Apple Computer Team 4: Richmond Bautista, David Broggie, Scott McLaughlin, Michael Stewart, Austin Wakeman, Evan Wong 1 Team #4/Spring 2009

Founding and Initial Products Apple’s Beginning Established April 1, 1976 by Steve Jobs and Steve Wozniak Initial Products The Apple I was first offered in July 1976 for $ The Apple II was introduced in 1977 for $1,200 2 Team #4/Spring 2009

Development and Growth Apple is considered a trendsetter in innovation and creativity in personal computers Shifts in lines of business The iPod was introduced on October 23, 2001 The iPhone first became available on June 29, Team #4/Spring 2009

Innovation Affecting Stock Price 4 Team #4/Spring 2009

SWOT Analysis STRENGTHS Apple has a great source of brand loyalty The favorable brand perception has increased sales of Macintosh computers Innovation is one of Apple’s key strengths It is the first large personal computer company to develop a graphical based computer Apple products are simple to use and appeal to a wide market 5 Team #4/Spring 2009

SWOT Analysis STRENGTHS (Continued…) Apple Company has complete control over its products Manufactures the products and the operating systems in which they process The invention of the iPod has given Apple a wider selection of market segments iTunes and the Apple On-line store has helped increase the company profits 6 Team #4/Spring 2009

SWOT Analysis WEAKNESSES Apple iPods were difficult to maintain Its sensitive screen leads to easy breakage Faulty batteries There is pressure to increase the price of its music download files Many music companies make more money off of iTunes than from their original CD sales Predicting the demand and the ability to deliver enough machines to satisfy the demand in a short period of time 7 Team #4/Spring 2009

SWOT Analysis WEAKNESSES (Continued…) Apple has higher Research and Development costs than its competitors In 2005, Apple ended its relationship with IBM as a chip supplier Switched to Intel The switch could potentially confuse Apple's consumers 8 Team #4/Spring 2009

SWOT Analysis OPPORTUNITIES Apple has constantly been able to create new and updated products/software such as iPhones, Macbooks, iPod Touches, and iPod Nanos Has the opportunity to develop its iTunes and music player technology into a mobile phone format This enables its users to keep track what songs have been used and bought Podcasts are free to subscribe to, which enable its customers to listen to radio shows on their iPod 9 Team #4/Spring 2009

SWOT Analysis THREATS The continuing technology updates on other computer companies Sony, Dell, and HPs are constantly updating their computer technologies The popularity of Apple Mac and iPod are subject to demand, and will be affected if economies begin to weaken and demand decreases for their products. Substitute products can lead to the replacement of Apple products because of pricing 10 Team #4/Spring 2009

SWOT Analysis Conclusion Apple Company seems to have a stable positioning The company’s strengths seem to outweigh its weaknesses The continuation of its updates and opportunities can easily increase its customer loyalty The threat of other competitors can push Apple to continue upgrading their products 11 Team #4/Spring 2009

External Environment Opportunities Businesses and Education were utilizing the use of computers, so the Apple II line fulfilled this new customer set Apple sought out the music industry to allow them to make their music legally downloadable Apple created their own retail store to push their own products 12 Team #4/Spring 2009

External Environment cont’d Threats IBM, amongst other companies, began to seize market leadership over Apple The high cost structure limited Apple’s ability to expand its market share The creation of the iPod led competitors to sell their own version of an MP3 player 13 Team #4/Spring 2009

Porter’s Five Forces Substitute Products Companies had the ability to create their own computers to compete with Apple The iPod is constantly battling with other similar products to maintain superiority Differentiation has helped Apple hold its appeal to consumers 14 Team #4/Spring 2009

Mission and Goals The goal of Apple “in a nutshell, is to obtain stellar products and services within tight timeframes, at a cost that represents the best possible value to our customers and shareholders.” Apple’s mission statement is closely tied to their main goal and makes it possible. 15 Team #4/Spring 2009

Corporate-level Strategy The lines of business in Apple can be broken down into three categories: Computer segment Consumer electronics segment Software segment 16 Apple is a rarity in their line of business because they make both the hardware and software of their products. Team #4/Spring 2009

Corporate-level Strategy Subsidiaries and acquisitions of Apple Mainly feed into parent company (Apple) Acquisition of PA Semi ($278 million) Is Apple simply a company that runs a portfolio of investments? 17 Team #4/Spring 2009 Is Apple’s corporate strategy appropriate? Yes, as the business environment of technology is constantly evolving. Aggressive expansion and acquisitions of other companies that could provide a competitive edge are extremely important.

Corporate-level Strategy Has Apple’s corporate strategy changed over time? Yes. One must remember the humble beginnings of “Apple Computer,” now known as Apple Inc. 18 What products have contributed most to Apple’s competitive advantage? Before: iMac, iBook, original iPod and iTunes Now: iPod(s), iPhone, iTunes music store, application store for iPod touch and iPhone, bundled software such as iLife Team #4/Spring 2009

Competitive Advantage = High Sales 19 Team #4/Spring 2009

Business-level Strategy Business model Originally pursued focused differentiation Currently pursues product differentiation Investment strategy Growth strategy Attempting to maintain their competitive position Functional strategies Innovation Quality 20 Team #4/Spring 2009

Business-level Strategy R&D has successfully developed the proper distinctive competencies Biggest threats Threat of substitutes Intensity of rivalry among established firms Apple can deal with these threats Maintain brand loyalty Continue being the leader in innovation 21 Team #4/Spring 2009

Structure and Control System The Original Intention Small business Hired experience Decentralizing Michael Sculley Apple goes public (1980) Bringing the company closer 22 Team #4/Spring 2009

Structure and Control System Focused Differentiation to Broad Differentiation MS-DOS/Windows Steve Jobs Refined the innovation after multiple CEOs failed Retail stores, iPod, iTunes, iPhone No politics 23 Team #4/Spring 2009

Recommendations Lower prices to reflect internal components after products (computers) are outdated, and/or update internal components more often Produce low-cost netbook to compete with current PC offerings Retail store expansion Continue innovation Continue updating iPod and iPhone 24 Team #4/Spring 2009