Pasca Sarjana Universitas Klabat 2011/2012

Apple Inc, : Taking a Bite Out of the Competitor

Disusun Oleh: Kelompok 5 Managerial Economics Class

Lahamendu, Dwi Mandagi, Anastasya Montolalu, Millyta

Background Apple Inc. Taking a Bite Out of the Competitor Apple computers was founded in Mountain View, California, on April 1976 by Steve Jobs and Steve Wozniak was the technical genius and A.C. Mike Markkula, Jr., who joined the team several months latter, was the businessman. Apple Computer , Inc., incorporate in 1977, sold the first computer with a graphical user interface (communicating with the user via icons on the screen), and had continued to innovate both in hardware and software, particularly when led by confounder and charismatic visionary Steve Jobs. And then in 1977 the first version of the Apple II became the first computer ordinary people could use right out of the box, and its instant success in the home market caused a computing revolution, essentially creating the personal computer industry. In 1980 Apple was the industry leader and went public in December of that year, and in 1983, although not achieving commercial success, innovation was evident in the Lisa, the firs GUI (graphical user interface) computer however it was priced high. And in the same year Wozniak left the firm and Jobs hired John Sculley away from PepsiCo to take the role of CEO at Apple. In 1985 Microsoft subsequently came out with the Windows operating system, a version of GUI for use on IBM PCs when Jobs had given Bill Gates at Microsoft some Macintosh prototypes to use to develop software. Steve Jobs famous volatility lead to his resignation from Apple in 1985, and he founded NeXT Computer. In 1986 Sculley moved to try take advantage of Apple s unique capabilities with introduced the Macintosh Plus with much expanded memory and the LaserWriter printers. Mac s growing reputation with graphic artists, and turning Apple into a worldwide brand. In 1990, Apple still did all design in house and manufactured most of its own products except the microprocessor and some applications software. In 1991, Apple introduced one of the first truly portable notebook computers, the Powerbook 100, to rave reviews. In a further attempt to innovate around the Microsoft and IBM compatible threat, Sculley formed an alliance with IBM and Motorola, intending to use this joint venture to develop a new operating system based around IBM s new Power PC chip. In the 1992, Sculley also secretly authorized Apple designers to create away for the Mac OS to run on an Intel-based computer. In 1993 Sculley was replaced as CEO by company President Michael Spindler. In 1997 Jobs announced an alliance with Microsoft that would allow for the creation for Mac version of the popular Microsoft Office software. In 1999-2001 Apple began acquiring software companies and creating entertainment software products such as Final Cut Pro and DVD Studio Pro video editing programs to complement their reputation as a professional digital imaging destination. And in late October 2001, Apple released its first major noncomputer product, the iPod. In January 2002, Apple reinvented the consumer desktop again when it released its flat panel iMac, and the new product Power Book sold well and the sales of flat panel iMacs remained steady. In 2004 Apple released iPod mini. in 2005-2007, Steve Jobs announced that Apple would begin producing Intel-based Mac computers in 2006. On January 10, 2006, the new MacBook Pro and iMac became the first Apple computers to use Intel's Core Duo CPU. By August 7, 2006 Apple had transitioned the entire Mac product line to Intel chips, over one year sooner than announced. The Power Mac, iBook, and PowerBook brands were retired during the transition; the Mac Pro, MacBook, and MacBook Pro became their respective successors. In 2007, Jobs announced that Apple Computer, Inc. would from that point on be

known as Apple Inc., because computers were no longer the main focus of the company, which had shifted its emphasis to mobile electronic devices. The event also saw the announcement of the iPhone and the Apple TV. And the future of Apple, although Steve Jobs had been credited with Apple s ability to innovate and to appeal especially to a certain type of consumer. And some analysts believed Apple had changed the rules of the game for three industries PCs, consumer electronics and music, and appears to have nothing to fear from major rivals.

Statement of the Problem

Could Apple continue taking bites: gain market share and sustain its profitability in the very competitive computer industry space, while simultaneously extending its reach into multimedia software and personal digital entertainment devices and how?

SWOT Matrix
Strengths (S): 1. Highest brand and repurchase loyalty among other computer manufacturers 2. Creative and fresh ads 3. High innovation and differentiation 4. Provide retail stores 5. Global brand 6. Apple Inc. has Steve Jobs as their national treasure 7. Long-term supplier agreements gave Apple a financial advantage 8. Low debt more maneuverable S O Strategies 1. Increase awareness through the web of the higher immunity of Mac products to worms and viruses. (S2, S3, O5) 2. Advertise using well-known individuals that will link Generation X & Y to the iTunes and other related products. (S1, S2,O3, O6) 3. Keep innovate or develop their product by using information regarding life style and trend (S3, S6, S7, S8, O3, O6) 4. Increase the number of retail stores especially outside the US (S1, S4, S5, O6) S T Strategies Weaknesses (W): 1. Highly dependent on Steve Jobs 2. Consistently ceded market share to lowerpriced Windows-based machines. 3. Incompatible with Windows (Apple to Windows) 4. Limitation to video capability (as for the iPod) 5. Dependency on new product launches 6. Often had trouble keeping up with demand 7. Sometimes had distribution problems during Christmas W O Strategies 1. Increase and promote the compatibility to Window operating system. (W3, O1) 2. Steve Jobs must gradually introduce the other people behind the Apple and also engaged with them in the strategy and product publication (W1, O6) 3. Make alliance with world shipping and distribution companies, such as FedEx and another local shipping companies (W7, O7)

1. 2. 3.

4.

5. 6.

7.

Opportunities (O): Software might be the solution for upgrade problems Expanding use of the Internet to sell products and services. Life style, trend and current issues might inspire the new product Declines in flash memory pricing might gave Apple a financial advantage Increase in worms and viruses on PCs other than Apples Large population (Gen X & Y) which are extremely individualistic and name brand conscious. Strategic alliances might bring advantage for the companies Threats (T)

W T Strategies

1. Saturated market for PC 2. The digital music player market was ambitious and treacherous 3. Further competition came from the blurring of lines between the digital music player and other consumer electronic devices. 4. Other competitors (i.e. Dell) provides a more cost effective rate for customers 5. Recession might affect the sales of Apple, when they price are higher than the others. 6. Sometimes companies not seeing Apple as compatible with their software

1. Promote to business the safety of having a worm and virus free computer by using Mac. (S1, T7) 2. Keep develop the new product iPhone, since mobile phone would be one of the highly responsive products (S3, S6, T3)

1. Using a more cost effective rate for customers ( W2, O4, O5)

Alternative Courses of Action

Alternative 1: Continue to develop and maintain all existing Apples line of products with all of its risks Advantage: Diversification enable Apple to provide a wide range of products Compatibility between one Apple products could support the other Apple products.

Disadvantage: Might not be able to overcome the risk beneath Apple TV that also limited the capabilities of iPod: the differentiation problem Higher financial risk, since it would compete with higher size and already existing firms

Alternative 2: Focus only on iMac + OS X, iPod + iTunes, and iPhone Advantage: Might be able to overcome the differentiation problem between iMac and Apple TV Able to overcome the trend of mobile phone

Disadvantage: The elimination of another Apple products, such as Apple TV might brought negative effect toward the financial bottom line

The post-sales service for customers who use products who already eliminated by Apple might be disturbed

Alternative 3: Decide to collaborate with Microsoft Advantage: Able to assess and attract Microsoft user to use their product Might gain a bigger market share not only in US, but also in another country

Disadvantage: Might hurt their brand reputation as the biggest competitor of Microsoft

Recommendation
Our group choose Alternative 1 and Alternative 3 as the best solution for this case

Action Plan
Develop an alliance with Microsoft, in order to gain access toward their users Increase and promote the compatibility to Window operating system. Advertise using well-known individuals that such as music spokesperson and athlete to attract the upcoming generation who are attending high school and college. This will stay in the customers awareness and influence future purchase decisions. 4. Increase awareness through the web of the higher immunity of Mac products to worms and viruses. 5. Increase the number of retail stores especially outside the US and also provide the accessories 6. Make alliance with world shipping and distribution companies, such as FedEx and another local shipping companies 7. Keep develop the new product iPhone, since mobile phone would be one of the highly responsive products and also develop a new concept of laptop which consider the power of thin 8. Keep innovate or develop their product by using information regarding life style and trend 9. Participate and promote in special events, such as Valentines Day, Mothers Day, and New Years Eve by offering special features, such as engraving for their products 10. Provide more application for their products, such as special social networking for iPhone or special customer home-page for Apple 11. Give benefit for their employees to keep motivate them work better 12. Regularly assess feedback and review the companys strategies overtime 1. 2. 3.