The rise and fall and rise of Apple.

Starting Apple:
On April 1st, !976 Apple Computer Inc was officially incorporated by the State of California as a business. It was founded by Steve Jobs & Steve Wozniak, and their first product was the Apple I, one of the first computers to use a television as the main output display. In 1980 the company went public, the IPO generated more capital then the Ford IPO in 1958, and created over 300 instant millionaires In 1981 Steve Jobs managed to find his way into XEROXs PARC research lab, the idea for the first mainstream GUI (graphical user interface) was born In 1982, the current Apple President wanted to retire, and Steve Jobs began talking to John Sculley of Pepsi to take over as CEO. The argument that finally won Sculley over to Apple came when Jobs asked Sculley if he wanted to "sell sugar water for the rest of your life or come with me and change the world?" In 1984 the Macintosh was launched, and with it Apple established its marketing credentials, when its 1984 commercial, directed by Ridley Scott, became known worldwide and is often seen as a watershed event. However, Jobs had predicted sales of up to 20 million Macs in the first year, yet only 250000 were sold by early 1985. Sculley removed Jobs from his managerial duties. Steve Jobs responds by trying to oust Sculley as CEO, a boardroom battle occurs and the board unanimously stands by Sculley, and Jobs resigns. Sculley now started acting on his own and implemented a much needed reorganization. Until then, Apple had been organized by product. Each division had its own marketing team and design team operating independently from the other divisions. Before Jobs left, the Macintosh and Lisa were merged into a single division, Apple SuperMicros. The other two major divisions were the Apple II and Apple III. These divisions were almost at war with each other. The engineers would not communicate with each other, and as a result there were lots of superfluous projects. Worse than that, the marketers didn't talk to each other, causing different projects to target the same audience (Apple III, Apple IIe, and Lisa) and actually compete with each other.

To solve this, Sculley implemented a more conventional structure based on function. All product development would take place in one division. The engineers would collaborate with marketers, who were in their own division. Then the product would be manufactured and sold in two more divisions. The heads of the divisions all reported directly to Sculley. This organization would yield Apple its biggest growth, percentage wise, in its history prior to the return of Steve Jobs in 1997.(1)

The fall:

Apples failure in the mid 1990s is one of the most publicized failures of a large corporation. With the advantage of hindsight and to simplify the process of the failure we can take a look at a SWOT analysis of Apple, if done circa 1996. Strengths The Apple brand is one of the strongest brands in the technology sector Apples rivals in the PC sector rely on Microsoft Windows, and Intel and AMD reference designs to produce their laptops and PCs. Apple controls every aspect of the design process

Weaknesses Higher R&D costs than the industry average Higher channel costs than industry average Niche player in PC industry when market share is taken into account Apple is hemorrhaging markets to rivals such as Dell and HP, which are producing designs based on the successful Microsoft Windows and Intel x86 architecture Apples line-up is suffering from poor positioning and marketing Newton, Pippin and other projects have cost Apple more than $1 billion in development, sales are lagging behind competitors Apple has lost the vision and leadership capabilities of people such as John Sculley and Steve Jobs Analysts have long been fixated with Apple's market share. However, limited market share wasn't Apple's real problem. That's why attempts to "fix" Apple's market share--by following strategies which worked in the PC world--didn't work for Apple.

Opportunities

Apple could leverage their brand better to reignite the following they had during the 1980s Apples recent purchase of NeXt gives them the opportunity to overhaul their OS and integrate the best of the two Simplifying the lineup could free up funds and provide a market exit for unprofitable products

Threats Open source operating systems could gain a foothold in traditional markets. Apples market share is threatened further by Mac OS clones, which are licensed designs from rivals such as Motorola, which produce them at lower price points than Apple is able to do If Apples share price and earnings decline further they will no be able to continue doing business as an independent entity.

Apples Hierarchy of Scepticism

In 1998 Steve Jobs laid out the basic framework for Apples recovery. He based the model he was to use and follow upon Abraham Mazlows Hierarchy of Needs.

Survival
Implementing a new management team with experience, some of whom worked with Apple during their 1980s heyday A new board of directors with experience in the technology sector Apple did a deal with Microsoft, whereby Microsoft would provide its line of immensely popular suite of Office products for the Mac, and invest $100 million in Apple in return for nonvoting stock

Stability
Apple then proceeded to deliver profits for the first time in over 4 years, starting in the first quarter of the new management team This was achieved mainly by cutting R&D from over 100 projects down to just 10 Apple re-aligned their distribution network, including working with CompUSA, and setting in motion plans for the opening of Apple branded retail stores Apples brand revival through the Think Different Ad campaigns Opened an online store for direct sales Apples market cap rose from $1.8 billion to $4 billion by 1998

Strategy - Apples strategy was on of simplification reducing product lines from 15 diverging line to just 4 Apple Lineup 1998 desktop consumer pro

iMac

Mac Pro

portable iBook Powerbook

Apple would cut development time from 18months to 9 months Apple would now be able have two generations of the product in development at all times, whilst cutting R&D and staff Moving from Mac OS 8 to Mac OS X Diversification through its iPod line-up

Apple went from strength to strength from 1998 onwards, and in 2011 surpassed Google to become the largest technology company by market capitalization, reaching over $330 billion in August. A SWOT analysis of Apple now showcases the differences within the company, mainly its new reliance on iOS products, as well as exposing some of its traditional weaknesses and new threats. Strengths Closed ecosystems within iOS and OS X gives total control of user experience from R&D to retail sale. The current product-mix is class-leading The Apple brand is one of the strongest brands in the technology sector, and has an almost cult-like following among enthusiasts Apples rivals in the PC sector rely on Microsoft Windows, and Intel and AMD reference designs to produce their laptops and PCs. Apple controls every aspect of the design process, allowing them to create a superior user experience The Apple retail outlets are some of the most profitable stores in the world, with sales of $14.14 billion so far in 2011 iOS enjoys unprecedented developer support

Weaknesses

Higher R&D costs than the industry average Higher channel costs than industry average Niche player in PC industry when market share is taken into account The recent loss of Steve Jobs, one of its founders and CEO, could lead to a loss of direction in the future

Opportunities iPhone, bootcamp, and virtualization could signa re-entry into corporate sales iOS market share could be increased through iPhones and other iOS devices at multiple price points Apple TV could become dominant TV player, Tivo, the current market leader has many weaknesses that could be exploited by Apple TV 3.0 or 4.0.

Threats Highly dependent on consumer purchases which are more likely to contract during slow economic periods - Record/Television/Movie content providers are key suppliers and act as if they were sole sources, giving them considerable power to impact Apple earnings. S - Open source operating systems could gain a foothold in traditional markets. - Googles Android is already the largest mobile phone OS, appearing on a large number of handsets at all price-points. This could threaten Apples position in the premium sector, and increase barriers to entry in lower sectors Losing market share in mobile devices could see Apple lose developer support, -