Apple Computers Avimanyu Datta, Doctoral candidate, College of Business, Washington State - PowerPoint Presentation

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Apple Computers

Avimanyu Datta, Doctoral candidate, College of Business, Washington State UniversitySlide2

Timeline of the Apple Computers (History, Present,& Future)History of the Apple Computer.From the beginning which was in 1976 through the present 2007.Prediction of the near future and new Apple Computer products to be released.Slide3

The Beginning “1976”Steven Paul Jobs, Stephen Gary Wozniak and Ronald Gerald Wayne founded Apple Computer.In 1976, Ronald Wayne resigned from Apple Computer with only a one time payment of $80.Hewlett Packard grants Gary Wozniak the permission to create the Apple I.Slide4

History of “1977”This was the year that Apple was incorporated.Rob Janov designed the Logo which is still used today.Mark Makula invests $92,000 in the companyMichael Scott becomes the first President of Apple.

The Apple I is released for $1,295.Slide5

History of “1978”Apple and Xerox sign an invest agreement.Xerox invest one million dollars in Apple stocks.Apple engineers were allowed to study Xerox’s PARC’s graphical user interface.The PARC operating system was the 1st OS for the public market with GUI. It was commercially unsuccessful.Slide6

History of “1979”Jef Raskin worked on a computer concept involving:DesignImplementation philosophyHuman usability over execution & speed

Raskin

named his concept after his favorite type of apples: McIntosh

.

Apple begins working on Lisa, originally a $2000 business computer.Slide7

History of “1980”Apple goes public.Stocks’ value increases by 1700%.The new Apple is released.Apple sold it for $4340 to $7800 depending on the configuration.Slide8

History of “1981-1982”Steve Wozniak is injured in a plane & takes time off from Apple and does not return to the Macintosh project.Michael Scott resigns as president of Apple.Mike Markkula succeeds Scott.The Lisa’s development is officially finished.Apple Computer, Inc. & Apple Corps (recording company of the Beatles) enter a secret agreement.Slide9

History of “1983 – 1984”The Lisa is released.Apple becomes the fastest growing company in history.John Sculley, former president of Pepsi Co., becomes president & CEO of Apple Computer, Inc.The Macintosh is released-retailing for $2495.Slide10

History of “1985 – 1986”Apple lays off 1200 employees.Stephen Jobs officially resigns as chairman of Apple.Apple sues Steve Jobs.Apple drops suit against Jobs & he founded NeXT, Inc.Apple tries to make Mac more attractive by releasing “Macintosh Office”.Slide11

History of “1987 – 1988”Apple’s 10th Anniversary.The Mac SE & the Mac II are introduced.Apple sues Microsoft & Hewlett Packard accusing them of violating copyrights of Apple.Slide12

History of “1989 – 1990” Apple Corps sues Apple Computer accusing it of violating the terms of the agreement in 1981 by producing synthesized music.Slide13

History of “1991 – 1992”IBM, Motorola & Apple form an alliance.Motorala makes Processors for AppleApple Computer, Inc. pays Apple Corps $26.5 million. The lawsuit between the two is settled.Slide14

History of “1993 – 1994”Michael Spindler replaces Sculley as CEO.Sculley resigns as chairman of Apple.Apple releases the first PDA (Newton Message Pad). Release of 1st

Power Macintosh desktop computer & system 7.5

Apple starts licensing the

MacOS

.

Apple announces Pippin, a multimedia systemSlide15

History of “1995 – 1996”Apples’ 20th Anniversary.The PowerPC 603e is announcedApple Computer, Inc. takes over NeXT Computer, Inc. for $430 million.Slide16

History of “1997 – 1998”Jobs returns to Apple due to the NeXT Computer, Inc.Apple starts buying back all licenses from Mac-clone manufacturers.The Power Macintosh G3 & The Apple Store are introduced at “Apple Event”.The iMac becomes the fastest selling PC in history, being reordered over 150,000 times.Slide17

History of “1999 – 2000”Jobs becomes permanent CEO.Chief sales executive Mitch Mandich steps down.Slide18

History of “2001 – 2002”Opens first Apple retail store in McLean, VA.Apple acquires fire wire company Zayante.Former executive John Couch returns.Larry Elisson resigns from Apple board.iPod, OS X , iMac G4 all introduced.Slide19

History of “2003 – 2004”iTunes music store opens.Tibco sues Apple over trademark.Apple launches iTunes Canada.iMac G5Slide20

History of “2005 – 2006”Raskin dies at 61.Software development Avie Tavanian leaves.Video iPod launched & 1 million videos sold from iTunes.Slide21

“2007” January of 2007 Apple dropped “Computer from its corporate name.Apple employs over 20,000 permanent & temporary employees currently.Worldwide annual sales in its fiscal year 2007 (ending September 29, 2007) are US $24.01 billion. Slide22

“2007”The Apple iPhone was released on June 29, 2007.It is a multimedia, internet phone and has a multi-touch screen with virtual keyboard and buttons.

On

October 26, 2007 Apple released a new operating system Mac OS X 10.5 Leopard.

It

is a Unix based operating

system

The recently released iPod Touch has all the capabilities of the

iPhone

except it can’t be used as a phone. Slide23

“2007”Google released beta version of Google gadgets for Mac.Google Gadgets are mini applications similar to Apple's own Dashboard Widgets

Google's Gadgets for Mac are now integrated and installable into Apple's Dashboard in Mac OS X.

This makes them functionally indistinguishable from Dashboard Widgets

.

Google Gadgets comes integrated with Google Desktop, a desktop search application also available from Google. Slide24

Future Products of Apple Inc.Rumors are floating around that a new Mac book will be released in early 2008.The new ultra portable Mac Books are to be aluminum clad, 50% lighter and "strikingly slimmer" to the existing 15" Mac Book. They are also expected to incorporate NAND Flash memory to improve battery life and boot times. Slide25

Future Products of Apple Inc.AT&T Inc. Chief Executive Officer Randall Stephenson confirmed that the 3G version of the iPhone would be made available in 2008.Steve Jobs stated that a 3G iPhone is coming, but that the delay is due to excessive battery life consumption with existing 3G chipsets.

The

iPhone

presently uses the EDGE network for its data connectivity. Slide26

4 major issuesHistorically what are Apple’s Competitive Advantages?Structure of PC industryApple’s Strategy since 1990Has Jobs finally solved Apple’s longstanding problems? Is i-pod any different?Slide27

Apples Competitive AdvantagesEase of UseTraditional strength in Desktop publishing, GUIBuyer LoyaltyProprietary Systems (Supports higher margins, creates barriers to entry and limits direct imitation)BrandPlug and Play (related to ease of use- components and peripherals can be added to a Mackintosh fairly easily as compared to a PC)Slide28

PC industrySophisticated powerful buyersBuy products in truckloads, Know what they wantWont pay a lot for itWill find some other company to sell at lower priceVicious RivalryOpen Standards: PCs are commodities , Manufactures compete on price, pushing down marginsFragmented: No market leader to provide price stabilityRapid technology Obsolesce

Strong buyers with great sophistication

Summary: very tough industry and not attractiveSlide29

PC IndustryFragmented: No market leader to provide price stabilitySlide30

PC industryLow barriers to entryTechnology: One can assemble a PC with a screw driverStandardized components are availablePlant/ garage: Can be done in a garageDistribution: Cheap. Over the Web on a classified AD. Customers: Price sensitive SOHO. Summary: Barriers to Entry are low-Harder to think of another Industry where it is lower. Slide31

PC industryLots of Potential Substitutes PDAs, Smart PhonesTV Set-top boxesVideo game Consoles. Summary: Existence of Substitutes Push PC prices further down. Average price of the substitutes are $300. Complements have been fueling demands (only the bright spot)Slide32

PC industryComplements have been fueling demands (only the bright spot)Customer still pay for PC because of software functionalities that runs on PCSSoftware, printers, scanners propel the demand. Summary Complements are only the bright spot in the industry. Slide33

PC industrySuppliers are appropriating most of Industries residual profitsSuppliers of components such as Disk drives have no power over PC manufacturers. Intel/ Microsoft: Together Intel and Microsoft earned more than 20billion in 2005. Net profit from PC industry remained at $6 billion with 3% of sales. How can two suppliers earn more that the whole customer base? DOMINANT WIN-TEL ARCHITECTUREBRAND (Intel Inside. Windows) Slide34

PC industry: SUMMARYSophisticated powerful buyersVicious RivalryLowe barriers to entryLots of Potential Substitutes Complements have been fueling demands (only the bright spot)Suppliers are appropriating most of Industries residual profitsSlide35

Apple’ Strategy since 1990: Key ProblemsPCs and Macs were substitutes. So decline in price of PCs put pressure on Apple’s Prices and Margins. Macs and PCs have different software complements. Industry was moving toward PC (Wintel). Software developers were not interested in writing codes for a small Mac market.Who is the largest software vendor for Mac other than Apple? MICROSOFT Win-Win Strategy for them. Even when Mac Sells, Microsoft becomes wealthier. Slide36

Apple’ Strategy since 1990: Key ProblemsTakes 1$billion to make an OS. AUP for XP was $45-$60. Sold 17 million in 8 weeks , thus breakeven in 8 weeks. Apple cannot have that speed in sales, and they are priced higher. With these economies it was impossible for Apple to survive. They needed to change. Slide37

Apple’ Strategy since 1990: The Sculley ApproachStrategyHigh Volume Low priceJV with IBM to develop a new OS.LogicCreate big installed baseIncrease DifferentiationCreate a new standard to compete with Wintel and share development cost of new OSAssessment IBM could not deliver the higher end performance chips to compete with Wintel.

Customers wanted Intel, so Apple had to re-write its OS top work with Intel.

First two logic were conflicting

Apple and IBM could not leapfrog Microsoft and Intel. Slide38

Apple’ Strategy since 1990: The Jobs ApproachStrategyFocus on traditional customer baseDesign and marketing to get a price premium.Shift to owned retails: Apple Stores. Shift to Intel CPUs. LogicRe-affirm your commitment to loyal customers and get big premiums for your product. Assessment As of 2006 Jobs did not raise Apple Market ShareShare is decliningKey to driving traffic for

i

-Pod and possible spillovers to Mac

Opens Apple for potential windows Users.Slide39

The iPod BusinessImitationApple’s barrier to imitation has been a steady stream of innovations: Video ipod, ipod nano, mini ipod. Successfully fulfilled all major price points. Switching CostsLocks current users with sales from

i

-tunes.

Cost Leadership

Has long term contracts with leading suppliers of flash memory, which reported to give 40% discount to Apple off list prices. Slide40

The iPod BusinessHold upApple sells i-pods at premium and gives away songs at less than a dollar. Music companies have pressurized apple to raise prices. But market share of Apple was able to retaliate. Substitution (2006 Questions)Will Mp3 remain an independent category? Will PDAs and Cell phones incorporate mp3 capabilities?Should Apple enter phone business against NOKIA, Motorola and Samsung?Slide41

Broader lessonsHuge difference between product advantage and competitive advantage. Companies must look broadly at economies and driving forces of their industries. Apple was too insular. Multiple standard co-exist when there is a huge gap between them. Difference between Mac and Windows diminished and it became hard to justify two standards, when one is clearly cheaper. Timing and Windows of opportunities. Slide42

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