought they would not survive. When asked in late 1997what Jobs should do as head of Apple, Dell Inc.'s (DELL) then-CEO Michael S. Dell said at aninvestor conference: "I'd shut it down and give the money back to the shareholders. (Burrows,Grover, and Green) Apple rarely introduces a new type of product. Thus, instead of being the pioneer, theya r e a n e x p e r t second mover by refining existing products. Portable music p l a y e r s a n d notebook computers are examples. Apple increases the appeal of these products by making themstylish and more function al. They now appear

poised to make significant strides in the homecomputer market and to creating a total digital lifestyle whereby the home is a multimedia hub. RECOMMENDATIONS FOR COMPANY: Lowering the cost of products and maintaining the same quality standardsCan form joint venturesKnowledge ManagementMore number of retail stores for easy accessContinuous innovation to expand FOR OTHERS: Do not compromise on price for qualityChoose the products based on individual needsBe unique and different CONCLUSION We feel that Apple must focus on several key aspects to continue to grow and succeed. Theymust continue a stable commitment to licensing, push for economies of scope between media and computers, and become a learning organization.Apple apparentl y made a commitment to licensing. Although it should continue, Applemay want to consider other forms of strategic alliances. An equit y strategic alliance may offer Apple the opportunity to obtain additional competencies. An effective way for a company likeApple to accomplish this would be in the form of a joint venture.Apple should continue pushing the new line of media -centric products. Meanwhile, Apple should not lose focus on its computers. Macintosh computers were 39% of Apples salesin 2005. (Burrows) This very innovative company exploits its second -mover position. In the f u t u r e , t h e y w i l l n e e d t o continue innovating to expand the boundaries of both media a n d computers.One persistent element of both competitive advantage and risk is Steve Jobs. He is boths ynonymous with Apples success and has a large equity interest in Apple and Disney. If hewere to divest his leadership position, the reaction of both the market and consumers would be uncertain. Given his position within the organization as well as the history of the company when he was gone, Apple must find a way to learn as an organization. This will allow the company towithstand a departure by Jobs.Based on the actions of the organization, we feel that the mid-term performance of Applewill be strong. This period allows Apple time to overcome their challenges if they move swiftly.For this reason, we feel that they will continue to succeed and will continue to outperform their peers.

When shoppers sleep outside of stores just to be one of the first to buy an iPhone, it's obvious that Apple Inc. is a company that enjoys fanatical brand loyalty. However, this brand success is not a result of dumb luck or forces beyond Apple's control; it's part of a well-thought-out plan to deliver strong products and create an Apple culture. Find out more about these and other strategies that Apple employs to achieve its tremendous customer loyalty.

A Store Just for Apple: Apple has historically been troubled by big-box sales staffers that are "tragically ill-informed" about its products, a problem that made it difficult for Apple to set its very different products apart from the rest of the computing crowd. By creating a store strictly devoted to Apple products, the company has not only eliminated this problem but has made an excellent customer-loyalty move. Apple stores are a friendly place where Mac and PC users alike are encouraged to play with and explore the technology that the company offers. This is a space where Macheads can not only get service but also hang out with others who enjoy Apple products just as much as they do. By creating this space, Apple encourages current and new customers to get excited about what it has to offer. Complete Solutions: Apple's products complement and complete each other. Buy an iPod, and you can download music via iTunes. For the average user, most Mac programs are produced by Apple. This sort of control over the entire user process, from hardware to software, strengthens customer loyalty. Apple users generally don't have to stray to find products and solutions they want. Are You a Mac?: Let's face it, Apple is a hip brand. It pushes a strong identification with everything young, up-to-the-minute and smart. Consider Apple's I'm a Mac campaign. The Mac guy is smooth and confident, while PC appears uptight and old. Once you've become smooth, would you want to go back to uptight? Varied Products: Many consumers may not be ready to buy an Apple computer, but they're willing to give gadgets like the iPod or iPhone a try. By selling products with lower entry costs, it creates an opportunity for new users to be introduced to Apple. If these users enjoy their gadgets, they're more likely to consider buying an Apple computer in the future. Proprietary Formats: Apple products are often not compatible for use with other systems, at least where customer transitions are concerned. Many of the files available from Apple's iTunes Store are encoded with FairPlay DRM (digital rights management) technology. While some files purchased at the iTunes Store can be played on other devices, the DRM feature keeps many songs from playing anywhere besides an Apple product. For that reason, it's not likely that a customer will want to start from scratch with another company's MP3 player that won't accept all of his music. Instead, this customer will probably look at replacing his old Mac with a new Apple model when the time comes.

Media Fodder: Media outlets, especially bloggers, love to write about Apple. Why? Because Apple makes it so easy. With leaked rumors about new developments, its very own expo and mysterious shutdowns of its online store, Apple gift wraps news stories that are just begging for speculation and hype. By perpetuating this cycle of media frenzy, Apple reminds its customers that they're excited about buying new Apple products now and in the future. Education Sales: By selling its products to schools and universities, Apple turns classrooms into showrooms. If students go through school using Apple products, they become comfortable with the interface and familiar with the superior performance the brand offers. By creating this early exposure, Apple captures customers before they even know that they are customers. Products That Deliver: Apple carefully considers what consumers are looking for, so its products are a result of both extensive research and strong design. This meticulous planning is a large contributor to Apple's high customer-satisfaction rates. It's plain and simple: robust and easyto-use products not only make your customers happy, but also make them want to buy more products from you in the future. Outsourcing Unpleasantness: With Apple products, the average consumer's interaction with the company is likely to be low. Unless something goes wrong, you don't have any reason to speak with an Apple customer-service representative. Of course, the iPhone presented an opportunity that could have made Apple much more involved, similar to administering iTunes for the iPod. With a phone, interaction becomes multifaceted. You have to consider billing errors, quality of wireless service, contracts and a number of other factors that often lead to customer frustration. With the iPhone, Apple was wise to stick with building a good product and letting AT&T handle the service. Consistency: All of Apple's products have the same basic architecture. Because of this consistency, customers who already own Apple products have a good idea of what they'll be getting before they make a purchase. They know that it will be easy to adapt to new hardware, and this makes them more open to making a repeat purchase. New Innovations: Although the architecture of Apple products is consistent, its portfolio is not. The company offers consumers a number of different ways to enjoy its products. By giving customers an

opportunity to employ Apple in their living rooms, pockets and offices, Apple makes it easy to stay loyal to a brand they already like. Attractiveness: From packaging to aesthetic design to user-interface experience, Apple makes its products accessible and attractive. Bright colors, a smiling icon and slick-looking hardware remind customers every time they use Apple products that what Apple offers is appealing When shoppers sleep outside of stores just to be one of the first to buy an iPhone, it's obvious that Apple Inc. is a company that enjoys fanatical brand loyalty. However, this brand success is not a result of dumb luck or forces beyond Apple's control; it's part of a well-thought-out plan to deliver strong products and create an Apple culture. Find out more about these and other strategies that Apple employs to achieve its tremendous customer loyalty.

Read more: http://wiki.answers.com/Q/What_are_apple%27s_strategies#ixzz1TkXiLc 3O

Apple Business Strategy 2011: Milk the iCow for Growth & Cash
by Christopher Meyer on 11/14/2010

What Well See A Verizon iPhone (Verizon wouldnt be selling the Apple tablet/iPad if they werent getting the iPhone), a cost-reduced iPad perhaps with a smaller screen as well as the original, refreshed minimally with a camera so Apple can push FaceTime, their personal video-calling tool. We could easily see some color skins as theyve done in the past with their iPod line. All in all though, Apples going into the barn and milking the hardware iCow for growth and cash.

Apple will put more energy into growing services, including mobile advertising with iAds and social networking via Ping. These are relative neophytes with plenty of room for experimentation and growth. Theyll also expand the reach of the iTunes and the app store to solidify its position as a one-stop source of digital content against Android, Amazon and others. I expect Apple might also act to leverage the color capabilities of the Apple tablet with magazine and book publishers. Amazon Kindle readers do a fine job with ordinary text but when it comes to photos, graphics and color, they disappoint highly. Competing head-to-head with Amazon in text is a tougher battle particularly since Amazon provides Kindle readers for nearly every cell phone, computer, and tablet. iPad magazine apps are just getting started and offer the potential to drive share gains. Leveraging Fertile Product Platforms Milking the iCow is a powerful business strategy that Apple has done extraordinarily well for years. Each of their platforms starting with the Mac, through the iPod and iPhone have been extraordinarily fertile, spawning many derivatives that have just enough newness, yet leverage design, test, supply chain, Applestore retail presence and current customer experience. While it may disappoint Apple product enthusiasts, it will delight shareholders. As a percent of sales, Apples investment in R&D at 4.1% is far more efficient than Googles 12% and Microsofts 15.4%. Apples product platform fertility drives this number. Beyond revenue and compared to other hardware manufacturers, Apple also extracts nearly twice the profit margins per product platform across their entire line. Under these conditions, increasing volume delivers Apple far more profit than the same volume growth does for their competitors. Will Competition Bolt Ahead? The primary liability of milking the iCow is that competitors with new technology could bolt ahead. Lets look at the threat to Apples existing platforms and then examine the threat from a potential unforeseen, new platform. Apples current platforms have strong defenses, starting with their elegant designs that integrate hardware, software and services. That said, as competitors introduce increasingly close lookalike products such as the Android, staying in front gets tougher. For example, Android phones have been gaining share with new purchasers over the iPhone. For this reason, I would argue that Apple needs Verizon more than Verizon needs Apple. It will significantly increase Apples total available market in the U.S. It will also force them to go head-to-head with Android in a carrier where Android has an established position. This will force Apple to be more outward-looking, which I would argue is a good business strategy for them. Another defense Apple has is the synergy between their products, services and marketing strategy. Apps that work on the iPhone also work on the iPad, plus iTunes provides consumers with the convenience of a one-stop digital marketplace. Expanding the app store to include

Macintosh applications increases this pull. It would not surprise me if they introduced a MacApp that enabled Mac users to run these apps easily on a Mac. Once consumers are introduced to the Apple family, they tend to want more. Of their current hardware platforms, the true outlier is Apple TV. This is really a placeholder product that keeps Apple in play as the confluence of TV/Internet/cable plays out. As a placeholder, Apple must be pleasantly surprised to see Apple TV pop up on this months Amazons top electronic list at number 12. Apples Insurance Against Radical Competition Lets turn to the challenges of a brand new product platform. As describe in Apples Most Obvious Secret, Apples forte is not time-to-market or introducing breakthrough technology. Apple makes quantum leaps by using new platforms to delivery next level user experience where the existing choices are stalled. They werent the first MP3, cell phone or tablet manufacturer. What they did in each case was crystallize a platform that raised performance and competitive expectations to a new level. This business strategy relies on a base of experience among users, available technology and a business model that can work within the respective industry. For example, Apple could not create the iPhone if people hadnt been already trained on the Palm Treo and Blackberry. The iPhone took that experience, combined it with what was already technically possibly and raised it to a new level of elegance. Did it require terrific insight and some new technologies? Absolutely. But while the product is a tour de force design, its not a technological breakthrough. However, when combined with Apples marketing strategy, its a hugely successful business strategy that drives up growth and returns tons of cash. In the case of the iPod, Apples greatest innovation was uniting the record labels around a new business model that addressed piracy. They were so successful that its fair to say that now, Apples power in the music industry transcends that of the record labels. Having watched this, existing TV/video content providers are not anxious to let Apple TV do this to them. The issues with Apple TV and all the other TV box and service competitors is not hardware design but finding a compelling business model. Potential Surprises What surprises might we see? The biggest question in my mind is will they dip into their $51B cash hoard thats returning less than 1%. Jobs says he wants to keep his powder dry, but it wouldnt surprise me if they used a chunk more boldly than their typical small acquisitions. With Ping as their primary play in social networking, Apple could make a change in their business strategy that would accelerate their social networking presence. Conclusion The fundamental premise behind any platform-derivative business strategy is that you have to have 1) fertile platforms, 2) introduce derivatives with incremental appeal, and, 3) have a

marketing strategy that sells the heck out of them. Apples business strategy for 2011 will harness their marketing engine to reap what their developers have done. Behind the curtain, this will give developers the breathing room to create the next exciting platform.