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University of Wales

&
Management Development Institute of Singapore (MDIS)
MFBD5 0907A – MMKD5 0906A

Subject: Working in Organization

Lecturer: Mr. Han Kok Kwang

Course: MASTER OF SCIENCE

GROUP ASSIGNMENT COVER SHEET

No. Name of Group Member FIN No. Signature

1 Auguslyzu G0715391R

2 Chen Ping G0755609N

3 Ngo Minh Duc G0720200N

4 Ngo Ngoc Phu G0715766K

5 Song Xiao Meng G0755680U

6 Zhong Yuan S8283488E

Submitted on Due Date? Yes (Date Submitted: 24/Apr/2009)

Word limit observed? Yes (Number of words: 4658 words count excluding tables)

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TABLE OF CONTENT

Executive summary…………………………………………………………………………...4

I. Introduction……………………………….………………………………………………...5

II. Analysis Critical Successful Factors……..………………………………………………..7

1. The cult brand…….………………….…………………………………………….….7

2. Innovation products……….……………..…………………………………………...8

3. Excellent leadership .….………………...…………………………………………….9

4. Supply chain management…………….…………………………….………...……...10

III. Insights ……………………………………………………………………………………12

IV. Recommendations…………………………………………………………………………15

1. Current problems of Apple……………………………………………………………15

2. Recommendations……………………………………………………………………..17

V. Conclusion…………………………………………………………………………………19

References……………………………………………………………………………………..20

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EXCECUTIVE SUMMARY

The Apple Company is one of the most admired and success brands in the world. That is
company, when it is good – is very very good, whereas when it is bad, it flounders. Today, Apple
continues to lead the technology industry in innovation with its award-winning computers and
stands a very high position of rival among competitors. So what are the critical factors contribute
to the cult brand called APPLE? Following the researching Apple’s steps to success, this
assignment is divided into 5 chapters:

Chapter 1: Introduction

Chapter 2: Situation Analysis

Chapter 3: Insights

Chapter 4: Recommendations

Chapter 5: Conclusion

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Chapter 1: Introduction

Apple Inc. is an American multinational corporation which designs and manufactures computer
products and consumer electronics. Apple was founded in Cupertino, California on April 1 in
1976 by Steve Wozniak and Steve Jobs with the name “Apple Computer, Inc.”. After some
disastrous losses in the 1980’s and 1990’s to their main competitor, IBM, Apple was able to re-
invent the entire company. When Jobs returned to Apple in 1996, he took an expanded role as
CEO and not only continually pushed for innovative ideas and products but also compelled
several structural changes and led Apple to success. On January 9, 2007, it was the first time
during 31 years, the company’s name dropped the word "Computer" and changed into “Apple
Inc.” that reflected the company's ongoing expansion into the consumer electronics market in
addition to its traditional focus on personal computers.

Today, Apple has about 35,000 employees worldwide and operates more than 250 retail stores in
nine countries and an online store where hardware and software products are sold. The
company's best-known products include Pro line laptops (MacBook Pro) and desktops (Mac
Pro), consumer line laptops (MacBook) and desktops (iMac), the iPod( offered with up to 160
GB of storage with the iPod classic or with web browsing and touch screen controls with the
iPod touch), and the iPhone. Apple software includes the Mac OS X operating system, the
iTunes media browser, the iLife suite of multimedia and creativity software, the iWork suite of
productivity software, and Final Cut Studio, a suite of professional audio and film-industry
software products.

According to Fortune magazine, Mac computers account for from 4% to 5% market share in the
world in 2008, the iPod media player is Apple's main source of revenue, including sales of the
player itself and of music and video downloads via the iTunes music store. The iPod captured
70% market share more than 100 million units and Apple's iTunes Store became the market
leader in online music services, with over 5 billion downloads by June 19, 2008

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Apple had worldwide annual sales of US$32.48 billion in its financial year ending September 29,
2008. For reasons as various as its philosophy of comprehensive aesthetic design to its
distinctive advertising campaigns, Apple has established a unique reputation in the consumer
electronics industry. This includes a customer base that is devoted to the company and its brand,
particularly in the United States. In 2008, Fortune magazine named Apple the most admired
company in the United States. Also, Apple ranked the number one among Fortune 500
companies for total return to shareholders over both the past five years (94%) and the past ten
years (51%).

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Chapter 2: Critical success factors

1. The cult brand

Branding is an emotional process which involves inspiring trust, comfort, desire, even love (Matt
Haig 2004). Apple is the most successful brand in the world, according to an international online
poll of marketers. The factor underlying this success is the high quality product. One of the main
contributors, however, is building brand image, named APPLE.
Computer owners include broadly into two areas. There is the large area which is cheap,
functional PC and customers do not care too much who makes it. On the other hand, the smaller
area is people who are passionate about the products they use. They want a computer that shows
off their personality, which provides a stylish and human face to technology. This is target
market Apple focus.

Apple is not simply company; it represents something beyond business – something that strikes a
strong emotional chord with consumers. The brand is built around myths, legends and individual
philosophies, the strong emotions they create are based on the attitudes they stand for as much as
the products they represent. Apple is one of the few brands that genuinely inspire love. This love
is result of revolutionizing the way viewing the technology sitting on our desks at work or at
home. What Apple did from the start was match function with form. It appeals to people
because, in beautifying technology, it is simplifying it. Instead of having to consider about
modem speeds and random access memory, people can choose their computers on the basis of
aesthetics. For instance, the first concern of customer for iMac is about: What is my favourite
color? Should I go for pink or blue or graphite? The words ‘megabyte’ and ‘hard drive’ are not
appearing for most people. That because Apple’s products have been designed from the outside
in, with the consumer’s perspective firmly in mind.

Apple is often mentioned a “cult brand” which makes different and takes risks also. The risks, on
the other hand, have paid off. To illustrate, the iMac and iPod, have more than compensated for
such failures. As a result, Apple has some of the most loyal customers there are and Apple brand

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worth of 13.7 billion dollars following brand consultants Interbrand Thursday (Ed Sutherland
2008).

Apple knows that getting customer happy is better than anything else. They do not see simply
“customers” are customers; Apple inspires fans and followers more akin to a rock group than a
computer company and they will discuss the brand in great detail on the internet forums. The
company demonstrated the power of viral marketing with Iphone to fans that can help to promote
this product. Just see what happen when Apple and viral marketing come in, Apple believed that
introduced new product also meant create a new culture. That is why Apple has a string brand
name and image that will be difficult to compete with and Apple’s constant innovation and
product improvement make it difficult for other firm’s to stand out in the eyes of the consumer.

2. Innovation products

Increasingly, corporate competitive success is hinging upon the product innovation. Innovation is
a process by which new information is created, and it is this information that is embodied in the
product. To understand this process we conceptualize human beings not merely as information
processors (Galbraith 1973), but more importantly as information creators. Inherently,
innovation is the process by which new information emerges and is concretized in a product that
meets human needs.
According to Business Week, innovation today is “much more than new products.” Innovation is
also “reinventing business processes and building entirely new markets that meet untapped
customer needs.” The ubiquity of the Internet and globalization of the business expand
generation of new ideas. Innovation is then “selecting and executing the right ideas and bringing
them to market in record time.”

Apple Company is the World's Number One Innovative Company, four years in a row according
to Business Week’s 2008 list of the world's 50 most innovative companies. Business Week
proclaims "their creativity goes beyond products to rewiring themselves." Business Week ranks
the innovative companies based on the responses received from over 1,000 global executives of
the largest global corporations; survey questions include innovation metrics on process, product

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and business model innovations. So how have they can gain such huge success and became a
giant in the electronics industry? We have to admire deeply their products innovative strategies.

Apple has created great innovations beginning with the first Apple computer in 1976 Graphical
User Interface (GUI) along with the popular Macintosh introduced in 1984, the reliable
PowerBook introduced in 1991, the PDA named Newton that created a new industry of
handhelds in 1993, the new millennium revolution beginning with the iMac in 1998, the new
iBook hot on the heels of the iMac in 1999, the iPod that put an oomph in the MP3 players and
essentially changed music as we know it in 2001, iTunes software and Music store service that
changed the Music industry business model and made it easy for fans to listen and buy music
piecemealed in 2003, iPod mini, iPod (U2 Special Edition) and iPod photo in 2004, iPod shuffle,
iPod Nano, iPod with Video and Mac Mini in 2005, the new iMac with Intel core Duo processors
and the new MacBook with Intel processors in 2006.

3. Excellent leadership

Leadership is vitally important at all levels within the company, from main board to the
shopfloor. Leadership is the moral and intellectual ability to visualize and work for what is best
for the company and its employees. The leaders directly support the value-adding activities,
which is central core of the organization. Ability of leaders influences survival of company.

Steve Jobs, the co-founder is the key success of Apple. Steve Jobs is the right man to lead Apple.
There is never been anyone at Apple who had impact that Steve Jobs has had since his return. He
is a demanding, visionary, responsible and genius leader. Steve Jobs is Apple. The company was
founded by him as leader and then the company fell on its face during the middle years of history
(1986-1997) when they lost him. When he came back to Apple as the role of CEO in 1997, his
return has made success for the company.

Firstly, Jobs made the evolution of Apple management. He knew that improvement was
impossible without the change of leadership so he immediately took action. He quickly fired all
but two of the previous board members and installs new ones. He made change in the executive
leadership and the company’s advertising agency. He issued discipline on Apple about the

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quality that company had not had many years. The company that used to be known as the “ship
that leaks from the top” was soon transformed into a tightly controlled, team – oriented machine.
The evolution of Apple management with the change of leaders and the issue of the working
regulation made the workers’ belief and loyalty, made Apple’s workplace to be more effective
with the co-operation of workers. Also, the new discipline help Apple attract to more new
brightest workers who bring Apple to success by their creativity.

Steve was visionary and responsible leader. When an independent contractor and hardware
expert named Tony Fadell approached Apple with an idea of an MP3 player and a music sales
companies, Jobs got it, even through other companies had reject it. Job is the responsible leader
when he involved with the iPod is an indication of his leadership. Jobs paid 100 percent of his
time involved in iPod since it started. He was involved in every single aspect of project to make
it good as much as possible. Jobs understood what will be the effect that the device could make.
It was consistent with his vision for creating a digital lifestyle. The launch of iPod made the most
incredible success of Apple through 26 years of Apple’s history. iPod sales were phenomena and
have passed the company’s computer sales. Apple was making profit while other technology
companies suffered. In the October of 2001 Apple began introducing iPod and in the spring of
2002, Apple sold more than 10 million units. In the end of 2005, Apple held 75% of the world
market of digital music player

4. Supply chain management

Apple retail strategy appears to be a key factor in its success. Today, Apple operates more than
250 retail stores in nine countries and an online store.

Retail stores were located in high traffic place like malls to attract customers’ shopping in the
environment. On May 19, 2001, Apple opened the first official Apple Retail Stores in Virginia
and California. The first two retail locations welcomed over 7700 people and sold the total of
$599000 of merchandise during their first two-day weekend. Ever since the first Apple Store
opened, Apple has sold third party accessories. This allows, for instance, Nikon and Canon to
sell their Mac-compatible digital cameras and camcorders inside the store. On July 11, 2008,

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Apple launched the Apple Store to sell third-party applications for the iPhone and iPod Touch.
Within a month, the store sold 60 million applications and brought in $1 million daily on
average. The Apple Store could become a billion-dollar business for Apple and help Apple had
become the third-largest mobile handset supplier in the world due to the popularity of the iPhone
in 2008

The success of Apple also goes along with the opening of online store. In 2003, Apple's iTunes
Store was introduced, offering online music downloads for $0.99 a song and integration with the
iPod. The service quickly became the market leader in online music services, with over 5 billion
downloads by June 19, 2008. In February 2008 the iTunes Store became the second-largest
music retailer in the U. S., right behind Wal-Mart. Almost everything Apple makes transcends
gender, geography, age, and race. An Apple Store is a demographic melting pot, with computer
games for kids and a Genius Bar for their parents and so much cool stuff to touch that it's a
magnet for young people

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Chapter 3: Insights

Apple is a technology brand like no other. Company understands that people choose brands
based on emotional responses. With the edible name and the products “make you want to lick
them”, a PC might me a machine, but it not sold to robots. Whereas, you can bet Dell Company
never said that about their computers. Apple’s computers, such as the legendary iMac, are design
icons. It has taken the fear factor out of technology by giving it a personality. In my opinion,
Apple holders, they are not using their computers that are simply another item of furniture; it
might as well be pleasing on the eye.

Apple products inspire strong emotions because the brand defines the identity of its customers.
Holding an iMac, it seems like owning a Ferrari car says something about you. It like all cult
brand, a collective individuality, people want to be different, but they want to belong.

Therefore, build expectation or forecast, impulse the holdings growth base on company brand
name and increase productions investment. MiniCooper of BMW is one of similar example.
After promulgated about this car, the expectation of market increased dramatically and
distributors of BMW got so many orders from future customers who want to own this car even
before seeing it. And the order happened even before new product comes to the market.

Ten years ago people are walking around with Sony Walkman, today they are using Ipod. May
say there is no other tech company that possesses the kind of mind share and respect Apple does.
Apple has effectively taken the coolness factor to a max. They know what a good looking
product should look like and they have a good handle on what the world wants.

Moreover, the key success factors for Apple would be the extent of their product offerings.
Competitors such as Dell are now also offering peripherals, and MP3 players, but Apple has the
strong brand name and innovation that is difficult for the competitors to overcome. Apple is the
oldest hardware manufacturer, and has a long history of improving on their current products
while constantly developing new ones.

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From Apple I personal computer to iPhone for over 30 years, Apple Company has introduced a
series of innovative products that changed the electronics industry, of which the best known are
the Apple II, Macintosh, iPod and the iPhone. Over the past decade, there is a belief in Apple’s
culture that is on the absolute belief in products innovation. The company has combined product
innovation with industrial design and clever marketing to gain a reputation far out of proportion
to its size or market share.

We can say that any product from the Apple wins the market wherever it appears although their
price much higher than others. Such as compared to earlier generations of cell phones, the main
difference in the iPhone’s features was the screen. The iPhone featured the largest screen (8.9cm
diagonal, 320x480) of any standard-sized cell phone. To make room for the larger screen, the
phone deleted a dialing keypad, and instead uses a touch screen for dialing and other input
functions. Under this screen was a stripped-down version of Apple’s Unix-based OS X operating
system, with an iPhone-specific user interface that’s claimed to match the ease of use of the
Macintosh and iPod. Apple’s iPhone innovation strategy is of huge importance to Apple, not
only occupy the biggest part of market share, but also marking only its fourth industry entry after
personal computers (1977), PDAs (1993) and portable music players (2001). Many of the
strategies are dictated by the core competencies that the company has acquired over its thirty
year history, especially in product marketing and innovation. Apple incessantly to invest
substantial funds to research and development new products so that their products become a
fashion trend and influence more young people uses them.

In addition, Steve Jobs is the key lead Apple to success, who is the excellent leader. He is a
encourage leader who keep his eyes and ears open and had the courage to seize new
opportunities as they come along. “Think different” help Jobs make his products unique and
available to the market effectively. If you dreamed of changing the world, Jobs was out to prove
any way he could do to satisfy your needs. Jobs work to ensure Apple a place at the top of
market next coming years. He did not like other previous CEOs only focus on sales and
financing. An open mind and ability to put new twists on old technique was one of the key
distinguishing factors between Jobs and his competitors like Dell leader or IBM leader. In 2001,
while other computer manufacturers were pursuing PDAs, he did not follow this, he decided to
turn Apple from just only focus on computers in the past into focus on digital music player

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market. "The place where Apple has been standing for the last two decades is exactly where
computer technology and the consumer electronics markets are converging. So it's not like we
have to cross the river to go somewhere else; the other side of the river is coming to us", Steve
Jobs said.

Finally, retail stores can become the key success of Apple because it can meet customer
satisfaction. Unlike many other companies' policies, where consumers cannot even talk to tech
support if they are out of warranty or they do not have an extended support plan, any Apple
customer can bring a machine into the store and get a free diagnosis. Customers must, of course,
pay for repairs if they have not purchased the AppleCare extended warranty.

We can identify that Apple retails are successful as we can compare Apple store to other
companies’ store. Apple stores are attractive to customers. Other companies create the store quite
small and not colorful while colorful Apple stores are set to be around 6000 square feet and will
carry Apple hardware and third-part software. Also we can recognize that in Apple stores,
customers to avoid confusion over what the rights they choose with Apple consider 6 best
options of third-party products in each peripheral category: 6 cameras, 6 camcorders, 6 mp3
player, and 6 handheld organizers.

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Chapter 4: Recommendations

1. Current problems of Apple

There are some competitive advantages of Apple: Firstly it is cult brand names, Apple spends a
few hundred million a year on advertising and has one of the most recognizable name brands in
the world. Secondly, it is new product pipeline; Apple is a pretty good new product company. In
Apple, there are over 2,000 folks in our engineering groups who work on new and exciting
products. Thirdly, Apple has CEO, Steve Jobs who is excellent visionary leaders and work to
ensure Apple a place at the top of market next coming years. The supply chain management also
is the Apple big advantage. Apple is one of the best companies in the world at supply chain
management and logistics. The retail stores would be viewed as extra warehouses in the current
system, so there would be one supply chain group for the whole company with the special design
and effective staff and operation. Furthermore, Apple has the stable finance statement with over
$4 billion in the bank; the company has the necessary financing to expend the product system
and marketing, retail strategy.

However, as we know that the computer industry is one of the fastest growing industries
globally. Globalization itself has increased competition against each of the computer companies
to strive their best towards their target markets, to have customer loyalty and gain competitive
advantage. Due to this reason, large and the “top of the rank” computer companies like Apple
continuously keeps on increasing its research and development, which in turn forces them create
new markets and large quantities of its products to fulfill the demands of its target markets.

A risk associated with focusing on the international market is again, unpredictability. Just as
political changes and consumer taste can change here in the United States, so can it around the
world. In the international market, it may be more difficult to predict and then recover from.

As following “cult brand”, Apple has taken a risk on practically every product it has made and
sometime, this has not paid off. For example, the Apple Newton “personal digital assistant”
failed because of the remarkably for an Apple product makes customers confused, even Apple
also seemed confused about the function of the product when ran adverts “ What is it”.

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Moreover, the risk in Apple using the broad differentiation strategy is that competitors can
imitate what they are doing, and also that consumer’s tastes can change.

Continuing the strategy of not licensing MacOS to Orriginal Equipment Manufacturer (OEM),
Apple had launched Macintosh which is a promise of making its position strongly and gaining
proprietary benefits. Yet, Apple did not realise that Microsoft was a close follower and ready to
launch the Microsoft Windows which had similar characteristics to MacOS and would reduce the
point of differentiation of Apple’s Graphical User Interface (GUI) that Apple intended to use for
gaining superior benefits (Apple Macintosh was launched in 1984; Microsoft Windows was
launched in 1985). The strategy of not licensing also reveals that Apple overlooked the
importance of speed in using other PC manufacturers’ distribution capability to bring the
innovation to market. As a result, the MacOS failed to take off as quickly as Microsoft Windows.
Furthermore, the strategy of not licensing constrained the growth in the installed base of Apple
machines, lowered Apple’s capability to compete and limited the potential to create a business
platform whereas Microsoft could create both technology platform and business platform. In
term of pricing strategy, the use of the low price licensing strategy by Microsoft enabled it to
achieve adoption for a variety of manufacturers and hence to create a virtual standard. The self-
reinforcing effect was evident in that the pursuit of low price licensing strategy to the PC
manufacturers led to the growing installed base of PCs running Microsoft Windows operating
system. Once, Apple has lost competitive advantage.

According to many analysts, Apple has no product blockbuster to make after the launch of its
iconic device 3G iPhone. Although, Apple had made a revolution in the Smartphone market, its
revenue is not as high as Black berry. RIM ranks the top position and make a further distance to
Apple. It is likely true that Macbook Air had announced as lightest and slimmest laptop in 2008.
Consequently, this year’s Trade show was witnessed as no big unveiling. In addition, Jobs is also
an elite products developer whose name is on the patents for iPhone and iPhone 3G smart
phones. This would make pressure on Apple whether it can keep coming out with popular
product like iPod and iPhone because some fear that lack of clarity would affect the company in
many ways. Furthermore, there will be a required margin of differentiation in order create
separate needs and target markets.

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Finally, one of the biggest challenges for Apple as well as the interim CEO is Steve Jobs. Many
people say that Apple is Steve Jobs who is an excellent leader. During almost 33 years since
1976, we can see the fervent devotion of Jobs for his company – the Mac faithful, and recently
are iPod and iPhone cult. These are the reasons of distinguishing Apple products from others
competitor. Once in case Jobs products are ineffectiveness or he is not back at the helm, analysts
fear that share price will be tumble.

A tough time for Apple has been not only the sudden absence of Jobs but coming with the
troubled economy in America. The economy has fallen far enough, long enough that consumer
demand and expenditure become extremely weak. According to a recent report from research
firm IDC, Apple has decreased from third to fourth rank in the US computer market share.
Apple’s share of the US computer market fell to 8 percent during the fourth quarter of 2008 from
9.5 percent in the third.

2. Recommendations

The concern is that what Apple should do to overcome these problems?

There is a trend toward the notebook computer and away from desktops PC’s. Apple may
develop and focus on their version of the laptop in order to keep up with this trend. Notebook
sales have been very strong and represent a large contribution to income. Apple must continue to
develop new products as well as improve on their current products in order to remain
competitive and achieve growth. They must also be able to retain customer loyalty which has
contributed to their success.

One mention relates directly to the iPod and iTunes. Currently, Apple is leaving money on the
table, so to speak. Apple has also been under pressure from the music industry to increase prices
on iTunes. They might have to completely reconsider their pricing strategy in order to try to
satisfy consumers as well as the music industry. Particularly, for downloading songs, consumers
have to pay $.99 for a song or typically $9.99 for an album through iTunes. That is why there is a
big amount of consumer not interested in that. On the other hand, other competitors of Apple
give good offers for their consumers who can download free many songs they would like.

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With this adaptation, Apple could aim to attract more new consumers and expect that they would
be interested in other Apple products in long term. Hopefully, in the next year, consumers will be
satisfied by new products which are considered as further and longer paces than its rivals.
Furthermore, with very low market share internationally, there is plenty of room for growth;
thereby Apple should implement internationally strategic plan. Hence, the company could
exploit the potential market segments such as China, Vietnam, and Thailand. Apple seems to
have nailed it when it comes to the MP3 player market and can possibly create a strong brand
name from that in the international market.

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Chapter 5: Conclusion

In technology industry, Apple can be called as a leading computer and entertainment products

nowadays which is still able to make great money on their excellent products. In order to

continue with rapid growth both on American soil and beyond, Apple may focus on

distinguishing themselves with top of the line products and services. Apple has seen success and

growth in the past two year in the architecture, engineering, and construction industries. Basing

on all advantages in the whole market like that, Apple is more and more successful when

continue to push more innovation products to the market.

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5. John C. Maxwell (2007) The 21 Irrefutable Laws of Leadership, Thomas Nelson Inc,
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http://cultofmac.com/apple-brand-worth-137b/2919

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14. Dennis Sellers (2001) Apple has big plans in store, Accessed April 14th 2009
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2009 http://infotech.indiatimes.com/quickiearticleshow/3989295.cms

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