1. BANZON / CHAN / LULU / MIRANDA / PANGANIBAN / SALAZAR
BA 190 - STRATEGIC MANAGEMENT
UNIVERSITY OF THE PHILIPPINES
PROF. MITA ANGELA M. DIMALANTA
APPLE
2. INTRODUCTION
FOUNDERS: Steve Jobs, Steve Wozniak and Mike Markkula (est. 1976)
CEO: Tim Cook
INDUSTRY: Computer hardware and software; Consumer electronic; Digital
distribution
PRODUCTS: iPhone, iPad, Mac, iPod, Apple TV, Apple Watch, OS X, iOS, iLife,
iWork
SERVICES: Apple Store, Mac AppStore, iOS AppStore, iTunes Store, iBook, iCloud
NUMBER OF STORES WORLDWIDE: 463 stores
REVENUE: $ 233.72 B
ENTERPRISE VALUE: $ 724.7731 B
3. July 1, 1976 Apple I
April 1, 1977 Apple II
December 1, 1981 Apple III
August 11, 1988 OneScanner
October 21, 1991 Powerbook 140
July 21, 1999 iBook
October 23, 2001 iPod Classic
July 17, 2002 iPod Second Generation
April 23, 2003 iPod Third Generation
July 19, 2004 iPod Fourth Generation
September 1, 2005 iPod Shuffle
October 12, 2005 iPod Fifth Generation
March 21, 2007 Apple TV First Generation
June 29, 2007 iPhone 1
September 5, 2007 iPod Touch First Generation
September 6, 2007 iPod Sixth Generation
January 2008 Macbook Air
July 11, 2009 iPhone 3G
April 30, 2010 iPad
June 24, 2010 iPhone 4
March 2, 2011 iPad 2
October 14, 2011 iPhone 4s
October 24, 2011 MacBook Pro
March 5, 2012
September 5, 2012 iPhone 5
October 5, 2012 iPad 3
November 5, 2012 iPad Mini
November 5, 2012 iPad 4
November 5, 2012 iMac
February 5, 2013 MacBook Pro Retina
September 20, 2013 iPhone 5s
September 20, 2013 iPhone 5c
4. THE IBM PC AND ITS AFTERMATH
• IBM had a huge and very profitable mainframe computer business, but failed to
develop a personal computer, despite two attempts.
• “Open architecture”
• Microsoft had been in the industry from its inception, writing a version of BASIC
software programming language for MITS Atari in 1977, the 1st PC produced.
• Introduced in 1981, IBM PC was an instant success. Over the next 2 years, IBM
would sell over 500,000 PCs, seizing market leadership from Apple. IBM had
what Apple lacked, an ability to sell into corporate America.
5. THE BIRTH OF THE MACINTOSH
By 1980 two other important projects were underway at Apple: Lisa and Macintosh.
Funded out of Xerox’s successful copier business, PARC was set up to do advanced research on office
technology.
Jobs was astounded by what he saw at PARC, and decided on the spot that these innovations had to be
incorporated into Apple’s machines.
• “reality distortion field”
• “Do you want to sell sugar water for the rest of your life, or do you want to change the world?“
In 1984, Macintosh captured attention for its stylish design, and utilization of a GUI, icons, and a mouse, which
made the machine easy to use and were not found on any other personal computer at that time.
In early 1985, Apple posted its first loss.
In late 1985 an embittered Jobs resigned from Apple, sold all of his stock, and left to start another computer
company, named NeXT.
6. SCULLEY’S APPLE
Fixed shortcomings of original Mac - changed it to Mac Plus
Created relationships with Adobe for better graphics in Mac computers
Proposed to license Mac operating system to other computer manufacturers,
allowing them to make Mac Clones
7. APPLE IN DECLINE
Due to the decline in market, Apple became a Niche player instead
Sculley’s Strategic Plan:
1. Appointed himself Chief Technological Officer and CEO
2. Committed to bring out a low cost version of Macintosh to compete with IBM
clones
3. Cut costs - reduced workforce, cut salaries of top management, used
subcontractors were instead of manufacturing its own
4. Brought out hit products every 6 to 12 months
5. Entered into an alliance with IBM
8. APPLE UNDER MICHAEL SPINDLER & GILBERT AMELIO
After Sculley stepped down, Michael Spindler took over
• Licensed Mac OS to other companies, allowing them to make Mac clones
• Not able to predict demand for products & overestimated demand in 1995
• Board could not take it
After Spindler stepped down, Gilbert Amelio took over,
• Apple purchased NeXT - which was owned by Steve Jobs
• Hired Steve Jobs as a consultant for Apple but he was busy with his other
company, Pixar
• Apple incurred more losses and Board asked Amelio to step down
10. STEVE JOBS:
- Appointed interim CEO in 1998
- Made a deal with Microsoft
- Microsoft agreed to invest $150M in Apple
- Continued to produce Office for the Mac
- Ended licensing deals with Mac clone makers
- bought leading Mac clone maker for $100M
- Stopped selling slow-selling products (Apple Newton handheld computers)
- Reduced number of products lines from 60 to 4
- Pursued online distribution
These remedies brought a favorable reaction from the stock market, but was not
enough to generate growth.
11. NEW MARKET OFFERINGS
iMac
- Released in May 1998
- Differentiator: design of machine itself (combined monitor and CPU)
- Team of designers: led by Jonathan Ive
- made plastic shell look exciting rather than cheap, visited a candy factory
- worked with Asian partners to come up with a sophisticated process capable of
producing millions of iMacs a year
- redesigned internal electronics, so they looked good through the thick shell
- 100,000 units were ordered even before iMac was available, at $1,299 each
12. NEW MARKET OFFERINGS
iBook
- Released in 1999
- Same design theme as the iMac
- Priced at $1,599 each
1999
Revenue: $6.1B
Profit: $420M
2000
Revenue: almost $8B
Profit: $611M
13. NEW MARKET OFFERINGS
OS X
- First version of Apple’s new operating system
- Introduced in 2001
- Capable of running multiple programs at once
- Supports multiple users
- Connects easily to other devices
- Easier for developers to write applications for
- Well-designed and intuitively appealing interface
- OS X Mountain Lion was introduced in 2012 at $19.99
14. NEW MARKET OFFERINGS
Apple had to offer applications to entice Mac users
to upgrade to OS X
- Deal with Microsoft (Office for Mac)
- which didn’t convince others to write programs for OS X
- Adobe refused to write video-editing program for Mac in 1998
Jobs: Apple to start working on its own applications
- Final Cut Pro (professionals) & iMovie (consumers)
- iLife
- iMovie, iPhoto, Garage Band, iTunes
- Safari
15. NEW MARKET OFFERINGS
Titanium Powerbook G4 Notebooks
- Released in 2001
- Ultralight and fast notebooks
- Clean post-industrial look
iMac G5 Computer
- Released in 2004
- Simple, stunning all-in-one design
Ultrathin MacBook Air
- Released in 2008
- Weighs 3 pounds
- 0.76 of an inch thick at its widest point
16. NEW MARKET OFFERINGS
Early 2000s
- Apple had relatively low market share
- Falling behind Dell, Hewlett Packard & IBM/Lenovo
*Weak demand and low market share led to another loss for Apple in 2001.
*Some started doubting the capability of Steve Jobs in managing Apple.
Market Share: 3% - 2004, rose in 2005
8.5% - 2008
*Growth in 2005-2008 mainly driven by the popularity of the iPod and the iPhone.
17. INTEL INSIDE, WINDOWS ON THE DESKTOP
- In 2005, Apple announced that they would be using Intel microprocessors,
because PowerPC chip failed to keep up with Intel chips.
- faster and had lower power consumption
- Risks: old applications and OS X must be rewritten to run on Intel processors
- In Spring 2006, Apple produced Intel-compatible versions of OS X, but many
other applications hadn’t been rewritten for Intel chips
- To make the transition easier:
- Rosetta - enabled users to run old applications on Intel-based Macs
- Boot Camp - enabled Mac owners to run Windows XP on their Macs
- In late 2006, Apple announced that its transition to Intel-based architecture was
complete
19. “We spent a lot of time
designing
the store, and it
deserves to be built
perfectly.”
• personal attention paid to
customer by smiling sales staff,
• a “genius bar” where technical
experts helped customers fix
problems with their Apple
products
• wide-open interior space
20. iPod and iTunes
• “Commercial value of music is being widely devalued by mass
copying and piracy.” - Phonographic Industry in 2003
• Music industry was desperate for a legal alternative to illegal
downloading.
• Macs did not have a CD burner, or software to manage their
digital music collections.
21. • iTunes program: to help Mac users manage their growing
digital music collections
• iPod: portable MP3 player to take music with them
22. • Licensed software from PortalPlayer
• Apple cut a deal with Toshiba
• Apple focused on designing the user interface, the
exterior styling, and the synchronization software
to make it work with the Mac
23. • Priced at $399
• Consumers’ high willingness to pay
for iPod’s high storage capacity
• Developed a version of iPod that is
compatible with Windows
24. Jobs: “Digital distribution is going to happen, and the best way to protect
your interests is to support a legal online music distribution business.”
• iTunes files would be downloaded for $0.99 each.
• Apple launched online iTunes store in April 2003.
• Customers were downloading over 4 million songs per week, which
represented a run rate of over 200 million a year by the end of 2004.
• iTunes store had a song catalog of 20 million, and Apple was seeing
15,000 downloads a minute, by the end of 2012.
• Apple announced that 25 billion songs had been downloaded from
iTunes, in February 2013.
25. • Apple was not making much money from iTunes downloads,
probably only $0.10 a song.
• Good margins of sales of the iPod- and sales of the iPod ballooned
after the launch of the iTunes online store.
• Downloads from iTunes accounted for 64% of the entire U.S. digital
music market and 29% of all music sold in the U.S. (including both
digital and physical formats), in mid 2012.
28. “This changes everything”
• The first iPhone introduced in 2007
• Designed by team led by Jonny Ive, iPhone
was differentiated from established smart
phone offerings by revolutionary touch
screen
29. Pricing strategy
• Priced between $599 and $499 depending
on the model, iPhone was positioned at the
high end of the smart phone market
• Uses a price skimming strategy
30. Reaching targets
• Steve Jobs announced the goal was to try
and grab 1% of the total global market for
wireless phones in the first full year that the
iPhone was on the market.
44. THE IPAD
- Released in 2001
- Revolutionary tablet computer
- Touch screen keyboard
- WiFi ready
- 3G wireless service support
- Same iOS as found on iPhone
- Elegant design (aluminum case & Gorilla glass)
- Powerful enough to download and watch full-length movies on HD
- Light enough
45. “STYLUS ISN'T MY STYLE”
- 2002 - Microsoft’s table computers “stylus”
- Jobs: “stylus” is a “failure”
- He wanted a glass touch screen
- 2010 - iPad was a success (300,000 units sold in the first day)
- 2013 - iPad 4 was released (with retina display and better features)
46. THE IMITATION GAME
- Tablets using Google’s Android OS
- Galaxy Tablet (Samsung)
- Amazon.com - Kindle Fire Tablet
- Microsoft - Surface Tablet - Windows
47. HEADS IN THE ICLOUD
2011
- Cloud storage
- Computing
- Synchronization device
- Allowed customers to store data
- Music
- Movies
- Books
- Documents
- Remote Servers
*Most comprehensive offering yet
- 20 million users n 1 week
- 2012 - 250 million subscribers
- It is for free but with small annual subscription for music storage and
synchronization services
49. STRATEGIC ISSUES
- 2013
- Lost its visionary
- Motivate?
- Tim Cook (COO); Johnny Ive (Design Op)
- Google - Google Drive and Google Chrome
- Microsoft - 90% of the world’s 1.5 billion PCs
- How to match Tham?
- Continued growth when you’re no. 1?
50. REFERENCES
Apple. (2016). The Apple Timeline. Retrieved November 16, 2016, from The History
of Apple, In One Place: http://www.theappletimeline.com
Hill, C. W., Jones, G. R., & Schilling, M. A. (2013). Strategic Management: An
Integrated Approach (11th ed.). Stamford, USA: Cengage Learning.
Linzmayer, O. W. (2006, March 30). 30 pivotal moments in Apple's history. Retrieved
November 16, 2016, from Macworld:
http://www.macworld.com/article/1050112/macs/30moments.html
Notas del editor
If people were going to maintain the bulk of their music collection on a computer, they needed a portable MP3 player to take music with them.
>Slogan for the first iPhone in 2007
>browse the web, take pictures and function as an iPod digital music player
>replaced the traditional mechanical keypad and allowed users to quickly and easily switch between functions
>It was elegantly designed and made extensive use of expensive materials including a body of brushed aluminum and a screen made of tough “gorilla glass”
>Up to this point, most phones had used plastic bodies and all had plastic screens.
“gorilla glass” Cornings- Designers at Apple had heard about a very strong form of glass Corning had developed, but which was not in manufacture. Jobs reportedly flew out to Corning, visited with the CEO, and personally persuaded him to put the material into mass production
Apple struck a deal with AT&T, under which it was to be the exclusive provider of wireless service for the iPhone
>some were skeptical
>established smart phones such as Blackberry,
and offerings from Palm, Motorola and Nokia, all of
which had gained a following among business users
>charges the highest initialprice that customers will pay. As the demand of the first customers is satisfied, the firm lowers the price to attract another, more price-sensitive segment.
Means selling 10million iPhones by the end of fiscal year 2008
By the end of fiscal 2008, Apple had sold 11.63 million iPhones
>slogan for iPhone 3G 2008
>iPhone would use AT&T’s slower data network, rather than the
faster 3G network that was more suited to web browsing
>Apple to drop the price for the iPhone to as low as $199 for an entry level model. Yet
again long lines formed outside Apple stores and in the
first 3 days the iPhone 3G was on the market over 1 million units were sold
>partly owes its success due to the rise of third party applications
In July 2008 Apple opened an online store for applications that were written to run on the iPhone.
Known as the App Store, consumers could download applications through their iTunes account.
Some of these apps are free, while others are sold. In the first month the phone was on the market, more than 60 million applications were downloaded.
Apple generated $4.9 billion in revenue from App Store downloads in 2012
The iPhone 3G was followed by the iPhone 4 and iPhone 5, each of which included more powerful features and functionality
What is the difference between Iphone 4 and 5?
The iPhone 5 packs a "twice" as fast dual core 1.3 GHz Apple A6 processor as well as 1 GB of RAM, compared to the iPhone 4S -- which has a 1 GHz dual core Apple A5 processor and 512 MB of RAM -- and the iPhone 4, which has a single core 1 GHz Apple A4 processor and 512 MB of RAM.
In 2011 Apple ended its exclusive relationship with AT&T when Verizon, the largest U.S. wireless service provider, started to offer the iPhone
Apple made $80.5 billion in revenues from iPhone sales in 2012,
making it by far the biggest revenue generator in Apple’s
portfolio of products. By comparison, the venerable line
of Mac computers generated revenues of $23.2 billion
in 2012.
iPhone 6 released on 2014
“The biggest thing to happen to iPhone since iPhone”
iPhone 7 launched on 2016
“This is iPhone”
http://www.cbsnews.com/news/apple-iphone-7-slogan-surprising-meaning-in-cantonese/
When translated into Cantonese, the Chinese dialect spoken in Hong Kong, the declarative slogan “This is 7” sounds a lot like slang for “this is penis.” The pronunciation of the number “7” in Cantonese sounds like “tsa.” The slang for the male member also sounds like “tsa.”
In 2007, 122 million smartphones were sold worldwide. The largest vendor at the time was Nokia with 63.5% of the market. The Nokia phones used the Symbian operating system.
>including web browsing, a music player, and a camera, it lacked the design elegance
of the iPhone, the connection with iTunes, and a rapidly expanding network of 3rd party application developers.
The other major players in 2007 were Blackberry (with 9.6% of the market), and Microsoft Windows Mobile (which was used on phones from various manufactures,
and had 12% of the market)
Closed operating system- apple iOS
Google adopted a very different approach—it licensed Android for free to smart phone manufacturers.
Began a war between android and iphone users
Android is an open source operating system, which
allows the code to be freely modified and distributed by
device manufacturers and wireless carriers
Google established its own applications store in 2008. Known as Google Play, by late 2012 the store had some 700,000 apps available for download to Android devices, about the same
number as at the Apple app store.
Nokia dropped Symbian OS.
Microsoft redesigned its smart phone operating system from the ground up.
In 2012 it introduced its Windows 8 operating system.
radically designed interface based on “tiles,” Windows 8 utilizes a touchscreen capability and can be used on any digital device from smart phone to tablet and personal computer. Microsoft has also established an App Store
By 2010 Android overtook Apple iOS to become the most widely used smartphone platform in the world. In the fourth quarter of 2012, 69.2% of the 216 million smart
phones sold worldwide ran on Android. Apple had a 22.1% share, followed by Blackberry with 3.5% and Microsoft with 2.4%
Some research analysts, however, expect Microsoft to gain traction. They point out that over 90% of the worlds PCs still use Windows, and that having the same operating system on your phone
and your computer is a major advantage
Back in 2013, the research group Gartner estimates that Microsoft’s OS will be found on around one-quarter of all smart phones shipped in 2016. Gartner sees Android losing share, while Apple holds onto its share