Apple Computers

Group 5

Before 1997
Early Achievements

April fools day, 1976 : Apple Computers

was founded.
Steve Wozniak, the designer & Steve Jobs, the
entrepreneur.

Apple I # Innovation
$666.
Several Limitations

Apple II # Product Development

Oct, 1976 : Started development & Got funded.
Early 1977 :Launched at @ $1200
Continuously updated and launched into the marked.
On the whole 2 Million machines were sold.

Before 1997
Early Achievements

Apple Executed IPO

Sales : $200 M; Profitable.
Apple III
Fall 1980 : Rushed to the market
Crashed Frequently & Filled with bugs
Not a runaway success, Apple II sales
outnumbered Apple III considerably.

Before 1997
Birth of IBM Computers

IBM made 2 attempts but failed in both.

Tried indigenously.

In 1981: Their third try had different approach

Adopted open architecture
Tied up with Intel & Microsoft

Sales were sky rocketing

Lots of 3rd party applications came in.
Industry witnessed lots of IBM clone
manufacturers
Compaq, Tandy, Zenith ,Dell and more

Before 1997
Birth of Macintosh

In 1979 : Jobs visit to Xeroxs PARC.

New Developments
GUI
Mouse
On screen Icons.

In 1980 : Two projects were worked on

simultaneously.
Lisa, High end Business machine
Macintosh, Low end portable machine #initial strategy

In 1984: Macintosh launched

Stylish Design & Easy to Use( Success factor)
No other external hard disk drive, other than a floppy
drive
Few applications were only available

Before1997
Golden years

In 1985
Apple posted its first loss
Sculley Stripped Jobs of his roles. Jobs Quit.

Lisa was scrapped ; Macintosh was updated.

Partnered with Adobe.
Got post script licence
Helped in desktop publishing

Gross margin : 55% for Mac lines.

Positioned Macintosh as niche. #Strategy changed

In 1990
Revenue : $5.6 B
Market share : 8%

Before1997
The crucial debate & Gliding path

Whether to license MAC OS?

Sculley was in favour but most of senior
executives were not. # talk about spindlers move and after
effects.

Early 1990: The Gliding path

New Industry Standard: Intel &
MSDOS/Windows.
Premium pricing not possible; windows 3.1 had
look and feel of Mac OS.
R&D Spend was about 8% whereas others
spent 4%.

Steps taken
Sculley , the new CTO

#A marketing savvy to handle technical stuff!! Is it a

good move???

Low cast Macintosh to compete with IBM

clones
Price cuts for Mac to $999
New products in every 6-12 months
Late 1991 : Apple PowerBook
Apple Newton

Alliance with IBM(2 JVs)

Taligent, to develop new OS.
Kaleida, to develop Multimedia Applications
Result : Boosted top line; bottom line shrunk
SCULLEY LEFT!

Spiralling problems
After Sculley, it was Spindler and
then Amelio.
Acquired NeXT, a computer company
started by Steve Jobs for $ 425 M
#inorganic way
Market share slumped to 3%
Booked loss of $742 Million.
Result??? Return of STEVE JOBS

1997-1998
Return of the Saviour

CEO: Steve Jobs

Deal with Microsoft
Microsoft to invest $150 M, develop office
till 2003 for Apple.

Reduced product lines to 4 from 60.

Introduced iMac
Differentiating factor: Design.
Price : $1299
First time buyers

After 1998
New offerings
Introduced iBook
Apple back on track
In 1999
Sales : $6.1 B
Profit : $470 M

In 2000
Sales : $8 B
Profit : $611 M

In 2001, developed OS X.
With the help of NeXT.
To jobs surprise none was willing to develop applications
for OS X.

Started developing own applications

Final cut pro, iMovie, iLife, iTunes digital juke box.

Despite all efforts # 2005

Market Share
18%

49%
16%

2% 4%
6%
5%
Dell

HP

Lenovo

Acer

Fijutsu-Siemens

Apple

Others

After 1998
Retail: The new way

In 2001
Opened first retail store
Patented its design

2005
137 locations
Revenue : $2.3 B
Profit : $140 M

Performance Evaluator
Sales/sq.Ft = $4000

After 1998
iPod Revolution

In 1999
Sales of Music : $ 38.5 B
In 2000 it is $ 32 B; In spite of mass copying
and piracy

In 2000

No CD
burner/software for
Mac

Portable MP3 player

that stores music

Peer-Peer computer
networks
iTunes

iPOD

After 1998
iPod Revolution

1.8 Inch hard drive from Toshiba stored

1000 songs
iPod, the new fashion accessory
Elegant design with a stunning interface

Introduced in October 2001 to mixes

reviews at a price of $399 ($546.75 adjusted to
inflation)

Consumers willing to pay for capacity

iTunes - Windows version Sales took off
Jobs persuaded major studios and artists to
support iTunes business
2003 all major labels in iTunes

After 1998
Sales of Apple in Millions
2004

2003

11%

11%

10%

10%

1%

3%

6%

59%
16%
72%

Computers

iPod

iTunes

Softwares

2005

Peripherals

Computers

8%
8%

6%
45%

33%
Computers

iPod

iTunes

Softwares

Peripherals

iPod

iTunes

Softwares

Peripherals

After 1998
Intel + Microsoft
In 2005
Partnered with Intel & Microsoft

Apple need to rewrite its old

application
Instead developed Rosetta, which
helps Mac to run on intel processor

Sales during transition period was

low.
Bootcamp
Windows OS on Mac

BCG Matrix

iPod

Computers
(Mac)

SWOT
Matrix
[Apple Inc.]
(Yr 2006)

Strengths [S]

Opportunities[O]

Concentrate on B2B business

(Government & Educational
Org)(1)

Introduce low cost products to

compete with Dell & HP.(2)
Growing need for compact
devices(3)

Threats[T]

Weaknesses[W]

Inorganic growth by

competitors(4)
Industry Standards driven by
Microsoft(5)
Aggressive marketing by Dell
& HP(6)
Intense competition in music
industry(7)

Innovation(a)
Design(b)
Brand Loyal Customers(c)
No duplicates and hard to
crack(d)
Cash Rich (e)

SO Strategies
Produce customized products
for organizations (a,b,d,1)
Develop new products using
its Innovation and design

expertise
( a,b,c,e,2,3)

High R&D spend as a % of

revenue(f)
Being Positioned as niche(g)
Low market share in
computers(h)
Not much 3 party App
developers(i)
Less No. of product lines(j).

WO Strategies
Increase product lines to
tackle growing needs of
compact device (j,3)
Improve sales on Mac by
cutting down the price to
compete with competitors.
(h,2)

ST Strategies

WT Strategies

Pursue inorganic growth to

battle competition (e,4,6)
Develop new marketing
programs for loyal/existing
customers(c,e,7)

Issues
Can sales of Mac improve?
Can iPod sales increase Mac sales?
What will be the long term
competitive position of Apple?