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INTRODUCTION Organization of Apple was established in 1976 as a computer company.

However, in the last decade, Apple has expanded into a complex company that specializes in much more than just computers. In 2001, Apple broke the barrier with the iPod, eventually becoming the dominant market leader in music players. In following, Apple joined the phone industry in 2007 with the iPhone, which has also been widely successful. Apple is known as a consumer goods company; therefore evaluating its value requires understanding its products and consumers. This would be very challenging where Apple competes with many different companies throughout the different industries it takes part in. Apple has established a unique reputation in the consumer electronics industry since it is flexible from its philosophy of comprehensive aesthetic design to its distinctive advertising campaigns. The unique characteristic about Apple is that it has a very strong customer base, which is extremely important in understanding Apple. Meanwhile, more press is associated with their CEO; Steven P. Jobs (Apple chief executive) who is seen as the architect of many of Apple's amazing products, and the reason for their success due to his presentations at Apple's media events that are electrifying and revolutionary. Given his superstar image, his status and health as Apple's CEO ties into how investors value Apple. For instance, earlier in the year there was an inaccurate report that he sustained a heart attack, and rumors flew through the internet, briefly dropping Apple's stock price 5%. Apple's major products are considered as iTunes, TVs, Macintosh computers, software iPod and recently iPhone.

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Executive Summary

Apple is a product-cycle-driven company. If it introduces the appropriate products, it will gain share in the consumer market, even if that market is flat year after year. Apple has developed a set of strategies, which will continue to grow its base of Mac users and Apple consumers over time. Apple has faced challenges competing in an extremely competitive market. However the company has overcome the majority of these challenges by changing strategic focus and entering the high end consumer market. Overall Apple has pulled itself out of maturity/decline back into the growth stage. An important element of Apple is its ability to differentiate itself from its competitors with the combination of introducing new innovative products and implementing aggressive marketing tactics. If Apple continues to improve their strategic management, marketing, human resources, production, and financial position, they will be successful in catering to their target market.

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Research Methodology Apple Inc. is a leading brand in the global marketplace of portable media players with such famous products as iPod, iPhone and iPad. Apple is an innovative computer company that employs about 49,400 employees (Apple Inc, 2010). The companys product portfolio includes Mac hardware products, music and movies available from iTunes stores, IPhone, IPad, IPod, displays and peripheral products, Apple TV, and a range of operating system software, and application software. Apple is a highly innovative company and innovation is achieved through adding extra features to the existing products, as well as introducing totally new products to the marketplace. Product differentiation is the main strategy pursued by Apple and this is achieved by mainly offering fundamentally innovative and groundbreaking products to the marketplace. For example, before iPod, iPhone, and iPad were introduced to the market by Apple there were no similar products in consumer electronics market that combined so many functions in them, and this fact has given first mover advantage for Apple, at the same time providing opportunities to charge high process for these products. In this sense it can be stated that Apple is the market leader in consumer electronics industry in terms of benefiting from product differentiation strategy. Moreover, Crum and Goldberg (1998) state that Apple computers have followed to the strategy of product differentiation in its extreme, by placing its Mackintosh brand computers as the most user-friendly computer in the market, at the same time ensuring that Mackintosh can work only with specifically designed software for it. In this way it can be seen that product differentiation has been the main strategy for Apple from the day of the formation of the company, and the efficient adherence to this strategy on the basis of technological innovation has ensured leadership position for Apple in each market the company operates in.

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Company History On April 1 1976, Steven Wozniak and Steven Jobs had decided to sell the machine named Apple I, designed by Wozniak. It was not until 1977 when Apple II was introduce at local computer trade shows that people actually notice it. The Apple II was an impressive machine that came in a plastic case and includes color graphics. With the invention of the inexpensive Apple Disk II (floppy drive), Apple sales has further increased ever since. In 1980, when Apple III was released, the company has expanded to several thousand employees and began selling computers abroad. In 1981, IBM released its first PC. The PC quickly began to dominate the playing field. Jon later had realized in order for his company to compete in the market, Apple would have to be a grown-up company and figure he was not the ideal man for the job. So in 1983, Jobs began to invite John Sculley, then president of Pepsi-Cola. In April, Sculley became president and CEO of Apple. On January 22, 1984, Macintosh was introduced and sold well until users were fed up with the small amount of Ram and lack of hard drive connectivity. So around the beginning of 1985 was when Jobs and Sculley began to argue. Jobs believed that Sculley knew nothing about the computer industry and did not put a lot of effort to learn. While Sculley believed that Jobs was dangerous and out of control. For this reason, Jobs then switched over to managing the Apple Macintosh project. In May 1985, Jobs convince Sculley to schedule a meeting in China, and decided to have a boardroom rebellion while Sculley was gone. Information leaked to Sculley which lead to an argument between them two. Later Jobs resigned and Steve Wozniak returned to college, leaving Sculley as the head of Apple. At the same time Microsofts Bill Gates introduce the Windows 1.0, which had many similarities to the Mac GUI (graphical user interface). It was not until Mac twin inventions of the LaserWriter, the first affordable PostScript laser printer for the Mac, and PageMaker, one of the first Desktop Publishing programs ever that made them back in the game. In 1987, the Mac II, Apple was shipping 50,000 Macs a month. This did not last long until 1990, where the market was saturated with PC-clones of every conceivable configuration and Apple was the only company selling Macs. Apple was experiencing difficulty providing both hardware and software to drive an industry. In 1991, Apple released its first generation of PowerBooks which was a success. In the meanwhile, the PDA-Newton were being ready to be released in August 1993, but was a failure due to the extremely poor hand-writing recognition (2.1 MB). Sculley began to lose interest in the day-to-day operations of Apple. In June 1993, the Board of Directors relieved Sculley of his position as CEO, putting Spindler in the big chair. Sculley eventually resigned after being chairman for several months. In 1994, Apple co-developed with IBM and Motorola to produce an extremely fast processor which ran on the PowerMac family based on the PowerPC chip. This powerful chip has enabled Apple to be able to surpass the speed of Intels newer processors.
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By June 1995, another obstacle Apple was experiencing was not selling computers but instead it was building them which led to them to $1 billion dollars in backorders. The problem grew worst as Windows 95. Due to the external and internal pressure, Apple took its worst plunge ever in the winter of 1995-96, to pushed low-cost Performas over mid-range PowerMacs. This incident had cost Apple a $68 million loss for the quarter. In January 1996, Spindler was asked to resign as CEO and was replaced by Gil Amelio, the former president of National Semiconductor. Amelio has split the company into 7 separate division, each responsible for its own profit or loss. There has made tremendous efforts to bring down the losses. In late December 1996, Apple made an announcement that it will be acquiring NeXT and that Steven Jobs will return back. This merger was to acquire NeXTstep, which is going to be the basis for Apples next-generation OS, which was schedule for a 1998 release. In early July 1997, Apple announced the resignation of Gil Amelio and in the meantime, Fred Anderson, Apples CFO has been put in charge of day-to- day operation. Jobs were also given expanded roles at Apple for interim. Jobs began to make striking changes in the structure of Apple and were referred to as interim CEO. Jobs also announced an alliance with Microsoft for a 5 year patent cross-license and more importantly, a final settlement in the ongoing GUI argument. In order to gain back its market share from the Clones Vendors such as Power Computing. Apple also announced to buy out Power Computings MacOS license. On November 10, 1997, Jobs implement a new selling strategy making computers available to purchase both over the web and the phone. The Apple Store was a runaway success, and within a week was the largest eCommerce site on the web. For the first time ever for Apple it had a net profitable First Quarter of $44 million. In April 1998, $57 million and by July 1998, it rose as high as $101 million, pushing Apples stock to several 52-week highs in just a few years. The iMac was the best selling computer in the nation for most of the fall. In January 2000, Jobs unveiled Apples new Internet strategy: a suite of mac-only internet based applications called iTools and an exclusive partnership with Earthlink as Apples recommended ISP. Jobs also announced that he would be dropping the interim from his title, becoming permanent CEO of Apple. In the second half of 2000, Apple experience slower sales as well as the industry as a whole. One of the major contribution was the high price of the G4 Cube compared to Apples other product. Another factor was the DVD-ROM drives in their consumer and professional machines instead of CD-RW drives. This has resulted in missing sales opportunities to customers who wanted to burn their own CDs. So in January of 2001, Apple announced a new line of PowerMacs, which included a new SuperDrive which could read and write both CDs and DVDs. These were all part of Apples new corporate strategy during the slow time in the Technology industry. They also take advantage of introducing the personal electronic devices-CD-players, MP3 players, digital cameras, DVD- players, etc. by building Mac-only applications that added value to those devices.
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In May 2001, Steve Jobs announced that Apple would be opening a number of retail stores across America, selling not only Apple computers, but various third-party digital lifestyle products such as mp3 players, digital still and video cameras, and PDAs. In the meantime, major update to the iBook line, a smaller and lighter design was in progress. In the Fall of 2001 brought new revisions to the PowerBook G4 and iBook which sold extremely well. In late October, Apple introduced its first non-computer in several years, the iPod. The iPod was a small hard-drive based digital music player and represented Apples first hardware addition to its digital hub strategy. In 2002, Steve Jobs announced that free iTools would be rolled into a new subscriptionbased dotMac service. In January 2003, Apple release iLife, a bundled software package that included iTunes, iPhoto, iMovie and iDVD, for $50. Apples financial troubles continued throughout 2002 due to the weak PowerBook and PowerMac sales. In 2003, Apple however began to recover, and to build for the future. In the meantime, the iPod was beginning to take off. In April of 2003, Apple unveiled the iTunes Music Store, which would sell individual songs through the iTunes application, for 99 cents each. These songs could only be played only on Macs or iPods. In October 2003, Apple released iTunes for Windows with the user-friendly Windows version of iTunes which include both iPod and Music Store. In the first year alone, the iTunes Music Store sold more than 70 million songs. iPods had moved from expensive to toys to must-have Christmas presents, and Apple found itself in the position of having a monopoly for the first time in several decades.

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Analyzing the Computer Industry After analyzing the industry, it is clear to notice that the market itself has reached the level of maturity. At this current level, the dominant operating strategy for firms would be to maintain sales by product differentiation and by managing cost efficiently. The most recent concentration ratio of 45 percent (CR4=45)1 also indicates that the top four industry giants only command an average of 11.25% per firm of market share. The present loose oligopoly nature of the industry also indicates that there is an intense level of rivalry among players, that is, there are number of firms offering close substitutes and firms are forced to engage in price wars in order to generate sales, consequently depleting profit margins. Currently, Dell is leading the market with highest sales of PCs in the United States, and being the dominant firm in industry Dell acts as the price setter. Due to these conditions it is clear to see that Apples long term survival is going to depend on innovative product differentiation and heavy marketing campaign if it chooses to remain within this industry. So why is it that good products can fail and inferior products can succeed and why is it so hard for computers to innovate?

According to The Invisible Computer, a successful innovative product must be balanced: marketing, technology and user experience must all play critical roles, but one cannot dominate the others. Different factors are important at different stages in the life cycle of computers. In the early stages, technology dominates. All that matters in that stage is better, faster, cheaper and more power. In the middle stages, marketing dominates. And finally in the maturity stage, where the computer industry is at now, technology is a commodity, user experience dominates over everything. Consumers want convenience and value for their money, ease of use and emotional appeal. Computer companies, such as Apple Inc, to maintain their position of their share of the market, try to create innovative products

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The Five Forces Impacting Industry

Number of Competitors

Stabilized Prices

Firm Rivalry (HIGH)

Slow Market Growth

Industry Profits are low.

Substitute Products (MEDIUM)

Product Sensitivity

There are a numerous competitors within the industry offering similar products. The high competition is causing firms to stabilize prices in order to produce sales. The stable prices have lead to small profit margins. Currently, the computer market is in maturity as compared to the boom in sales a few years ago and is therefore experiencing a very slow growth rate. Also, in attempt to increase sales, firms are engaged in aggressive promotion strategies which could lead to the occurrence of prisoners dilemma which will further reduce profit margins. There are not many other products that can offer the same satisfaction, of using computers, to customers. However, there are some considerations. The new cell phone technology is slowly merging the applications used in computers into the handset. E.g. Nokia 9500 and Palm. Also, if computers were solely used for entertainment purposes,

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Brand Sensitivity Power of Buyers (Low)

Buying Groups

Capital Requirements

Market Condition Threat of New Entrants (Low)

Potential Profits

whether it is gaming or graphic design, the threat of substitutes would indeed be a credible threat. E.g. Playstation and Xbox Luckily, the applications and uses of a computer can only be offered by the device itself. The demand for having a device with numerous functions can only be met using a PC and this prevents any lost sales by substitute products that satisfy this function. Although brand names are a key sales driver in this industry, it seems that their affect on sales is relatively minor as compared to the affect of prices. This also relates to rivalry within the industry. There could be possible buying groups in the Education market that force Apple to give purchase discounts. Difficult to enter the market because of the large financial requirements to manufacture the products. The market seems to be in an equilibrium condition, that is, the demand for computer products is approximately equal to the supply, and therefore entry into the industry is not worth the large capital requirement. The monopolistic competitive nature of the industry does not generate profit opportunities for firms and makes this industry less attractive for new entrants. The power is low due to the Page | 9

Power of Suppliers

Supplier Concentrations suppliers being competitive to gain customers to manufacture products for. Suppliers manufacture goods that are not final end products, thus not needing to open retail stores to sell products.

(LOW) Vertical Integration

The analysis above clearly indicates that companies are indeed sitting in a comfortable position in the industry and paying for that comfort with low profits. In order to generate increased revenue the companies would have to redevelop there strategies and target other industries where there is low market presence and high opportunity. Apple saw this opportunity and capitalized on it with the creation of the iPod. The iPod is a small hand help computer device that stores MPEG 3 files. The iPod ranges from 10 gigabytes to 40 gigabytes in size and can hold anywhere from 2500 songs to 10000 songs. As the iPod emerged in the markets, Apple captured a niche in the emerging digital music industry. Through its innovation and creativity Apple has broken out of its box as a boutique computer maker and emerged as a force to be reckoned with in consumer electronics and music. The iPod success has generated revenues up to $3.5 billion through the world wide sales of 4.6 million portable music players. This success has moved Apple from a company with a minuscule PC market share to achieving market shares of 65%, 70% and even 90% in other industries. Being the first of its kind, the iPod, allowed Apple to diversify from a competitive market into a new flourishing industry where Apple has become a dominant player, setting the standard for new entrants (potential rivals). The success of the iPod has put Apple back on the map and placed them in ideal position within the industry life cycle. With consumer demand rising and Apple being the dominant supplier, they have capitalized on large profits by setting premium prices. Looking at Apples future strategic paths, it seems that Apple is using its resources to diversify and enter into different industries where the markets are not as saturated as the computer industry. Most companies have finally understood that success is not merely producing a product that does the job, but is being able to bring ideas, bits and pieces if you will, from different industries then putting them together to come up with something new and innovative that ties into peoples needs or lifestyles.

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SWOT ANALYSIS OF APPLE Strengths Professional notebooks Financial position Brand R&D spending Customer retention Weaknesses Professional desktops Cannibalization of products Supply of raw materials Reliance on US/iPod sales Lawsuits Opportunities New product development Expand retail operations Grow international sales Wireless products iPod/ Music downloads Threats Strong competition US education market Demand for IT products

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Strengths Professional notebooks Sales of Apples professional notebooks have been strong in recent times. The companys sales in this area have been boosted by sales of its 12 and 17- inch models. The continued strong sales performance of Apples 15-inch notebook has also boosted the companys sales in this area. In 2003 sales of Apples PowerBook increased by 56% to $1,299 million overtaking PowerMac as the single largest product contributor to total revenues, helping to drive overall growth for the company. Financial position Please refer to the Financial Analysis section of this Report. Brand The Apple brand is well regarded amongst most consumers. When thinking of Apple computers, the words innovative, easy to use, and trendy. Apple also enjoys a high level of brand awareness and brand recognition for its products throughout the markets in which it operates. High brand awareness and brand recognition of Apples products will help to drive sales of the companys products. Apples strong brand name helps create barriers to entry within the market and differentiates the company from its competitors helping to guarantee future sales. Research &Development Spending Apples research and development expenditure totaled $471 million and $446 million in fiscal 2003 and fiscal 2002, respectively. Rapid technological advances characterize the personal computer industry, so Apples ability to compete successfully is heavily dependent upon its ability to ensure a continuing and timely flow of competitive products and technology to the marketplace. Continued R&D expenditure should see the company continue to develop new and innovative products to drive company revenues. Customer retention As Apple is the only PC vendor in the industry that designs and manufactures its own hardware and system software, they are able retain its customers more easily than other companies in the industry as it releases fresh products compatible with their existing PC. Providing the company can maintain the quality of its new product developments to the same standard as the rest of the industry, the company should be able to record a high level of customer retention.

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Weaknesses Professional desktops Apples professional desktops business has experienced sluggish sales in recent times. Sales of the companys PowerMac products have fallen by around 20% year- on-year to drop to their lowest level for a number of years. If future unit sales fail to partially or fully recover, it will be difficult for Apple to improve its overall profitability. Supply of raw materials While most of the companys raw materials are available from a number of sources, other materials tend to be only available through a limited selection of suppliers, and as such, the company is susceptible to a supply risk for key components. Also, Apple must contend with price fluctuations to ensure the continuity of supply, as pricing pressures and industry competition may drive up the cost of raw materials. Should problems with supply vendors occur, Apples ability to produce its products in a timely manner may be adversely affected. Therefore, Apples reliance on a small number of suppliers will not benefit the company. Reliance on US sales The United States represents Apples largest geographic marketplace. Approximately 51% of the companys net sales in fiscal 2003 came from sales to customers inside the United States. This focus on the US market makes the company more vulnerable to adverse localized market conditions that may affect the revenues and profits generated by the company. Apples reliance on the US market possibly means that the company could be hit badly if any economic downturn affected this particular country. Lawsuits Apple is subject to certain legal proceedings. Claims could have a material adverse effect on its financial condition, liquidity or results of operations. Unresolved cases include issues such as patent infringement, false advertising and unfair business practices. These legal issues represent a considerable threat to Apple, as the companys insurance may not be sufficient to settle some of the more costly cases that could possibly arise.

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Opportunities New product development One way in which Apple could stimulate demand in the marketplace is to develop new products that more closely match customer needs. Apples research and development spend should enable it to develop new products. For example, Apple has developed the PowerMac G5, which is the worlds first 64-bit PC. The company hopes that the release of the product will stimulate demand to boost its professional desktop revenues and its overall company revenues. Expand retail operations Since inception of its retail initiative in 2001, Apple has opened over 65 retail stores in the United States. One of the main goals of the retail initiative is to bring new customers to the company and expand its installed base through sales to both first time computer buyers and those switching from other computing platforms. Additionally, the stores provide a forum in which the company is able to present entire computing solutions to users in areas such as digital photography, digital video, music, childrens software, and home computing. Apple has attempted to locate its stores at high traffic locations in shopping malls and urban shopping districts. The company could look to open more retail outlets in order to increase the coverage of its stores in the US. Increased store coverage may mean Apple could potentially further expand its installed base through sales to both first time computer buyers and those switching from other computing platforms.


Threats Strong competition Apple is confronted by aggressive competition in all areas of its business. The market for the design, manufacture, and sale of personal computers and related software and peripheral products is highly competitive. This market continues to be characterized by rapid technological advances in both hardware and software development, which have substantially increased the capabilities and applications of these products, and have resulted in the frequent introduction of new products and significant price, feature, and performance competition. Over the past several years, price competition in the market for personal computers has been particularly intense. Apples competitors who sell Windows- based personal computers have aggressively cut prices and lowered their product margins to gain or maintain market share in response to weakness in demand for personal computing products. Apples results of operations and financial condition have been, and in the future may continue to be, adversely affected by these and other industry wide pricing pressures and downward pressures on gross margins. The principal competitive factors in the market for personal computers include relative price/performance, product quality and reliability, design innovation, availability of software, product features, marketing and distribution capability, service and support, availability of hardware peripherals, and corporate reputation.


Human Resources Analysis Background of APPLE In the last two decades, Apple computer went through many changes in their product line, corporate direction, corporate mission, corporate strategy and most importantly, their management system. In 1990, executives at Apple Computers realized that the company needed to focus on volume and employ a strategy to increase market share to fight off price wars as the computer industry became more competitive. The Human Resource department saw this as a management opportunity to transform itself as they change their business model. This plan required operating expense to also be lowered leading to profit margins to go down. The Vice President of Human Resources played a key role in providing a persuasive vision and strong leadership. The Human Resource Management team also did a good job of managing the growth of employee expense while maintaining an aligned and committed workforce. This became beneficial as they did not foresee how far the margins would go down. Even though Apple experienced some difficulties in its industry, advancement in technology was still at the front position. Apple has put in astonishing work to align business with its Human Resource function. The Human Resource function's mission is to contribute to the companys success by building up a outstanding working environment that draws and hold on to outstanding employees, support their position and loyalty, and encourage them to do extremely well. Apple Computers Human Resource function to acquiring its mission requires: Take an active role with management in developing the philosophies and strategies that define the working environment. Be the keeper of the strategy for maintaining employee alignment and commitment; maintain the policies, programs, and processes that support employee alignment and commitment. Keep management aware of any changes in the alignment and commitment of the critical asset its people.


Role of Technology Apple thinks that the use technology vital and all employees must have access to it; therefore, they created technology-based tools to improve employee and management efficiency. Using technology, Human Resources was able to reducing clerical and transaction expense. Change Approach Provide all employees with access to technology Transform routine but critical work activities Provide information on demand Change communications patterns Create tools for self-sufficiency

Eventual Benefits of Change Reduced clerical/transaction expense Increased knowledge-based problem solving More resources to leverage across organizations Higher level of customer satisfaction Increased productivity through standardization

Employee Help Line. The new service delivery model that is a essential tool for HR is the Employee Help Center, which deals with daily employee concerns and counseling. The Help Center consists of a group of 14 people who are trained in Apple policies and procedures. In addition online Internet support accessible as well. Complicated questions and situations are forwarded to a group senior HR staff. Lastly, for more serious matters face-to-face investigation may be required. In the last year, The Employee Help Line obtained about 165,000 calls. Shifting HR transactions to the line. Apple HR is uses technology focus for people management. HR is used the Macintosh desktop technology to transfer all traditional administration and documentation operate business. By doing this, HR is able use their time efficiently to help managers develop and apply the skills they need to manage their people resources. With the use of The Employee Help Line managers are able to perform this role. With the use of the internet technology, Apple uses On-line applications handle manageremployee transactions. These include compensation changes, promotions and demotions, and performance reviews, to adding someone to the payroll. The only transaction that HR must get involved in is involuntary termination. In addition, all policies and procedures are available on-line.


Critical Success Factors Be an intelligent, sensitive voice in helping the enterprise resolve the dilemma between pragmatism and humanism as you compete globally in the 1990s Become obsessed with customer services. Be committed to innovation and finding new ways of doing work. Become obsessed with the relevant use of technology to drive management, HR, and employees to become more self-sufficient. Be expert in: o Workforce dynamics o Employee development and career management o Evaluating management capabilities o Facilitating organizational change Become much more quantitatively focused in adding value to the business. Continuously examine your assumptions and strategies for the role of the HR function and how it supports the business. New Values We will strive to offer an exciting environment that stimulates creativity and a high degree of personal involvement. We want individuals to participate in the success and the risk associated with being with a dynamic enterprise We will strive to provide opportunities and support to increase individual employability We will strive to be honest, truthful, and open in all our interactions. We will encourage and provide incentives for individuals to prepare for long-term financial needs We will ensure that you have protection against catastrophic events. When necessary, we will provide a helpful and respectful bridge into the future.

The Changing Nature of Employer/Employee Expectations When Apple went through major change, employees at Apple became concern about their job security and their expectations of the company. Change was a threat to them because they feared the possibility of losing their jobs, and their expectation of the company needed to be addressed. During this time, many employees were re- evaluating their identity and commitment to Apple. In addition, many in the Human Resource Management thought that they had did a poor job in preserving their corporate culture. Also they experienced role in conflict being either employee supporter or manager supporter. The Human Resources of Apple thought it would be important to talk about current issues in Apple, instead of the pass problems.


Production Analysis Maturity Stage For companies that are currently in the maturity stage of the industry life cycle, it is important to improve the product and reduce operating costs. In order for Apple Inc. to grow and increase market share, they must be more proactive about technological changes in the market. However, Apple Inc. would not be able to survive if they continued to produce only computers with its Macintosh line of computers. So in order to be successful, the company must concentrate in attempting new products. Transition When products mature, the company must work to extend the life cycle by introducing product variants; new and improved or additional add-ons or features. Since the computer industry is at the maturity stage, Apple Inc. will have to sell off their existing products and start again with new products and new innovations. They've shifted our conceptions of how a computer should look and feel, and changed the way we interact with technology and listen to music and connect with friends. Some innovations are small, like the trash icon or the placement of a trackpad. Apple makes wildly imaginative products with a consistency few companies rival. "Idealism is a major part of Apple," says Andy Hertzfeld, an original Macintosh team member. "The company operates for artistic values rather than for commercial purposes."7 To consistently improve the products, Apple Inc. is slowly transforming it into a high-end consumer-electronics and services company a la Sony Apple is gradually transforming as of 1999 when the company introduced iMovie, a video editing program for the Mac that brought professional-quality editing to the masses.8 In September, 2005, there has been announcements that Apple Inc. is thinking of shifting to using chips from Intel in is systems beginning next year. This will help regain some of the market share back that was competed from Windows-based rivals.9 This will definitely be a turning point for Apple Inc. to be back in its original products Not only focusing on production efficiency and successors, Apple Inc. has decided also to add an additional division instead which gear towards the digital music market. Since then the iPod then latter the iPod nano, was introduced.


Growth Stage Apple Inc. is currently at the growth stage increasing its production capacity while retaining quality. They are still currently producing and offering the iPod shuffler and the iPod. Although the iPod mini which was the first one to be introduce out of all the devices, is almost reaching close to maturity stage. To ensure that Apple Inc. maintains the market leader in digital music, improving the current product is the way to go. When the iPod Nano was introduced, it basically replaces the best-selling iPod mini, with a brand-new model. It offers a higher resolution color screen, and a decrease in size of 25 % less wide (half the thickness), a greater hard drive capacity and is able to hold up to 25,000 photos you can sync from you Mac or Windows PC via iTunes.

Before Apple Machintosh PowerBook Performa

After iMac Power Macintosh G4 iPod mini iMac G5 iPod shuffle iPod nano


Marketing Analysis Background Apple was and currently is a part of a newer age of marketers focusing on image and quality. Apple is in a constantly changing industry and faces tough competition by many names in the industry. It is never easy when you have Microsoft as a competitor. The most important element of a marketing plan is the development of a marketing strategy that will successfully penetrate the market. Most companies these days are using the traditional marketing tactics that are ineffective for their organizations. Some companies try to benchmark tactics from other successful companies; unfortunately such tactic rarely works to that companys target market. Essentially as time progresses, industries are getting more competitive and businesses are looking for ways to set themselves apart from the competition. An effective strategic marketing plan can provide a company with that edge. Apple tried several marketing tactics such as repositioning their products and several branding techniques, however with Microsoft in the picture it became hard to directly compete. Internal conflicts arose as the company was on the downfall, essentially entering the declining stage of the industry life cycle. Apple Computers has been in the PC industry for close to 30 years and they have experienced some major bumps along the way, especially with a player like Microsoft in the market. Initially marketing tactics for Apple were relatively simple with the introduction of the Apple II. It was the first personal computer to come in a plastic case and include color graphics. It was a hot item and people from all over were lining up to purchase it. However players in the industry soon caught on, resulting in the PC market being saturated with clones. Apple Stores There are over 120 Apple stores in the North America. Apple decided to install a number of techs, called Geniuses. The Geniuses are dressed in cool black uniforms and offer anyone that walks in the store Mac or PC users -- technical service and advice. So far, according to a USA Today dispatch, over 100,000 people visit the Genuises every week. And the stores represent nearly 50 percent of Apples retail sales. The stores are setting a burning pace for revenue growth. Apple stores were on track to generate $1.2 billion in annual sales, compared to Apples $8.3 billion fiscal revenue. Fascinatingly, Apple serves only about 2.6% percent of the computing public.


Apple Store downtown Vancouver.

The intimacy created by using real people to connect with other real people may not seem to be revolutionary, but when measured against the widespread forms of disturbing marketing tactics used by traditional marketers, it is clear how something like the notion of the Geniuses becomes an extraordinary tool to reach and influence the consumer. Apple positioning We believe that Apple had done an excellent job in positioning themselves. It is rare that you are able to see students that do not own an iPod. Since the iPod introduction many people switched from using PCs to Macs. Apple have now positioned themselves as a cool and hip gadget with the iPod, a must have object. Also apple were successful in positioning themselves with quality computer that are ad ware, virus, non freeze computers. Many companies fail to position themselves in the right fashion into their target market. This is something that tends to be overlooked in many businesses today. Companies will be able to attract new businesses and customers and creating the right buzz in to industry. Essentially if a company positions itself the proper way they can control how they want to be perceived by consumers. Ultimately this is the organizations goal, and if they can accomplish it their market presence will be tremendously larger. In the process of rejuvenation apple has changed numerous corporate strategies. Currently apple computers are targeted to certain type of customers instead of targeting the entire PC buyers industry; this was a very smart move by Apple to set the company away from the Microsoft competition. The company is now targeting the upper class and high end user. Currently Apples market share is only 2.6% of the PC marketplace which is significantly lower than the competition; they have essentially created a market with very few substitutes. There are essentially no products in the industry that offer the high end user experience that Apple has established. Therefore the company must continue pursing with this strategy in order to continue catering to their niche market.


Competitive Advantage In a rapidly evolving world, it becomes of great importance to be distinguished from the competition, and this is why many businesses nowadays have set off to maximize their competitive advantages over competing companies. One such company is Apple, whose unique product line and dynamic hardware have earned them a competitive advantage in the market. Yet, what is key to the survival and thriving of any business is their market tactics and strategies. These are so important that many business analysts have repeated that the marketing tactics and strategies are what give a name to the company. The success of Apple stems for their foresight for what will attract people to their product and the consequent execution of that vision. Rather than marketing their product based on its key features and technology like their competitor Dell, Apple adopts a new strategy by depicting how their product will enrich their customers life and become an indispensable part of it. Ultimately, they try to create a connection with potential consumers which results in an influx of individuals who buy Apple products and enjoy them. Apple is renowed in the market for their aggressive advertising strategy. This makes the company stand out from their competitors who are employing more conservative marketing approaches. For example, a typical comercial for Apple products lavshes on the superiority of their product while bashing their competitors goods. We all remember the ad aired a couple of years ago showing intel laptops catching fire while getting flattened by steam rollers. Apple has seen great benefits in their ads despite the fact that they appear controversial to many. It is precisely these advertisements that have earned Apple many advertisement awards while also enabling Apple to become a great contributor in the PC market.


Brand Identity Apple realized the concept of establishing a good brand identity and spent massive resources to provide end users with quality high end products. Potential consumers are going to be spending top dollar for these products, therefore the buying decision is more complex. Consumers are only going to purchase goods of high quality and from highly reputable and credible companies. As a result they have built up a solid reputation and a very strong brand name becoming one of the most high end brands in the business world. Innovation and quality are related with high price, the high price for the most part guarantees the customer with quality goods. This is a psychological approach that Apple has used, and has incorporated it within their business model. The human psychology says that the higher the price, the better the product. Cheap Apple products would mean low quality and a desperate need for cash. Ultimately this would hurt the Apple brand from both a short term and long term perspective. Apple can not break the association of themselves and quality, nor can they consider significantly lowering their product prices. This would result in entering into direct competition with the likes of Dell; furthermore it would create a price war with Microsoft.



Free flow of information permits innovation. Venture Capital as strong Catalyst. Synergy between an inventor & Entrepreneur. Packaging leads to success of product. Worked feverishly to project this philosophy. Incremental Innovation need to be managed with same as vigor as radical innovation. Importance of forming alliances with competitor. Decided to license OS. Attempted to reorganized R&D activities several times




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