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The members of Group 4:
1. Trần Thị Hoàng Phượng 082719Q
2. Lai Kim Thuận 080879Q
3. Nguyễn Thị Thanh Lê 082701Q
4. Võ Thỵ Kiều 082698Q
5. Nguyễn Thị Xưa 080888Q

 Foreword
If there’s one company that is the envy of the high-tech community these days, it’s Apple.
Steve Jobs is hailed as a genius CEO and lauded for a string of hit products. Apple Inc is an
American multinational corporation that designs and markets consumer electronics, computer
software, and personal computers. Apple’s market capitalization is over $200 billion dollars
currently, easily ranking it in the top 10 companies in the world by market cap, and just shy of
Microsoft for biggest technology company. Apple has once again been named the most admired
company by Fortune magazine, and it did so with the highest margin of victory the magazine
has ever recorded for a number one - Apple scored a 7.95 on the index system used by the
magazine, while number two Google scored a 7.70. To get its list of the Top 50 Most Admired
Companies, Fortune's survey asked businesspeople to vote for the companies that they admired
most, from any industry. Apple was voted #1 for the third year in a row in a poll of executives,
industry analysts and company directors. Apple is delivering an experience that makes
customers happy to spend as much money as they can afford to spend. With 250 million iPods,
43 million iPhones, and 32 million iPod touches sold to date, plus the promise of a game-
changing iPad, Apple won this year's vote by the highest margin ever for a No.1. ."
While so many companies are struggling to break even in the current recession Apple is
getting stronger day by day. The last three years has seen Apple's profits soar, take a look at
these figures: a profit of 8.2 Billion in 2007 followed by a profit of 11.2 Billion in 2008 and
most recently a profit of 17.2 Billion in 2009. That is more than a 100% growth in profit from
2007 to 2009- Incredible!
"What makes Apple so successful? Product, product, product," the magazine wrote about
Apple ". This is the company that changed the way we do everything. Its track record for
innovation and fierce consumer loyalty translates into tremendous respect across business'
highest ranks."
Everyone wants to understand the secrets of Apple’s success. This essay help us find
what Apple’s secrecy and CEO Steve Jobs’s leadership.
2
 Table of content:
Foreword ......................................................................................................................................1
I. History of the Apple company corporation..................................................................................4
1. Operating History...................................................................................................................4
2. Product History......................................................................................................................6
3. Steve Jobs.............................................................................................................................13
II. Organizational Architecture......................................................................................................18
1. Organization structure..........................................................................................................18
1.1. The history of Apple management structure...............................................................18
1.2. The early in 1980s and John Sculley..........................................................................18
1.3. The change in structure...............................................................................................18
1.4. The new organization wthout Tobs.............................................................................22
1.5. The present Apple’s structure.....................................................................................24
2. Incentive system...................................................................................................................30
2.1. Reward........................................................................................................................30
2.2. Promotion....................................................................................................................30
3. Organizational culture..........................................................................................................30
3.1. Apple corporate...........................................................................................................30
3.2. Culture secrecy............................................................................................................31
3.3. Culture of Innovation..................................................................................................33
III. Apple’s environment................................................................................................................33
1. General.................................................................................................................................33
1.1. PC industry..................................................................................................................33
1.2. Apple international......................................................................................................34
1.3. Interbational growth....................................................................................................34
1.4. Analysis of environment change.................................................................................34
1.5. Apple response to the environment change................................................................35
2. Apple’s Competitor..............................................................................................................37
3. External analysis..................................................................................................................39
4. Internal analysis...................................................................................................................42
IV. Business strategy.....................................................................................................................43
1. The change of strategy.........................................................................................................43
1.1. Beginning....................................................................................................................43
1.2. Sculley with strategy of low cost in 1990...................................................................43
1.3. 1990-1995: Apple vs Microsoft..................................................................................44
1.4. 1997-Steve Jobs: Matrix product................................................................................47
1.5. Apple’s present strategy: Product Differentiation......................................................47
2. Apple’s competition.............................................................................................................48
2.1. Apple’s competitive advantage...................................................................................48
2.2. Apple’s weakness........................................................................................................49
2.3. Creation & sustainning of competitive advantage......................................................49
2.4. 11 Effective strategy Apple uses to create loyal customers........................................49
3. Branding strategy.................................................................................................................51
3
4. Apple’s alliance...................................................................................................................52
4.1. AIM alliance...............................................................................................................53
4.2. Apple – Microsoft alliance..........................................................................................53
4.3. Apple – Nike alliance..................................................................................................56
5. List of mergers & acquisitions by Apple.............................................................................58
V. R&D and Marketing..................................................................................................................60
1. Marketing strategy...............................................................................................................60
1.1. The marketing tactic...................................................................................................60
1.2. Ipod marketing plan....................................................................................................61
1.3. Apple Iphone marketing plan......................................................................................62
1.4. SWOT analysis...........................................................................................................64
1.5. Marketing objectives...................................................................................................65
1.6. Marketing Mix strategy...............................................................................................65
1.7. The real secret of Apple’s successful marketing strategy...........................................66
2. R&D.....................................................................................................................................66
2.1. Apple’s R&D..............................................................................................................66
2.2. Marketing research......................................................................................................68
2.3. 4 Innovation secret......................................................................................................68
3. Apple’s advertising..............................................................................................................69
VI. Apple’s financial analysis........................................................................................................73
VII. Reference................................................................................................................................78
4
I. HISTORY OF THE APPLE COMPANY CORPORATION
Apple Inc., formerly Apple Computer Inc, is a multinational corporation that creates
consumer electronics, computer software, and commercial servers. Apple's core product lines
are the iPhone, iPod music player, and Macintosh computers.
Co-founder Steve Jobs and Steve Wozniak created Apple Computer into effect April 1,
1976, with the release of the Apple I, and the combined company on January 3, 1977, in
Cupertino, California. For over two decades, Apple Computer has been primarily a
manufacturer of personal computers, including Apple II, Macintosh, and Power Mac line, but
faced revenue and market share in recent years low stone 1990. Jobs, who was ousted from the
company in 1985, returned to become chief executive of Apple in 1996, and brought a new
philosophy of the company's products are recognized and simple design . With the introduction
of successful iPod music player in 2001, Apple established itself as a leader in the consumer
electronics industry, with "computer" from its name and continue to release the iPhone and
iPad. Today, Apple is the largest technology companies in the world.
1. Operating History:
 1973-1984: Jobs and Wizniak:
• 1973: Steve Wozniak joined HP.
• 1975:The Byte Shop, one of the first computer stores, opened in California.
• 1976: Wozniak proposes that HP create a personal computer. He was denied.
• 1976: March - Steve Wozniak and Steve Jobs finish work on a computer circuit board, which
they call the Apple I computer.
• 1976: April - Steve Jobs and Steve Wozniak formed Apple Computer Company, on April
Fool's Day.
• 1976: July - Apple I computer board is sold as a kit, and sent to the shop of Steve Jobs
and Steve Wozniak. Price: U.S. $ 666.66.
• 1976: August - Steve Wozniak begins work on the Apple II.
• 1976: October - Wozniak remains at HP, but was soon convinced that he should leave and join
Apple Computer.
• 1976: December - Steve Wozniak and Randy Wigginton demonstrate the first prototype of the
Apple II at a Homebrew Computer Club meeting.
• 1977: March - Apple Computer moves from 'Jobs' garage to an office in Cupertino.
• 1977: April - Apple Computer, provides the first system of the Apple II, for $ 1295.
• 1977: May - 10 months after its introduction, 175 Apple I kits have sold.
• 1978: Apple Computer begins work on an enhanced Apple II with custom chips, code named
Annie.
• 1978: Apple Computer begins work on a supercomputer with a bit-state architecture, code-
named Lisa.
• 1979: June - Apple Computer introduced the Apple II Plus, with 48KB memory, for U.S. $
1195.
• 1979: September - Apple Computer sold 35,000 Apple II computers for the financial year.
• 1979: October - 2.5 years after the introduction of the Apple II, 50,000 units were sold.
5
• 1979: Apple Computer begins work on "Sara", the codename for what would be the Apple III.
• 1980: May - Apple Computer introduced the Apple III. Prices range from U.S. $ 4,500 to $
8,000.
• 1980: September - Apple Computer sells over 78,000 Apple II computers in the fiscal year.
• 1980: Apple ships the first Apple III units with limited numbers.
• 1980: Apple Computer begins project "Diana", which will become the Apple IIe.
• 1981: September - Apple Computer introduced its first hard drive, 5MB file, to U.S. $ 3499.
• 1981: Apple Computer officially reintroduces the Apple III, with improved software and a
hard disk.
• 1982: Sales of Apple II Plus to date: 45,000.
• 1982: Sales of all Apple II systems to date: 750,000.
• 1982: Apple Computer becomes the first personal computer company to reach $ 1 billion in
annual sales.
• 1982: Franklin Computer Corp. announced the Franklin Ace 1000, the first legal (at) Apple II
clone.
• 1983: January - Apple Computer has officially launched Lisa computer. its original price is $
10,000. During its lifetime, 100,000 units were produced.
• 1983: January - Apple Computer introduces the Apple IIe for U.S. $ 1400.
• 1983: June - one millionth Apple II was made.
• 1983: June - Apple Computer begins shipping the Lisa.
• 1983: June - Video Technology introduces the Laser 3000, an Apple II computer workalike.
• 1983: June - Unitronics shows Sonic, an Apple II computer workalike.
• 1983: July - Apple Computer officially begins marketing the Lisa computer.
• 1983: December - Apple Computer introduces the design of the Apple III Apple III +, for U.S.
$ 3000.
• 1983: December - Apple launches new Macintosh to the press.
• 1983: Franklin shows an operating Franklin Ace 1200 Apple II compatible for U.S. $ 2200.
• 1984: January - Apple released a new version of the Lisa computer, Lisa 2. It uses all new
software, and Macintosh operating systems.
• 1984: January - Apple Computer, Steve Jobs introduced the Apple Macintosh.
• 1984: April - Apple Computer released the Apple IIc, priced U.S. $ 1300.
• 1984: April - retirement Apple Computer and Apple III Apple III +, with only 65,000 units
sold in total (90,000 made).
• 1984: May - Apple Computer announced that 70,000 Macintosh computers have been shipped
in the first days after notification of 100.
• 1984: September - Apple introduces the Macintosh 512K for U.S. $ 3200.
• 1984: November - The 2 millionth Apple II computer is sold.• 1984: Apple sells 250,000 th
Macintosh system.
 1985-1997:Sculley, Spindler, Amelio:

• 1985: January - Apple Computer officially renamed Lisa Macintosh XL.
• 1985: March - Apple Computer introduces the Apple IIe enhanced.
• 1985: April - The Macintosh XL (formerly called Lisa) is dropped from the line of
Apple computer products.
• 1986: January - Apple introduced the Macintosh Plus. Price is $ 2600.
• 1986: April - Apple Macintosh Computers and abandon the original Macintosh 512K.
• 1986: April - Apple introduces the Macintosh 512K enhanced, for U.S. $ 2000.
• 1986: July - Apple Computer Macintosh XL abandoned.
6
• 1986: September - Apple Computer introduces the Apple IIGS, with the Apple 3.5 drive, for
U.S. $ 1000.
• 1987: January - Apple Computer introduces the Apple IIe Platinum.
• 1987: March - Apple Computer introduces the open architecture of the Macintosh II, U.S. $
3900.
• 1987: March - Apple Computer makes its first million Macintosh PCs.
• 1987: March - Apple introduced the Macintosh SE for $ 2900 U.S. Open.
• 1987: March - Apple Computer Macintosh 512K enhanced to give up.
• 1987: Apple Computer begins shipping the Macintosh II.
• 1989: January - Apple Computer introduces the Macintosh SE/30, U.S. $ 6500.
• 1989: September - Apple Computer announces the Macintosh Portable, for U.S. $ 6500
• 1989: September - Apple Computer announces the Macintosh IIci, for about U.S. $ 8700.
• 1990: Apple's response to the PC threat from IBM was a profusion of new Macintosh lines
including Quadra, Centris, and Performa.
• 1991: Apple partnered with long-time competitor IBM to form the AIM alliance.
• 1993: Apple released the Newton, an early PDA.
• 1994: Apple started the Power Macintosh line Apple purchased Steve Jobs' company, NeXT
• 1996: December - Apple purchased Steve Jobs' company, Next and its Next step operating
system.
• 1997: July-The returns of Jobs
• 1997 :November - Apple introduced the Apple Store.
• 1997: Entering into partnership with Microsoft.
 1998-2001: Apple of renaissance:

• 1999: Apple introduced the Power Mac G4.
• 2001: Apple introduced Mac OS X, an operating system based on Next's Nextstep and the
FreeBSD kernel.
• 2001: May - Apple announced the opening of a line of Apple retail stores.
• 2001: October - Apple introduced its first iPod portable digital audio player.
 2002-present:
• In early 2002: Apple unveiled a redesigned iMac, using the G4 processor.
• 2002: Apple also released the Xserve 1U rack mounted server.
• In mid-2003: Steve Jobs launched the Power Mac G5, based on IBM's G5 processor.
• 2004: August - A new iMac based on the G5 processor was unveiled and was made available
in mid-September.
• 2004: December - Apple -Motorola alliance.
• 2005: April - Apple released Mac OS X v10.4 "Tiger" to the general public.
• 2005: June - Steve Jobs officially announced that Apple will begin producing Intel-based
Macintosh computers beginning in 2006.
• 2006: January - The first Intel-based machines, the iMac and MacBook Pro, were introduced.
• 2007: January - Apple Computer, Inc. shortened its name to simply Apple Inc.
• 2008: July - Apple introduced iPhone 3G.
• 2009: August - Eric Schmidt left Apple of board.
• 2010: January - The Apple iPad was announced.
• 2010: April - The phone carries the iOS4, their newest mobile operating system, were
introduced.
7
• 2010: June - Apple introduced the iPhone 4, which they call "the biggest leap since the
original iPhone".
2. Product History:
1976
Apple I
1977
Apple II
1979
Apple II+
1980
Apple III & III+
1983
Apple ][e
Lisa/Lisa 2/Mac XL
1984
1984 Commercial
Graphical User Interface (GUI)
Macintosh 128k
Apple IIc & IIc+
Macintosh 512K
1985
Apple IIe Enhanced/Platinum
1986
Macintosh Plus
Macintosh Plus ED
Macintosh 512Ke
Macintosh ED
Apple IIgs
1987
Macintosh II
Macintosh SE
1988
Macintosh IIx
1989
Macintosh SE/30
Macintosh IIcx
Macintosh SE FDHD
Macintosh IIci
Macintosh Portable
1990
Macintosh IIfx
Macintosh Classic
Macintosh IIsi
Macintosh LC
1991
Macintosh Classic II
Macintosh Quadra 700
8
PowerBook 100
PowerBook 140
PowerBook 170
1992
Macintosh LC II
PowerBook 145
Macintosh IIvi
Macintosh IIvx
PowerBook 160
PowerBook 180
PowerBook Duo 210
PowerBook Duo 230
PowerBook Duo 270c
PowerBook DuoDock
1993
Macintosh Centris 610
Macintosh Centris 650
Macintosh Color Classic
Macintosh LC III
PowerBook 165c
Workgroup Server 80
Workgroup Server 95
Macintosh LC 520
PowerBook 180c
Macintosh Quadra 660av
Macintosh Quadra 840av
PowerBook 145B
Workgroup Server 60
Newton Message Pad (OMP)
PowerBook 165
Macintosh Centris 660av
Macintosh Color Classic II
Macintosh LC 475
Macintosh LC III+
Macintosh TV
PowerBook Duo 250
1994
Macintosh LC 550
Macintosh LC 575
Newton Message Pad 100
Power Macintosh 6100
9
PowerBook Duo 280
PowerBook Duo 280c
PowerBook DuoDock Plus/II
Workgroup Server 6150
PowerBook 520
PowerBook 520c
PowerBook 540
PowerBook 540c
Macintosh LC 630
PowerBook 150
1995
Macintosh LC 580
Power Macintosh 5200 LC
PowerBook 550c
PowerBook 190
PowerBook 190cs
PowerBook 5300
PowerBook 5300c
PowerBook 5300ce
PowerBook 5300cs
PowerBook Duo 2300c
1996
Network Server 500/700
PowerBook 1400c/cs
Power Macintosh 6300/120
1997
PowerBook 3400
10
eMate 300
20th Anniversary Macintosh
PowerBook 2400
PowerBook G3
Power Macintosh G3
1998
Macintosh Server G3
Power Macintosh G3 All-in-one
PowerBook G3 Series
iMac
PowerBook G3 Series (rev. 2)
1999
iMac (Rev. C)
Power Macintosh G3 (Blue & White)
iMac (Rev. D)
PowerBook G3 (Bronze Keyboard)
iBook
Power Macintosh G4 (AGP Graphics)
Power Macintosh G4 (PCI Graphics)
iMac (Slot Loading)
iMac DV/SE
2000
iBook SE
PowerBook G3 (FireWire)
iMac (Summer 2000)
iMac DV (Summer 2000)
iMac DV+
iMac DV SE (Summer 2000)
Power Macintosh G4 (Gigabit Ethernet)
Power Macintosh G4 Cube
iBook/iBook SE (FireWire)
2001
PowerBook G4
Power Macintosh G4 (Digital Audio)
iMac (Early 2001)
iMac SE (early 2001)
iBook (Dual USB)
iMac (Summer 2001)
Power Macintosh G4 (Quicksilver)
iBook (Late 2001)
iPod
PowerBook G4 (Gigabit Ethernet)
11
2002
iBook (14.1")
iMac (Flat Panel)
Power Macintosh G4 (Quicksilver 2002)
eMac
PowerBook G4 (DVI)
iBook (Mid 2002)
Xserve
iMac (17")
Power Macintosh G4 (Mirrored Drive Doors)
iBook (Late 2002)
PowerBook G4 (1 GHz/867 MHz)
2003
PowerBook G4 (12.1")
PowerBook G4 (17")
Power Macintosh G4 (FireWire 800)
iMac (Early 2003)
Xserve (Cluster Node)
Xserve (Slot Load) / Xserve RAID
iBook (Early 2003)
iPod (Dock Connector)
eMac (ATI Graphics)
Power Macintosh G5
iMac (USB 2.0)
PowerBook G4 (12.1" DVI)
PowerBook G4 (15" FireWire 800)
PowerBook G4 (17" 1.33 GHz)
iBook G4
2004
iPod mini
Xserve G5
Xserve G5 (Cluster Node)
eMac (USB 2.0)
iBook G4 (Early 2004)
PowerBook G4 Family
Power Macintosh G5 (June 2004)
iPod (Click Wheel)
iMac G5
iBook G4 (Late 2004)
iPod (U2 Special Edition)
iPod photo
2005
iPod shuffle
Mac mini
PowerBook G4 (1.5 - 1.67 GHz)
iPod mini (2nd gen)
Power Macintosh G5 (Early 2005)
eMac (2005)
iMac G5 (Ambient Light Sensor)
12
iPod (color)
iPod (color U2 SE)
iBook G4 (Mid 2005)
iPod nano
iMac G5 (iSight)
iPod (with video)
PowerBook G4 (Dual Layer SD)
Power Macintosh G5 (Late 2005)
2006
iMac (Early 2006)
MacBook Pro
Mac mini (Early 2006)
MacBook Pro (17-inch)
MacBook
iPod (with video, U2 SE)
iMac (Mid 2006)
Mac Pro
iMac (Late 2006)
iPod nano (2nd Generation)
iPod shuffle (2nd Generation)
Mac mini (Late 2006)
MacBook Pro (Late 2006)
MacBook (Late 2006)
Xserve (Late 2006)
2007
Apple TV
MacBook (Mid 2007)
iPhone
MacBook Pro (Mid 2007)
iMac (Mid 2007)
Mac mini (Mid 2007)
iPod classic
iPod nano (3rd Generation)
iPod touch
MacBook (Late 2007)
2008
MacBook Air
Mac Pro (Early 2008)
Xserve (Early 2008)
MacBook (Early 2008)
MacBook Pro (Early 2008)
iMac (Early 2008)
iPhone 3G
iPod classic (120 GB)
iPod nano (4th Generation)
iPod touch (2nd Generation)
MacBook (13-inch, Aluminum, Late 2008)
MacBook Air (Late 2008)
MacBook Pro (15-inch, Late 2008)
13
2009
MacBook (Early 2009)
MacBook Pro (17-inch, Early 2009)
iMac (Early 2009)
iPod shuffle (3rd Generation)
Mac mini (Early 2009)
Mac Pro (Early 2009)
Xserve (Early 2009)
iPhone 3GS
MacBook (Mid 2009)
MacBook Air (Mid 2009)
MacBook Pro (13-inch, Mid 2009)
iPod classic (Late 2009)
iPod nano (5th Generation)
iPod touch (3rd generation)
iMac (Late 2009)
MacBook (Late 2009)
Mac mini (Late 2009)
Mac mini (Server, Late 2009)
2010
iPad
MacBook (Mid 2010)
iPhone 4
3. Steve Jobs
Steven Paul Jobs (born February 24, 1955) is an American business magnate and
inventor. He is well known for being the co-founder and chief executive officer of Apple.
3.1. Early years
Jobs was born in San Francisco and was adopted by Paul and Clara Jobs who named him
Steven Paul. Jobs' biological parents – Abdulfattah Jandali and Joanne Simpson.
Jobs attended Cupertino Junior High School and Homestead High School in Cupertino,
California, and frequented after-school lectures at the Hewlett-Packard Company in Palo Alto,
California. He was soon hired there and worked with Steve Wozniak as a summer employee. In
1972, Jobs graduated from high school and enrolled in Reed College in Portland, Oregon.
In the autumn of 1974, Jobs returned to California and began attending meetings of the
Homebrew Computer Club with Wozniak. He took a job as a technician at Atari, a
manufacturer of popular video games.
Jobs then traveled to India with a Reed College friend, Daniel Kottke, in search of
spiritual enlightenment. He came back a Buddhist. During this time, Jobs experimented with
psychedelics, calling his LSD experiences "one of the two or three most important things [he
had] done in [his] life".
Jobs returned to his previous job at Atari and was given the task of creating a circuit board
for the game Breakout.
14
3.2. Career
3.2.1 Beginnings of Apple Computer
In 1976, Steve Jobs, Steve Wozniak and Ronald Wayne founded Apple. Prior to co-
founding Apple, Wozniak was an electronics hacker. Jobs and Wozniak had been friends for
several years, having met in 1971. Steve Jobs managed to interest Wozniak in assembling a
computer and selling it. As Apple continued to expand, the company began looking for an
experienced executive to help manage its expansion.
In 1978, Apple recruited Mike Scott from National Semiconductor to serve as CEO for
what turned out to be several turbulent years. In 1983, Steve Jobs lured John Sculley away from
Pepsi-Cola to serve as Apple's CEO. The following year, Apple aired a Super Bowl television
commercial titled "1984." At Apple's annual shareholders meeting on January 24, 1984, an
emotional Jobs introduced the Macintosh to a wildly enthusiastic audience. The development of
the Mac was started by Jef Raskin, and eventually taken over by Jobs.
An industry-wide sales slump towards the end of 1984 caused a deterioration in Jobs's
working relationship with Sculley, and at the end of May 1985 – following an internal power
struggle and an announcement of significant layoffs – Sculley relieved Jobs of his duties as
head of the Macintosh division.
3.2.2 NeXT Computer

Around the same time, Jobs founded another computer company, NeXT Computer. Like
the Apple Lisa, the NeXT workstation was technologically advanced; however, it was largely
dismissed by industry as cost-prohibitive.
The NeXTcube was described by Jobs as an "interpersonal" computer, which he believed was
the next step after "personal" computing. During a time when e-mail for most people was plain
text, Jobs loved to demo the NeXT's e-mail system.
Jobs ran NeXT with an obsession for aesthetic perfection, as evidenced by such things as the
NeXTcube's magnesium case. This put considerable strain on NeXT's hardware division, and in
1993, after having sold only 50,000 machines, NeXT transitioned fully to software
development with the release of NeXTSTEP/Intel.
3.2.3 Pixar and Disney

In 1986, Jobs bought The Graphics Group (later renamed Pixar) from Lucasfilm.The new
company, which was originally based at Lucasfilm's Kerner Studios in San Rafael, California,
but has since relocated to Emeryville, California, was initially intended to be a high-end
graphics hardware developer. After years of unprofitability selling the Pixar Image Computer, it
contracted with Disney to produce a number of computer-animated feature films.
The first film produced by the partnership, Toy Story, brought fame and critical acclaim to
the studio when it was released in 1995.
In the years 2003 and 2004, as Pixar's contract with Disney was running out, Jobs and Disney
chief executive Michael Eisner tried but failed to negotiate a new partnership, and in early 2004
Jobs announced that Pixar would seek a new partner to distribute its films once its contract with
Disney expired.
In October 2005, Bob Iger replaced Eisner at Disney, and Iger quickly worked to patch up
relations with Jobs and Pixar. On January 24, 2006, Jobs and Iger announced that Disney had
agreed to purchase Pixar in an all-stock transaction worth $7.4 billion. Once the deal closed,
Jobs became The Walt Disney Company's largest single shareholder with approximately 7% of
the company's stock.
15
Jobs also helps oversee Disney and Pixar's combined animation businesses with a seat on a
special six-man steering committee.
3.2.4 Return to Apple

In 1996, Apple announced that it would buy NeXT for $429 million. The deal was
finalized in late 1996, bringing Jobs back to the company he co-founded. He soon became
Apple's interim CEO after the directors lost confidence in and ousted then-CEO Gil Amelio in a
boardroom coup. In March 1998, to concentrate Apple's efforts on returning to profitability,
Jobs immediately terminated a number of projects such as Newton, Cyberdog, and OpenDoc.
Jobs also changed the licensing program for Macintosh clones, making it too costly for the
manufacturers to continue making machines.
With the purchase of NeXT, much of the company's technology found its way into Apple
products, most notably NeXTSTEP, which evolved into Mac OS X. At the 2000 Macworld
Expo, Jobs officially dropped the "interim" modifier from his title at Apple and became
permanent CEO.
In recent years, the company has branched out, introducing and improving upon other
digital appliances. With the introduction of the iPod portable music player, iTunes digital music
software, and the iTunes Store, the company made forays into consumer electronics and music
distribution. In 2007, Apple entered the cellular phone business with the introduction of the
iPhone, a multi-touch display cell phone, which also included the features of an iPod and, with
its own mobile browser, revolutionized the mobile browsing scene. While stimulating
innovation, Jobs also reminds his employees that "real artists ship", by which he means that
delivering working products on time is as important as innovation and attractive design.
In 2005, Jobs responded to criticism of Apple's poor recycling programs for e-waste in the
U.S. by lashing out at environmental and other advocates at Apple's Annual Meeting in
Cupertino in April. However, a few weeks later, Apple announced it would take back iPods for
free at its retail stores. In 2006, he further expanded Apple's recycling programs to any U.S.
customer who buys a new Mac.
3.3.Business life
3.3.1 Wealth
As of October 2009, Jobs owned 5.426 million shares of Apple, most of which was
granted in 2003 when Jobs was given 10 million shares. He also owned 138 million shares of
Disney, which he received in exchange for Disney's acquisition of Pixar. Forbes estimated his
net wealth at $5.1 billion in 2009, making him the 43rd wealthiest American. As of 2006, Jobs
had not appeared on national tallies of charitable donations totaling $1 million or more, as
compiled by Indiana University's Center on Philanthropy. Although he may well have donated
significant sums anonymously, some have doubted this assumption, given Jobs' equally poor
track record on corporate philanthropy; after resuming control of Apple in 1997, Jobs
eliminated all corporate philanthropy programs as a temporary cost-cutting measure until
profitability improved. Despite the company's record-breaking profits and $40 billion cash on
hand, Jobs has not reinstated a philanthropic division at Apple.
3.3.2 Stock options backdating issue

In 2001, Steve Jobs was granted stock options in the amount of 7.5 million shares of
Apple with an exercise price of $18.30, which allegedly should have been $21.10, thereby
incurring taxable income of $20,000,000 that he did not report as income. This indicated
backdating. The investigation is focusing on false dating of the options resulting in a retroactive
$20 million increase in the exercise price. The case is the subject of active criminal and civil
16
government investigations found that Jobs was unaware of these issues and that the options
granted to him were returned without being exercised in 2003. On July 1, 2008, a $7 billion
class action suit was filed against several members of the Apple Board of Directors for revenue
lost due to the alleged securities fraud.
3.3.3 Management style

Much has been made of Jobs' aggressive and demanding personality. Fortune wrote that
he "is considered one of Silicon Valley's leading egomaniacs." Jef Raskin, a former colleague,
once said that Jobs "would have made an excellent king of France," alluding to Jobs'
compelling and larger-than-life personal.
Jobs has always aspired to position Apple and its products at the forefront of the
information technology industry by foreseeing and setting trends, at least in innovation and
style.
There's an old Wayne Gretzky quote that I love. 'I skate to where the puck is going to be,
not where it has been.' And we've always tried to do that at Apple. Since thevery beginning.
Floyd Norman said that at Pixar, Jobs was a "mature, mellow individual" and never
interfered with the creative process of the filmmakers.
In 2005, Steve Jobs banned all books published by John Wiley & Sons from Apple Stores
in response to their publishing an unauthorized biography, iCon: Steve Jobs.
3.4.Personal life
Jobs married Laurene Powell, on March 18, 1991. Presiding over the wedding was the
Zen Buddhist monk Kobun Chino Otogowa.The couple have a son, Reed Paul Jobs,and two
other children. Jobs also has a daughter, Lisa Brennan-Jobs (born 1978), from his relationship
with Bay Area painter Chrisann Brennan. Jobs is also a Beatles fan. He has referenced them on
more than one occasion at Keynotes and also was interviewed on a showing of a Paul
McCartney concert. In 1982, Jobs bought an apartment in The San Remo, an apartment
building in New York City with a politically progressive reputation.
In 1984, Jobs purchased a 17,000-square-foot (1,600 m2), 14 bedroom Spanish Colonial
mansion. Although it reportedly remained in an almost unfurnished state, Jobs lived in the
mansion for almost ten years.
In June 2004, the Woodside Town Council gave Jobs approval to demolish the mansion,
on the condition that he advertise the property for a year to see if someone would move it to
another location and restore it. In January 2007 Jobs was denied the right to demolish the
property, by a court decision.
Jobs had a public war of words with Dell Computer CEO Michael Dell, starting when
Jobs first criticized Dell for making "un-innovative beige boxes."On October 6, 1997, in a
Gartner Symposium, when Michael Dell was asked what he would do if he owned then-
troubled Apple Computer, he said "I'd shut it down and give the money back to the
shareholders." In 2006, Steve Jobs sent an email to all employees when Apple's market
capitalization rose above Dell's. The email read: Team, it turned out that Michael Dell wasn't
perfect at predicting the future. Based on today's stock market close, Apple is worth more than
Dell. Stocks go up and down, and things may be different tomorrow, but I thought it was worth
a moment of reflection today. Steve.
3.6. Health concerns
In mid-2004, Jobs announced to his employees that he had been diagnosed with a
cancerous tumor in his pancreas. During Jobs' absence, Timothy D. Cook, head of worldwide
sales and operations at Apple, ran the company.
17
In early August 2006, Jobs delivered the keynote for Apple's annual Worldwide
Developers Conference.
Two years later, similar concerns followed Jobs' 2008 WWDC keynote address; Apple
officials stated Jobs was victim to a "common bug" and that he was taking antibiotics. During a
July conference call discussing Apple earnings, participants responded to repeated questions
about Steve Jobs' health by insisting that it was a "private matter." Others, however, opined that
shareholders had a right to know more, given Jobs' hands-on approach to running his company.
On August 28, 2008, Bloomberg mistakenly published a 2500-word obituary of Jobs in its
corporate news service, containing blank spaces for his age and cause of death. Although the
error was promptly rectified, many news carriers and blogs reported on it, intensifying rumors
concerning Jobs' health. Jobs responded at Apple's September 2008 Let's Rock keynote by
quoting Mark Twain. Jobs concluded his presentation with a slide reading "110 / 70", referring
to his blood pressure, stating he would not address further questions about his health.
On December 16, 2008, Apple announced that marketing vice-president Phil Schiller
would deliver the company's final keynote address at the Macworld Conference and Expo 2009,
again reviving questions about Jobs' health. In a statement given on January 5, 2009 on
Apple.com, Jobs said that he had been suffering from a "hormone imbalance" for several
months. On January 14, 2009, in an internal Apple memo, Jobs wrote that in the previous week
he had "learned that my health-related issues are more complex than I originally thought" and
announced a six-month leave of absence until the end of June 2009 to allow him to better focus
on his health. Tim Cook, who had previously acted as CEO in Jobs' 2004 absence, became
acting CEO of Apple, with Jobs still involved with "major strategic decisions."
In April 2009, Jobs underwent a liver transplant at Methodist University Hospital
Transplant Institute in Memphis, Tennessee. Jobs' prognosis was "excellent".
3.7.Honors
He was awarded the National Medal of Technology from President Ronald Reagan in
1985 with Steve Wozniak and a Jefferson Award for Public Service in the category "Greatest
Public Service by an Individual 35 Years or Under" in 1987.
On November 27, 2007, Jobs was named the most powerful person in business by
Fortune Magazine.
On December 5, 2007, California Governor Arnold Schwarzenegger and First Lady Maria
Shriver inducted Jobs into the California Hall of Fame, located at The California Museum for
History, Women and the Arts.
In August 2009, Jobs was selected the most admired entrepreneur among teenagers on a
survey by Junior Achievement.
On November 5, 2009, Jobs was named the CEO of the decade by Fortune Magazine.
In November 2009 Jobs was ranked #57 on Forbes: The World's Most Powerful People.
3.8. In popular culture

Jobs was prominently featured in three films about the history of the personal computing
industry:
• Triumph of the Nerds - a 1996 three-part documentary for PBS, about the rise of the home
computer/personal computer.
• Nerds 2.0.1 - a 1998 three-part documentary for PBS, (and sequel to Triumph of the
Nerds) which chronicles the development of the Internet.
• Pirates of Silicon Valley - a 1999 docudrama which chronicles the rise of Apple and
Microsoft. He was portrayed by Noah Wyle.
Jobs has also been frequently parodied:
18
• Mad Magazine - a feature called Calvin and Jobs, a parody of Calvin and Hobbes,
starring Steve in the role of Hobbes and his attempts to explain to Calvin his job.
• Jobs was also parodied in "Mypods and Boomsticks", a 2008 The Simpsons episode which
features an adventure into the 'world' of Mapple, MyPods, and "Steve Mobbs".
• 30 Rock parodied Jobs's keynote presentation style, turtleneck and all in the episode
"Cutbacks".
• Jobs was also parodied on Mad TV and Saturday Night Live.
II. ORGANIZATIONAL ARCHITECTURE OF APPLE
1. Organization Structure:
1.1. The history of Apple management structure:
Apple Computer was formed in 1976 by Steven Jobs and Stephen
Wozniak, who visualized a personal computer that could be used easily by
anyone. Together, they created the Apple I. Setting up shop in Jobs’ garage,
they soon experienced sales beyond the garage’s capacity. In the same
year, A.C. Markkula was recruited as the company’s first professional
manager. With financing from Markkula and a group of venture capitalists,
Apple Computer was incorporated on January 3, 1977. As cofounder of
Apple, Jobs’ focus was on creating new and different products. He was the
visionary responsible for Apple’s reputation for innovation. Apple’s mission
was to change the
world by bringing computers to the masses. Jobs’ notion of “one person--
one computer” became a central tenet of the Apple belief system.
1.2. The Early 1980s and John Sculley

Since 1981, Apple’s market share relative to its industry competitor had
steadily declined. Apple attempted to enter the business market with its
new Lisa and Apple III computers, but the products failed to win acceptance
and could not compete successfully with the IBM PC. In May of 1983,
Markkula retired from his posts as CEO and president but remained as
director and consultant. Jobs hired John Sculley from PepsiCo, where he had
been the president of domestic operations and, before that, vice president
of marketing. Sculley was hired for both his executive and marketing
expertise. Considering Apple’s new competitive pressures, choosing Sculley
with his corporate experience as the company’s new president was
considered by Jobs to be “one of the most important decisions in Apple’s
history”. Once Sculley joined the company, he had the following reaction: As
a member of the executive staff, I came away with a clear impression that
there wasn’t a common understanding of the company we were trying to
build. In fact, there were many, competitive fiefdoms. A group called PCDS
(Personal Computer Systems Division) was responsible for the development
and marketing of the Apple II. Within that division was a smaller splinter
group in charge of the Apple III. There was the Lisa computer division, and
Steve’s Macintosh team, which hadn’t yet introduced a product. The
Macintosh and Lisa teams were not getting along. The Macintosh people
believed that once on the market their product would be better than Lisa
and any other Apple product. They routinely referred to the Apple II people
19
as “bozos” and were given perks such as free fruit juice and a masseuse to
work the tense backs of the Mac engineers. The Apple II group resented this
favoritism. They also resented that they had been moved to a building that
was two and a half miles from the Apple campus. Furthermore, there was
duplication of activities and resources within the company. Sculley recalls,
“When I arrived, I found people all over the organization doing the same
thing. Three or four home-marketing groups, for example, existed. Everyone
had great ideas. But some structure was needed if people were to feel a
greater sense of accountability.”
1.3. The Change in Structure

In December of 1983, Sculley reorganized management. His main
change was to reduce the number of Apple product divisions to three: a
division for Apple II products, another for the Lisa product and the
development and production of the Macintosh, and an accessory products
group. Each division was responsible for its own functions and could be
managed as “independent profit-and-loss centers.”. Sculley placed himself
in charge of the Apple II group to “learn how a product division worked.”12
He later gave this position to Del W. Yocam, a six-year Apple veteran. Jobs
was placed in charge of Macintosh division but maintained his position as
chairman of the board of directors. Sculley hoped that the new structure
would eliminate most of the overlap without causing massive layoffs. Also,
he did not want to be insulated from the organization.14 He wanted many
people reporting to him, both line and staff people, so he could “assess all
the pieces.” Sculley also installed tighter control policies and increased the
market focus and level of discipline of Apple’s managers. No longer did he
have more than a dozen vice presidents reporting to him, as was the case
when he arrived. “Now there was a distinct hierarchy, with two powerful
product divisions responsible for their own manufacturing, marketing, and
finance and a small central organization for sales, distribution, corporate
finance, and human resources--in essence, two companies, each reporting
to Sculley and his staff, each competing with the other.”
Exhibit 2 presents the organizational chart
20
Internal Problems
Disappointing market performance was attributed to internal problems.
Jobs and his director of engineering were missing schedules for crucial parts
21
of the system. They were “months behind with a large disk drive that would
help Mac run sophisticated software programs for business and make it
easier for users to share information.” In addition, Apple had no salesforce
with direct access to corporations. Unlike IBM, which had 6,000 to 7,000
direct salespeople, Apple relied on 300 manufacturers representatives over
whom they had no direct control. These representatives also sold the
products of other manufacturers. In the early 1980s, Apple established a 60-
person direct sales staff. However, soon after, the staff began to experience
conflict with the independent dealers who still provided most of Apple’s
revenue. The direct salespeople were accused of selling Macintoshes at
lower prices than dealers, “elbowing” them out of markets.
There were also marketing problems. The company failed to
communicate a business image for the Macintosh to the market. A former
Macintosh employee stated, “Mac was being perceived as a cutesy,
avocado machine for yuppies and their kids, not as an office machine or as
the technology leader that it is”. This image problem was compounded by
the fact that Jobs and Sculley disagreed over marketing strategy. Jobs
believed that Apple should focus on technology, which would be the
motivating force behind purchases of computers. Sculley thought the focus
should be on customer needs. Customer needs should determine the
product. Therefore, getting close to the market was of fundamental
importance. Jobs complained that Sculley didn’t understand the nuts and
bolts of the business or how products were developed and questioned
Sculley’s competence.
These problems were heightened by conflicts between the Apple II and
Macintosh Divisions. The members of the Apple product group, led by Del
Yocam, were frustrated by Job’s favoring the Macintosh product group.
According to several insiders, Jobs, a devout believer that new
technology should supersede the old, couldn’t abide the success of the
venerable Apple II. Nor did he
hide his feelings. He once addressed the Apple II marketing staff as
members of the “dull and boring product division.” Jobs’ intense
involvement with the Macintosh project had a demoralizing effect on
Apple’s other divisions. The Apple group considered this intolerable
favoritism, especially since their division was producing more than twice the
revenues as the Macintosh division. Apple had become “two different
warring companies,” and the internal competition was self-defeating.
Sculley described his own perspective of the organization: Initially, I saw
Apple in PepsiCo terms. Frito-Lay and Pepsi-Cola could comfortably and
successfully exist as separate entities under Pepsi-Co. The Apple II group
could have its own factories and sales organization for the K-12
(kindergarten through 12th grade) education and consumer markets.
Macintosh,with its own independent operations, targeted the university and
business markets.What I didn’t realize was that it wasn’t working. The two
groups became too competitive with each other. People were getting
burned out.
In February 1985, Stephen Wozniak, designer of the Apple I and an
engineer in Yocam’s group,resigned.Sculley was losing confidence in Jobs’
22
ability to manage the Mac division. When Jobs failed to order necessary
parts for the Macintosh XL, and Apple had to discontinue the product after
having introduced it only three months earlier, Sculley became
concerned.The organizational structure contributed to these management
problems. As Sculley explained, The organization created two power bases
and removed me from day-to-day operating decisions. I became more
remote from the business. As chairman, Steve was over me. And as head of
a product division, he was under me. He really had more knowledge about
what was going on in the business than I did because all the information
was coming up through the product divisions. They had all the power. The
corporate staff basically became an impotent group, largely a financial
organization.
Sculley felt that he was losing control: It was nearly impossible to get the
right information quickly when I needed it most. I was constantly surprised
by new and disturbing findings, including the failure to order parts for the
Macintosh XL. The management inexperience of many of Apple’s key
players as well as my own lack of experience in the personal computer
industry should have been early warning signs that a decentralized
organization wasn’t suited for our volatile marketplace. It set up a system
under which people would fight for what was best for their groups, not what
was best for the company as a whole. According to middle managers at
Apple, Sculley was in Jobs’ shadow. He was not taking the action he needed
to run the company. Jobs was making all the decisions and was being
favored over all the other vice presidents.44 The board was also unhappy
with the way Jobs was running the Macintosh division. They encouraged
Sculley to exercise his authority as CEO and hire a new general manager to
improve the Macintosh’s sales.
1.4 The New Organization without Jobs

In May of 1985, Sculley announced another reorganization. The three
product divisions were consolidated into one called Product Operations. The
company was downsized in an effort to reduce operating costs. Advertising
was reduced, factories were closed, and the Lisa computer and some
development efforts were eliminated. The direct sales force was dismissed
except for those on established accounts. A total of 1,200 employees were
laid off, 60% of whom were in manufacturing.46 Other cutbacks were made
across the organization except for R&D. The other part of the reorganization
called for bringing in a new general manager of the Macintosh Division to
replace Jobs. Also, Jobs operating role in the company as chairman was
taken away. On September 17, 1985, he resigned from Apple. Yocam was
placed in charge of engineering, manufacturing, and distribution, and
William V. Campbell became responsible for U.S. marketing and sales.
Sculley imported two top-level executives to headquarters in California from
Europe. Jean-Louis Gassee, head of Apple France, was promoted to replace
Jobs as head of product development, and Michael Spindler, a German
national, who had been running European marketing and sales, was
promoted to head all of Apple’s international operations. Apple became one
23
of few companies to have two Europeans at the highest levels of senior
management.
Exhibit 3 is an interoffice memo from Sculley introducing the

new organizational structure to Apple’s employees
The executive staff, key mangers and I have met almost daily over the
past several weeks to develop a new organization. As you know, Apple has
been a divisionalized company with several highly autonomous profit
centers which have acted almost like stand-alone companies:
I am please to announce a new structure which is vastly simplified and

organized around functions:
24
The new organization will reduce our breakeven point. It should also
simplify internal
communication of company objectives and allow for greater consistency in
their implementation.We have selected leaders of each functional area who
have had considerable experience in their specialty and in managing
people.
In the process of moving to this new organization, we will reduce the
number of jobs at Apple by 1200. This is a painful and difficult decision.
However, this streamlining will allow us to eliminate unnecessary job
duplication in the divisional structure. (As shown in the organization chart,
each division has had its own product development, manufacturing, finance,
management information systems, and human resource staffs.)
The new organization would be more effective at providing products the
marketplace wants and at providing them in a more timely manner. In
addition to the greater effectiveness of the organization it should also be
more efficient making us more profitable on lower sales than would have
been the case with the former organization.
The reorganization will be costly in the short run. We take such a strong
step only because it is clear that the new organization and management
team will vastly improve Apple's profitability for success as an industry
leader.
1.5. The present Apple’s structure

In recent speech, Steve Jobs said that: “One of the keys to Apple is that Apple is an
incredibly collaborative company. You know how many committees we have at Apple? Zero.
We’re organized like a startup. We’re the biggest start up on the planet. We meet for three
hours every morning and talk about all the business, about what’s going on everywhere. We’re
great at figuring out how to divide things up into great teams, and we talk to each other. So
what I do all day is meet with teams of people… I have one of the best jobs in the world. I get
to come in and work with some of the most brilliant people in the world. We play in the best
sandbox?”
Apple organizational structure is a solid foundation. Let we find out about how Apple
organized? This is Apple’s organizational structure chart. (Updated in 24/11/2010)
25
Apple’s Executive Board
According to the above link, under CEO Steve Jobs there are 10 Senior Vice Presidents:
CFO, COO, Operations, Hardware Engineering, Software Engineering, iOS software,
Worldwide Product Marketing, Industrial Design, Retail and General Counsel. The
management duties will be separated out but they will ultimately report to the few at the top.
These executives lead over 35,000 employees. Apple's Board of Directors oversees the Chief
Executive Officer and other senior management in the competent and ethical operation of Apple
on a day-to-day basis and assures that the long-term interests of shareholders are being served.
To satisfy the Board's duties, directors are expected to take a proactive, focused approach to
their positions, and set standards to ensure that Apple is committed to business success through
the maintenance of high standards of responsibility and ethics.
26
The Board has adopted the following committee charters and governance guidelines that, in
conjunction with Apple’s articles of incorporation and bylaws, form the governance framework
for Apple. The governance structure is designed to foster principled actions, effective decision-
making and appropriate monitoring of both compliance and performance.
As the company has grown and been led by a series of chief executives, each with his own
idea of what Apple should be.
The important role of CEO Steve Jobs:

CEO Steve Jobs Jobs-an Apple co-founder who is considered the company's creative leader
is key factor of Apple’s success. Thanks to the influence of its founders; Steve Jobs often
walked around the office barefoot even after Apple was a Fortune 500 company. By the time of
the “1984” TV ad, this trait had become a key way the company attempts to differentiate itself
from its competitors. Numerous employees of Apple have cited that projects without Jobs'
involvement often take longer than projects with his involvement. Another presents the image
of Jobs "wandering the hall with a flamer thrower in hand, asking random people 'do you work
on MobileMe”
Apple management:
To manage its products and marketing, Apple Computer had five product
divisions responsible for the development, evaluation and manufacture of
computer systems, software, and peripheral devices (e.g., Macintosh). It
also had four product support divisions which handled marketing,
distribution and post-sale product support (e.g. North American Sales
Division). In addition, there were a number of administrative departments in
charge of overseeing Apple’s day-to-day corporate activities (e.g., the
Finance Department).
Description of Apple divisions:

There are two major types of divisions within Apple:
+Product Division: esponsible for the development, evaluation and manufacture of
computer systems, software, peripheral devices includes includes:
Personal Computer Systems Division (DCSD): is responsible for Apple II and Apple III
computer system and is constantly working to refine and improve them. Apple II most recently
introduced the Apple IIe, a significantly enhanced version of the Apple II.
Personal Office Systems Division (POSD): design and manufactures mass-storage devices for
Apple computer systems
27
Accessory Product Division (APD): produces all keyboards for Apple computers. It is all
responsible for developing, manufacturing, and marketing accessory products. In addition, APD
designs and markets a variety of monitors, printers, modems and plotters Macintosh Division
(MAC) is pursuing product line that promises to become the hightest volume personal computer
system of the ‘80s.
Operations Division: is responsible for most of the Apple’s manufacturing activity. Other
product division manufacture the initial pilot units and establish process procedures. Products
ready for high-volume production are then transferred to the Operations Division, which
manufactures in Dallas, Texas, Cork, Ireland, and Singapore.
+Product Support Divisions: which handle marketing, distribution and both-scale
product support. There are, in addition, a number of administrative departments in charge of
overseeing Apple day to day corporate activities includes:
North American Scale Channels Apple’s products to customers through field sales groups
which service a larger dealer network. The division also handles direct sales to volume user and
is responsible for the identification and penetration of major markets. Its highly successful
National Accounts Program furnishes Fortune 1000 corporations with direct sales, installation,
service and support. Sales and marketing for the Far East, South Africa Central and South
America and handled by Intercontinental Sales.
European Division manage field scales and distribution activities throughout European,
supporting the efforts of original equipment manufacturers (OEMs) and assisting others
divisions in tailoring Apple Products to European markets.
Communications Division sees that sales prospects, investor, and others parties interested in
Apple receive whatever information they need. The division handles advertising and public
relations activities, conducts market research, and manages employee, investor, and press
communications. Market Marketing group identifies and defines target markets for Apple and
develops strategies for approaching them. The group also coordinates all proposed marketing
activities to ensure that Apple’s messages to each segment are clear.
Administrative Departments:
Many activities at Apple fall outside the neatly structured division, they are intimately
associated with daily operations of the company. The activities report to Vice Presidents, just as
the divisions do, and are lumped together under “ Administration”. Such operations include the
following:
Financial department monitors Apple’s financial well-being. It provides accounting and
cash management services to the company as a whole, at the same time working with each
division to help project and manage expenses. Finance also oversee Apple’s Management
Information Services (MIS) computers, which track all sales and inventories.
Human Resources safeguard and helps develop Apple’s most valuable asset, its people. In
addition to handling counseling, compensation, and benefit programs the department is
responsible for staffing and training to ensure that Apple has the people it needs to reach its
goals. Human Resources also provides the resources to assist employee in reaching personal
and professions goals.
Legal Services make certain that Apple complies that the law in all business operations. It
also represents the company in legal disputes with individuals, business, and the government. In
addition, facilities and the Apple Education Foundation both now report to Legal Services.
Exhibit 1 represents what such an organization probably would

have looked like.
28
Growth
Business market expansion resulted in a 30% increase in Apple’s sales
from $1,901.9 million in 1986 to $2,661.1 million in 1987. Apple expected
this rapid growth to continue, predicting a more than doubling of revenue to
$10 billion annually by the early 1990s.
The table shows net sales, net income, and the
total number of employees for years
1982-1989
YEAR 1982 1983 1984 1985 1986 1987 1988 1989

Net sales 583. 982. 1515 1918 1901 2661 4071 5284.
(millions 1 8 .9 .3 .9 .1 .4 0
USD)
29
Net Income 61.3 76.7 64.1 61.2 154. 217. 400. 454.0
(millions 0 5 3
USD)
As the number of employees increased, there was less time available for
Sculley to devote to day-to-day operations. As the “bureaucracy continues
to grow,…there is a limit to how many engineers can walk directly into
Sculley’s office to pitch their ideas”.
Also, there were constant battles between Apple’s sales, marketing, and
engineering departments. Upper managers were “not all lined up facing in
the same direction.” “The
technical people didn’t respect the marketing department, the marketing
department was
disorganized, and there was little possibility that we could afford all the
projects it was working on”. These problems required even more of
Sculley’s time.
In an effort to centralize operations and involve Apple’s senior
management in day-to-day decisions, Sculley created a new position of
Chief Operation Officer to which Yocam was appointed. Sculley hoped that
this change would free up more of his own time to spend on long-term
planning. New high-level management positions included vice president of
advanced technology and vice president of U.S. sales and marketing.
Sculley doubled the size of Apple’s field force and the number of employees
grew to 10,836.
An International Business Market Structure

By 1988, Apple had established strong markets in France, Canada, and
Australia. Major European companies, such as France’s Aerospatiale and
Renault, Germany’s Bayer and BASF,and Britain’s Plessey purchased a
significant number of Macintosh machines. Apple gained 6% of the overall
European market. Apple’s European revenues grew by 55%, faster than
revenue growth for the entire company. Apple experienced the same
success in new markets such as Spain, Sweden, Holland, Belgium, and
Japan. Its Swedish subsidiary, developed in 1985, captured 15% of the
business market in 1988. Sales in Japan also took off as localized products
were developed. Apple’s foreign operations now consisted of three
manufacturing facilities in Ireland and Singapore and distribution facilities in
Europe, Canada, and Australia. In October of 1988, European sales alone
made up nearly one-third of total revenues for Apple.
International growth spurred Apple to expand its European headquarters
in Paris. The staff was increased by over 150 people.66 “We can’t do
everything from the U.S. anymore; valuable things are happening in
Europe,” said Spindler.67 A new corporate “account management” program
was established, which included several hundred corporate account
specialists fanning out across the Continent. The proportion of European-
made components used in Apple’s Irish production plant was increased and
Apple opened a $10 million R&D center in Paris that employed 50
engineers.
30
This growth was accompanied by a realization that Apple’s various
markets were distinct and required different expertise. Apple responded by
splitting its International Division into separate, autonomous Pacific and
European units and creating the Apple USA division from what was formally
known as U.S. Sales and Marketing. Exhibits 7 and 8 show the old and new
Apple structures. The four functional divisions were replaced by two, Apple
Products and Apple USA, and the role of Chief Operating Office was
removed. Each division was headed by a president who reported directly to
Sculley. Jean-Louis Gassee was placed in charge of Apple Products,
responsible for all product development, manufacturing operations and
marketing. U.S. sales and marketing, service and support, and Apple’s
internal information systems operations were incorporated into Apple USA.
Sculley segmented this division’s operations into business and education
market units and a marketing support unit. Apple’s International Division
was split into Apple Europe and Apple Pacific. Michael Spindler was placed
in charge of Apple Europe
responsible for sales, service, and marketing operations for primarily
France, West market opportunities in Pacific Rim and Latin American
nations. You do not need a gigantic process or staff to do these things. Keep it simple,
important, and demand regular progress. The CEO's level of passion, ability to mentor, and
attention to detail around these goals will have a huge impact on whether this becomes just
another exercise or truly becomes central to the culture.
In my next post I'm going to talk about the core processes of strategy and operations and their
impact on execution.
2. Incentive system:
2.1. Reward:
Apple is handing out free iPod shuffles to many of its retail employees. Sources says that
the freebies may be an incentive to increase the work ethic amongst Apple sales reps, or maybe
even a 'thank you' for recent prosperity.
In the past, Apple has offered promotional items to retail staff of stores that meet weekly or
monthly sales targets. Apple's retail employees, however, do not work on commission.
Several Apple employees at the company's retail stores have been told to expect a free 1GB
iPod shuffle sometime in the next three weeks. So far, AppleInsider has confirmed that certain
stores in New York, California, and Missouri are awaiting arrival of the complimentary players.
According to sources, Apple retail stores that meet weekly quotes often hold weekly raffles,
where lucky employees can walk away with cool gadgets such as the iPod photo.
Apple announced the iPod shuffle just over a week ago. To date the player has been met
with favorable reviews from both the main stream media and Wall Street analysts, and is
already in tight supply with Apple's online store quoting backlog of up to 4 weeks.
"Seeing as last year we all received additional vacation time, an iPod shuffle is a small
investment for a company to reward its employees for the best quarter in our history," one
employee said.
2.2. Promotion:
No one can deny that Apple are quite strict in managing their staff. But if you have talent
and devote to the company really, you still can receive the appropriate promotion.
31
For example: Bob Mansfield who was senior vice president of Macintosh Hardware
Engineering. He joined Apple in 1999 and oversees the team that has delivered dozens of
breakthrough Mac products including the MacBook Air and the all-in-one iMac line.
Bob is a deligent employee. He always tries his best to complete all of work and receive the
appreciation.
In August 2010, Bob has taken over the devices hardware management as well from Mark
Papermaster, who was leaving Apple in the wake of the iPhone 4 antenna troubles.
Now, Bob plays more important role in the team of Apple employees. He was even considered
one of the candidates to replace Steve Jobs in the future.
3. Organizational Culture:
3.1. Apple Corperate
Culture is the collective norms, behaviors, and ways of working that define how people
behave in an organization. Powerful cultures are reinforced by leaders who embody those
beliefs. The work is shaped by processes and organizational designs that reflect the values.
Culture is a powerful force in attracting, retaining, and developing people who fit those beliefs
Corporate culture is the intangible assets of each business. Along with the development of
market economy, the construction of corporate culture is an essential job but not less difficult.
Apple should pay more attention to human factors by Corporate culture is to create a code of
conduct for businesses without having to create direct effects. This approach of enterprises not
only work to promote your business done business methods "people are center", but also for
product development capability and capacity to unite union the collective enterprise becomes
prosperous, increasing employee engagement with business and improving business efficiency.
Here is what makes Apple’s corporate culture so unique:
3.1.1. Focus on design
The first thing that every employee must remember about Apple is that the company cares more
about the design of products than any other firm in the market. Unlike Microsoft, which has
historically done a poor job of creating aesthetically pleasing products, Apple really gets design.
It understands what consumers want, it knows how to meet those desires, and sets out to beat
any and all expectations. It’s not always easy, but Apple seems to get it right every time. If an
employee doesn’t help the company do that, they might end up with another company sooner
than they think.
3.1.2. Believe in Jobs
Apple is an interesting firm. Its corporate culture extends beyond its employees to its
consumers. So, what it expects from its employees, it also expects from its customers. One of
the most important things it expects is for both stakeholders to believe in Steve Jobs. Over the
past decade, Steve Jobs has been the Apple’s savior. He has helped the company revive its
aging business model, innovate beyond all expectations, and deliver some of the better products
on the market. Sometimes, that belief in Jobs can go too far, as evidenced by the most recent
iPhone antenna debacle, but for the most part, believing in Steve Jobs has been good for Apple
and good for both employees and consumers.
3.3.3. Forget everything that came before it
When employees come to Apple, they are expected to immediately do one thing: forget
everything they ever knew about the technology world. Apple does everything differently.
Whether it’s the design of products, how it goes about devising ideas for new products, or
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simply the way it carries itself, everything is different at Apple. To pretend like something is
similar to a past employer is a mistake that could cause more trouble than it’s worth. Apple is
different.
3.1.4. Believe Apple is better than all others
Apple has an ego unlike any other company in the space. Whereas Microsoft always believes
that the other shoe is about to drop, Apple believes that it can stop the shoe from ever falling.
Part of that is due to Steve Jobs’ ego. He believes that his company is the best in the world and
it should carry itself that way. Apple haters can’t stand that, but it has become a call to arms for
all of the company’s lovers and employees.
3.2. Culture of Secrecy

Apple is one of the most mysterious companies in the world. Secrecy is part of their culture
and there are times at which one can’t really grasp the big picture. No one can deny that it is the
intriguing technology company in the world. But it’s very difficult to understand the reason
why Apple always keeps distant to their clients, even with their own shareholders. This
company has rejected chatting with the world through blogs and dropping tidbits of information
about its inner workings. Few companies are more secretive than Apple, or as punitive to those
who dare violate the company’s rules on keeping tight control over information. Employees
have been fired for leaking news tidbits to outsiders, and the company has been known to
spread disinformation about product plans to its own workers. The secret is not only a
"strategic" relation with the media but also has become a cultural characteristic of Apple.
Employees who work in secret project to go through a series of security doors, their bags were
checked and searched, and then must enter a separate password for each new person can walk in
their office. All areas within the company's headquarters are monitored by security cameras.
Secrecy at Apple is not just the prevailing communications strategy. It is baked into the
corporate culture. Employees working on top-secret projects must pass through a maze of
security doors, swiping their badges again and again and finally entering a numeric code to
reach their offices. Work spaces are typically monitored by security cameras. Some Apple
workers in the most critical product-testing rooms must cover up devices with black cloaks
when they are working on them, and turn on a red warning light when devices are unmasked so
that everyone knows to be extra-careful.
Mr. Edward Eigerman who spent four years as a systems engineer at Apple and now runs his
own technology consulting firm was fired from Apple in 2005 when he was implicated in an
incident in which a co-worker leaked a preview of some new software to a business customer as
a favor. He said Apple routinely tries to find and fire leakers.
And one member of Apple said that: Philip Schiller, Apple’s senior vice president for
marketing, has held internal meetings about new products and provided incorrect information
about a product’s price or features, according to a former employee who signed an agreement
not to discuss internal matters. Apple then tries to track down the source of news reports that
include the incorrect details.
"Law silent" Apple's harsh that even the senior managers also felt very scared when facing or
just "walk" through Steve Jobs. A senior staff currently working for Apple refused to answer
when asked about his health status jobs, even when that information has been published in the
newspaper last week. "Do not talk about that, this issue is too sensitive," the manager said.
Five years ago, Apple took its obsession with secrecy to the courts. It sued several bloggers
who had covered the company, arguing that they had violated trade-secret laws and were not
entitled to First Amendment protections. A California appeals court ruled for the bloggers, and
the company had to pay $700,000 in legal fees.
33
Apple also sued a blog called Think Secret and settled the case for an undisclosed amount,
but as part of the settlement that blog shut down.
Regis McKenna, a well-known Silicon Valley marketing veteran who advised Apple on its
media strategy in its early days, said the culture of secrecy had its origin in the release of the
first Macintosh, which competitors like Microsoft and Sony knew about before it was unveiled.
Apple’s decision to severely limit communication with the news media, shareholders and the
public is at odds with the approach taken by many other companies, which are embracing
online outlets like blogs and Twitter and generally trying to be more open with shareholders
and more responsive to customers.
“They don’t communicate. It’s a total black box,” said Gene Munster, an analyst at Piper
Jaffray who has covered Apple for the last five years.
But even by Apple’s standards, its handling of news about the health of its chief executive
and co-founder, Steven P. Jobs, who has battled pancreatic cancer and recently had a liver
transplant while on a leave of absence, is unparalleled.
For corporate governance experts, and perhaps federal regulators, the biggest question is
whether Mr. Jobs’ approach has led to violating laws that cover what companies must disclose
to the public about the well-being of their chief executive.
On that key issue, the experts are divided. Some believe Apple did not need to disclose Mr.
Jobs’ liver transplant because Mr. Jobs was on a leave of absence and had passed responsibility
for the day-to-day operations of the company to the chief operating officer, Timothy Cook.
“In this environment, where transparency is critical, the more information you give the
marketplace the better,” said Charles Elson, director of the John L. Weinberg Center for
Corporate Governance at the University of Delaware. “For a technology company that views
itself as innovative, it’s a little odd that they are getting a reputation for lack of transparency.
3.3. Culture of Innovation

In today’s fast-paced business environment, innovation is the key element that helps a
company not only to survive, but thrive. Success comes from new products with innovative
differentiation, agile business processes, and expanding markets and sales channels - all of
which are vital for achieving competitive advantage.
Innovation does not depend on just one person, or even a few - it stems from a culture that
encourages and breeds innovative thinking. Every organization has a unique ethos that drives its
success or failure in the face of accelerating change. The culture is the collective personality
that embodies the values, beliefs, philosophies, attitudes and operating norms. It boils down to
“how we do things around here.”
In Boston Consulting Group released their Innovation 2006 study, Apple had a rank as the
most innovative company. The statements about Apple quoted in the article was "every single
person in the company contributes to Apple's innovation success every day. Apple is very
focused on the user experience and how design impacts that experience. Apple is telling its
customers what's next. It's not following the classic 'market-led' innovation path that inevitably
leads to incrementalism and 'me-too' innovation. Customers trust Apple and view it as a
lighthouse guiding them on what to adopt next. If Apple has it, it must be useful.
In January 2007, once again Apple stole the limelight by introducing the innovative new
iPhone - the name is in dispute, though the innovative product is widely acclaimed. Against
powerful major competitors - the likes of Motorola and Nokia - Apple introduced a new design
that is expected to capture significant market share. Beyond CEO Steve Jobs’ charisma, several
new features generated spontaneous applause with what I term the “Wow factor.”
Apple’s “culture of innovation” allowed itself to reinvent its business processes and
products, and build entirely new markets that meet untapped customer needs. Its competitive
34
advantage went beyond productivity and efficiency to rewiring itself for creativity and growth.
Its drive for innovation also led it to think creatively about how to develop and incentivize its
people.
III. APPLE’S ENVIRONMENT
1. General
1.1. PC Industry
A large number of competitors especially from Wintel (Windows Intel) family create a ‘red
ocean’ for Apple. Wintel platform is not produced by single firm rather than combination of
firms. These competitors offer similar product to apple with only little different in features,
brand and design. Several Apple competitors are IBM, HP, Compaq, Dell, Lenovo, Gateway,
Acer, Fujitsu, Sony, ECS, Toshiba, etc.
Strong bargaining power of suppliers creates high cost of computer components. As there
is only small number of processor suppliers (e.g. Intel, AMD, Cyrix, and IBM) and only small
of them has capability and willingness to provide the best for Apple, the bargaining power of
supplier is high to the Apple. This condition made the price of processor component is high.
At the other side, the great number of competitors with similar product specification and the
birth of Internet are also strengthening the bargaining power of final consumers. This limits the
ability for Apple set price too high.
Low threats of substitute product also characterize the industry. Besides Wintel personal
computer, there are no pure substitutions for Apple personal PC. Since Wintel personal
computer is the same kind of product with Apple, it is considered as rivalry instead of product
substitution.
1.2. Apple International
Apple was an early market leader in Europe. Before 1983, the company expanded sales into
Britain, Germany, and France. Gassee led a successful marketing effort in France, and, under
his strong leadership, Apple achieved a high profile and a critical mass of buyers. However,
Apple was not as successful in Britain and Germany. Competitors in the British education
market shut out Apple. In Germany, the home market of hobbyists, where Apple products were
most popular, never took off with the same popularity that it had elsewhere. Still, the company
established a European headquarters in Paris with a staff of 45 people and built a production
plant in Ireland. Apple managed its international operations from California. This drew
criticism from the European computer industry. Both Gassee and Spindler tried to convince
Apple to pay more attention to growing markets abroad.
1.3. International Growth
In 1987, international growth became a priority at Apple. The European
market for PCs was expanding faster than the U.S. market. Apple depended
on growth in markets abroad to cover up declining U.S. sales. Sculley said,
“We were going to reduce our dependency in the U.S. consumer market,
which meant sales growth in the international area would be important
because otherwise people could feel Apple was failing.”58 Sculley turned to
Michael Spindler, head of Apple’s international division, to develop a
strategy for growth in the European market. Spindler’s strategy involved
focusing more closely on the needs of corporate and other markets rather
than on those of home users. In order to appeal to these consumers,
Spindler developed a businesslike approach to the European market, similar
to the one Apple developed in the U.S. He brought more experienced
computer industry professionals into Apple’s older European subsidiaries
and stressed a professional, corporate image from the start in newer ones.
35
Spindler reorganized Apple’s European distribution network, which was
geared more to individuals and small business buyers. He cut back the
network and upgraded the remaining distributors to lure large corporate
dealers who were accustomed to dealing with IBM. As Spindler explained,
“We made a decision to take the distribution network down, and build it
back up in quality rather than quantity. We put more emphasis on adding
value, rather than just moving boxes.” Spindler also championed a new
“multilocal” approach to international subsidiaries. Most American
multinationals simply cloned their U.S. operations overseas, selling the
same products as were successful in the United States. According to
Spindler, a multilocal approach meant “you have a network model that
adapts to local markets. You behave and act like a local company, yet you
are within the network of the mother company back home. The whole world
can thus become one big shopping cart for ideas and capital.”
1.4. Analysis of how environmental change (future) will influence the strategy
The environmental change trend in current and past can depict the future. The rapid
increasing of technological innovation, changing customer need, competition due to low entry
barrier lead to the more and saturated and fragmentation of market. Thus, it made environment
situation in the future more turbulent and complex for Apple.
Thus, this made Apple strategy have to be adapted continuously as a response of the
dynamics of environment. Strategy has to be reshaped based on internal and external
environmental analysis. As environment change, so do strategy.
Since the return of Steve Jobs as Apple CEO, Apple response to the environmental change
shows improvement to the company revenue. Apple selling on MacBook shows increasing
trend which represent the successfulness of Apple strategy (Figure 13).
Figure 12. Mac unit sales
1.5. Apple response to the environmental change
36
As environmental change dynamically, Apple responded by adapting its business model and
strategy in order to struggle for survive. Since Apple was keep losing market share in personal
computer industry, Apple has been tried to create new business model to create new source of
income. Through its research and development, Apple decided to enter digital media sector, by
creating innovative design iPod and iTunes. As a result, iPod and iTunes are successful due to
its innovative design, easy to use and large storage.
Apples business model for the iPod generates money in many different levels. Money is
being made both on the hardware, software and on the accessories. When Apple introduced the
iPod it was not a new product. The mp3 players had existed for some time without being a big
success, but customer preferences were changing rapidly. Apple quickly saw a new market and
created an inferior music player with a great design. Apples most decisive move was to create a
web shop with hundreds of thousands of licensed songs. Soon Apple was making big money
both on the iPod and the music – a dream scenario for most companies. Songs bought at the
Apple music store can only be played on iPods but this has not affected the sales so far. Apples
margins on the iPod Mini is on average about 35% and $0.25 on each sold song. At the end of
2004 Apple has sold 10 million iPods and 250 million songs.
With this innovative approach, as he did previously with home computers, Jobs has
developed a new market: that of legal digital music, which in 2005 reported $1.1 billion in sales
to the record companies, as compared to 400 million from the previous year.
Apple improves design to create differentiation and offer with premium price (figure 13).
To gather back its market share in personal computer and mobile computer, Apple conducts
differentiation strategy. Apple creates very distinctive and innovative design that simplifies the
size of computer, increase the artistic look of its products.
Figure 13 Apple perception map
Apple also reduces product category to ease consumers. Currently Apple no longer creates
too many product variations in order to ease consumer choosing products.
37
Apple also transforms its marketing channel by using exclusive delivery channel. In order to
manage its brand as high class and high quality product, Apple chose to transform its retail
channel into exclusive store. The openings of Apple Stores are in order to extend the reach of
the external distribution channel.
To respond with dynamic of innovation and create competitive advantage, Apple leaves
IBM and does alliance with Intel as a response of rapid innovation of processor. After IBM
cannot afford Apple to provide processor that is faster to Intel, Apple has no other source that
capable providing high-speed processor. Apple moves and does alliance with Intel, as both of
the company can create mutual benefit to compete AMD for Intel and MS Windows for Apple.
Apple currently uses Intel processor for its new computer and laptops for the next five years.
This strategy gives benefit to Apple as it is allowing Microsoft Windows to run above it in turn
it reduces the risk, cost and barrier for customer to switch from Microsoft to Apple platform.
The Mac Mini is expected to be the first Apple computer to use Intel chips, with the entire
product line switching by the end of 2007.
Apple’s move to Intel is thought to have come about because of IBM’s reluctance to expand
the number and range of PowerPC chips it makes. Furthermore IBM has yet to produce a
version of the G5 chip that would be suitable for use in Apple laptops. IBM has the contract to
make PowerPC chips for Microsoft’s imminent Xbox 360 console, Sony’s forthcoming
PlayStation 3 and Nintendo’s future game-playing machine. As a result the cash it gets from
making chips for Apple has become a very small slice of its revenue.
In responding social pressure on environmental issues, Apple recycled 13 million pounds of

e-waste in 2006, which is equal to 9.5% of the weight of all products Apple sold seven years
earlier. We expect this percentage to grow to 13% in 2007, and to 20% in 2008. By 2010, we
forecast recycling 19 million pounds of e-waste per year - nearly 30% of the product weight we
sold seven years earlier.
2. Apple’s competitors:
Google, Inc is a multinational public corporation invested in Internet search, cloud
computing, and advertising technologies. Google hosts and develops a number of Internet-based
services and products, and generates profit primarily from advertising through its AdWords
program. The company was founded by Larry Page and Sergey Brin.
International Business Machines Corporation (IBM) is an American multinational
computer, technology, business consulting, and IT consulting corporation headquartered in
Armonk, New York, United States. IBM is the world's fourth largest technology company and
the second most valuable global brand (after Coca-Cola). IBM is one of the few information
technology companies with a continuous history dating back to the 19th century. IBM
manufactures and sells computer hardware and software (with a focus on the latter), and offers
infrastructure services, hosting services, and consulting services in areas ranging from
mainframe computers to nanotechnology.
Hewlett-Packard Company: commonly referred to as HP, is an American multinational
information technology corporation headquartered in Palo Alto, California, USA.. The
company was founded in a one-car garage in Palo Alto by Bill Hewlett and Dave Packard, and
is now one of the world's largest information technology companies, operating in nearly every
country. HP specializes in developing and manufacturing computing, data storage, and
networking hardware, designing software and delivering services. Major product lines include
38
personal computing devices, enterprise servers, related storage devices, as well as a diverse
range of printers and other imaging products.
Dell Inc is a American multinational information technology corporation based in Round
Rock, Texas, United States, that develops, sells and supports computers and related products
and services. Bearing the name of its founder, Michael Dell, the company is one of the largest
technological corporations in the world.
Cisco Systems, Inc is an American-based multinational corporation that designs and sells
consumer electronics, networking and communications technology and services, is
headquartered in San Jose, California. The stock was added to the Dow Jones Industrial
Average on June 8, 2009, and is also included in the S&P 500 Index the Russell 1000 Index,
NASDAQ100 Index and the Russell 1000 Growth Stock Index. Cisco is one of the world's
biggest technology corporations.
Xerox Corporation is a Fortune 500 global document management company (founded in
1906) that manufactures and sells a range of color and black-and-white printers, multifunction
systems, photo copiers, digital production printing presses, and related consulting services and
supplies. Xerox is headquartered in Norwalk, Connecticut though its largest population of
employees is based in and around Rochester, New York, the area in which the company was
founded. On September 28, 2009, Xerox announced the intended acquisition of Affiliated
Computer Services for $6.4 billion. The deal closed on February 8th, 2010. Xerox holds a
Royal Warrant from HM Queen Elizabeth II and the Prince of Wales.
NCR Corporation is an American technology company specializing in products for the
retail, financial, travel, healthcare, food service, entertainment, gaming and public sector
industries. Its main products are self-service kiosks, point-of-sale terminals, automated teller
machines, check processing systems, barcode scanners, and business consumables. They also
are one of the largest providers of IT maintenance support services.
Microsoft Corporation is a public multinational corporation headquartered in Redmond,
Washington, USA that develops, manufactures, licenses, and supports a wide range of products
and services predominantly related to computing through its various product divisions.
Established on April 4, 1975 to develop and sell BASIC interpreters for the Altair 8800,
Microsoft rose to dominate the home computer operating system (OS) market with MS-DOS in
the mid-1980s, followed by the Microsoft Windows line of OSs. Microsoft would also come to
dominate the office suite market with Microsoft Office. The company has diversified in recent
years into the video game industry with the Xbox and its successor, the Xbox 360 as well as
into the consumer electronics market with Zune and the Windows Phone OS. The ensuing rise
of stock in the company's 1986 initial public offering (IPO) made an estimated four billionaires
and 12,000 millionaires from Microsoft employees.
EMC Corporation: (EMC) a Financial Times Global 500, Fortune 500 and S&P 500
company, develops, delivers and supports information infrastructure and virtual infrastructure
hardware, software, and services. EMC is headquartered in Hopkinton, Massachusetts, USA.
Toshiba Corporation is a Japanese multinational conglomerate corporation, headquartered
in Tokyo, Japan. The company's main business is in infrastructure, consumer products,
electronic devices and components. In 2009, Toshiba was the world's fifth largest personal
computer vendor, after Hewlett-Packard of the U.S., Dell of the U.S., Acer of Taiwan, and
Lenovo of China.
Toshiba is a diversified manufacturer and marketer of electrical products, spanning information
& communications equipment and systems, Internet-based solutions and services, electronic
components and materials, power systems, industrial and social infrastructure systems, and
household appliances.
39
Canon Inc. is a Japanese multinational corporation that specialises in the manufacture of
imaging and optical products, including cameras, photocopiers, steppers and computer printers.
Its headquarters are located in Ōta, Tokyo, Japan.
NEC Corporation is a Japanese multinational IT company, has its headquarters in Minato,
Tokyo, Japan. NEC, part of the Sumitomo Group, provides information technology (IT) and
network solutions to business enterprises, communications services providers and government.
The company used the name Nippon Electric Company, Limited before re-branding in 1983.
It still goes by the full name in Japan. As a chip maker, NEC Semiconductors is among the
worldwide top 20 semiconductor sales leaders.
The Seiko Epson Corporation: known around the world as Epson, is a Japanese
technology company and one of the world's largest manufacturers of computer printers,
information and imaging related equipment. Headquartered in Suwa, Nagano, Japan, the
company has numerous subsidiaries worldwide and manufactures inkjet, dot matrix and laser
printers, scanners, desktop computers, business, multimedia and home theatre projectors, large
home theatre televisions, robots and industrial automation equipment, point of sale docket
printers and cash registers, laptops, integrated circuits, LCD components and other associated
electronic components. It is one of three core companies of the Seiko Group, a name
traditionally known for manufacturing Seiko timepieces since its founding.
Hitachi Ltd. is a Japanese multinational corporation specializing in high-technology and
services headquartered in Marunouchi Itchome, Chiyoda, Tokyo, Japan. The company is the
parent of the Hitachi Group as part of the larger DKB Group companies. Hitachi is the third
largest technological company by revenue as of 2009.
Ricoh Company Ltd or Ricoh, is a Japanese company that was established on February 6,
1936 as Riken Sensitized Paper a company in the RIKEN zaibatsu. It is headquartered in the
Ricoh Building in Chūō, Tokyo.
Ricoh produces electronic products, primarily cameras and office equipment such as printers,
photocopiers, fax machines, and offers Software as a Service (SaaS) document management
solutions such as Document Mall. In the late 1990s through early 2000s, the company grew to
become the largest copier manufacturer in the world. During this time, Ricoh acquired Savin,
Gestetner, Lanier, Rex-Rotary, Monroe, and Nashuatec. Although the Monroe brand was
discontinued, products continue to be marketed worldwide under the rest of these brand names.
In 2006, Ricoh acquired the European operations of Danka for $210 million. These operations
continue as a stand alone business unit, under the Infotec brand.
Fujitsu Limited is a Japanese multinational computer hardware and IT services company
headquartered in the Shiodome City Center complex in Minato, Tokyo. Fujitsu's central focus is
on providing IT-driven business solutions, but the company and its subsidiaries also offer a
diversity of products and services in the areas of personal computing, telecommunications and
advanced microelectronics. Fujitsu is the world's third largest IT services provider and the
largest in Japan.
Acer Incorporated is a Taiwan-based multinational computer technology and electronics
corporation that manufactures desktop and laptop PCs, personal digital assistants (PDAs),
servers, storage devices, displays, smartphones and peripherals. Acer provides e-business
services for business, government, education, and home users. Acer Group has its headquarters
in Xizhi, Taipei County.
Oki Electric Industry Co. Ltd commonly referred to as OKI, OKI Electric or the OKI
Group, is a Japanese company manufacturing and selling info-telecom and printer products, is
headquartered in Tokyo, Japan OKI manufactured the first telephone in Japan in 1881, and
now, after more than 120 years the company specializes not only in developing and
manufacturing telecommunication equipment but also in information products and
40
mechatronics products, such as Automated teller machine(ATMs) and printers. OKI provides
products to telecom carriers, financial institutions, government agencies, large corporation as
well as SMBs both directly and via distributors and dealers.
Research In Motion Limited (RIM) is a Canadian telecommunication and wireless device
company best known as the developer of the BlackBerry smartphone. RIM is headquartered in
Waterloo, Ontario, Canada and is a sponsor of RIM Park in the northeast of the city. It was
founded by Mike Lazaridis, who currently serves as its co-CEO along with Jim Balsillie.
HTC Corporation, formerly Hong-Ta Corporation, is a Taiwan-based manufacturer of
smartphones. The company initially made smartphones based primarily on Microsoft's
Windows Mobile software, but in 2009 it began to shift its core focus away from Windows
Mobile devices to devices based on the Android operating system. HTC is also a member of the
Open Handset Alliance, a group of handset manufacturers and mobile network operators
dedicated to the advancement of the Android mobile device platform. The HTC Dream,
marketed by T-Mobile in many countries as the T-Mobile G1, was the first phone to the market
that used the Android mobile device platform.
Motorola, Inc is an American-based, multinational, telecommunications company based in
Schaumburg, Illinois. It is a manufacturer of wireless telephone handsets, and also designs and
sells wireless network infrastructure equipment such as cellular transmission base stations and
signal amplifiers. Motorola's home and broadcast network products include set-top boxes,
digital video recorders, and network equipment used to enable video broadcasting, computer
telephony, and high-definition television. Its business and government customers consist mainly
of wireless voice and broadband systems used to build private networks and public safety
communications systems like Astro and Dimetra. Motorola's handset division is now focusing
on smartphones using Google's open-source Android mobile operating system. The first phone
to use the newest version of Google's open source OS, Android 2.0, was released on November
2, 2009 as the Motorola Droid.
3. External Analysis: 5 Forces
3.1. Threat of Entry:
Barriers to entry: The cost of entry is relatively low. Apple has been making high profits
and been very successful in the MP3 industry. The higher the profits the larger number of firms
want and will try to enter the marketi. There aren’t any legal barriers, Apple doesn’t have any
patents on the actual MP3 technology and others are free to use the technology. If competitors
can create an MP3 player, they are welcome to try and sell their product on the open market.
Economies of scale: Ideally, the larger the batches the cheaper the costs. Another way to
increase the profit margin is charging a higher price to the consumer. Company’s can only be
successful when there is perceived value from the customers point of view. For new entrants the
initial start up costs are high but not unbearable.
Product Differentiation: The most difficult part of trying to enter the MP3 market would
be overcoming Apple’s reputation. There are many consumers whom have brand loyalty with
Apple and wouldn’t easily switch. The new product would have to be cheaper and have a better
design and a completely new look for the MP3 industry.
Proprietary Technology: Apple didn’t patent the iPod interface. No real technological
barriers to enter the market. Apple did however patent the touch interface.
3.2. Threat of Substitutes:
The threat of substitutes is always a concern for successful industries. Some of the
substitutes to Apple, Inc. iPod mp3 player are portable compact disc players and portable
radios. Both of these substitutes are older technologies developed prior to the iPod. Realistically
there are not many new and innovative substitutes available on the market. However, the
biggest concern seems to be the rivalries who are trying to gain market share against the iPod.
41
3.3. Threat of Rivalry:
Since the birth of the iPod on October 23, 2001, many have tried to imitate the innovative
design. Apple has been able to sustain the market share and has continued to develop the
original iPod, into smaller and larger physical sizes, versions with more or less memory
capabilities. Many of these rivals have aimed at competing with one specific version of iPod,
such as the “Nano”, the “Shuffle”, the “Touch” and the “Classic”. One of the iPod’s largest
competitors is the Windows version called the “Zuneii”. The Zune is available in single size
with multiple options for memory capabilities. Some other alternatives not as commonly known
are the “iRiver”, Sony “Bluetooth Walkman” and the Sandisk “Sansa Fuze”. The “Sansa Fuze”
is available with limited memory capabilities.
Through the innovation of the iPod, Apple has been able to formulate a strategy to set them
apart from the rest of the industry. Apple’s strategy has allowed them to position themselves
and create product differentiation. Apple has differentiated themselves by providing multiple
choices allowing consumers to choose their preference of iPod. Apple’s position has allowed
them to influence the industry and created innovation throughout the entire industry.
3.4. The Threat of Suppliers:

The number of suppliers can increase the price and can reduce quality. There are multiple
Apple
indicators in an industry to help foresee the threat of suppliers. The most common indicators
are, supplier’s Zune
Low industry dominated by few firms, supplier’s sellingHigh
unique or differentiated
Consumer Consumer 42
Preference iRiver
Bluetooth Preference
Sansa
Walkman
Fuze High Cost
products, suppliers aren’t threatened by substitutes, suppliers threaten forward vertical
integration, and firms are not important customers of supplies. There are many suppliers Apple
could choose from, if their suppliers were to increase costs to Apple. Apple would respond and
most likely switch suppliers to another company who was interested in their business. It would
not be in the best interest of Apple’s suppliers to increase their cost because of the amount of
volume Apple would provide their supplier. Apple’s suppliers sell similar products that could
be easily purchased from other suppliers. The one concern Apple might have with their
suppliers is there isn’t a threat of substitute product currently available on the market. Overall,
Apple isn’t threatened by their suppliers mostly due to the large amount of market control.
3.5. Threat of Buyers:
There isn’t an overwhelming concern with the threat of buyers. Some leading indicators
Apple could look for within the industry to foresee this threat are, small number of buyers,
products sold are undifferentiated and standard, products are a significant percentage of buyer’s
final costs, buyers aren’t earning high economic profits, and buyers are threatened by backward
integration. In Apple’s case consumers are willing to pay a higher price for their products
because they believe it carries a higher value. Apple’s iPod’s are one of a
Conclusion:
Initially Apple was the price setter; there was no other comparable technology. Now with
the changing MP3 market, it is beginning to shift and become a buyers market and Apple with
have to work harder to maintain customers and guaranteed those repeat sales. Apple needs to
maintain a high level of customer satisfaction to ensure they don’t switch to competitors
products. A few options to retain customers could be, offering customers ten percent off the
purchase of next apple item, maybe fifteen percent on the next purchase of the iPod. Apple
could increase the length of the warranty, offer a deal if price drops within 30 days of the
original purchase and Apple could refund customers the difference. These are just some of the
options Apple could look into. Overall, I wouldn’t recommend trying to enter the consumer
electronics market, with an emphasis in MP3 players. Though Apple is making high profits,
they control significant market share.
4. Internal Analysis:
 VRIO Analysis
Competitive
Table 1.1 V R I O Implications
Brand Name X X X X Sustained
Product Design X X X Temporary Advantage
Compatibility
with Multiple X X Parity
Programs
Adapt to Market
X X X X Sustained
Change
43
Environmental
Health and X X X X Sustained
Safety
Apple, Inc. has been able to establish their brand name through innovation and
sustainability. The creative logo, advertisements, customer service, and product design bring
additional value to the Apple brand name. The Apple symbol is unmistakable and impossible
to imitate. The brand name and logo alone allow Apple, Inc. to adapt to change through
creative advertisements and product design.
Apple, Inc. has proven their ability to adapt to market change and demand. Apple, Inc. has
been able to develop their iPod product design by creating different sizes, shapes, colors, and
memory. The iPod began as a single size, shape, and color. Now, Apple, Inc. designs and sells
an iPod classic, touch, nano, and shuffle. All of the different iPod’s vary in colors and memory
space.
Although Apple, Inc. has developed many different styles of iPod’s that meet customer
demands, many other companies provide customers with MP3 players that are affordable and
comparable in memory size and use. Since Apple, Inc. does not have a patent on their iPod
product design other companies within the industry are able to create similar products that are
affordable, thus the iPod product design is temporarily competitive.
The Apple iPod is compatible with any Apple product including iTunes and The Apple
Music Store. Apple iTunes and Music Store offer a wide range of products for many different
consumers, but iPod users are limited to the products offered through Apple. Since iPod’s are
only compatible with Apple products, iPod users are not able to transport music from their
windows media player, or buy music from any online music store besides The Apple Music
Store. The limitations of the iPod make the iPod’s compatibility with other programs a
competitive parity.
Apple, Inc. is committed to serving both the customer demands and the environments
demands. Apple, Inc. has taken the opportunity to add value to both the product and
environment through four areas of manufacturing and service. These four areas are product and
packaging design, responsible manufacturing, energy efficiency, and recycling.iii Apple has
eliminated the use of polyvinyl chloride and brominated flame retardants in its products. Apple
has also created energy efficient tools in their products allowing customers to monitor their
energy consumption. Through Apple’s use of recycling and conscious efforts to be more
efficient gives Apple a sustained competitive advantage.
IV. BUSINESS STRATEGY

1. The change of strategy
1.1. Beginning
Apple began with the mission to “change the world through technology.” More specifically,
the company sought out to make the personal computer an accessible and affordable device to
the mass market. The proliferation of new software and hardware technology drastically
changed the landscape of the industry and Apple evolved into a leader in desktop publishing.
The crucial point not to be overlooked is that the company’s mission did not guide Apple into
this differentiating strategy. Rapidly changing industry dynamics dictated Apple’s competitive
strategy.
Since 1986, in an attempt to shed the company's hobbyist image and tap into the lucrative
market for office computers, Sculley had focused on building ever more powerful and
expensive Macs. The line now includes six models, ranging up to the Macintosh II FX, which
features fast processing, capacious memory, and lavish color graphics and sells for more than
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$10,000. This high-end, high-margin approach transformed Apple into one of the fastest-
growing and most profitable makers of PCs. Sales swelled from $1.9 billion in 1986 to $5.3
billion in the fiscal year ended September 1989. Profits nearly tripled as well, to $454 million
Unit sales of Macs started to slip, and Apple's worldwide market share declined from 9.5%
in 1988 to 7.3%. Revenue growth for fiscal 1990 is expected to sag alarmingly, to below 6%.
The company's problem: a dramatic change in the PC industry. Among the IBM compatibles,
which account for nearly 90% of the global market, cutthroat prices became the main selling
point. At the same time, Apple, which had no cloners to fend off, kept churning out premium
Macs. By last Christmas the company seemed totally out of step: A Mac with a color monitor,
large memory, and hard disk cost $5,000 the price of two comparably equipped IBM clones.
Those same business customers who had clamored for more powerful Apple machines now
complained that Macs were simply too expensive.
Microsoft also released Windows 3.0, a program that gives IBM compatibles a snazzier
screen that rivals the famously friendly Mac. Windows machines aren't Mac clones, but they
come close enough to make Apple sweat
1.2. Sculley with strategy of low-cost in 1990:

Sculley has devised a two-pronged counterattack, in which he hopes lower prices and a
broader product line will jump-start unit sales. By cutting Apple's notoriously fat and forgiving
operating margins, the strategy will profoundly alter the company's way of doing business. If it
works, Apple will open up new markets for the aging Macintosh line and buy itself time to
discover the breakthrough technologies necessary to remain a PC leader. If it doesn't work,
profits will drop precipitously, and Apple, short of cash for research and development, could
end up an also-ran in the industry it invented. The emphasis on low-cost Macs is just the
outward manifestation of a whirlwind of change. Says senior vice president Albert Eisenstat,
60, who has been at Apple longer than any other top executive: ''The low-cost machines are
creating a whole new ball game for Apple. It calls for new disciplines and permanent changes
that go to the core of the company.''
Sculley’s last try, in fall 1988, was a wholesale decentralization. He broke Apple into three
sales and marketing divisions covering the U.S., Europe, and the Pacific, and a division to
handle product development and manufacturing. The reorganization helped the European and
Pacific operations thrive. The other two divisions, however, had problems. Sales in the U.S.
slowed as Apple lost ground to IBM and its clones, products bogged down in the lab, and the
company began to splinter as marketers and product developers blamed each other. In the last
three months of 1989, the company had a poor quarter, with sales flat and profits lagging 11%.
Right away the two laid off 400 employees, Apple's first firings in four years. He immediately
accelerated the schedules of Gassee's low-cost Macs and ordered up the budget model that will
replace the best-selling Mac SE, which lists for $2,295. Sculley also restructured the product
development teams to remedy a problem that has nagged Apple from the beginning: its inability
to execute simultaneously the development of more than one major product. Says he: ''We have
to prove we can walk and chew gum at the same time.'' In the old setup, engineers reported to
the heads of their particular technology units disk drives, video circuitry, or system software.
For a product to be born, its manager had to get all the technology sachems to agree. In
Sculley's new arrangement, engineers report directly to the product's manager. He wound up
canceling several projects and spinning out another into a company, called General Magic, in
which Apple holds a 20% stake.
As Sculley explains it, Apple will continue to produce costly, high-powered machines, but
''the low-cost Mac strategy is the first, most immediate priority.'' Besides making Macs
affordable to more customers and more attractive to businesses, he hopes that the anticipated
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higher unit sales will assuage software developers, who lately had begun shifting programming
resources to Windows projects. Windows' allure is compelling in the five months since the
software was introduced, Microsoft has sold one million copies. In contrast, Macintosh sales for
all of 1989 were about 650,000. Even Apple's software subsidiary, Claris, is developing
products for Windows. The second priority, says Sculley, is to come up with ''innovative laptop
and notebook computers, where we are obviously behind the power curve.'' Indeed, Sculley
believes that in a few years portable computers will be as ubiquitous as calculators. Hence, he
goes on, sounding like a computer nerd, ''miniaturization and mobility, and the software that
makes it all work, are the keys to the next paradigm in computing, and that's where we're
concentrating much of our research.'' This concept bears the stamp of Alan Kay, who'd like to
see Apple build what he calls ''intimate computers'' portable devices the size of a notebook, or
even a paperback book, that can read and manipulate handwriting and plug into computer
networks. Priority No. 3: pumping up Apple's software prowess. The Mac's operating system
software is what gives the machine the distinctive look and ease of use that are its main selling
points. The company has been struggling to bring out System 7, a powerful new version of the
operating system that will help Apple beat back the challenges of Windows and OS/2, an
advanced operating system from IBM. Since Sculley took over R&D, System 7's debut has
been postponed twice as programmers iron out bugs. The delays have convinced him that Apple
needs to rethink how it manages software development.
1.3. 1990-1995: Apple vs Microsoft

Apple's distant lead in graphical computing began eroding quickly in the early 1990's.
Microsoft worked to improve its DOS based Window 3.0 while it also made incremental
progress in developing the entirely new Windows NT operating system.
During The Rise of Windows, Apple merely entrenched in a rut of announced initiatives
that failed to decisively deliver real progress or marketable products.
While Microsoft looked for new markets and targeted business users in particular, Apple
seemed content to rely on its existing, established share of specific niche markets that offered
large profit margins.
In the mid 90's, the emergence of Local Area Networks began to cultivate new applications
for computers. After file sharing, messaging was the next obvious new application for LANs;
Apple and Microsoft each developed very different solutions for this need.
Since the commercial Internet had not yet arrived, both PowerTalk and Exchange were
designed prior to the arrival of the now standard SMTP email system. Microsoft's Exchange
Server was intended to be based on open industry standards: X.400 messaging and X.500
directory services.
Apple's PowerTalk was an entirely proprietary system based upon AppleTalk. Rather than
just delivering text messages, PowerTalk was conceived as a client side system for choosing,
sending, and interacting with various things, including files, mail, fax machines, and printers.
PowerTalk mirrored the rest of the elegant and richly engineered point-and-click Mac desktop
environment, and promised to be the next great Mac advantage.
Apple's business model revolved around selling hardware, so their plans and motivations for
messaging centered on sophisticated, high value client machines.
Apple didn't think the world was ready for dedicated servers to handle email, particularly within
the company's own core markets of education users and graphic designers working in small
workgroups.
Along those lines, PowerTalk didn't require a dedicated server; local Macs on a network
were intended to exchange messages at regular intervals, whenever they found each other
online.
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Apple had already pioneered the concept of automatic network configuration and presence
discovery services with AppleTalk networking and AppleShare file sharing; these features were
reintroduced for modern IP networks under the name Bonjour a decade later.
(Notable platform lesson: in theory, theory and practice are the same; in practice, they are
not.)
Apple's ability to deliver products was increasingly being hampered by a lack of product-
oriented discipline. Rather than creating insanely great products designed to sell and enrich the
company in ways that would foster further great developments, Apple gravitated into the
position of a research lab full of engineers working on various projects that never seemed to
materialize.
Apple's middle managers sought to prevent their pet projects from getting canceled, without
any regard for the potential marketability of those products. In the typical fashion of corporate
cube politics, they created fiefdoms of control over various projects, and then tied them together
to create essential packages of functionality that would be hard to veto.
These projects snowballed into horrific disasters that were so complex they could never be
completed, but which also contributed highly touted features that were tightly woven into
Apple's increasingly widening strategies. That made them impossible to deliver but difficult to
kill.
(Notable platform lesson: undeliverable zombie projects have to be put down or they will
simply eat up all the brains in a company.)
The PowerTalk Disaster:
PowerTalk was one of those snowballing disasters. It grew into the Apple Open
Collaboration Environment, a suite of messaging technologies that picked up features as it
rolled downhill: extensive foreign language support, digital signatures and encryption features,
a centralized address book with a universal addressing system, and a protocol stack designed to
accommodate virtually every existing messaging protocol and any others still to arrive, and an
extensible information cataloging system.
The resulting suite of software was simply too much to run on existing Mac hardware,
particularly when paired up with Apple's other gigantic snowball project, QuickDraw GX.
While software had been straining to keep up with hardware advancements in the late 80's,
by the early 90's, Apple was delivering overarchitected software which was simply too much
for the hardware of the time. Even for users with enough disk space and RAM to install
PowerTalk, simply getting mail became a problem because individual mail items quickly ate up
any remaining disk space.
Networking capacity was another problem for PowerTalk. The polling required to find other
networked systems became a liability when working remotely over dial-up networks; systems
would dial expensive circuits at regular intervals to attempt deliveries to remote PowerTalk
clients.
Since PowerTalk saw only marginal use, it failed to ever become lean and refined, a classic
problem for Apple's out of control software initiatives. By the time hardware was available to
run PowerTalk and the rest of AOCE, the world was aligning behind a different set of goals and
expectations for email.
(Notable platform lesson: raw technologies don’t sell; finished products do.)
Apple eventually dropped PowerTalk, although a few of its associated ideas, such as a system
wide keychain and address book, were salvaged and are still in use today in Mac OS X.
Gursharan Sidhu, the lead engineer of Apple's networking efforts in the AppleTalk era, got
started with PowerTalk in 1989. Apple was shipping it in 1993 as part of System 7 Pro, its
attempt to sell a premium version of the Mac system software.
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After failing to make any progress in getting AOCE adopted by Mac users, Apple gave up
on PowerTalk in 1996 and turned their attention toward the emerging commercial Internet with
Cyberdog.
Apple: Not Down To Business
Apart from A/UX, the failure of PowerTalk left Apple without any Enterprise products, or
even any serious workgroup server strategy.
Apple tried to build workgroup server products on top of Mac System 7, but again ran into
significant legacy problems: the Mac system software was never designed to accommodate the
needs and requirements of a dedicated server.
Apple desperately needed a better underlying platform to built upon, but was running out of
time. Once a platform becomes commonly established, it is often very difficult to unseat.
Because Apple didn't have a lot to offer larger businesses, the company concentrated its efforts
on selling to its existing customer base: education and individuals
Apple managed to lose a large amount of profit, and its market share dwindled from 8% to
3.4% from 1995 - 1998. The company also slipped in the education sector during this time by
as much as 14% per year.
1.4. 1997-Steve Jobs: Matrix product
Apple pioneered the PDA market by introducing the Newton in 1993. Later, Apple
introduced the easy-to-use iMac in 1998, and updates following 1998. It released a highly stable
operating system in 1999, and updates following 1999. Apple had one of its critical points in
history in 1999 when it introduced the iBook. This completed their “product matrix”, a
simplified product mix strategy formulated by Jobs. This move allowed Apple to have a
desktop and a portable computer in both the professional and the consumer segments. The
matrix is as follows:
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Professional Segment Consumer Segment
Desktop G3 iMac
Portable PowerBook iBook
In 2001, Apple hit another important historical point by launching iTunes. This marked the
beginning of Apple’s new strategy of making the Mac the hub for the “digital lifestyle”. Apple
then opened its own stores, in spite of protests by independent Apple retailers voicing
cannibalization concerns. Then Apple introduced the iPod, central to the “digital lifestyle”
strategy. Philip W. Schiller, VP of Worldwide Product Marketing for Apple, stated, “iPod is
going to change the way people listen to music.” He was right.
Apple continued their innovative streak with advancements in flat-panel LCDs for desktops
in 2002 and improved notebooks in 2003. In 2003, Apple released the iLife package, containing
improved versions of iDVD, iMovie, iPhoto, and iTunes. In reference to Apple’s recent
advancements, Jobs said, “We are going to do for digital creation what Microsoft did for the
office suite productivity.” That is indeed a bold statement. Time will tell whether that happens.
Apple continued its digital lifestyle strategy by launching iTunes Music Store online in
2003, obtaining cooperation from “The Big 5” Music companies—BMG, EMI, Sony
Entertainment, Universal, Warner. This allowed iTunes Music Store online to offer over
200,000 songs at introduction. In 2003, Apple released the world’s fastest PC (Mac G5), which
had dual 2.0GHz PowerPC G5 processors.
1.5. Apple’s present strategy: Product differentiation
Apple has pursued a Differentiation strategy. They manufacture almost all the components
their selves even if there is a cheaper alternative, which could be out sourced this Includes the
operating system called Mac OSX instead of Windows, which the other manufacturers use.
They invest a lot of money in design, brand image (For example placing retail stores on
premium high streets) trying to differentiate themselves from the competition by creating a
“Mac” experience or way of life. This allows them to charge high premiums for their product,
meaning that even though they sell less volume they are still extremely profitable.
Apple’s mission is to deliver a highly innovative and superior solution to a customer’s

personal computing needs. Apple’s present day competitive strategy is a return to
differentiation. Key elements to this strategy are an emphasis on design, service, branding
through advertising, and quality. Drivers needed to attain these objectives are through the firm’s
unique marketing abilities, engineering skills, creativity, and R&D.
For Apple, differentiation encompasses tangible and intangible dimensions. Tangible

differentiation is concerned with the physical characteristics and performance of a product, in
this case, a personal computer. Physical characteristics include form, features, performance
quality, durability, reliability, and style. Products that are enhancements or complements to the
personal computer are also vital in pursuing this differentiation strategy. The scope,
functionality, and ease of integration of these complements affect the “utility” consumers will
gain from an Apple PC. Apple adopted a competitive strategy that vertically integrates these
complementary products that include the iPod, digital cameras, PDA’s, and wireless devices.
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It is also important to note that adopting a differentiation strategy by no means insinuates
that a company is not concerned with cost. Although differentiation adds costs by way of higher
quality inputs, skilled labor, higher advertising, and increased vertical integration, these costs
need to be continually assessed an evaluated so that they can be improved. Apple made
significant progress in this arena. They streamlined operations to the point where they now have
the highest inventory turnover in the industry. This feat has significant implications. Dell’s core
competency is in their direct model that leverages JIT inventory. They pioneered this method
and had a first mover advantage for quite some time, yet Apple has been able to surpass their
arch rival in terms of inventory turnover. In 1999 and 2000, Apple’s operating and profit
margins exceeded industry averages. Although 2001 was a dismal year, this was more due to
industry wide demand contraction as industry sales declined by over 5%. If Apple had
maintained its 3 year growth rate, their operating and profit margins would have been
competitive with Dell, Compaq, and HP.
2. Apple’s competition
2.1. Apple competitive advantages:
A loyal customer base.
Apple's engineering and software skills could make it a force to be reckoned with
in the consumer electronics business long dominated by Sony and Matsushita.
Apple's own engineers design much of the hardware and virtually all the key
software for Macintosh computers. The result is a distinctive line of comp uters
that are more stylish and reliable and easier to use than their Wintel PC
counterparts, and that, despite Apple's small market share, often set the aesthetic
and technical standards for what a PC should be.
Apple has one of the best management teams in place.
Regular technological breakthroughs by Apple's component suppliers has helped
it keep pace in terms of performance with Windows PCs. Motorola, which makes
the PowerPC microprocessor for the Mac – a RISC chip which technically
delivers faster performance for less complex design - has finally managed to
improve the performance of its chips to exceed the processing speed and power of
Intel's Pentiums.
Apple is the only vertically integrated computer company and thus can manage all
aspects of the customer experience.
2.2. Apple’s weakness:
Apple is lagging behind in providing the kind of interoperability that corporate
and educational buyers are concerned about: the network. Apple's computers don't
mix well with Windows servers, This however, is due to Microsoft co-opting
backend standards with their suite of server and application software – Outlook
mail for instance. However, on open standard networks such as the internet,
Apple’ offerings have no difficulty integrating.
Apple products have poor network compatibility. The education market, long a
stronghold for Apple, is under pressure to abandon the company because of
relatively low initial cost PCs. Dell for instance has been courting the education
market very aggressively.
Motorola's R&D efforts simply can't match the money and muscle Intel devotes to
its products. "The economies of scale behind Intel’s new Itanium products are
going to eclipse Apple. Long term, going to the Intel platform may be a correct
strategy.
2.3. Creation & Sustaining of Competitive Advantage
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Apple has been able to maintain a competitive advantage while creating innovative, high
quality products. Apple has done an excellent job proving to customers their product is the
highest quality and is incomparable to rivals’ products. Apple has created products that have
become a lifestyle for consumers. Apple has been able to establish a brand name and an image
that lead customers to live a certain lifestyle. Apple needs to maintain repeat customers and still
provide the highest quality innovative products to ensure they will continue to purchase
products. Apple has done a phenomenal job creating products that complement already existing
successful products to retain customers. Apple established the original iPod in October 2001,
since then they have developed numerous sizes, styles, and capabilities that have been able to
adapt with the changing market and still meet the consumer demand for MP3s. With the many
different iPod versions and personalizing options, they have allowed consumers to create a
product that meets their specific needs and lifestyles choices. This approach has also allowed
Apple to market the iPod to many different ages and ethnicities. This is what sets Apple apart
from other competing companies and will continue to help them maintain their competitive
advantage.
2.4. 11 Effective strategies apple uses to create loyal customer
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 to create an Apple culture. Find out more about these
and other strategies that Apple employs to achieve its tremendous customer loyalty, we will
study 11 effective strategies Apple uses:
A Store Just for Apple: Apple has historically been troubled by big-box sales staffers who
are 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.
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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 keeps its
customers 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
easy-to-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.
3. Branding strategy
Apple Inc uses the Apple brand to compete across several highly competitive markets,
including the personal computer industry with its Macintosh line of computers and related
software, the consumer electronics industry with products such as the iPod, digital music
distribution through its iTunes Music Store, and more recently in the smart phone market with
the Apple iPhone.
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3.1. The Apple Brand Personality
Apple has a branding strategy that focuses on the emotions. The Apple brand personality is
about lifestyle; imagination; liberty regained; innovation; passion; hopes, dreams and
aspirations; and power-to-the-people through technology. The Apple brand personality is also
about simplicity and the removal of complexity from people's lives; people-driven product
design; and about being a really humanistic company with a heartfelt connection with its
customers.
3.2. Apple Brand Architecture
From a brand architecture viewpoint, the company maintains a "monolithic" brand identity -
everything being associated with the Apple name, even when investing strongly in the Apple
iPod and Apple iTunes products.
Apple's current line-up of product families includes not just the iPod and iTunes, but iMac,
iBook, iLife, iWork, and now iPhone. However, even though marketing investments around
iPod are substantial, Apple has not established an "i" brand. While the "i" prefix is used only for
consumer products, it is not used for a large number of Apple's consumer products (eg Mac
mini, MacBook, Apple TV, Airport Extreme, Safari, QuickTime, and Mighty Mouse).
The list of Apple's Trademarks reflects something of a jumbled past. The predominant sub-
brand since the introduction of the Apple Macintosh in January 1984 has always been the Apple
Mac. Products whose market includes Microsoft computer users (for example MobileMe,
QuickTime, Bonjour, and Safari) have been named so they are somewhat neutral, and therefore
more acceptable to Windows users. Yet other product have been developed more for a
professional market (eg Aperture, the Final Cut family, and Xserve).
3.3. The iPod Halo Effect
Though Apple's iPhone and iTunes music business is profitable in its own right, Apple's
venture into these product areas was based on a strategy of using the music business to help
boost the appeal of Apple's computing business.
Apple is using iPod, iTunes, and now iPhone to reinforce and re-invigorate the Apple brand
personality. At the same time, these product initiatives are growing a highly relevant, appealing
brand image in the minds of consumer segments that Apple has not previously reached.
In a so-called iPod halo effect, Apple hoped that the popularity of iPod and iTunes among
these new groups of customers would cause these segments to be interested in Apple's computer
products. This does seem to have happened. Since the take-off of the iPod there has been a
dramatic rise in Apple's computer sales and market share.
A couple of years ago, Apple's aspirations for the iPod halo effect was was highlighted most
strongly when it used the slogan "from the creators of iPod" in its promotion of iMac G5
computers. In this instance, the Apple brand came full-circle - having been built into a branding
system that originates in the personal computer market, then leveraged into the consumer
electronics market, and then back into the consumer personal computer market.
3.4. Apple Brand Strength Now Creating Financial Success
So far, Apples' branding strategy is bearing fruit. For example, Apple reports that half of all
computer sales through its retail channel are to people new to Macintosh, the company's sales
and margins have been growing strongly since 2006, and Apple has achieved several "best
ever" quarterly financial results during the past couple of years.
Leveraging the success of the iPod, Apple launched the iPhone (released in July 07) to
extend the brand even further. Apple's buzz marketing efforts in the first half of 2007 were truly
superb, culminating in the release of one of the most highly anticipated products for many years
- and launching apple into a completely new market: mobile handsets. By July 2008 the buzz
about the 3G iPhone resulted in over 1 million units being sold in the first 3 days of its release
in over 20 countries around the world.
53
4. Apple’s Alliance
4.1. AIM alliance

Power Architecture
Historical Current Future
Power PowerPC PowerPC A2
Power1 e200 e5500
Power2 e300
Power3 e500
Power4 e600
PowerPC-AS QorIQ
PPC6xx PA6T
Gekko POWER5
POWER6
POWER7
PPC4xx
PowerPC 7xx
7xxx
PPC970
Cell
Xenon
Broadway
Titan
The AIM alliance was an alliance formed on October 2, 1991, between Apple Inc (formerly
Apple Computer), IBM, and Motorola to create a new computing standard based on the
PowerPC architecture. The stated goal of the alliance was to challenge the dominant Wintel
computing platform with a new computer design and a next-generation operating system. It was
thought that the CISC processors from Intel were an evolutionary dead-end in microprocessor
design, and that since RISC was the future, the next few years were a period of great
opportunity.
The CPU was the PowerPC, a single-chip version of IBM's POWER1 CPU. Both IBM and
Motorola would manufacture PowerPC chips for this new platform. The computer architecture
base was called PReP (for PowerPC Reference Platform), and later named CHRP (for
Common Hardware Reference Platform). IBM used PReP and CHRP for PCI version of IBM's
RS/6000 platform, from existing Micro Channel architecture models, and changed only to
support the new 60x bus style of the PowerPC
Apple and IBM created two new companies called Taligent and Kaleida Labs as part of the
alliance. Taligent was formed from a core team of Apple software engineers to create a next-
generation operating system, code-named "Pink", to run on the platform. Kaleida was to create
an object-oriented, cross-platform multimedia scripting language which would enable
developers to create entirely new kinds of applications that would harness the power of the
platform
Efforts on the part of Motorola and IBM to popularize PReP/CHRP failed when Apple,
IBM, and Taligent all failed to provide an operating system that could run on it and when Apple
and IBM couldn't reach agreement on whether the reference design must or must not have a
54
parallel port. Although the platform was eventually supported by several Unix flavours as well
as Windows NT and OS/2 (OS/2 for PowerPC), these operating systems generally ran just as
well on Intel-based hardware so there was little reason to use the PReP systems. The BeBox,
designed to run BeOS, used some PReP hardware but as a whole was not compatible with the
standard. Kaleida folded in 1995. Taligent was absorbed into IBM in 1998. Some CHRP
machines shipped in 1997 and 1998 to no fanfare.
The PowerPC program was the one success that came out of the AIM alliance; Apple
started using PowerPC chips in their Macintosh line starting in 1994. Almost every Mac
featured a PowerPC processor from then until 2006, when they transitioned all their models to
Intel processors, due to disappointment with the direction and performance of PowerPC
development. The chips have also had success in the embedded market, and all three major
seventh-generation video game consoles feature chipsets derived from the PowerPC
architecture at their core.
4.2. Apple-Microsoft
4.2.1. Microsoft Corp:
Microsoft Corporation is a multinational computer technology world-class corporation of
America, chaired by Bill Gates with headquarters located at 1 Microsoft
Way, Redmond, Washington, USA.
Microsoft established in 1975 with the original name is Micro-soft. Microsoft founders
were Paul Allen and Bill Gates Gardner. Number of employees is 79,000 in 102 countries and
total sales in 2008 reached 60.42 billion dollars, 18.2 billion profit, ranked No. 44 in the largest
corporations.
Name of listed securities in the market as New York and Nasdaq is MSFT. This group is
developing, processing, and licensing for software for your computer.
The best-selling products include the Microsoft family of operating systems in their Microsoft
Windows and Office software suite Microsoft Office.
Microsoft is present in most countries and Microsoft branch is located more than 102
countries (2007) and classified into six regions: North America, Latin America, Europe-Middle
East-Africa, Japan, Asia Pacific, China.
4.2.2. Background to form alliance:
In 1996, at that time CEO ,Gil Amelio has had many attempts to improve Apple's losses in
previous years, but surprisingly it was one of the biggest failures of Apple.
12/1996, Apple bought Next-an American computer company founded by Steve Jobs and
he came back .During the period 1997, Apple has been deep crisis within 18 months, lost up to
$ 1.5 billion. This time Apple and Microsoft were rivals in the market 20 years PC, but for the
sake of his apple has teamed with Microsoft to improve the situation.
Toward Microsoft, the alliance with Apple in this difficult period as a form of investment
and support for a potential customer, your primary. Because when Apple earned huge resources
from the PC, Microsoft also will make a profit through the no small contract signed with Apple
about providing the software product, a browser. Moreover they also earn a substantial gas
price of Apple shares rise again.
4.2.3. Apple-Microsoft alliance:
In Boston in 1997, Steve Jobs announced Microsoft has agreed to an alliance with Apple: $
150 million investment to buy shares of the company and the two sides have reached a license
agreements to use inventions for 5 years.
The specific contents of the alliance as follows:
Microsoft made the latest version of Microsoft Office, Internet Explorer and some
Microsoft tools to Apple's Macintosh platform.
55
Apple integrated into Internet Explorer and Mac OS and made it becomes the default
browser in the operating system software in future.
The two companies have reached an agreement in using license patents for two products.
Apple and Microsoft had planned to collaborate on technology to ensure harmony
between the Java computer programming language or the other.
To support more than a relationship with Apple, Microsoft will invest $ 150 million in
non voting shares of Apple.
4.2.4. Benefits of the alliance:
 Apple:
An additional amount not less than 150 million shares was sold for Microsoft to promote
its plans later
Alliance with Microsoft will help bring the look, better features for Apple and PC
products to improve the competitive position of Apple's previous opponents in the market of
personal computers AS IBM, Sony ...
Alliance with a class companies like Microsoft at that time would be a positive sign
giving a better view from the public, customers and so will also help contribute to Apple over
the period crisis.
 Microsoft:
Cooperating with Apple is an attractive investment opportunity:
When purchasing 150 million shares with the price about $ 6, $ 7 per share and later, as
Apple has overcome difficult times and grow back, the share price will increase significantly
and of course bring about a great bargain for Microsoft.
The alliance with Apple is saving a potential customer, the strategy in the near future.
When Apple's sales increase again, of course, Microsoft also will gain more profit through the
signing of this license with Apple and then Apple could become a major customer in providing
integrated software and the Microsoft tools.
In addition, this strategic alliance will also help Microsoft to exploit the school market is
still unanswered, such as in 1998, Apple launched the iMac with a reasonable price and of
course the iMac also integrate the Windows operating system or other software products of
Microsoft.
 General Benefits:
Alliance is at a reasonable complement of Microsoft software and Apple hardware which
offers customers the most products completed about quality and price and more options such as
Power Mac, Power Book, iMac, ...
Increasing competition in the market, improving product quality and providing better choices
for consumers.
4.2.5. Results of the alliance:
Can see a strategic alliance with Microsoft at that time has brought many benefits for Apple.
Event of the cooperation gave Apple a new life. Strategic alliance with Microsoft has had a big
impact on Apple's share price, pushed it up nearly 35%, from $ 6.56 to $ 26.50 NASDAQ.
Apple had successful beyond expectations. In just over a week Applet Store website became
the third largest trade in the U.S.. In San Francisco in January 1998, Steve Jobs, has announced
that the company had $ 44 million profit in the first quarter. In April 1998, Jobs continues to
inform a more profitable quarter (57 million) and a surprise to most people about the strong
recovery of Apple.
In 1998 Apple launched the iMac a PC, the iMac has become the best selling PC across the
country helped Apple sales greatly increased. 7 / 1998, the company has reported three
consecutive quarters of profitability with total profits up to 101 million USD. In fall of that
56
year, Mr. Jobs announced a quarter continued to be profitable again and completed a very
successful year for Apple. We are not hard to realize that the alliance with Microsoft Strategy
not only save Apple from the brink of bankruptcy but also take home one of its heyday in the
history of its development.
Towards Microsoft Corporation, working with Apple gave them certain benefits. Microsoft
already has millions of customers who rely on Apple's Mac platform, thanks to this alliance.
Noticing on cooperation has pushed the stock price to rise 1/8 times. By forming strategic
alliances with Apple, Microsoft has increased the positive perception of customers using
Internet software giant of a potential and further ensure the "survival" of a core customer-
Apple. In other words, the Microsoft bought shares of Apple or the agreement within five years
mentioned above is a form of investment in Apple-a potential group, and as Apple reached
great success 1997-1998. Of course, Microsoft also had great profit.
4.2.6. Element to the success of the alliance:
Understand partners: Apple has been looking at Microsoft's reputation as a corporation has
a range of influencing public opinion as well as large and clear customer benefits that Microsoft
gives them greater than what Apple is giving Microsoft.
The operating flexibility of the wise leadership which is headed by CEO Steve Jobs: he
knows how to take full advantage of the strengths that alliances bring success to bring to the
company consecutively from 1997 -1999.
Understand yourself: Apple has itself recognized his position at that time was very difficult
to go for capital and direction for products, so when the alliance launched Apple products to
their customers exactly.
Efforts to build coalitions from both the broad agreement on the use of patent licenses for
the product of both sides, cooperation in technology to ensure harmony between the Java
computer language or other programming languages ... thereby creating a mutually beneficial
alliance and strong cooperation within the two companies.
4.3. Apple-Nike
4.3.1. Nike
Nike, Inc is a major publicly traded sportswear and equipment supplier based in the United
States. The company is headquartered near Beaverton, Oregon, which is part of the Portland
metropolitan area.
It is the world's leading supplier of athletic shoes and apparel and a major manufacturer of
sports equipment with revenue in excess of US $18.6 billion in its fiscal year 2008 (ending May
31, 2008). As of 2008, it employed more than 30,000 people worldwide. Nike and Precision
Castparts are the only Fortune 500 companies headquartered in the state of Oregon, according
to The Oregonian.
The company was founded in January 1964 as Blue Ribbon Sports by Bill Bowerman and
Philip Knight, and officially became Nike, Inc. in 1978. The company takes its name from
Nike, the Greek goddess of victory.
Nike markets its products under its own brand as well as Nike Golf, Nike Pro, Nike+, Air
Jordan, Nike Skateboarding and subsidiaries including Cole Haan, Hurley International, Umbro
and Converse. Nike also owned Bauer Hockey (later renamed Nike Bauer) between 1995 and
2008. In addition to manufacturing sportswear and equipment, the company operates retail
stores under the Niketown name. Nike sponsors many high profile athletes and sports teams
around the world, with the highly recognized trademarks of "Just do it" and the Swoosh logo.
4.3.2. Background to form alliance:
Apple: For Steve Jobs - CEO at Apple – the company decided to work with Nike in order to
elevate together music and sport to a new level of performance. The practical result of the
57
alliance was the launch of a personal trainer (or a training colleague), to motivate and control
each stage of exercise.
Nike: According to Mike Parker – CEO, Nike+iPod resulted from forming a partnership
between two global brands that have a mutual passion, i.e. creation of products or services that
let the user enjoy new experiences full of innovation and design, as well as an effective change
in the way people perceive and do sport.
4.3.3. Apple-Nike alliance (Competitive alliance):
On 23 May 2006 the CEOs of Nike, Mike Parker, and of Apple, Steve Jobs, together with
the athletes Lance Armstrong and Paula Radcliffe, at an event in New York, announced a
partnership between these two brands, which resulted in forming a competitive alliance of co-
branding named Nike+iPod. This alliance raised expectations for the launch of innovative
products with the campaign slogan of “Tune your run”.
The co-branded product created through the competitive alliance analyzed is the
‘Nike+iPod Sport Kit’, which includes a sensor and a receiver for the iPod Nano player. This
fitness system operates on a wireless platform, allowing communication between the Nike+
trainers and the iPod. The trainers have a pocket for the sensor which communicates with the
receiver, giving instant feedback on the iPod screen about individual performance during
training. This automatic sensor includes an accelerometer and a Nike+iPod patented
technology, which allows evaluation of information regarding foot movement and display
according to different analysis variables, namely distance covered, time, rhythm and calories
burned.
Information about the progress of the run is supplied by headphones and the iPod screen.
Once the receiver is connected to the player, the Nike+iPod option appears on the screen and
the user can make a selection from his personal training list or his Power Song4, or from a list
of pre-programmed exercises that can be acquired on iTunes Music. Nike, as a global brand,
created the on-line Nike+ community to develop the cult associated with the brand and link
consumers in any part of the world. This community had its origins in the partnership
established with Apple, more precisely through the iPod player.
Nike+ consumers become members of this global community, in which it is possible to
accompany the result of their activities individually or together with other members all over the
world. When the receiver is removed from the iPod and connected to a computer, the user is
automatically connected to the nikeplus.com site.
The strategic cooperation between Apple (iPod) and Nike is a co-branding alliance formed
between two global brands, adhering to a rigorous selection of strategic partners that aimed to
establish a relationship leading to mutual benefits, i.e. of the win-win type.
The main motivation of global brands for forming a strategic cooperation alliance of co-
branding lies in the possibility it gives to combine global insignia. Chang (2008) stresses the
motivation associated with the practice of global branding, claiming that the latter is
characteristic of strategic cooperation between well-known global brands that are recognized
internationally.
Concerning the form analyzed, taking the typology proposed by Nunes et al. (2007), this is
innovation-based co-branding, based on the supply of a highly differentiated and innovative
product: the ‘Nike+iPod Sport Kit’. This product unites Nike trainers and the Apple iPod.
Additionally, from the joint R&D efforts of the two companies, two forms of technology result:
(i) a sensor for the trainers; and (ii) a receiver for the iPod, which allows communication
between both.
Bearing in mind the typology proposed by Blackett & Boad (1999), the strategic
competition alliance analyzed can also be considered as an example of complementary
competence co-branding, inasmuch as two global brands complement each other in developing
58
a joint product that connects music and physical exercise. That union is based on the joining of
products and core competences of the two companies involved in the alliance. On the one hand,
Apple provides its know-how and experience as a manufacturer and supplier of electronic
equipment, players and digital music. On the other, Nike provides the technology and
ergonomic design of running shoes, in this way allowing the creation of a personal trainer with
innovative characteristics, production of which is based on intensive incorporation of
knowledge and technology.
4.3.4. Benefits of the alliance:
Although this is a relationship of the win-win type, benefits resulting from formation of the
strategic competition alliance are unequal. Setting out from theoretical suppositions, through
co-branding, Apple obtained a greater increase in brand value than
Nike. The value of Apple has recorded annual rates, on average, of 22.5% and the increase in
the Nike brand value, since 2006, has been on annual average 8%.
For both global brands analyzed, there were increased sales, increased market share and
greater international recognition of the brand, in individual terms. Moreover, there was an
increased market penetration through sharing portfolios of loyal clients. Therefore, the joint
communication efforts, and the exchange of specific means and resources, namely technology,
innovation and marketing, contributed to increased individual brand values, through supply and
transmission of a greater benefit to users of the co-branded product: ‘Nike+iPod Sport Kit’.
After signing the co-branding alliance, on one hand Nike recorded a 0.4 percentage points
variation in its brand value, and on the other hand Apple recorded a variation of 11.5 percentage
points. The strategic competition alliance between Nike and Apple is based on a relationship of
the WinMin-WinMax type, since both brands obtain benefits, although in unequal measure
5. List of mergers and acquisitions by Apple
Apple Inc is an American multinational corporation with a focus on designing and
manufacturing consumer electronics and software products. The company's hardware products
include the Macintosh line of personal computers, the iPod line of portable media players, and
the iPhone line of mobile phones. Apple's software products include the Mac OS X operating
system, the iTunes media browser, and the iLife suite of multimedia and creativity software.
The company has acquired twenty-one companies, purchased a stake in two companies, and
made five divestments; most of them were software companies. Apple has not released the
financial details for most of these mergers and acquisitions.
Apple's business philosophy is to acquire small companies that can be easily integrated into
existing company projects. For example, Apple acquired Emagic and its professional music
software, Logic Pro, in 2002. The acquisition led to the creation of the digital audio workstation
software, GarageBand, now part of the iLife software suite.
The company made its first acquisition on March 2, 1988 when it purchased Network
Innovations. In the 1990s, Apple purchased its only minority stake when it acquired 5% of
Akamai Technologies, a content delivery network company. It has also made five divestments,
all in the 1990s, in which parts of the company are sold to another company. The company's
largest acquisition was the purchase of NeXT in 1996 for US $400 million. Apple made the
most acquisitions in a single year in 2002, with five, when it acquired Nothing Real, Zayante,
Silicon Grail Corp-Chalice (from Silicon Grail), Propel Software, and Emagic. Of the
companies that Apple has acquired, 18 were based in the United States.
Acquisitions
Date Company Business Country Value(US $)

March 2, 1988 Network Software United
59
Innovatio States
ns
June 7, 1988 Orion Network Satellite United
Systems communi States
cation
Systems
June 27, 1988 Styleware Computer United
software States
July 11, 1988 Nashoba Computer United
software States
January 3, 1989 Coral Software Computer United
software States
February 7, NeXT Computer United 404,000,000
1997 programm States
ing
services
September 2, Power Clone United 100,000,000
1997 Computin computers States
g-Clone-
Making
January 8, 1999 Xemplar Software United 4,926,000
Educatio Kingdom
n
November 3, Raycer Computer United 15,000,000
1999 Graphics graphic States
chips
January 7, 2000 NetSelector Internet United
software States
April 11, 2000 Astarte-DVD Software Germany
Authorin
g
May 11, 2001 Bluebuzz Internet service United
provider States
July 9, 2001 Spruce Graphics United
Technolo software States
gies
December 31, PowerSchool Online info United 62,000,000
2001 systems States
services
February 1, Nothing Real Special effects United 15,000,000
2002 software States
April 4, 2002 Zayante Software United 13,000,000
States
June 11, 2002 Silicon Grail Digital effects United
Corp- software States
Chalice
June 20, 2002 Propel Software United
Software States
60
July 1, 2002 Emagic Music Germany 30,000,000
productio
n software
April 2005 FingerWorks Gesture United
recognitio States
n
company
October 16, Silicon color Software United
2006 States
December 4, Proximity Software Australia
2006
April 24, 2008 P.A. Semi Semiconductors United 278,000,000
States
July 7, 2009 Placebase Maps United
States
December 6, Lala.com Music United 17,000,000
2009 Streaming States
January 5, 2010 Quattro Mobile United 275,000,000
Wireless Advertisi States
ng
Aril 27, 2010 Intrinsity Semiconductors United 121,000,000
States
Aril 27, 2010 Siri Software United
States
July 14, 2010 Poly9 Web-based Canada
mapping
Stakes
Date Company Business Country Value(US $)

June 1, 1999 Akamai Web site United 12,500,000
Technolo support States
gies services
December 18, Imagination Imagination United 4,700,000
2008 Technolo Technolo Kingdom
gies gies
Divestitures
Date Acquirer Target Target Acquirer country/ Value(US

com busines nationality $)
pany s
April 22, Misys Sign Maintenance United 705,000
199 Comp Expr activitie Kingdom
2 uter ess s
Maint Grou
enanc p
61
e
May 31, SCI Apple Computers United States
199 Syste Com
6 ms puter
April 2, Al-Waleed Apple Personal Saudi Arabia 115,000,00

199 bin Com comput 0
7 Talal puter ers
August 6, Microsoft Apple Personal United States 150,000,00

199 Com comput 0
7 puter ers
August 7, Grupo Apple Personal Mexico 60,650,000
199 Carso Com comput
7 puter ers
Notes
1. Acquired from Power Computing Corporation

2. Acquired from Astarte
3. Acquired from Japan Information Processing Service
4. Acquired from Silicon Grail
5. Acquired a 5% stake
6. Acquired a 3.6% stake, or 8.2 million shares
7. Acquired a 5% stake, or 6.25 million common shares
8. Acquired a 5% stake, or 150,000 Series A shares. Microsoft has since sold this stake.
9. Acquired a 3% stake, or 3.79 million common shares
V. R&D AND MARKETING
1. Marketing strategy
1.1. Marketing tactic
Here are five reasons why you should follow Apple’s marketing strategy:
They Focus on One Thing and Make it Great. When the iPod made its debut in 2001, the
company’s focus was on music and putting a thousand songs in your pocket. Then they kicked
off the iTunes store, which made it easy and legal to download songs to your computer or iPod.
In 2007, the iPhone changed the way smartphones were made and used. This year, millions of
the “magical” iPad sold in a matter of weeks.
They Train Their Customers. Apple’s best clients know that most of Apple’s product line
is “refreshed” every year to the month, with upgrades in memory, speed, design, added features
and overall ease-of-use. There are many forums and blogs tracking down rumors of new
62
products and release dates as fans wait in anticipation of the next great Apple product. Check
out these photos of the lines forming in Tokyo just to pre-order the new iPhone.
They’re Green. Companies that promote eco-friendly products gain respect and garner
positive press from “green” organizations that in turn encourage their followers to buy from
these companies. The latest round of Apple MacBook Pro computers are billed as “The World’s
Greenest Lineup of Notebooks.” For a company that expects its best clients to upgrade their
hardware annually, they’d better produce something that’s easily recycled. Visit Apple’s
Environment page here.
They Don’t Have Sales. OK, that’s not entirely true. They have a one-day Black Friday
sale that saves 5-10% off certain products. But that’s it. One day. They set their prices high and
back them up with a stellar reputation for providing excellence in their products and in
customer satisfaction. You can find a decent PC notebook at Best Buy for about $600, but
Apple has no problem charging $999 for its least expensive notebook.
They Know and Market to Their Customers. Even before the days of the ‘Think
Different” ad campaign, Apple was reaching out to college students and graduates, creatives,
rebels, and the anti-establishment. Microsoft dominated the market and Apple ran a distant
second. Watch the “Get a Mac” commercials and you’ll see Apple’s attempt to paint PC users
as well-meaning, but kind of dumb for sticking with bad computers, while Mac people are
young and carefree because their computers “just work.”
The marketing strategy behind the ipod and iphone is ease of use, you can simply see and
touch, and the all in one features, you don't need anything else.. your phone, pager, music,
videos, are all in one. and you can access the Internet from it also. they have lots of memory so
you won't run out.. most mp3's etc have limited memory, they also target the young adults
although the 2nd answer has good points there are a few things that go against normal
marketing methods, yes it's people that sell things, but if the product is bad, no person can sell
it. Products do sell themselves if they are marketed right. Ipod does not use a person to sell but
the product instead. and being the first to market something is often the key to the products
success. being 1st and unique is easier than being 2nd and trying to compete with the first
product. and people don't buy products simply because they are surprised, they buy for different
reasons, need, desire, price, are all considerations. The 2nd answerer lists selling techniques for
salespeople not marketing methods for manufacturers. five of Apple's marketing principles:
 Products don’t sell. people do.

 Never be first to market.
 Empower early adopters.
 Make your message memorable.
 Surprise and delight your customers
1.2. iPod Marketing plan
1.2.1. Executive Summary:
The focus of this report is on new Apple Ipod product that has created increasing demands
in various outlets.
63
This product allows consumers to download not only their favourite music but also books and
other literature which can be read and listened to. Additionally this Ipod can be used in your car
and in other mobile settings.
This report is for Apple to give a brief description of this product. Within this marketing
report there is an insight of the situation analysis of this product, marketing objectives, the
target market, marketing strategies that have been used and the forecasted strategies, monitoring
and controlling.
1.2.2. Situation Analysis:
Market Analysis:
Internal Influences:
Management: Effective management is required for the training and development of
employees for the continue innovation of Apple Ipod and for retraining sufficient funds during
competitor introducing new product.
Capital Availability: Competition may cause mishap in the cash flow. Sufficient funds must
be available when competitors unpredictably put forward their product in the market.
Technological Adoption: Technology must be adopted to improve overall efficiency. It
must be integrated directly into operations (to increase productivity), as well stay on date with
the amounts of Ipod’s ordered, made and delivered.
External Influences:
Competitors: Competitors will regulate what, when, how and why strategies will be
adopted. The introduction of new products will greatly influence Apple Ipod.
Overseas Influences: The breaking down of barriers between countries can increase the
sales of the new Apple Ipod, as more people are made aware of the product.
Demographic Patterns: Males and females from the age of 12years and over will be in
favour of this product because of its new innovation to be able to not only play music but also
books and other literature which would in fact appeal to them.
Product Analysis:
Product Lifecycle:
X- The stage that Apple Ipod is currently in: Apple Ipod is currently in the growth stage,
where more and more people are aware and purchasing the product, increasing product demand.
Sales are growing rapidly and profits are rising quickly, however competition is increasing as
competitors are more cognisant of the tactics of Apple Ipod i.e. using new features to market
their product. During this stage there are also opportunities for wider distribution, which will
result in higher sales.
1.3. Apple Iphone marketing strategy
1.3.1. Executive Summery:
The Past – Steve Jobs, Steve Wozniak and Ronald Wayne established Apple on April 1,
1976 in order to sell the Apple 1 Computer Kit that was hand built by Steve Wozniak. The
Apple 1 was sold as a motherboard (with CPU, RAM and basic textual video chips) – less than
what is considered a personal computer today. Apple was responsible for creating the desktop
publishing market due to their innovative programmes, PageMaker and LaserWriter. Between
1983 and 1996 Apple experimented with a number of failed consumer target products including
digital cameras, portable CD players, speakers, video consoles and TV appliances. Market share
and stock prices decreased. In 2001, Apple introduced the iPod portable digital audio player.
The product was phenomenally successful – over 100 million units were sold within 6 years.
The Present – January 2007, Steve Jobs, the CEO and Co-Founder of Apple, announces
that Apple Computer Incorporated would now be known as Apple Inc. He also reveals the long
anticipated iPhone, a combination of an Internet-enabled smartphone and the iPod. In June
64
2008, he announces that the iPhone 3G would be released in July 2008, this newer version
added support for 3G Networking and assisted GPS navigation, among other things.
The Future – Apple plans on focusing on satisfying personal consumer demands rather
than merely fulfilling a demographic requirement as well as, improving performance and
stability rather than introducing new features when releasing new versions of any product.
The iPhone targets consumers who need to store information and communicate or people
who want entertainment on the go. Apples target segments consist of professionals, students,
corporate users, entrepreneurs, and health care workers. Currently, the market for high-end
phones like the Apple iPhone is small. Few people want Internet, video, and PDA features in
one device because of the high price. The smart phone market is still relatively small compared
with general phone market. The market will rapidly increase in coming years due to lower
prices and greater power.
1.3.2. Situational Analysis:
 Political Situation
Taxation is something that governments put and Apple should be study this as country by
country case to anticipate profitability, and pricing strategy.
Importing laws in the world with GATT are in favor of trading.
Countries are very variable in stability of, so we should study each country case by case.
 Economical Situation
Economical growth world wide is in a big recession which need careful manipulation.
Potentiality of the market is decreasing but it is higher than any others in the Telecom
sector.
 Socio-Cultural Situation
Population growth leading to expansion of the sector needs for cell phones.
People depend more an more on mobile communication everywhere.
There is educational growth in the world.
Culture’s perception of the technological devices is positive worldwide.
Literacy & illiteracy level is not affecting using cell phones but affecting high technological
cell phones, this fact needs to be considered.
Acceptance of imported products in some countries are less if there is local provider
There are different social views that may affect product should be considered (e.g.:
Boycotting American products in the Islamic world):
 Technological Situation
Level of technology in the world is increasing.
Internet level of awareness & usage for individuals & industrial aspect are increasing
worldwide
Fixed phone lines capacity and development attempts.
New technologies in the cell phones are increasing.
Future plans for technological linkage between cities, universities, colleges, hospitals and
other institutes are increasing and can be connected to cell phones.
Level of usage of the E- Technology (online bidding, billing, complaints, blogging etc) are
high and trendy.
 Competition Situation
There are 19260 cell phone producer in the world, but there are more than 15 big companies
competing at the world level Market.
 Environmental Situation
The global concern of the Global Warming issue & other pollution effects concerning the
packaging material and radiation of the cell phones.
65
The demand of the international environmental approvals is a must (if there is any).
 Sales Situation
Cell phones industries are one of the most profitable industries everywhere and the Market
is increasing.
1.4. SWOT Analysis:
1.4.1. S/O Analysis:
Strengths:
Innovative – The iPhone has an innovative touch screen. It also has many functions of
other mobile products all in one device.
Compatibility –The phone will work with iTunes and with other Mac/Apple products and
OS software tools which means limitless potential for upgradeability.
Ease-of-Use – The all-new touch screen interface recognizes multi finger gestures, just as
the human hand normally behaves.
Brand awareness – Apple is well known for cool essential gadgets like the iPods along
great technological innovations like the original Macintosh.
Price – iPhone would be sold at a reasonable price for its value.
Quality – Scratch resistant screen – durable and light metallic finish - software suite
resistance to computer viruses.
Opportunities:
Increasing demand and expansion to a new target segment – As technology advances
and smart phones get cheaper Apple will attract consumers and get iPod users to upgrade to
iPhones.
Upgradeable – iPhone software allows new exciting features to be brought in which take
advantage of the touch screen ability. Future versions will also be hardware upgradeable.
Partnerships – Apple can collaborate with many powerful global mobile phone companies
to flood the market with iPhones, which reduces costs in marketing and increases revenue
through long-term agreement deals.
1.4.2. W/T Analysis:
Weaknesses:
Image – The Apple brand is not targeted towards business people and does not have a
reputation as being compatible with the corporate world.
Price – Apple does not yet offer lower priced models for more cost conscious consumers.
User Interface – Touch screen interfaces suffer from the problem of “gorilla arm”( Gorilla
arm is a side-effect that humans face when using touch screens for long times as humans are not
built to hold their arms at waist or head-height, making small and precise motions. After a short
period of time, cramp may begin to set in, and arm movement becomes painful and clumsy.
This is now considered a classic cautionary tale to human-factors designers.)
Increased competition – Smart phones are easier to make now more than ever. More
companies may enter the market, and competitors or even Apple contractors can maneuver
around patents to create similar devices.
Downward pricing pressure – The iPhone is marketed as a highend phone, but phone
prices are almost certainly going to fall when other companies undercut the price of iPhones.
Difficulty expanding into Asian market – There is less hype and interest in Asia since
smart phones are better known and already widely used.
Threats:
Competition (Palm) - Palm has the longest history in PDA market and has experience-
developing software for mobile devices. It is also a well-known brand for businesspeople.
Existing software is well established and compatible with many products for this market. The
market is familiar with Palm products; significant switching costs are involved in going to an
66
iPhone. Palm can add many similar capabilities to their products that match the iPhone and
expand to a wider market through lower cost and higher-power products.
1.5. Marketing Objectives:
Set an aggressive buy achievable objective for the first and second years of market :
1. First-year Objectives - We are aiming for a 2 percent share of the U.S and U.K.
PDA/Phone market through unit sales volume of 445,000.
2. Second-year Objectives - are to achieve a 10 percent share based on sales.
Extend on the Apple brand name and link to the established meaningful positioning.
Extend on Apples image of innovation, quality, and value.
Measure the awareness and response in order to make adjustments to the marketing
campaigns as necessary.
Target Market:
Differentiate the iPhone from other PDA’s on the market.
Primary customer targets is the middle-upper income professional to coordinate their busy
schedules and communicate with colleagues, friends and family.
Secondary consumer targets are high school, college and graduate students who need one
portable multifunction device.
Primary business target is to partner with: -Large cell phone service providers, AT&T,
Verizon, Sprint and Cellular One. -Large enterprise software firms where information is critical
to the end user.
Secondary business target is mid-to mid-size corporations that want to help managers and
employees stay in communication or access critical data on the go.
Market segment will consist of companies with $10-$50 million in annual sales.
Positioning:
Using product differentiation, positioning the iPhone as the versatile, convenient, value
added device for personal and professional use.
Focus on the convenience of having one device for communication, but also music,
pictures, and video, and full Internet access.
The iPhone will be promoted as both professional and hip..
1.6. Marketing Mix Strategy:
-Product:
•Full year warranty along with an optional three-year Apple Care warranty.
•Same taste as all other Apple products.
•Special edition version to be launched (including the iPhone Beatles edition celebrating
their 40th anniversary).
•Launching a cheaper version in 2008 with less advanced features along with a more
advanced version for professional use.
•Adding the following features to the iphone (large disk storage capacity, lower weight,
thinner device, long battery life, 4G wireless, GPS and improved camera).
-Price:
•Set the base model at a cheap price of $349.
•A more advanced model for $399.
•Special limited edition Beatles iPhone for special prices.
•Generally lower our prices to ensure we establish market dominance in as short of time as
possible.
-Place:
•Massive rollout worldwide at all reputable major retailers.
•Massive rollout Online, Showrooms and in all cell phone providers.
•All Apple Stores the Apple website will dedicate themselves to the iPhone.
67
•Eye catching displays will be found at all physical stores featuring the iPhone to make the
product stand out from the pack.
•Apple Stores will have the iPhone on display a full month before its worldwide release.
-Promotion:
•Integrate Apple message of revolutionary communications and audio/visual experience
together in all media advertisements.
•Differentiate the iPhone against others is the touch screen functionality.
•Emphasize Apple brand prominently and associate the iPhone with the iPod’s
groundbreaking lineage.
•Original but tasteful advertisements at the same time.
•A massive TV campaign is planned before launching the iPhone featuring a soon to be
legendary ad to be the talk of the country.
•Advertising will be appearing on a regular basis to maintain general public awareness.
1.7. The Real Secret of Apple's Successful Marketing Strategy:
Nice product: Everything in Apple's product line was almost perfect and eye-catching
design, even to put advertisements on television.
Simple message: The message is simple to understand, easy to remember and easy to share.
Creating consumer's interest: Their strategy is sharing the comments with the guest from
others who are using and talking about their product. It will be objective and more reliable.
Listen: They let customers use their products then invite them to speak their feelings.
Due to various opinions, they can create good product which are suitable with
customer’s tastes.
Create credibility and always one step ahead: About 5 years ago, after apple control MP3
market domination, they may have self- confidence with their success. But that's not what this
company did. They continued innovate, research new products. So that The Apple's brand
becomes more and more
famous.
The names to remember: Look at the names of Apple products: iPod, iPhone, iMac…
They might not be perfect but all of them are easy to remember, right? This can help customers
find out product's
information easily.
2. R&D
2.1. Apple’s R&D:
Apple (AAPL) used their R&D budget very smartly.
They usually innovate their products. They enter a market, take it over, raise the bar
whether it's in notebooks, music, cell phones.
Their operating income has gone from -1 million dollars in 2003 to to 4409 million dollars
in 2007. That works out to an increase of 881% a year the last 5 years.
From 2003 to 2007, Apple spent 2991 million dollars while raking in 8818 million in
operating income. Apple's R&D is 34% of operating income. And as Apple's operating income
rises, the percentage of R&D/operating income plummets. 2004 saw R&D/operating income at
68
156%, now Q1 2008 it's dropped to 12%! On average, Apple's R&D has risen 13% a year,
operating income 881% a year over the last 5 years.
Apple hasn't skimped on its R&D. It's been growing but its operating income has been
growing far faster. It's amazingly productive.
 Compare the Research and Development strategy of Apple vs Microsoft and Sony:
This graphic can help you conceptualize the revenue and R&D gap:
 Analysises:
Apple (AAPL) spent a total of $4.6 billion over the last four years. Revenue in 2006 was
$25 billion. In 2009, sales climbed to $43 billion. Its market cap, has tripled over the since the
start of 2006.
In contrast, Microsoft (MSFT) used $31 billion on research over the same period.
Revenue rose from $44 to $58 billion.
Sony must spend significant resources on research and development to keep up with rapidly
advancing technology and shifting consumer demand. In 2007, Sony spent a total of $ 5.036
billion (¥543.9 billion).
Apple's R&D is extraordinarily cost efficient. Other tech companies seem to lack the same
"vision" in allocating their R&D budget. One wonders what new products come out of Apple's
R&D in 2011 and beyond?
69
Now, Microsoft spends about 17% of their revenue on R&D. Sony spends about 8%. Apple
spends less than 4%.
If you were to break down the amount of R&D that goes purely to physical (non-software)
products sold by Apple and Sony, Sony would spend about $11.5 million per product while
Apple would spend about $78.5 million per product.
Microsoft just spends a lot of money in R&D, period—about $9 billion last year in
generalized research (that often doesn't lead to specific products). In terms of percentage growth
over the last decade, Apple's R&D has grown the most (nearly quadrupled) while Sony's has
grown the least (not quite doubled).
2.2. Marketing Research:

Four age groups will be targeted: 15-20 years, 20-25 years, 25-45 years, and 45 years and
up.
High School and College aged people will demonstrate social uses.
The 25-45 years group will be used to determine business application and social/personal
use.
The 45 years and above will give us a plan to market to more senior well-refined group.
This research will be done through surveys (via email campaign through portals such as,
iTunes and other on-line application developed for the iPhone) and interviews (in Apple stores)
with the same age groups listed before.
To bring the iPhone to the front of the business world it is important to research different
ways to grow the 15-25 year old group into business uses of the product.
Brand awareness will be an important tool in taking the Apple brand from "social cool" -to
"business cool”.
We will ask for feedback on iPhone features, and implement those changes most important
to the end user in the next generation iPhone.
We will allow users themselves to design their own ideal iPhone online and use any useful
ideas to further refine future iPhone models.
We will continuously scour the Apple fan websites to understand what the Mac faithful are
saying, as they are our best customers
3.3. Four Innovation secret of Apple
Put a Dent in the Universe: “Innovation requires a team and you cannot inspire evangelists
unless you offer a compelling vision….”
Sell Dreams, Not Products: “Steve Jobs doesn’t rely on focus groups. "Steve Jobs avoids
most focus groups like the plague," says tech analyst Rob Enderle. "It comes down to the very
real fact that most customers don’t know what they want in a new product." Apple customers
should be glad Jobs doesn’t do focus groups. If he had, they may never have enjoyed iPods,
iTunes, the iPhone, the iPad, or Apple Stores. Jobs doesn’t need focus groups because he
understands his customers really, really well. Yes, sometimes better than they know
themselves!… Sure, "listen" to your customers and ask them for feedback. Apple does that all
the time. But when it comes to breakthrough success at Apple, Steve Jobs and his team are the
company’s best focus group. Asked why Apple doesn’t do focus groups, Jobs responded: "We
figure out what we want. You can’t go out and ask people ‘what’s the next big thing?’ There’s a
70
great quote by Henry Ford. He said, "If I’d have asked my customers what they wanted, they
would have told me ‘A faster horse.’"”
Say No to 1,000 Things: “Steve Jobs once said the secret to innovation comes from
"Saying no to 1,000 things." In other words, Jobs is as proud of what Apple chooses not to do
as he is about what Apple chooses to focus on. This philosophy has helped Apple introduce
products that wow consumers because of their elegance and simplicity…”
Create Insanely Great Experiences: “There are no cashiers at an Apple Store. There are
specialists, creatives — even geniuses — but no cashiers. Although the Apple Stores have no
commissioned sales staff, they generate more revenue per square foot than most other widely
recognized brands. Why? According to Jobs, "People don’t want to just buy personal computers
anymore. They want to know what they can do with them, and we’re going to show people
exactly that…"
(by George Ambler on Sunday, September 26,

2010)
3. Advertising
In the past two decades, Apple Inc has become well known for its advertisements, which are
designed to reflect a plan of marketing their products to creative individuals. Their most
significant ad campaigns include the "1984” Super Bowl commercial, the 1990s Think
Different campaign, and the "iPod people" of the 2000s. Apple's portable music player, the
iPod, has been showcased as a piece of contemporary art in New York's Museum of Modern
Art.
Since the original Macintosh Super Bowl commercial in 1984, which mimicked imagery
from George Orwell's 1984, Apple has maintained a style of homage to contemporary visual art
in many of its more famous ad campaigns. For example, the Think Different campaign linked
Apple to famous social figures—including artist John Lennon and social activist Mahatma
Gandhi.
Apple has been criticized for its sometimes questionable use of modern art as an inspiration
for its marketing campaigns—at times re-creating a short film or music video shot-by-shot for
its commercials. Some artists have documented entering into rights-negotiations with Apple,
only to have Apple pull out of the discussions, then use the artistic imagery anyway. As a result,
several lawsuits have been filed against Apple by artists and corporations alike, such as visual
artist Louie Psihoyos and shoe company Lugz. These claims were later confirmed.
In 1997 the “Think Different” campaign introduced Apple’s new slogan, and in 2002 the
Switch campaign followed. The most recent advertising strategy by Apple is the Get a Mac
campaign.
Today, Apple focuses much of its advertising efforts around “special events", and keynotes
at conferences like the MacWorld Expo and the Apple Expo. The events typically draw a large
gathering of media representatives and spectators. In the past, special events have been used to
announce products such as the Power Mac G5.
71
1980–1985
A “Macintosh Introduction” 18-page brochure was included with various magazines in

December 1983, often remembered because Bill Gates was featured on page 11 For a special
post-election edition of Newsweek in November 1984, Apple spent more than US $2.5 million
to buy all of the advertising pages in the issue (a total of 39).
Apple also ran a “Test Drive a Macintosh” promotion that year, in which potential buyers
with a credit card could try a Macintosh for 24 hours and return it to a dealer afterwards.
It began to look like a success with 200,000 participants, and Advertising Age magazine
named this one of the 10 best promotions of 1984. However, dealers disliked the promotion and
supply of computers was insufficient for demand, and many computers were returned in such a
bad shape that they could no longer be sold.
"1984" television commercial: launching the Macintosh
"1984" (created by Ridley Scott) is the title of the television commercial that launched the
Macintosh personal computer in the United States, in January 1984.
 1985–1990
In 1985 the “Lemmings” commercial aired at the Super Bowl.
It was a large failure and did not capture nearly as much attention as the 1984 commercial
did. Many more brochures for new models like the Macintosh Plus and the Performa followed.
In 1988 Apple released a short film titled Pencil Test to showcase the Macintosh II's
animation capabilities.
1990–1995
72
In the 1990s Apple started the “What's on your PowerBook?” campaign, with print ads and
television commercials featuring celebrities describing how the PowerBook helps them in their
businesses and everyday lives.
During 1994, Apple introduced the worlds first infomercial style sitcom named 'The
Martinetti's Bring Home a Computer'. This can be viewed on this YouTube link.
In 1995, Apple responded to the introduction of Windows 95 with both print ads and a
television commercial.
1995–2000
"Think Different"
"Think Different" was an advertising slogan created by the New York branch office of
advertising agency TBWA\Chiat\Day for Apple Computer during the late 1990s. It was used in
a famous television commercial and several print advertisements.
Even today, Think Different remains an intrinsic part of Apple's identity, alongside flagship
products like the iPod and iMac. The use of the phrase, "Think Different", however, has ceased.
Television commercials
Significantly shortened versions of the text were used in two television commercials titled
"Crazy Ones" directed by TBWA's Jennifer Golub with a voiceover narrated by Richard
Dreyfuss.
This commercial aired only once, during the series finale of Seinfeld.
Print advertisements
Print advertisements from the campaign were published in many mainstream magazines
such as Newsweek and Time. Sometimes these were traditional advertisements, prominently
featuring the company's computers or consumer electronics along with the slogan. However,
there was also another series of print ads which were more focused on brand image than
specific products. They featured a portrait of one of the historic figures shown in the television
ad, with a small Apple logo and the words "Think Different" in one corner, with no reference to
the company's products, which atests to Apple's brand recognizition.
2001–present
"Switch"
"Switch" was an advertising campaign launched by Apple on June 10, 2002. "The Switcher"
was a term conjured by Apple, it refers to a person who changes from using the Microsoft
Windows platform to the Mac. These ads featured what the company referred to as "real
people" who had "switched". An international television and print ad campaign directed users to
a website where various myths about the Mac platform were dispelled. The television
commercials were directed by Errol Morris.
73
iPod
Apple has promoted the iPod and iTunes with several advertising campaigns, particularly
with their silhouette commercials used both in print and on TV. The silhouette commercials are
a family of commercials in a similar style that form part of the advertising campaign to promote
the iPod, Apple's portable digital music player. The commercials include television
commercials, print ads, posters in public places and wrap advertising campaigns, and are
unified by a distinctive, consistent style.
"Get a Mac"
The two characters from the ads who personify a PC (left, John Hodgman) and a Mac (Justin
Long).
In 2006, Apple released a controversial series of twenty-four "I'm a Mac, I'm a PC"
advertisements as part of their "Get a Mac" campaign. The campaign was officially ended in
2010.
Since the launch of the original ads, similar commercials have appeared in Japan and the
UK. While they use the same form and music as the American ads, the actors are specific to
those countries.
Sponsorships
Apple is in talks with the New York Yacht Club to be a principal sponsor of an America's
Cup challenge to be skippered by Paul Cayard.
Apple began advertising on FreeRice, a program to fight world hunger, on 7 October, 2007.
74
Criticism
Advertising authorities in various countries took issue with these claims, for example UK
Advertising Standards Authority gave Apple a grilling for each slogan but eventually Apple
was let off the hook because it was actually classing its computers as workstations rather than
personal computers.
Debate continues about whether Apple's use of established visual art to sell its products is
acceptable. Artist Christian Marclay denied Apple the rights to his 1995 short film
"Telephones" to market their iPhone, but then decided against filing suit when Apple ran a
similar ad during the 2007 Academy Awards broadcast.
In July 2007, Colorado-based photographer Louie Psihoyos filed suit against Apple for
ripping his "wall of videos" imagery to advertise for Apple TV. Apple had allegedly been
negotiating with Psihoyos for rights to the imagery, but backed out and promptly used the
imagery anyway.
More recently, Apple has been criticized for its iPhone ads, which depict much faster
network speeds than are realistically possible on current 3G network infrastructure; although
they do include a disclaimer explaining that fact. In August, 2008, the Advertising Standards
Authority (ASA) in the UK had banned one iPhone ad from further broadcast in its current form
due to "misleading claims". The ASA took issue with the ads' claim that "all parts of the
internet are on the iPhone", when the device does not support Java or Flash. However, the
newer iPhone ads show a caption, 'Sequence Shortened' at their beginning.
VI. APPLE’S FINANCIAL ANALYSIS
Income statement analysis for the September 2010 quarter:

This post examines Apple's Income Statement for the latest quarter.
Apple earned $4.64 per diluted share in fiscal 2010's fourth quarter, which ended on 25
September. Earnings per share were nearly 70 percent more than the $2.77 Apple made in the
same quarter of 2009.
In a second article, we will report Apple's scores as measured by the GCFR financial
gauges. The follow-up post will also provide the latest figures for the various financial metrics
we use to analyze Cash Management, Growth, Profitability and Value.
75
Apple sold 7.5 million iPads in the six months after the product's launch date on 3 April
2010.
News reports indicate that Apple in 2011 will start selling iPhones that will work on
Verizon's network. iPhones in the U.S. have always been marketed in conjunction with AT&T.
The "A4" computer chips that run the iPhone, iPad, and some other products are based on
the low-power ARM architecture, but the design was customized by Apple. Samsung (SEO:
005930) manufactures these chips.
Apple's products are sold online and through the company's chic retail stores. Digital
content is made available through the iTunes Store, as well as iPhone and iPad Apps stores.
For fiscal 2009, which ended one year ago, Apple earned $8.2 billion on sales of $42.9
billion. The comparable figures for fiscal 2008 were earnings of $6.1 billion and sales of $37.5
billion.
76
A soaring stock price has elevated Apple's market value towards $300 billion, making
Apple the second-most valuable U.S. company.
In the first quarter of fiscal 2010, Apple revised how it accounts for sales of the iPhone (and
the less important Apple TV). This change, which complies with the latest standards issued by
the Financial Accounting Standards Board, enables Apple to recognize "substantially all"
iPhone and Apple TV Revenue in the period that sales to consumers took place. Apple had
been required to recognize Revenue from these products over each product's two-year estimated
economic life. The "subscription accounting" method resulted in substantial amounts of
deferred Revenue and costs.
Apple, when it made the change, restated earlier results to conform to current accounting
principles.
As has often been the case recently, Apple's Revenue of $20.3 billion far surpassed Apple's
$18.0 billion guidance. The reported amount, a record high Revenue figure for Apple, was 67
percent greater than Revenue of $12.2 billion in the September 2009 quarter.
The following table lists Apple's Revenue by product category.
77
Macintosh Sept 2010 Sept 2009 % Change
Units (m) 3.885 3.053 27.3%
ASP ($) $1254 $1304 -3.8%
Revenue ($B) $4.870 $3.980 22.4%
iPad
Units (m) 4.188 - -
ASP ($) $667 - -
Revenue ($B) $2.792 - -
iPhones
Units (m) 14.102 7.367 91.4%
ASP ($) $626 $625 -
Revenue ($B) $8.822 $4.606 91.5%
iPod
Units (m) 9.051 10.177 -11.1%
ASP ($) $163 $154 5.8%
Revenue ($B) $1.477 $1.563 -5.5%
Other *
Revenue ($B) $2.382 $2.058 15.7%
Total Revenue ($B) $20.343 $12.207 66.7%
"Other Music Related Products and Services" (e.g., the iTunes Store), "Peripherals and
Other Hardware," and "Software, Service and Other Sales."
All Apple operating segments experienced torrid Revenue growth.
Revenue ($B) Sept 2010 Sept 2009 % Change

Americas $7.186 $5.236 37.2%
Europe $5.458 $3.235 68.7%
Japan $1.401 $0.634 121%
Asia Pacific $2.732 $1.061 158%
Retail $3.566 $2.041 74.7%
Total $20.343 $12.207 66.7%
The Cost of Goods Sold(COGS) was 63.1 percent of Revenue in the September quarter,
which translates into a Gross Margin of 36.9 percent. The margin contracted nearly 5 percent
(a hefty 490 basis points) from 41.8 percent in the September 2009 quarter.
78
Although down, the Gross Margin still surpassed the company's 35 percent guidance (made
during July's conference call). Apple now says that "About two-thirds of [190 basis point
better-than-expected Gross Margin] was driven by lower commodity and other costs, and the
remainder was mostly attributable to a better-than-planned mix of iPhone sales."
Research and Development and Sales, General, and Administrative expenses in the latest
quarter summed to $2.065 billion, only 3.2 percent higher than the company's $2 billion
guidance for these Operating Expenses. Because Revenue soared, R&D fell from 2.9 to 2.4
percent of Revenue, and SG&A dropped from 8.7 percent of Revenue to 7.7 percent.
The quarter did not include any separately identified "Other" operating expenses, such as
restructuring charges or asset impairments.
79
Subtracting the various operating expenses from Revenue yields Operating Income of
$5.447 billion, which was 48 percent more than $3.684 billion in the September 2009 quarter. If
the quarter had played out as implied by the Apple's July guidance, we figure that Operating
Income would have been about $4.3 billion.
Net interest and other non-operating items produced income of $14 million. This figure was
less than expected, but the difference is trivial when compared to the company's bottom line.
The 21.1-percent effective income tax rate was significantly less burdensome than the
previous September's 32.1-percent rate. The company's guidance was for the rate to equal 26.5
percent. Apple says that the lower-than-expected rate was due to a greater proportion of
earnings realized overseas and some one-time tax benefits.
Bottom-line Net Income rose by 70 percent to $4.31 billion ($4.64 per diluted share),
compared to (restated) earnings in the year-earlier quarter of $2.532 billion ($2.77 per share).
Apple's guidance suggested earnings of around $3.44 per share in the September 2010
quarter.
In summary, Apple had another exceptional quarter. The top and bottom lines of the
Income Statement have continued to grow at year-on-year rates rarely seen at a large company.
Both figures, Revenue and Net Income, were records for Apple.
The company sold 27 percent more Macs and 91 percent more iPhones. The iPad, in its
second quarter, brought in Revenue of nearly $2.8 billion. iPod unit sales were lower, but the
average selling price expanded. Apple's earnings also benefited from a falling tax rate, as
international sales outpaced those in the U.S.
VII. REFERENCE
http://www.apple.com
http://www.itunes.apple.com
www.nytimes.com
http://en.wikipedia.org
http://rohitbhargava.typepad.com
http://www.wikinvest.com
http://www.informing-arts.biz
80
http://seekingalpha.com
http://bx.businessweek.com
http://www.veille.com
http://metainsights.com
http://money.cnn.com
http://www.roughlydrafted.com
http://ivythesis.typepad.com
http://macdailynews.com
http://www.ifoapplestore.com
http://www.appleinsider.com
http://viewfromthemountain.typepad.com
http://news.cnet.com
http://vnexpress.net
http://www.newyorker.com
http://www.time.com
http://phx.corporate-ir.net
http://www.businessweek.com
http://sec.edgar-online.com
http://www.alacrastore.com
http://fingerfans.dreamhosters.com
http://news.cnet.com
http://www.techcrunch.com
http://www.imgtec.com
http://blogs.computerworld.com
http://www.mbaknol.com
http://findarticles.com
http://www.ifoapplestore.com
http://www.tuaw.com
http://finapps.forbes.com
http://www.financial-gauges.com
http://novriansyah.wordpress.com
81
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The members of Group 4:

1. Trần Thị Hoàng Phượng 082719Q

2. Lai Kim Thuận 080879Q

3. Nguyễn Thị Thanh Lê 082701Q

4. Võ Thỵ Kiều 082698Q

5. Nguyễn Thị Xưa 080888Q

 1985-1997:Sculley, Spindler, Amelio:

 1998-2001: Apple of renaissance:

3.2.2 NeXT Computer

3.2.3 Pixar and Disney

3.2.4 Return to Apple

3.3.2 Stock options backdating issue

3.3.3 Management style

3.8. In popular culture

II. ORGANIZATIONAL ARCHITECTURE OF APPLE

1.2. The Early 1980s and John Sculley

1.3. The Change in Structure

Exhibit 2 presents the organizational chart

1.4 The New Organization without Jobs

Exhibit 3 is an interoffice memo from Sculley introducing the

I am please to announce a new structure which is vastly simplified and

1.5. The present Apple’s structure

The important role of CEO Steve Jobs:

Description of Apple divisions:

Exhibit 1 represents what such an organization probably would

YEAR 1982 1983 1984 1985 1986 1987 1988 1989

An International Business Market Structure

3.2. Culture of Secrecy

3.3. Culture of Innovation

Figure 12. Mac unit sales

1.5. Apple response to the environmental change

Figure 13 Apple perception map

In responding social pressure on environmental issues, Apple recycled 13 million pounds of

3.4. The Threat of Suppliers:

Brand Name X X X X Sustained

Product Design X X X Temporary Advantage

IV. BUSINESS STRATEGY

1.2. Sculley with strategy of low-cost in 1990:

1.3. 1990-1995: Apple vs Microsoft

1.4. 1997-Steve Jobs: Matrix product

1.5. Apple’s present strategy: Product differentiation

Apple’s mission is to deliver a highly innovative and superior solution to a customer’s

For Apple, differentiation encompasses tangible and intangible dimensions. Tangible

Outsourcing Unpleasantness: With Apple products, the average consumer's interaction

Attractiveness: From packaging to aesthetic design to user-interface experience, Apple

4.1. AIM alliance

Date Company Business Country Value(US $)

Date Company Business Country Value(US $)

Date Acquirer Target Target Acquirer country/ Value(US

April 2, Al-Waleed Apple Personal Saudi Arabia 115,000,00

August 6, Microsoft Apple Personal United States 150,000,00

1. Acquired from Power Computing Corporation

V. R&D AND MARKETING

1.1. Marketing tactic

 Products don’t sell. people do.

1.2. iPod Marketing plan

1.2.1. Executive Summary:

2.1. Apple’s R&D:

Apple (AAPL) used their R&D budget very smartly.

2.2. Marketing Research:

3.3. Four Innovation secret of Apple

(by George Ambler on Sunday, September 26,

A “Macintosh Introduction” 18-page brochure was included with various magazines in