Issues and Outlook: 1999 and Beyond Is Apple successful? Past/current strategy? What are the main concerns/issues that confront Apple? Where is Apple headed in the future?

Comparative Market Share (%) by Revenue

Revenue Comparison (in $millions)

Profit Comparison (ROS %)

Actual Results:

Rebound?

External Analysis Influences from Remote Environment Influences from Competitive Environment Promoters of / Barriers to Change SWOT Summary Competitor Analysis

Threat of Substitute Products Threat of New Entrants Analysis of the Competitive Environment Rivalry Among Competing Firms in Industry Bargaining Power of Buyers Bargaining Power of Suppliers

Breadth of Competitive Scope Source of Competitive Advantage BroadTargetMarket NarrowTargetMarket Cost CostLeadershipCostLeadership Differen- tiation Differen- tiation Apple’s Business Level Strategy Focused Differen- tiation tiation Focused Low Cost Uniqueness

Strategic Group Map Pre-Windows Price Premium Low Strategic Focus - Differentiation BroadNarrow Apple IBM Sun Clones Compaq

Strategic Group Map Post-Windows Price Premium Low Strategic Focus - Differentiation BroadNarrow Apple IBM Sun Clones Compaq

Support Activities Primary Activities Value Chain Analysis Technological Development Human Resource Management Firm Infrastructure Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service MARGIN MARGIN

Revised Mission/Intent Statement “Apple ………………………………..” Definition of Industry Description of Core Values Description of Basic Strategic Approach General Identification of Customer Base

Revised Mission To position Apple as the world leader in man-machine interfaces though the development of ergo- and cerebro-nomic software and interface devices required for electronic and electromechanical applications.

Goals 20% ROS by % Share of O/S Market by 1994 Develop 3 New Interface Devices by 1994 Achieve full interoperability with –Intel and RISC microprocessors by 1993 –Top 4 Software Vendors by 1993

Milk Mac No new manufacturing and R&D investment in existing hardware products Outsource next 3 years’ production to Malaysia: –Send VP Mfg. and 3 Engineers on “Sourcing Mission” Benefit: Decrease COGS from 53% to 33%

Apple Core “Open system” O/S (a.k.a. Pink) –not processor specific –head-to-head with Windows –increase installed base –increase ISV applications Shift 80% of R&D budget to Core Benefit: Increase ROS from 5% to 20% (NOTE: O/S production has COGS average 19% percent of sales vs. 66% in hardware manufacturing.)

Apple’s Recent Actions 1994 Layoffs and Mfg. Rationalization Pushed Pink –H-P joined Apple and IBM Sculley resigns; Spindler is new CEO 1993 Cut Mac prices 26% –down from a 20-40% premium PowerPC with IBM and Motorola –PowerMac –PowerBook laptop Overseas expansion; Japan (2% to 15%) Newton (PDA)

Recent Actions (cont.) 1995 Attack educational and desktop pub markets License Mac O/S (aka Copeland) Record revenues; $69 million net loss Fujitsu starts price war in Japan Terminated Taligent and Kaleida Jobs and Woz are back Accepted $150 million from MSFT Intros iMac

New Products