Shri Vile Parle Kelvani Mandals

Mithibai College of Arts,, Chauhan Institute of Science & Amrutben Jivanlal college of Commerce and Economics Vile Parle (West) Mumbai 400056 A PROJECT ON

CASE STUDY ON APPLE INC.

IN THE SUBJECT

STRATEGIC MANAGEMENT
SUBMITTED BY NAME: NIRAJ FARIA ROLL NO.: 10 DIVISION: B

UNDER THE GUIDANCE OF PROF. SHRIRAM DESHPANDE TO

UNIVERSITY OF MUMBAI
FOR

MASTER OF COMMERCE PROGRAMME (SEMESTER - I) YEAR: 2012-13

Shri Vile Parle Kelvani Mandals

Mithibai College of Arts,, Chauhan Institute of Science & Amrutben Jivanlal college of Commerce and Economics Vile Parle (West) Mumbai 400056

EVALUATION CERTIFICATE
This is to certify that the undersigned have assessed and evaluated the project on Case Study On Apple Inc. submitted by Niraj Faria, student of M.Com. Part - I (Semester I) for the academic year 2012-13. This project is original to the best of our knowledge and has been accepted for Internal Assessment. Name & Signature of Internal Examiner Name & Signature of External Examiner

College Seal
MANGAONKAR

PRINCIPAL DR. KIRAN

Shri Vile Parle Kelvani Mandals

Mithibai College of Arts,, Chauhan Institute of Science & Amrutben Jivanlal college of Commerce and Economics Vile Parle (West) Mumbai 400056

DECLARATION BY THE STUDENT

I, Niraj Faria, student of M.Com. (Part I) Roll No.: 10 hereby declare that

the project titled Case Study On Apple Inc. for the subject Strategic Management submitted by me for Semester I of the academic year 2012-13, is based on actual work carried out by me under the guidance and supervision of
PROF. SHRIRAM DESHPANDE. I further state that this work is original and

not submitted anywhere else for any examination.

Place: Date: Name & Signature of Student

ACKNOWLEDGEMENT

Apart from the efforts of myself, the success of any project depends largely on the encouragement and guidelines of many others. I take this opportunity to express my gratitude to the people who have been instrumental in the successful completion of this project. I would like to show my greatest appreciation to Prof. Shriram Deshpande. I can't say thank you enough for her tremendous support and help. Without his encouragement and guidance this project would not have materialized. The guidance and support received from all the members who contributed and who are contributing to this project, was vital for the success of the project. I am grateful for their constant support and help.

INDEX

Table Of Content Chapter No. 1 Contents Page No. 6

Introduction

Historical Overview

Business Strategy

16

Future Plans

34

Conclusion

36

Bibliography

37

INTRODUCTION
An inexpensive speedy disk drive with good storage capacity Enough memory to establish Multitasking The first graphic-based user interface available to the general consumer Development of a pointing device called "mouse" as an essential peripheral part of a PC The first use of 3.5 inch disks and CD-ROM Production of cool-looking but also powerful computers

All these inventions and utilities are inseparably linked with one name, Apple Computer Inc., which represents a fascinating compilation of engineering talent, innovation, perseverance, and success in spite of dysfunctional behaviour. Apple obtains the unique distinction of being the single surviving company from the early days of the industry that is still successfully acting in the computer vending business, as well as challenging Microsoft's dominance in operating systems. Apple also came perilously close to irrelevancy. After the lifeblood of the company, co-founder Steve Jobs was ousted in a boardroom coup in 1985, Apple had too many products, too little focus and was paralyzed by two inept chief executives. Apple's already small market share was dwindling further. By 1996, it had racked up $1.5 billion in losses, and there were weekly speculations over who would buy the company. Then, in the summer of 1997 Apple stunned the world by announcing that Jobs would return as interim CEO. Even more shocking, Apple said it was partnering with its blood enemy Microsoft and scrapped dozens of its products to refocus the company. Jobs also challenged our perceptions of computers, introducing several new colourful computers. While Apple's market share has hovered at about 5%, the company has re-established itself as an innovator in design and ease of use and has managed to build up a loyal customer base.

HISTORICAL OVERVIEW
Apple Computer was formed in April 1976 by 25-year-old Steve Wozniak and 21-yearold Steve Jobs- both college dropouts. After selling a van for some extra start-up cash, the two set up shop in the Jobs family garage at 2066 Crist Drive in Los Altos, California, to start building computers. The ideas and early innovation techniques that emerged from this location would set the foundation for building one of the most important and globally effective technology companies the world has ever seen. In fact, some diehard Apple fans come from all over the globe just to pose for pictures in front of this now-famous garage. Apple Computer stands out from similar companies with their unconventional business ideas that constantly redefine the standards for product, marketing, and industry innovation techniques. The company has become well-known through their commitment to challenge the so-called possibilities of the computer industry. Their goal is to improve the userfriendliness of their products and to encourage an open-minded approach when developing new technologies and services.

The First Apple Computers

Figure 1. Apple Logo (1976)

Wozniak, the true technical mind behind the building process of Apples early computers, spent the summer of 1976 building the companys very first computer, the Apple I. Meanwhile, Jobs began creating advertisements and found a buyer for the computer. The Byte Shop in Mountain View, California, proved to be Apples first major customerand, coincidentally, the first retail computer store chain in the world. The two Steves were able to build and sell fifty Apple I computers that summerall from within the confined space of the Jobs familys single-car garage. This would mark the first of many successful products to come from the company. Apple Computer was officially incorporated on January 3, 1977.

Later that summer, Wozniak and Jobs began building the Apple II with the help of a few technically-savvy friends and classmates. It was at this time that Jobs first realized his true passion for the burgeoning computer industry. To fuel this passion, Jobs consulted with retired Intel Corporation marketing manager Michael Markkula regarding the possible future of Apple Computer. During this consultation, Markkula worked with Jobs in coming up with a solid business plan and even purchased one-third of the company for $250,000.

Creating an Image

Figure 2. Apple Logo (1977)

In 1977, Jobs and Markkula hired Michael Scott as the companys first president and Chief Executive Officer (CEO). In April of that same year, Apple decided it would be beneficial to their marketing strategies if they updated their image before putting the Apple II on the consumer market. To create their new logo, Jobs contacted Robert Janoff, an art director for advertising and public relations agency Regis McKenna. Janoff agreed to design the logo from an essentially blank canvas. The really funny thing, explains Janoff, was the only direction we got from Steve Jobs is: don't make it cute. Aside from some color alterations, Janoffs iconic 1977 design remains to this day as the official logo of Apple Computer, Inc. After the success of the Apple I and Apple II, the company began work on the Apple III, which turned out to be their very first project failure. The Apple III proved to be an early sign of disagreements-to-come between the president Michael Scott and Steve Jobs. In fact, Scott laid-off 40 employees after the Apple IIIs failurewithout any consultation or approval from the Board of Directors. Because of his abrupt actions, Scott was demoted to vice chairman, while Jobs was promoted to chairman. Markkula, who had originally hired Scott, took over as Apples new CEO. Scott officially resigned from Apple in March of 1981. This tension would continue to escalate through the development of the companys next computer, the Apple Lisa.

Graphical User Interface

Named after Jobs oldest daughter, the Lisa (also, Local Integrated Software Architecture) was the first personal computer to implement a graphical user interface (GUI) technology an idea which Jobs had adopted from a prior visit to the Xerox Corporation. Surprisingly, Xerox did not think the technology would serve a practical purpose for personal computing. The Lisa was the first personal computer to include such features as: a hierarchal file system, windows, folders, icons, multiple tasking, a mouse, a drop-down menu bar, and the ability to copy and paste. Jobs tested the patience of president Markkula and eager consumers by continuously implementing new GUI features and pushing back the Lisas release date. Markkula grew tired of Jobs constant need for improvement at any cost, and removed him from his valued position as Lisas project designer. The Board of Directors then demoted Markkula and hired former PepsiCo vice president John Sculley as the new CEO in 1983. Jobs saw this reorganizing as an opportunity to shift his focus to designing the features for his next brainchild the Macintosh.

The Macintosh
With improvements in the GUI, the Macintosh became a possibility box for companies developing similar products. Enhancing some features from the Lisa, the Macintosh implemented a desktop, mouse, graphical file system, icons, bit-mapped graphics, menu bar navigation, applications running inside windows, and more. The Macintosh laid the foundation for the entire computer industry. The true look and feel of personal computers today can be attributed to the early design features of the Macintosh.

Figure 3. Graphical User Interface of the Apple Macintosh (1984)

The Macintosh, however, did not dominate the consumer market as the company had hoped. Supported by Markkula and the other members of the board, president Sculley once again demoted Jobs (this time from vice-president and leader of the Macintosh division) in May 1985, leaving Jobs without any managerial power. In a somewhat desperate attempt to boost Macintosh sales, Apple released the Macintosh XL. This computer came with even more improved GUI updates, the innovative New Folder command, and the introduction of AppleTalkthe first self configuring local area network (LAN) technology used to connect multiple computers to a single printer. This set the desktop publishing revolution into motion.

Jobs NeXT Move

Steve Jobs resigned from Apple in December 1985, due to constant power struggles and disagreements with president Sculley and the Board of Directors. Upon his resignation, Jobs formed a new company called NeXT, Inc.18 Jobs saw NeXT as an opportunity to reignite the spark he had when he founded Apple. NeXT focused on creating computers that were user friendly, aesthetically pleasing, and capable of running powerful software in the most efficient ways possible. Throughout the next eleven years, Apple continued to develop desktop computers and operating systems, but the company was not able to fully recover after Jobs had left. Sculley
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resigned from the company in October 1993, while under extreme pressure to increase Apples sales and market share with new products and services. Michael Spindler, President of Apple Europe, was then promoted to head the entire company as the new CEO. Most projects headed by Spindler (most notably the Apple Newton and Copland operating systems) proved to be major failures. After three yet-again unsuccessful years, Spindler was forced to resign from his position as CEO. Apple then promoted board member Gil Amelio to head the company in 1996. Apples stock prices continued to plummet, and the Board of Directors were once again facing the reality that they would soon need to find someone who could successfully run the company. Similar to his predecessors, Amelios reign as CEO proved unsuccessful, and he was removed from the position in late 1996. In what proved to be the companys best decision of the decade, Apple re-hired Steve Jobs this time serving as the companys new CEO. With his innovative vision and strong leadership style, Jobs finally made his triumphant return to the company he had co-founded. Days later, on December 20, 1996, Apple announced its plans to acquire NeXT Software, Inc. The purchase was completed on February 4, 1997, and this software became the foundation for the Macs future operating systems. In regards to Apples new plans for expansion, product development, and business strategy: Steve Jobs is sitting in the Apple boardroom. Actually, he is slouched like a teenager in one of the cushy leather chairs, his worn jogging shoes resting on the directors' table. The table is very long, very impressive--and very empty. Just Jobs here, wearing shorts and an impish grin. The old board of directors at Apple is history, he says. . . Eight stories of corporate excess are about to be abandoned. I hate this building, says Jobs. This building has come to symbolize everything that went wrong with Apple. It's about corporate hubris. Greed. This is not a building that can make insanely great computer products.

Jobs Personality
Described as obsessive, impulsive, and overly critical, Steve Jobs truly knows what he wants, and cultivates his ideas into realities. In a television documentary entitled Triumph of the Nerds, Jobs describes Apples largest competitorMicrosoft: The only problem with Microsoft is they just have no taste. I dont mean that in a small way. I mean that in a big way, in the sense that they dont think of original ideas and they dont bring much culture into their products. I have no problem with their success they've
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earned their success for the most part. I have a problem with the fact that they just make really third-rate products. Jobs is said to have called Microsoft CEO Bill Gates after the interview was published to apologize for the harshness of his words. Still, he apparently told Gates that he truly meant what he had said, and that every word of it was the truth. It is apparent that Jobs not only cares about the performance of Apple computers, but also the look and feel of them as well. This is but a mere insight to Steve Jobs personalityboth as the CEO of a multibillion dollar global corporation, and as the average person eager and excited for new products and technologies that shape our social environment. This eagerness has led Jobs to develop one such pocket-sized technology has changed ways in which college students (even top business executives) go about their daily routines

The iPod and iTunes Media Store

The iPod (October 2001) is a prime example of Steve Jobs innovative mastery. The neverbefore-seen features of the iPod can be attributed to its sophisticated user-friendly design and the devices ability to be used on both Mac and Windows-based computers. To accompany the iPod, Apple released iTunes in April 2003. iTunes is software that manages various types of mixed digital media between the computer and the iPod, allowing users to purchase, organize, and playback various types of mixed-media files (photos, videos, music, podcasts, etc.). Users can then transfer these files directly to their iPod using Apples user-friendly drag-and-drop file transferring feature.

Widespread success
Apple achieved widespread success with its iPhone, iPod Touch and iPad products, which introduced innovations in mobile phones, portable music players and personal computers respectively. In addition, the implementation of a store for the purchase of software applications represented a new business model. Touch screens had been invented and seen in mobile devices before, but Apple was the first to achieve mass market adoption of such a user interface that included particular pre-programmed touch gestures. The company's global prosperity was continuing when its co-founder and chief executive officer Steve Jobs died, and some speculated that this would lead to Apple's days of technological innovation and compelling product design to become things of the past.

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Delivering his keynote speech at the Macworld Expo on January 9, 2007, Jobs announced that Apple Computer, Inc. would from that point on be known as Apple Inc., because computers were no longer the main focus of the company, which had shifted its emphasis to mobile electronic devices. The event also saw the announcement of the iPhone and the Apple TV. The following day, Apple shares hit $97.80, an all-time high at that point. In May, Apple's share price passed the $100 mark. In an article posted on Apple's website on February 6, 2007, Steve Jobs wrote that Apple would be willing to sell music on the iTunes Store without digital rights management (DRM) (which would allow tracks to be played on third-party players), if record labels would agree to drop the technology. On April 2, 2007, Apple and EMI jointly announced the removal of DRM technology from EMI's catalog in the iTunes Store, effective in May. Other record labels followed later that year. In July of the following year, Apple launched the App Store to sell third-party applications for the iPhone and iPod Touch. Within a month, the store sold 60 million applications and brought in $1 million daily on average, with Jobs speculating that the App Store could become a billion-dollar business for Apple. Three months later, it was announced that Apple had become the third-largest mobile handset supplier in the world due to the popularity of the iPhone. On December 16, 2008, Apple announced that after over 20 years of attending Macworld, 2009 would be the last year Apple would be attending the Macworld Expo, and that Phil Schiller would deliver the 2009 keynote in lieu of the expected Jobs. Almost exactly one month later, on January 14, 2009, an internal Apple memo from Jobs announced that he would be taking a six-month leave of absence, until the end of June 2009, to allow him to better focus on his health and to allow the company to better focus on its products without having the rampant media speculating about his health. Despite Jobs' absence, Apple recorded its best non-holiday quarter (Q1 FY 2009) during the recession with a revenue of $8.16 billion and a profit of $1.21 billion. After years of speculation and multiple rumored "leaks" Apple announced a large screen, tablet-like media device known as the iPad on January 27, 2010. The iPad runs the same touch based operating system that the iPhone uses and many of the same iPhone apps are compatible with the iPad. This gave the iPad a large app catalog on launch even with very little development time before the release. Later that year on April 3, 2010, the iPad was
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launched in the US and sold more than 300,000 units on that day and reaching 500,000 by the end of the first week. In May of the same year, Apple's market cap exceeded that of competitor Microsoft for the first time since 1989. Apple released the fourth generation iPhone, which introduced video calling, multitasking, and a new uninsulated stainless steel design, which acts as the phone's antenna. Because of this antenna implementation, some iPhone 4 users reported a reduction in signal strength when the phone is held in specific ways. After a large amount of media coverage including mainstream news organizations, Apple held a press conference where they offered buyers a free rubber 'bumper' case, which had been proven to eliminate the signal reduction issue. Later that year Apple again refreshed its iPod line of MP3 players which introduced a multitouch iPod Nano, iPod Touch with FaceTime, and iPod Shuffle with buttons which brought back the buttons of earlier generations. In October 2010, Apple shares hit an all-time high, eclipsing $300. Additionally, on October 20, Apple updated their MacBook Air laptop, iLife suite of applications, and unveiled Mac OS X Lion, the latest installment in their Mac OS X operating system. On January 6, 2011, the company opened their Mac App Store, a digital software distribution platform, similar to the existing iOS App Store. Apple was featured in the documentary Something Ventured which premiered in 2011.

PostSteve Jobs era

On January 17, 2011, Jobs announced in an internal Apple memo that he would take another medical leave of absence, for an indefinite period, to allow him to focus on his health. Chief operating officer Tim Cook took up Jobs' day-to-day operations at Apple, although Jobs would still remain "involved in major strategic decisions for the company." Apple became the most valuable consumer-facing brand in the world. In June 2011, Steve Jobs surprisingly took the stage and unveiled iCloud. iCloud is an online storage and syncing service for music, photos, files and software which replaced MobileMe, Apple's previous attempt at content syncing. This would be the last product launch Jobs would attend before his death. It has been argued that Apple has achieved such efficiency in its supply chain that the company operates as a monopsony (one buyer, many sellers), in that it can dictate terms to its suppliers. Briefly in July 2011, due to the debt-ceiling crisis, Apple's financial reserves were greater than those of the US Government. On August 24, 2011, Jobs resigned his position as CEO of Apple. He was replaced by Tim Cook and Jobs became Apple's chairman. Prior to this, Apple did not
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have a chairman and instead had two co-lead directors, Andrea Jung and Arthur D. Levinson, who continued with those titles until Levinson became Chairman of the Board in November. On October 4, 2011, Apple announced the iPhone 4S, which included an improved camera with 1080p video recording, a dual core A5 chip capable of 7 times faster graphics than the A4, an "intelligent software assistant" named Siri, and cloud-sourced data with iCloud. One day later, on October 5, 2011, Apple announced that Jobs had died, marking the end of an era for Apple Inc. The iPhone 4S was officially released on October 14, 2011. On October 29, 2011, Apple purchased C3 Technologies, a mapping company, for $240 million. C3 is the third mapping company Apple has purchased to date.[119] On January 10, 2012, Apple for $390 million acquired Anobit, an Israeli hardware company that developed and supplies a proprietary memory signal processing technology that improves the performance of flash-memory used in iPhones and iPads. On January 19, 2012, Apple's Phil Schiller introduced iBooks Textbooks for iOS and iBook Author for Mac OS X in New York City. This was the first major announcement by Apple since the passing of Steve Jobs, who stated in his biography that he wanted to reinvent the textbook and education. The 3rd generation iPad was announced on March 7, 2012. It includes a Retina display, a new CPU, a five megapixel camera, and 1080p video recording. On a July 24, 2012, conference call with investors, Tim Cook said that he loved India, but that Apple was going to expect larger opportunities outside of India, citing the reason as the 30% sourcing requirement from India. On August 20, 2012, Apple's rising stock rose the company's value to a world-record $624 billion dollars. This beat the non-inflation-adjusted record for market capitalization set by Microsoft in 1999. On August 24, 2012, a US jury ruled that Samsung should pay Apple $1.05 billion (665m) in damages in an intellectual property lawsuit. Samsung said they will appeal the court ruling. On September 12, 2012, Apple unveiled the iPhone 5, featuring an enlarged screen, more powerful processors, and running iOS 6. The latter includes a new mapping application (replacing Google Maps) that has attracted some criticism. It was made available on September 21, 2012, but has already become Apple's biggest iPhone launch; with over 2 million pre-orders pushing back the delivery date to late October.

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BUSINESS STRATEGY
CURRENT BUSINESS STRATEGY
A firms business strategy reflects its leaders. Under Steve Jobs, Apple differentiated itself through elegantly simple design. This piece explores Apples business strategy in the first full year of Tim Cooks leadership. Already, we can see Tim Cook is changing Apple. In contrast to Jobs rare appearance before the press and analysts, Cook took the opportunity to discuss Apples business strategy at the recent Goldman Sachs Technology Conference. When questioned about the future of the iPhone, Apples largest revenue stream, Cook underscored that smartphones only represent 9% of the global handset market and even within smartphones, 3 out of 4 customers bought something other than Apple. Apple manufacturing partners and practices have also come into the spotlight following the unprecedented disclosure of their supply chain partner audit combined with the hiring of a third party employment practices review agency. Most recently, Apple invited ABC Nightline into their primary supplier Foxconn. In increasing increments, Cook is making Apple more accessible. In the past, his operational expertise has been a perfect counter to Jobs legendary product instincts and will serve Apple this year. What we wont learn in 2012 is whether Cook can plant the seeds for a new platform in the years beyond. Its a no-brainer to assume Apple Labs is cooking away. There just wont be much evidence in 2012. What we can expect is that Apple will continue to get paid for the integrated value they deliver. Apple products initially cost more than most competitors. They win by tightly integrating hardware and software for a superior user experience. Many would argue Apples integration provides a lower aggregate cost as well.

Apple 2012
2012 will be dominated by the following four themes, all targeted at cementing users and developers into Apples lush, walled garden of peerless user experience: 1. Scaling all operations (manufacturing, retail, Internet) to meet global demand 2. Rapid expansion in China and developing economies
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3. New product form factor: Apple TV 4. Apples iCash Mountain Problem

1. Scaling: Flawlessly Synchronizing Billions of Transactions

With revenue greater than $46B in the fourth calendar quarter of 2011, any conversation about Apple strategy has to begin with the challenges of scale. The iPhone and iPad have plenty of runway left for growth as does Apple retail, but as numbers grow, so do the consequences of the smallest hiccup. Meeting demand for hundreds of millions of annual units requires flawless execution across the supply chain, distribution and with their manufacturing partners. Weve become so accustomed to high tech products that its easy to forget what a shortage of a single component can do. When floods struck Thailand last fall, it disrupted disk drive supplies for nearly six months. Last year, Apple sold 156 million IOS-based devices (iPhone, iPad and iTouch) which is more than the 122 million Macs sold since its 1984 introduction. In Tim Cooks own words, the trajectory is off the charts. Geometric growth plays to Cooks strengths. In fact, if theres a hallmark to Apples business strategy in 2012, it begins with leveraging his unique competencies.

2. Chinaand other developing countries

Any conversation about scaling quickly turns to Apples China opportunity. Focusing just on iPhone, Apple currently sells it exclusively through China Unicom (196 million subscribers). This is slightly less than the combined subscriber base of Verizon Wireless and AT&T. But in a country of billions, it doesnt compare to China Mobiles 616 million subscribers. Its no surprise that Cook visited China Mobile this past June. As important as Apples innovation machine has been for the developed world, 2012 success in China and emerging economies will be fed by incremental product improvements. They may be combined with creative cost and/or pricing strategies that subsidize purchasing much like Verizon and AT&T has for U.S. iPhone customers. With rapidly growing middle classes, one might consider market access more important in the developing world than ground-breaking innovation. And the above doesnt account for iPad or iTouch. Apples Asia Pacific sales (minus Japan) grew approximately 200% last year and account for 20% of Apples total revenue. Add in an

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expanded global retail presence and theres not much that stands in the way of superior revenue growth in 2012.

3. Next Platform Form Factor: Apple TV

The speculation regarding an Apple next generation television has evolved significantly. According to Cook, the current Apple TV hockey puck has been a hobby product. Shortly before his death, Steve Jobs told biographer Walter Isaacson that he had finally figured out TV. True or false, there are several reasons why flat screen TVs make sense for Apple: 1. Market size & headroom for premium pricing: The global market for flat screen displays is over 77 million units and grew 15% last year. Apple needs large markets like this to move the needle even if they only appeal to the high end of the market. 2. Platform expansion via form factor: Just as the iPad is essentially a larger iPhone, an Apple flat screen will enlarge the form factor again. It will leverage technologies such as Siri for a new control interface. Facetime will evolve into home video conferencing, likely enhanced by motion sensing technology that automatically follows action. As connection speeds improve, iCloud based recording (currently limited by upload speeds) and playback (available today) will be incorporated. 3. Apple ecosystem lock-in: Just as Frito-Lay thinks about the share of stomach it captures with drinks and snack foods, Apple seeks share of screens be it on Mac, iPod, iPhone or iPad. Just as salty snacks drive you to drink more soda, Apple TV will leverage device interoperability via iCloud. Apple TV widens the moat that keeps competitors away while fertilizing the soil in land of Apple. 4. Innovation Bluebird: Borrowing from Donald Rumsfield, the biggest unknowable that we know today is that Apples legions of independent apps developers will provide something surprising. The causal gaming phenomena of Angry Birds didnt exist before mobile apps. TV will offer a new and much larger landscape in which to play. 5. Hardware opportunity: As important as iTunes, mobile advertising and iCloud may be in Apples future, they currently constitute a thin sliver of overall revenue and profits. For now, the route to growth remains hardware. But Apple TV will face challenges. First are the flat screen incumbents. LG, Samsung and Visio have not been sleeping and will quickly counter Apples moves at lower price points. They will most likely scale Googles Android interface; perhaps a long shot might be Microsoft. Assuming Apple pushes Facetime as a family video conferencing play, you can
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bet that competitors will counter with a similar feature based on Google Voice or Microsofts Skype and Kinect technology. The second and more troublesome foe will be current content producers and distributors. After watching Apple iTunes disrupt music distribution, pricing and margins, movie and TV studios as well as cable, satellite and phone companies will be very wary. If you need evidence of their strength, just look at Neflixs recent struggles (see Netflix at a Crossroad). Can Apple drive the same disruption through television that they did in mobile phones? Without question, Apple will make good money but we wont know if its only a good business or a more serious disruption in 2012.

4. Apples iCash Mountain Problem

Do you recall the mountain of cash Donald Ducks rich uncle Scrooge McDuck possessed? Tim Cook has a $100B mountain and its rapidly growing. Far beyond whats needed for a rainy day, Cook cannot continue to ignore it. Declaring a special dividend to return some to stockholders is simple but hardly strategic. Technology acquisitions like the 2008 acquisition of P.A. Semi which brought the iPads ARM processor in-house will continue, but they dont dent the bank. The current maelstrom of patent lawsuits in the mobile space suggests that Apple will ultimately use some to settle issues much as Google did with its acquisition of Motorola Mobility. Similarly some will go to addressing market expansion issues such as the current licensing spat between Apple and Chinas Proview regarding use of the iPad trade name in China. Or Apple could follow Amazons Kindle strategy and subsidize hardware pricing to lower entry price. The problem is none of these strategies drain more cash than is coming in. The obvious next question is what if Apple pursued a large acquisition? This raises three significant challenges, at a minimum: 1. Regulatory: As the most valuable company on earth, regulators in all geographies would scrutinize any deal for monopoly concerns. Its hard to think of a large technology acquisition that wouldnt cause concern.

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2. Cultural fit: Strong cultures exclude rather than include. Add in Apples penchant for secrecy and try to name an asset of scale that would naturally fit in the Apple world. I cant. 3. Assimilation capability: Companies such as Cisco that have a track record of acquiring and assimilating large entities; Apple has never done so. Starting with a big bite would be challenging. Having said this, Apple could acquire an infrastructure capability outside of traditional tech that enriched the breadth of Apples ecosystem. For example, what if Apple acquired a financial services player? Blend Apples mobility hardware/software, advertising and iTunes to offer an electronic wallet with Apples legendary ease of use? Apple could buy a no-name bank and quietly use their existing financial infrastructure to leverage its 200 million iTunes customers and software expertise into an Apple iWallet. In the midrange, they could look at Intuit ($17B market capitalization) though that might raise regulatory flags. Alternatively, they could go big, buy Mastercard ($50B market capitalization). Stepping outside the technology arena would reduce regulatory monopoly concerns while leveraging Apples technology, branding and retail expertise. Going big doesnt directly address the cultural fit and assimilation issues but neither does it require much in the near term. Mastercard is a well-run, growing firm. Please take above for what it is: an example to illustrate a strategic choice versus a fully vetted alternative.

Summary
Apples business strategy 2012 has three elements: 1. Leveraging momentum with scale 2. Expanding the walled garden geography and IOS foundation 3. Investing in new directions: new product platform innovation and cash

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Corporate Strategy
In Corporate Strategy, Collis and Montgomery explain there are two kinds of diversificationlinked and constrained. Companies using linked diversification enter new businesses when it relates in some way to another business they are already in (it is linked to it), but does not necessarily have any connection to their other businesses. If they are using constrained diversification, however, they only enter a new business if it is based on their core resources or competencies. Companies based on linked diversification have little coherence to their overall corporate strategy, while companies using constrained diversification tend to be more focused. Constrained diversification allows companies to maximize the effect of their resources because they are shared . Apple uses constrained diversification. Apple is, inherently, a personal computer company (hardware and software), and their businesses utilize their competencies in developing hardware and software. The Macintosh, iPad, iPhone, iPod and AppleTV are all computers, which allow Apple to share resources between businesses. For example, the Macintosh, iPad, iPhone and AppleTV all run OS X, Apples operating system. This creates economies of scope, which, Collis and Montgomery point out create cost savings for the company because their resources are shared across multiple businesses. Rather than just have related businesses, though, each business is a focused platform with no extraneous products or product types. The Macintosh, for example, consists of two kinds desktop and notebook. These separate product lines each share resources and complement each other. The iMac and MacBook Pro are both primarily constructed from aluminum and glass, so not only do they share the same materials (which reduces costs), but they resemble each other, creating unity between product lines. Each platform, too, complements the other. Apples Macintosh computers sync their media and personal data (calendar, contacts, email) seamlessly with the other platforms. Because they work so well together, owning products from each platform benefits users by creating an experience where their devices just work. The platform advantage does not apply just to Apples devices. Through iTunes, users can purchase music, movies and television shows that syncs across all of their devices, or even do so from their iPhone or iPad. The App Store allows users to download applications for their iPhones and iPads wherever they are, and now the iBook Store, released in April, will allow them to do the same with books.
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Because Apple has chosen what businesses to enter carefully, these platforms reinforce the others and make them more powerful. The sum is greater than the parts. This creates a complete package for consumers to choose, and it is difficult for competitors to match. Their platform strategy makes each individual business more valuable than it would be as a separate entity. Their strategy can be improved, however. Currently, MobileMea service Apple offers that keeps contacts, calendar, and email in sync across multiple devices over the airis a premium service that costs $99 per year. This is the wrong approach. Rather than a premium service, MobileMe should be free and integrated into Apples platforms. MobileMe should act like the glue that integrates the platforms and as a draw for users. Apples goal should be to get as many MobileMe users as possible. Once someone is happily using MobileMe across their various devices, they are less likely to switch to a competitors product. The iBook Store, too, can be much more. At the moment, it is just thata book store. Instead, it should become a print media platform for books, text books, newspapers and magazines. The print industry is at a juncture in its history, where it is switching from print to digital. The digital print industry is in its infancy, but is vital for the future. This provides Apple a significant opportunity to establish its platform as the preeminent one. This fits Apples platform strategy well. With iTunes, Apples intent is to make the major forms of media used on their devices immediately and easily available, and the iPad is positioned as a reading device and is perfect for it. Establishing the best print media platform would strengthen their media offering and make the iPad much more convincing as a device.

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Mobile Business Strategy

Apples goal for their mobile business should not be to take a Microsoft-like monopoly of the industry, but rather to take a sizable portiontwenty-five to thirty percent or so. Since Apple is fundamentally about innovation, differentiation, they can seek high profit margins, and thus do not need overwhelming market share. Strong profit margins allow them to have a high percentage of the industrys profit share without a corresponding market share. It should be asked, then, why they should seek a market share as high as twenty-five to thirty percent if they are targeting higher profit rather than market share. The reason is that some level of market share is necessary to attract developers, both in quantity and quality, to develop for the platform. Just like for the PC, a solid group of third-party developers is necessary for a mobile platforms success. Gaining market share, however, should not be Apples primary goalit is just a means. Market share today does not guarantee market share tomorrow. Rather, Apples goal should be to define what these devices are, again and again, so the competition responds to Apple. Peter Drucker wrote that What makes the future happen is always a businesss embodiment of an idea of a different economy, a different technology, a different society. It need not be a big idea; but it must be one that differs from the norm of today . This means defining what the devices are (e.g., a pocket-sized device, or a tablet-sized device), and what they do. Apple must do this through constant innovation. By constantly defining what these devices are and what they do, Apple can secure for itself the role of industry innovator, and thus a position of strength. If they are constantly redefining the industry, they do not need overwhelming market share. The iPhones release in 2007 is a perfect example. Before the iPhone, no smartphones used touch as a primary means of input. After its release, however, most smartphones use large touch screens and even resemble the iPhone. The similarities extend to the software, too. They try to match the iPhones features specifically, its excellent web browser and the App Store. The iPhone defined what smartphone devices are (all screen, touch input) and what they do (browse the web, run userdownloadable applications). Competitors have tried to make incremental improvements, such as a higher-resolution screen or a physical keyboard, but none have made serious changes to the basic definition laid out by Apple in 2007.
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There is an interesting parallel between the nascent mobile market and the personal computer market of the mid-1980s. Apple dominated the early personal computer market with integrated hardware and software (only Macintosh ran Mac OS, so consumers could only use the Mac OS by purchasing a Macintosh), but Microsoft licensed its operating system to any computer manufacture who wanted it. Microsoft ended up dominating the market. In the mobile market, Apple is following a similar path as it did with the Mac: hardware and software are integrated. With Android OS, however, Google is using Microsofts strategy (with a few differences). In an attempt to grab market share, Google allows any device manufactures to use Android on their smartphones. By giving away the operating system and taking a majority of the market, Google can ensure a place for the company in the mobile market, entice developers to their platform and commoditize their competitors main advantagethe operating system. They are grabbing significant market share in the smartphone market. In first quarter 2010, Androids market share grew to twenty-eight percent, up from twenty percent in fourth quarter 2009. Apples market share in the same period stood at twenty-one percent.3 Going forward, Androids success may come at the expense of Apples own market share, and thus could marginalize the platform. The question, then, is whether Apple should follow Googles strategy and license the iPhone OS to other companies in an attempt to negate Androids advantage. This is not the proper strategy. Apples basic business model is to sell hardware. Everything elsethe operating system, iTunes, the App Storeare used to make their products more valuable and thus to increase hardware sales. Apple enjoys high profit margins on their products not because the hardware is better than what others offer (although that is a part of it), but primarily because their software is better. At the 2007 All Things Digital conference, Steve Jobs said, If you look at what a Mac is, its OS X, right? Its in a beautiful box, but its OS X. And if you look at what an iPhone will hopefully be, its software. If Apple were to license the iPhone OS to other manufactures, this would give away their hardwares main advantage and thus significantly cut into their sales. Apple would have to find a different business model.

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In Leading the Revolution, though, Gary Hamel provides an even more compelling answer. Hamel wrote, What is not different is not strategic. To the extent that strategy is the quest for aboveaverage profits, it is entirely about varietynot just in one or two areas, but in all components of the business model. If Apple merely follows Googles strategy, but plans just to do it better, they are playing on Googles terms, and that is a difficult game to win. Instead, Apple should differentiate the platform. Because the Android platform is spread over a large number of devices and manufactures, it is necessarily fragmented. Some devices have 3.5 inch screens while others are 4.3 inches; some have track balls; some have hardware keyboards while others do not. Worse, because Android devices are manufactured by different companies with unique versions of the operating system, and are dependent on them for software upgrades, some Android phones are stuck on older versions of the operating system that cannot take advantage of new features or applications. This is confusing for users and makes it difficult for developers to build applications that can run on the entire platform. Android may have twenty-eight percent of the market in the last quarter, but developers can only build applications for a portion of those devices. This is terrible for users and developers. Apples hardware-software integration strategy eliminates this problem. Because Apple controls the iPhones hardware and software, they can guarantee that users can access operating system updates immediately and that the hardware characteristics are uniform across the entire platform. For developers, this means if their application is on the App Store, every iPhone user can use their application, and for users, this means if an application is available on the store, they can use it. They do not have to worry whether their iPhone is stuck with an outdated version of the operating system, or whether their hardware is incompatible with the application. They just use it. Their integration strategy provides other advantages as well. By controlling the hardware and software, Apple can guarantee a level of quality their competitors cannot. Moreover, they can build hardware and software features their competitors cannot access, and thus make their products more valuable. For example, the iPads battery lasts for ten hours of use. For its weight, thickness and price, this is an incredible advantage over competing devices, and it is due to Apples own battery and processor technology. Apple is doing this in software, too,
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with iPhone OS 4 (announced in April), and recent acquisitions like Siri, a natural speech recognition company. Controlling the hardware and software together is the best way for Apple to differentiate their products, because they can guarantee the quality of their devices and create innovations and features exclusive to the platform. This not only is Apples best strategy for succeeding in the mobile market, but it serves their goal of constantly re-defining it. Controlling the hardware and software allows them to make substantial changes quicklythere are no other manufactures to deal with.

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Global strategy
Apples unique history made the company known as the typical example for the American Dream stereotype. Nowadays, Apple is more than a domestically operating enterprise. Over the years it has become a pure multinational, resourcing raw materials and selling products globally. Apples foreign operations As Apple manages its business primarily on a geographic basis, its segments are the Americas, Europe (including Middle East and Africa), Japan, the Retail segment and Others (comprising Asia-Pacific). This organisation already indicates Apples widespread global operations and activities although the United States still represent Apple's largest geographic marketplace with 58% of net sales. Nevertheless, a large portion of the company's net sales is derived from its international operations. Also, a majority of the raw materials used in Apples products is obtained from foreign sources. Final assembly of products outside the US is conducted in Apples manufacturing facility in Cork (Ireland) and by external vendors in Taiwan, Korea, the Netherlands, the Peoples Republic of China and the Czech Republic. Currently, manufacture of many of the Apple PCs components and final assembly of all portable products are performed by third-party vendors in Japan, Taiwan and China. Sale and marketing subsidiaries were founded in several countries all around the world to serve a global customer base whereby Japan and France became the most prosperous markets for Apple. In contrast, to penetrate countries like Germany or the United Kingdom was difficult due to restrictions and cost- as well as responsiveness pressures. Additionally, the company expanded its retail program, the Apple Store, to Japan by launching the first international shop in the Ginza in Tokyo. As margins on sales of Apple products in foreign countries and on sales of devices that include parts obtained from foreign suppliers can be adversely affected by foreign currency exchange rate fluctuations, by international trade regulations, including tariffs and antidumping penalties or by pressure on cost reduction and local responsiveness and therefore can impose huge risks to the company, its necessary to evaluate why Apple moved abroad. As with any internationalization Apple tried to increase profitability through lowering costs and to explore new customer groups through selling more. When Apple started this expansion in the late 1980s and intensified it in the early 1990s the company already benefited from

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lower costs over the life-cycle of their products as learning effects and economies of scale occurred. These abilities enabled Apple to differentiate its product offerings (new products and services). Furthermore, Apple transferred these distinctive competencies (but still domestic) which generally lead them to achieve superior efficiency, quality, innovation or customers responsiveness to foreign countries for exploiting a probable value creation potential. However, going abroad created the chance to not only use, but also improve and leverage Apples skills. A perfect example for this development at Apple is the PC Companys production plant in Cork (Ireland). The Americans shipped over their know-how and knowledge to the Celtic Tiger which is characterised by low taxes and by a well-educated work force. In the end, Apple achieved to lower costs as transportation efforts to Europe and consequently expenses decreased. Additionally, value arised from being able to provide faster delivery of accurately fabricate products, better service, reach a higher customer satisfaction and in the end have increased sales/profits. It is indispensable for Apple to maintain and even strengthen their way towards internationalisation by taking advantage of the positive aspects of globalisation. For instance, the African market isnt covered at all in practice despite being in the position to provide Apple with a small, but soaring number of wealthy clients. Although having experienced difficulties in Germany and the UK years ago, even there Apple succeeded as their products became more and more stylish.

Apples Transnational Strategy From the four strategies possible Apple finds itself in the fourth quadrant facing both, high pressure for local responsiveness as well as for cost reduction. Its by far the most difficult one to realise, but if accomplished a company can obtain a low cost structure as well as a considerable level of customer acceptance. Apple applies this strategy, but hasnt reached the optimal point yet. This is due to the fact that Apple could get to an appropriately low cost situation, it still has to persuade PC users in each country from the very entry of their technological and innovative superiority. Despite of living in a world more and more knitted together a huge amount of computer owners doesnt know much about Apples technology. Moreover, Apple is heading towards Transnational Strategy from a point in between Global and Transnational Strategy.
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Apples methods of entering new markets When deciding to move abroad Apple executives were asking themselves the questions which markets to enter, when to enter and on what size. This meant finding out the size of the market, possible local consumers, their wealth and purchasing power and the situation in Apples market there (i.e. competition). Would Apple have to adapt products to meet the local preferences? Apples assessment of benefits, risks (also politically) and costs concluded in first of all expanding to Europe which was and is only slightly different to the US. Later on, politically risky and highly competitive Japan was taken on, followed by a number of other countries. Timing the entry wasnt hard to work out as the US market at the beginning of the 1990s was in a bad shape (i.e. recession) concerning the business cycle and not many other PC companies went overseas. So Apple despite taking on some risk as nobody knew what it would be like was in a position to build up demand and pre-empt future rivals as first-mover advantages. Furthermore, Apple tried to start their foreign ambitions with baby steps which means not being exposed to too much risk if the decision failed. As soon as the company encountered that business performed, Apple imposed a strategic commitment to enhance their activities overseas by all means and forces. The method Apple used was to simply export at the very start which also could infer huge costs (e.g. exchange rate fluctuations, shipping costs, cheaper producing competitors located in the objected market) by using economies of scale at their US plants, but altered the strategy and implemented fully owned subsidiaries in some specific countries (e.g. Cork plant in Ireland). Additionally, Apple started licensing their PC production, but that emerged only within the US. Franchising or joint venture never played an important role for Apple as the PC producer never wanted to provide partners with access to their know-how. So at the moment, Apple operates with a good strategy by combining strategically allocated subsidiaries worldwide with exporting activities from the companys assembly plants. With putting aside domestic US mergers and acquisitions and the Microsoft deal, Apple never proceeded any forms of major strategic alliances with foreign companies. Pressures for cost reductions and local responsiveness Although the PC market is one of high technology and high quality goods, Apple as well as the whole PC industry has to have an immense focus on the cost side. Increased domestic and
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abroad competition makes use of prices as the main source of competitive advantage. This wasnt the case at the start of Apples business, but brought the company already on the edge in the 1990s. This was one of the reasons for Apple to look for business opportunities overseas, but even there pressures for cost reduction were sustained. Therefore, price policy which means drawing the line between the quality and the price of a product was and is an essential one for Apple as the management often was reluctant to lower short term profit margins. Even today, not charging too high or low represents a crucial criteria when selling fashionable PC ware. Concerning the global strategy, consumer awareness and acceptance of Apples products is important. Not for the Wintel-standard base industry, but especially for Apple log-on and network effects are extremely dangerous as they influence people not to abandon the OS or PC-standard they were trained on or are constantly using at home as in office. This makes it much harder for Apple to gain market share abroad (e.g. Europe) as theres a much higher percentage of people that choose Wintel than in the US. Therefore internationally, adapting to local tastes and preferences, being able to deal with the different infrastructure and altered traditional practices becomes much more decisive abroad to acquire customers. In addition, demands of local politics arise (e.g. Japans wired political and economical situation) and require Apple to act to avoid running the risks of protectionism, local legal barriers or economic restrictions. Although Apple doesnt vary its product and marketing message from country to country, the company has early developed strategies to respond to pressures in local acceptance by adapting. Building up an intercultural communications skill when doing business helped them to prevent, minimise or get rid of problems arising from internationalisation. Globalisation moves on, but doesnt destroy local differences, local uniqueness. Nevertheless, the fear can emerge that Apple reinforces their global ambitions too little although having been one of the front-runners for an international strategy in the PC sector.

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BUSINESS LEVEL STRATEGY

The business strategy proposes how a specific business model can gain a competitive advantage over its competitors in the industry. There are three main factors influencing the shape of Apples business strategy. They are customer needs, customer groups, and distinctive competencies in other words Apple has to find answers to what and how customer needs are satisfied and who is going to be satisfied.

Customer needs Apple, throughout all industries it participates in, tries to implement its vision of being the digital hub in an area where networking between hardware, software, and services is getting more and more important, as consumers require sophisticated as well as integrated digital devices who can smoothly communicate with each other. Apple since ever tries to differentiate itself from competitors in order to justify the premium price it charges. It is important to find the right balance between customer satisfaction and pricing option as this mix is crucial to maximise value for the customer and drive up profitability. Apple is known for its high cost structure, as development of product design and innovation is a costly matter. Nevertheless product differentiation is a strong competitive weapon because Apple can increase the perceived value of its products and be as profitable as other competitors despite the higher cost structure.

Customer groups For a company it is indispensable to know its customers. Know your customers means to be able to carry out proper market segmentation, because each set of consumers needs to be properly differentiated. This procedure helps companies to target individual customers in a better way with better and more appropriate products, increasing customer responsiveness. There are three types of strategy available for market segmentation. The first option would be that Apple could try to serve the average customer without making any differences in serving their needs, second Apple could still serve all customers, but recognise the different tastes and therefore create separate products for each customer segment or third Apple could simply position itself into a niche and serve just specific customer groups. Apple uses consumer

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characteristics to segment the market as the following diagram shows and employs a niche strategy.

Distinctive competencies Apples business model must acknowledge its distinctive competencies and set a business model which allows it to organise and enforce its competitive advantages. With Apple as industry leader in design and product innovation the task of the manager is to choose a strategy which is in compliance with the high cost structure and the differentiation approach. Investment strategy The second determinant of where Apple is heading in the future on a business level is its investment strategy. As the name already suggests, the investment strategy defines and allocates resources needed to create distinctive competencies. The choice is dependent on the strength of Apples position in the industry and the stage of the industry life cycle. To analyse Apples position in the industry you need to consider the market share in its key market segments. In the education sector Apple has a 28% market share in portable devices (iBook) and an overall market share of 12.4%, in the creative professionals sector Apples market share exceeds 65%. In the consumer and the small business segments it captures only insignificant market shares. To sum it up, Apple has a relatively strong competitive position within the industry. Apples position has again implications for the investment strategy. As stated before, the PC industry is in its shake out stage reaching maturity, meaning that demand is only increasing slowly with 2001 being the second year of a decline in worldwide PC sales after 1985. As a strong competitor and a differentiation specialist Apple investments are oriented towards the development of a sophisticated customer service, marketing, and broader differentiation. Apple therefore entered as part of the digital hub industry the consumer electronics market, more specifically the MP3 player market with its iPod and developed iTunes, an online music platform and media content player. Naturally the PC business remains Apples core business (70% of Apple revenues come from PC sales), but as profits start to dry up, broader diversification is the only liable way for Apple to ensure profitability in the long run. All in all the investment strategy tends to be coherent with the generic business level differentiation strategy, as new products are marked by the same qualities and features Apple has established

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and is proud of in the PC industry. iPod and iTunes perfectly fit in the corporate image as they seamlessly join the existing products in terms of design, reliability and pricing.

Competitive strategy After choosing the appropriate generic business level strategy and investment strategy, Apple faces another critical decision. To chose a competitive strategy which best fits generic business level strategy, given the maturity stage of the PC industry in the industry life cycle. As this stage is characterized by a small amount of dominant players such as Dell, HP/Compaq, Gateway and Apple, these companies have the power to influence the five competitive forces. Apple therefore is constantly watching the other players, trying to predict their next step in order to be ahead of the rivals. This so called competitive game can be analyzed using game theory. As Apple 2000/2001 tried to enter the low priced market to better serve its education segment, it launched its eMac and priced it competitively at $999. Just weeks after this launch, Dell, its main competitor in the education market, announced deep price cuts for its Dell Dimension 4100 Desktop to as low as $799 per unit. This obvious high interdependence in the PC industry requires Apple and its managers to look forward and reason back, before launching any initiatives. This interdependence doesnt only pose a threat to Apple, as Apple can use this already existing invisible hand to protect companys and industrys profitability. There are two major starting points how Apple can achieve sustainable profitability. Either deter entry into the industry or reduce rivalry among existing competitors.

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FUTURE PLANS
Biting into a Greener Apple Today, while most companies primary strategies include increasing revenue and cutting costs, Apples focus is on transforming every aspect of their business process to operate more efficiently. In other words, Apple is becoming greener. When asked about the companys plans to become more environmentally conscious and reduce their carbon footprint, Steve Jobs explains: It is generally not Apples policy to trumpet our plans for the future; we tend to talk about the things we have just accomplished. Unfortunately this policy has left our customers, shareholders, employees and the industry in the dark about Apples desires and plans to become greener. Apple plans to reduce and eventually eliminate the use of mercury by transitioning to LED backlighting for all displays when technically and economically feasible. Apple has recycling initiatives implemented in 95% of the countries that sell their products. In 2008, the company recycled 33 million pounds of electronic waste (e-waste), accounting for 41.9% of their products sold world-wide. Figure 5 shows the companys progressive commitment to their recycling programs, as well as a projected goal to be reached by the end of the 2010 fiscal year.

Figure 5.Apples Weight Recycled Per Year (2007-2015) Source: Apple, 2012

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A Mobile Society of Constant Connection Humans are social creatures. As such, we thrive on the ability to remain constantly connected through a variety of our beloved mobile communications devices. Realizing this, Apple is synergizing their products and services (iPod, iPhone, iTunes, etc.) with all types of mixed media content (music, videos, photos, applications, etc.). As Apple continues to bring convergence to a now-digital world, consumers can expect extensive improvements with each Apple product release.

Development and Operations Apples future operations depend largely on the companys ability to continue developing high-quality components of mobile communication devices, such as: microprocessors, nonvolatile (NAND) flash memory, dynamic random access memory (DRAM), liquid crystal displays (LCDs), and many moreall in sufficient quantities made available to consumers at competitive prices. The company plans to continually stimulate demand for certain products by implementing new design, operability, and user-friendly features. Apple also plans to continue lowering product prices, despite the fact that doing so would affect the companys gross margins unfavorably. Due to their significant international operating locations, fluctuations with resources, exchange rates, and taxes can also affect their future financial results and operational strategies. Apples future also depends on third-party developers and their ability to continue creating software applications that are both powerful and useful for Apples products. Companies like Microsoft, Dell, Sony, Hewlett-Packard, and other manufacturers of electronic communication devices could pose a major threat if third-party Apple software development should decrease or cease in production.

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Conclusion
Apple has truly put the personal in personal computing. In 1984, the Macintosh proved to be the companys foundation-laying product. The Macintosh began the desktop publishing revolution with its cutting-edge GUI and laser writer printer capability. Today, Apple continues to lead the industry with their outstanding and award winning products and services. Apple is also credited with leading the digital media revolution with their iPod portable music and video players and iTunes online media store, creating the first sustainable music-downloading business model in history. The company has also entered the mobile phone industry with an altogether different business strategy known as value innovation with the iPhone. Value innovation focuses on making the competition irrelevant by opening up new and untapped markets, creating a leap in value for consumers. The iPhone is yet another product that has changed the way the industry defines new product standards and possibilities. With growing demand for high-quality, powerful, user-friendly, and cost effective products, Apple is undoubtedly the leader in terms of bringing these ideas to life. The company realizes that rather than publicly announcing product development plans years in advance, products are better-received with an awe response if they are simply released when theyre finished as opposed to providing beta or demo versions to the public. This is an excellent strategy when the goal is to keep consumers eager for the latest products and asking, What could they possibly improve next?

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BIBLIOGRAPHY
WEBSITES: http://www.apple.com/macmini/ http://www.apple.com.html http://images.apple.com/pr/pdf/q206data_sum.pdf on 5/6/06 http://online.wsj.com/article_print/SB114355415653810027.html http://www.apple.com/hotnews/agreenerapple http://www.apple.com/pr/library/2009/10/19results.html http://support.apple.com/kb/HT1656 http://www.apple.com/jobs/us/corporate.html http://www.time.com/time/magazine/article/0,9171,986849,00.html

http://simson.net/ref/NeXT/aboutnext.htm http://www.silicon-valley-story.de/sv/apple_sculley.html http://www.apple.com/environment/complete-lifecycle BOOKS: Barney, J. (2002). Gaining and Sustaining Competitive Advantage. Upper Saddle River: Prentice Hall. Bartiromo, Maria. (2/8/2006). Apple Computer Analysis. Transcribed interview retrieved from LexisNexis Academic database on 4/17/2006. Boddie, John. (August 29, 2005). Behind Apple's Strategy: Be Second to Market. Ret Linzmayer, Apple Confidential: The Real Story of Apple Computer, Inc., Apple Computer, 2009 10-K Annual Report,
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