Apple Computers – Strategic Management

Apple Computers – Strategic Management

Strategic Management Report

By Jose Alexander Ros Lopera University of Lampeter

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Table of Contents

Introduction History TOWS Strategy Strategic Moves Licensing The Value Chain Operations THE Supply Chain Innovation(R&D) Marketing Differentiation Recommendations Conclusion References Bibliography Appendices

4 5 5 -6 6–7 7 8 10 10 12 13 14 16 18 18 19 21 24

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Executive Summary

Apple established in 1976 has transformed itself beyond belief, not only as accompany but also have impacted the whole world of technology with their products and strategy Apple as a learning organisation has learnt to deal with is weaknesses and threats and also taken opportunities using its strengths, their strategy is a more innovative and differentiated and stylish approach, they have changed from focusing on niche markets to a more broad one creating a paradigm shift regarding telecoms and music incorporation. A series of strategic moves and alliances have seen apple acquired and retrained knowledge, gaining experience and exposure to new markets, its alliances ie Microsoft has opened the door for apple to enter the business market with its PCs Apple has began to licence some of its products creating the sense that apple is capable to take on to business world with its Operating System and software packages, by opening retails stores apple have created brand awareness and have also incremented sales for more than 40% Its operations and manufacturing has been moved to China, an strategic move that see apple as one of the leaders in supply chain management, due to the way in which all products and parts get delivered to an assembly point, once they are assembled, get shipped to its various distributions points Within the value chain apple makes most of their money on Manufacturing, R&D (Innovation) and Marketing, these three set of activities are the key core competences for apple. Innovation has given apple the competitive advantage over its competitors, however the fact that apple remains very secretive and not opening to share its OS might become a huge hurdle to overcome. It remains to be seen what will happen in the next few years, but it looks like apple strategic decisions have placed them ahead of anybody else, generating revenues beyond anyone's expectations.

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Apple Inc. Strategic Management 1 Introduction The following report is based on the Computer giant Apple, a company that has transformed the way in which we see and use technology. The world today is not predictable in terms of technology and apple has demonstrated this by curving a market that was heading in one direction but by pure strategic management and well coordinated exploitation of resources at their disposal, apple has become one of the leader industries in computer technology shifting the conception of technology development for business industry only to a broader audience. Such has been this transition that apple is not only seen as a computer giant but as a fashion statement, it has become trendy to own an apple product, whether is for business activities or just for entertainment. Apple products are competing against other products in the market and very successfully have surpassed some and gaining terrain on its competitors, while overtaking others, acquiring more market share with their products. Appendix 1 Figure 1 demonstrates the percentage apple has acquired just in the Smartphone market in the US and Appendix 1 figure 2 the percentage in the same market worldwide

But what makes apple be so successful?, is it their (silly) logo, or is it their core competences, perhaps its people, or perhaps combination of their core competences with a business strategy very well executed, and how have they manage to survive in a market where cannibalization is the law, the strongest will prevail. Why have they become a life style statement? What is apple's strategy? or strategies?. How have they acquired their brand value and awareness? What strategy have they adopted to cope with the rapid change in technology? These questions and many more will be attempted on this paper, by applying a series of strategic management tools we will go deep into apple's structure.

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Apple Computers – Strategic Management Apple has changed radically in business, it has transformed it self into a style statement rather than a computer producer, it has shifted its purpose and created a new entry into a market that many thought it had no entry possibilities, it only had to be exploited and apple has managed to do this in by using its core competences in a very sophisticated way.

1.1 A bit of history Apple was formed in April 1 1976 was the first company to innovate and changing things with a vision of the future, penetrated market with something new and climbed to the top very soon, but a lack or foreseen their weaknesses, opportunities, threats and strengths saw apple being overtaken by a competitor (IBM) who totally missed the boat at the beginning but overtook apple by creating a competitive advantage, and exploiting their strengths of being a large and serious regarded company by the industry and seeing feasible opportunities and taking them. Now apple used its strengths to their advantage, has exploited all its weaknesses to become stronger, saw new opportunities and penetrate new markets and develop products for the different market places and is very much aware of its threats. 2 Apple SWOT Analysis Appendix II can clearly state the position of Apple in regards to its Strengths, Weaknesses, Opportunities and Threats. However applying a TOWS matrix will prove a much clear insight into Apple way of doing things (strategy). 2.1 SO Strategy Apple uses its strengths to seize new opportunities. Using its available cash, apple has made a number of acquisitions (see appendix III) which have been the key of success in many of its projects, it has acquired software companies, semiconductors, web-base mapping, advertising, music streaming among the others which have help them to integrate products as an example is the iPhone, a combination of an iPod and a mobile phone, this paradigm shift is being mapped by other companies. Page | 5

Apple Computers – Strategic Management Their stylish designs (strength) capture the eye of young generations (opportunity). Apple uses its customer loyalty to firstly penetrate with new products and uses them as a platform to reach other customers. Apple's secrecy has created an interest from the public and media into any product launch, providing an excellent marketing channel. On top of that apple's high price is justifiable by their differentiation, quality and style of their products. Their robust economical state of apple has aided them to sustain high prices despite increase pressure from the public. 2.2 WO Strategy By creating a compatibility in the operating system platform, apple can enter deeper into the business sector and be able to compete with windows, there is much noise about apple OS being more secure and Google are in fact moving towards using a more secure and efficient platform. Apple can maximize their presence into people's minds and create security among users by tackling their poor problem solution or better said their abrupt responses to any problems with its products. Regarding the electronics presence of apple, by expanding their presence into this market, apple can gain more terrain on its competitors; they are doing this at a slow speed securing every investment made to be profitable. 2.3 ST Strategy One of apples great strengths is it innovation, by harnessing innovation apple can raise the bar very high its competitors to be able to catch up, making them stronger and unique. Apple's image is good however recent events have weaken their position and competition are ready to capitalize on this, by trying to destroy their image, but by using their innovative strength and their differentiation style apple can not only stop their loyal customers switching but attract more from the competition. 3 Strategy Every company has a strategy or at least every company that wants to perform well, Michael Porter (2004) says that every firm competing in an industry has a Page | 6

Apple Computers – Strategic Management competitive strategy, whether explicit or implicit. Apple has its own strategies which have led them to become a driving force in the industry, innovation has been one of the Key principles for apple's success along with proprietary simplicity and integration, their slogan says it all, "Think Different" Apple has created a paradigm shift, revolutionising the way in which telecommunications have merged with entertainment and how music now is streamlined and listened to, this new idea has provided apple with more value to their business and has proven to be successful, selling over two million songs during the first two weeks.1 They are the leaders in the digital music industry with a 69% of all legal digital sales2. See (Appendix IV) Then what is apple's strategy? The essence of strategy is choosing to perform activities differently than rivals do.(Porter 1996) and yes that is apple's strategy, apple has improved in more or less every aspect compare to its rivals, and by the innovation added to its products, Apple has been able to put themselves on the top of customers sights, not only owing a product for any particular reason being pc for your business, or laptops for home usage or business usage, iPods to listen music etc, is more than that, having an apple product means you are part of something, you are up to date and you are trendy, it states that you are a person that likes to be known for owing the best. 4 Strategic Moves As part of their strategy apple have complemented if not increase their competences by making certain strategic moves, these moves being mergers acquisitions licences, partnerships, patents etc. have allowed apple to become stronger and stronger in the market, maximize expertise, learnt from other firms while remaining secretive themselves. Apple's approach to merge, partnered and acquisition adds a little condiment to the Apple pie, apple learns from every move they make, like partnership with AT&T no expertise in telecoms but this partnership allowed apple to get more depth in the telecoms industry, recently

1

2

http://www.ad-mkt-review.com [Accessed on the 17th August 2010]

http://www.theatlanticwire.com [Accessed on the 17th August 2010]

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Apple Computers – Strategic Management Apple acquired a mobile advertising company, this will allow them to exploit more their iPhone creating their own advertising channel and also selling advertising. Appendix V contains a list of the most important apple mergers, acquisitions, and partnerships that might end in divorce but as said before, it gave apple some good insights into markets they pretended to explore and open doors to new markets as an example we have the telecoms market, their key alliance with Microsoft welcomed apple to the business world by somehow making Microsoft to write Office for apple and apple building machines able to run on windows, and indeed apple has taken advantage of this by gaining some market share in the business operating system not to mention some businesses already changing their WINTEL machines for Macs. Their alliance with Intel provided Apple with knowledge and expertise in the Microchip Industry, allowing their machines to be faster and more efficient and in some way redesigning the Chip's structure to fir their requirements. In overall Apple as a learning organisation has demonstrated how it is done, behind every move there is something Apple needs.

5

Apple licensing Apple began to licence its products and services to big, medium and small businesses, schools and government agencies. Companies are now able to migrate from the troubled infected windows pc to a more secure and reliable system, apple has integrated in its retail stores, business support departments, which are responsible for providing help to small businesses wishing to migrate. Appendix VI will show a list of licensed products by Apple. The direct competition with Microsoft has begun. Microsoft only sales software and very little products compare to apple, the move to the business sector in direct competition to Microsoft is bound to be successful, the only producer and provider of complete product is Apple which provides not only the hardware but the operating system, browser and applications running on its machines, now capable of running windows OS and office applications. Apple is also licensing software for the iPad, new ipad updates will be guaranteed software updates for

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Apple Computers – Strategic Management the model purchased, if a new model is out the software for that particular model will not be free for the older model of the iPad3 The market share of Apple's Operating System is increasing to a 10% 4

As per exclusivity, apple signed exclusivity agreements with mobile carriers for the launch of the iPhone, in the US was AT &T for the UK was O2, this created desperation for users who wanted an iPhone but were unable to obtain one because of their network contracts, now Apple has culminated these agreements and is now opening to various carriers, this will increase sales dramatically. The iPad is another product in which apple is to make more money the same way as the iPhone, not only form sales but from licensing to the carrier, the carrier will pay a dividend to apple for the privilege of having exclusivity of this precious product. Compare to other operating systems apple is gaining quite slowly but the move for making Mac-windows compatible is paying off, for a comparison among Operating Systems market share see Appendix VII In regards to the mobile phone operating system apple is the leading force see Appendix VIII

3 4

http://www.appleinsider.com/ [Accessed on the 17th August 2010] http://hothardware.com/ [Accessed on the 17th August 2010]

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6

The value chain (apple)

The value chain according to Michael E Porter is a Tool for analyzing competitive advantage (Porter, 2004 competitive advantage) it separates each of the firms activities to be able to understand the behaviour and where are the possibilities to differentiate gaining advantage and value, this can be achieved by performing this activities cheaper than competitors. In this was a firm like apple can add value, and this value is what customers are willing to pay for a product or service (Porter 2004). Apple makes according to researches between 50% - 60% in profit on iPhone and iPad products (See appendix X), Apple is confident that

customers must accept their prices if they want to get such a product, and yes they are expensive but if you want one you must pay for it.

Every activity within the value chain contribute to add value to Apple products, however some more than others, in this case the activities within that value chain which create more value to their products are the operations, R&D (innovation) and marketing.

6.1 The operations Apple operations is one of the basis of its success, much of its operations are destined to make money and add value to apple's brand, the manufacturing process is outsourced to china using Foxconn, they are responsible for the assembly of most products, this process of manufacturing costs very little to apple, taking advantage of the cheap labour china can provide. This was a key strategic move for apple as for instance in India labour becomes more expensive as Indian workers become more technical therefore wages increase, the cheap labour is no longer cheap and therefore a new location to exploit labour is required. Page | 10


Value chain

Applied to

R&D

Product Idea

Design Product

Manufactu ring

Distribution

Marketing & Sales

Customer Service

Apple greatest value added contributors Every product goes through, a process, it begins with the conception of an idea, this idea has to be approved by the CEO, to understand the responsibility level for the CEO (Steve Jobs) we must look when he rejoined apple, out of thousands of product ideas to be materialised these ideas were reduced to under 15, this is how important is for apple to get it right and indeed they do. Each idea goes through a scrutiny process and once the go ahead is given, it moves to the next stage, the design of the product also involving Mr Jobs, the prototype is made and then it is given the order for manufacturing, here in manufacturing the process becomes a bit more complex as materials for the products have to be purchased, chips microprocessors, flash memories, hard drives etc. these once purchased get delivered to the assembler (Foxconn), which assembles and distribute the

finished goods to apple retail stores. In this practice the manufacturer is responsible for the transportations costs leaving apple outside this equation.

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Apple Computers – Strategic Management The manufacturing process is very secretive and pretty much everything done in Apple is, that is the culture of the company, no one is allowed to talk about work or about what they are doing, and manufacturers only know about one or two weeks prior to launch what they are going to do and at the plant no one pretty much know what they are doing in the assembly line, just a few at the end of this process.5

Apple has become a leader in the supply chain business by exploiting the supply to its maximum; it provides a significant input in the whole value system. Apple saves money in manufacturing by purchasing materials from undeveloped countries such as Taiwan, Africa, India etc although many manufacturing materials are unknown, however they all come to one place at the very end and is the assembly point, here is where all the materials get sent to, assembly and distribution are originated here(China). However the most value for the iPhone and apple products lies in the design, this is always done in USA. Appendix XI will show a breakdown of the products supplied for and iPhone.

6.2 The Supply Chain Below is a graphic of the supply chain based on the information available, this is one of Apple's core competences. Money is saved by carefully purchasing raw materials or components made by other companies, like Intel and Samsung among others. As previously mentioned materials and components get delivered to Foxconn and assembly begins, once assembled, products get packed and shipped for distribution.

5

http://www.pcpro.co.uk/ [Accessed on the 17th August 2010]

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Apple Computers – Strategic Management Apple Supply Chain

Raw Materials Purchased

Distribution to manufacturing

Assembly

Distribution

Apple Stores

Retailers

Wholesalers

7 Innovation (R&D) Research and development is the core of Apple strategy, they have influenced society with all the technological innovations that have brought forward, innovation and style have become a strategy of apple to bring in all sorts of customers, but not only that, Apple comes up with new products, enter new markets, takes it and creates a high level for new entrants,6 once competitors have level with them, apple brings another innovation and is like catch me if you can. Apple was a new entrant in the telephone market was in 2007, a market dominated by the five giants, Nokia, Motorola, Samsung, Sony Ericsson and LG, (ICFAI, 2008), however apple decided to enter with the innovation, the convergence of the technology and entertainment has been the key for apple success not only this instruments (PCs, laptops, iPod and iPhones) are meant for business only but for all kinds of use. Apple strategy to enter a market in which its expertise is close to none, is by partnering with some one with the experience and knowledge, then learning and dropping it. For example the case of Motorola, apple started its test with iTunes in a Motorola Mobile phone, since its design was not to apple standards and failure was imminent, apple then withdrew and continue on its own, developing the iTunes for telephone, then it move into AT&T used their expertise in mobile technology

6

http://seekingalpha.com/ [Accessed on the 18th August 2010]

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Apple Computers – Strategic Management gave them exclusivity for a while now their partnership is about to collapse due to AT&T problems, now apple is moving to Verzion network. Apple's R&D is also obtained by the means of partnership, however apple does spend huge amounts of money on R&D and compared to its main rivals, apple seems to allocate resources where is most needed. In comparison apple spends considerably less in R&D as its competitors and lately is generating more revenue than any of them. (See Figure below)7

Apple spends around 8 times less money than Microsoft its biggest rival yet it generates much more revenue nowadays. Apple by May 26th overtook Microsoft in Market Capitalization in Nasdaq stock market trading apple was valued at $222.1 billion and Microsoft at $219.2 billion. Apple is now the most valuable technology firm in the world.8 Over a period of 4 years Apple spent $ 4.6 Billion on R&D and revenue rose from $ 26 to $43 Billion however Microsoft over the same 4 years spent $31 Billion on R&D and revenue rose from $44 to $58 Billion, in contrast Apple Market Cap has tripled.9

8 Marketing Apple marketing strategy for most if not all products is taking advantage of the style and functionality of the product, and take the people through an experience never seen before, once you generate good fame, everything you

7 8

http://www.businessinsider.com/ [Accessed on the 18th August 2010] http://www.businessweek.com/ [Accessed on the 18th August 2010] 9 http://seekingalpha.com/ [Accessed on the 18th August 2010]

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Apple Computers – Strategic Management say even if it's not true, it will go down well, for example the iPad is marketed as the best web experience, however there is no flash player incorporated, taking into account that most vide on the web is flash based, I do not believe it is a great experience not being able to view most video content, another low point is that there is not a USB connector, yes the product has great features but it lacks others, yet it is being loved and praised by the public.

The iPhone 4 reception problem has caused chaos among apple users and the company, apple's response has been abrupt at the beginning and it was thought of a recall, but yet again it sales are rising and apple is benefiting from their innovative and stylish features. Taking advantage of their brand, which means style, innovation, personality, youth, contemporary, apple markets all its products in such way that customers get the feeling that there is not other like apple. Another part of the strategy is that there is not better marketing than word of mouth, apple fans are evangelising products in such way that it is becoming like the apple religion and those who obtained a product are saved. Apple's later products have become a leverage for other products and in fact these comply with double functionality, not only as product but as a mean for more products to be advertised by apple, apple is creating its own individual place or channel were they can market themselves alone. The below graphic shows apple expenditure in advertising.

Advertising Spenditure

510 500 490 Millions 480 470 460 450 2007 2008 2009 Year

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9 Differentiation Strategy Based on Michael Porter's Generic Strategies, Apple clearly fits on a differentiator strategy, differentiator consists on offering a product or service that is perceived industry wide as being unique (Porter)(Cited on Moore J.I. 2001) apple have created the unthinkable by many and have surpassed expectations regarding innovation, they have come up with products through the years that have impressed the public, apple have become the leader on innovation, the Mp3 was not an innovation because it already existed, however the integration of software and hardware made the ipod what it is, a more user friendly mp3. The integration of a mp3 an a phone made the iPhone. Mp3 and mobile phones already existed but using their competences to merge these two into one created the iconic iPhone. Then the iPad came along and still is a unique product, yes competitors are trying to imitate or else apple would be the Microsoft of a few years back, monopolising the market and putting higher prices, however they are not even a match for the original and stylish iPods, iPhones and iPads. The products developed by apple have an interrelation which gives apple a great advantage, Macs, iTunes, iPad, iPods iPhones and Ipod Touch; they all link together perfectly and offer channels for Apple's marketing strategy. The differentiation provides a greatest opportunity for a company that you can't imagine, there are relations and interrelations which successfully managed can create very lucrative inputs for an organisation, for example, iPods were created, then iTunes, iTunes is related to iPod as is the software management content for the iPod, but iTunes (Apple) licensed from major music labels, movies, television, through iTunes Music Store, and if you are not an iPod, or are not compatible or have no rights you can not download and view content, here is the interesting part, iTunes now accounts for around the 68% of legal entertainment content downloaded from the internet, apple previously licensed Motorola but since the iPhone introduction it no longer supports it, (see appendix IX for a list of supported players). This list is very limited, the strategy here since iTunes have become so popular among the consumer industry, apple has decided to create the need of an apple product to be able to enjoy the entertainment of movies music telephone and much more. Page | 16


The uniqueness of their products has provided apple with a great competitive advantage, previously apple used to Focus on wealthy consumers and niche Markets, ie graphic designers and media segment groups, with their great style and designed, however, this helped apple to build a reputation through time of being reliable and efficient, once this reputation is acquired apple decided to move into other areas. Apple strategy like an organization is changing with time; their strategy varies according to time, technological advances and people/business requirements. Much also of their improvements depend on the technological advances from other companies. ie the microprocessor Intel which supplies apple with chips for their products. The figures below show how Apple has expanded in relation to market segments.

Apple covered markets 10 years ago

Home

Businesses

Niche APPLE Explored Markets Wealthy

Unexplored Market

Government

Education

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Apple Computers – Strategic Management Apple Current market segments (this are segments covered by the whole apple range)

Businesses PC Industry Home Niche

Professionals

APPLE Product range GROWTH

Middle/ Upper Class

Government Education

Music Enthusiasts

10 Recommendations

Apple should open its operating systems to other software writes, this will give them more exposure to markets and also will provide them with more accessibility.

Price is an issue would recommend apple to take into account that people are aware of the high percentage of profits on each item and this does not go down well with customers, it creates the feeling that customer are being ripped off.

Before coming out blazing guns to customers telling them silly excuses trying to overshadow their mistakes, apple should just recognise that there might be a fault and that investigations are underway, this will go much better than MR Jobs answers

Compatibility issues need to be address, like flash for web browsing and usb ports for other products (iPad) Apple should look into the possibility of a merger and why not Microsoft, this might sound crazy but combining these two giants the whole world might benefit in regards of technological advances

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11 Conclusions Apple is not no doubt a differentiator and innovator, these two have provided apple with a leverage to become a force to be reckoned within the business and the technological world, however it was not that long ago that apple also was pioneer on new technologies and innovations but a lack of strategy saw them being overtaken by other companies such as Microsoft. Strategy is a necessity in this modern business world and organisation are not able to survive on their own, therefore strategic alliances, partnerships, mergers and acquisitions are required for the survival of a business, take as an example Apple, if it was not for the strategic alliances, partnerships and acquisitions, apple would have fallen into administration years ago. Expenditure must be part of strategy, not only spending will return in investment, unlike Microsoft Apple has carefully directed investment where is most needed and by the figures, it is clear that Apple has done exceptionally well over the last 10 years. Apple always held on to is proprietary10, few years ago almost got them out of business because apple did not want it to release its operating system, now it is same old story, iPods & iTunes, I wonder how long will it last, or will apple begin to understand that a more open source approach is more beneficial in the long run. Apple remains its options opened by tackling every sector within the Ansoff Matrix See Appendix XII

10

http://www.innosight.com/

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Rao, A. Srinivasa, (2008), Launching iPhone, Apple's entry into the mobile phone market. ICFAI, Center for management Research. D Muro Fabritzio, Stretegic Planning at Apple INC, Richard Ivey School of Business http://abh-news.com/apple-requires-raw-materials-supplier%E2%80%99scertification-stating-conflict-free-3381.html [Accessed on the 15th August 2010] http://www.macworld.com/article/48210/2005/12/10k.html [Accessed on the 15th August 2010] http://www.theferrarigroup.com/blog1/?tag=apple-computer-supply-chain[Accessed on the 16th August 2010] http://arstechnica.com/apple/news/2007/02/6890.ars [Accessed on the 16th August 2010] http://seekingalpha.com/article/197583-apple-s-research-and-development-humblesother-tech-companies [Accessed on the 17th August 2010] Page | 22

Apple Computers – Strategic Management www.apple.com [Accessed on the 17th August 2010] http://www.businessweek.com/magazine/content/07_28/b4042058.htm http://wallstreetpit.com/33974-iphone-supply-chain [Accessed on the 19th August 2010] http://www.ad-mkt-review.com/public_html/air/ai200308.html [Accessed on the 20th August 2010] http://www.iclarified.com/entry/index.php?enid=6028 [Accessed on the 20th August 2010] http://www.geek.com/articles/apple/itunes-in-numbers-no-one-can-beat-thesuperstore-20100226/ [Accessed on the 20th August 2010] http://www.independent.co.uk/life-style/gadgets-and-tech/features/for-applesuppliers-loose-lips-can-sink-contracts-1903412.html[Accessed on the 21st August 2010] http://economictimes.indiatimes.com/infotech/hardware/Apple-betting-on-its-ownmicrochip-in-iPad/articleshow/5527741.cms[Accessed on the 21st August 2010] http://www.ad-mkt-review.com/public_html/air/ai200308.html [Accessed on the 17th August 2010] http://www.theatlanticwire.com/opinions/view/opinion/Is-iTunes-Too-SuccessfulApples-Antitrust-Problem-3759 [Accessed on the 17th August 2010] http://www.appleinsider.com/articles/10/03/29/ipad_licensing_agreement_specifies_p aid_annual_os_updates.html [Accessed on the 17th August 2010] http://hothardware.com/News/Apples-US-Operating-System-Market-Share-Nearing10/ [Accessed on the 17th August 2010] http://www.pcpro.co.uk/features/355654/the-extreme-and-violent-methods-used-tokeep-apples-secrets/3 [Accessed on the 18th August 2010] http://seekingalpha.com/article/69148-it-s-all-about-apple-s-r-d [Accessed on the 18th August 2010] http://www.businessinsider.com/chart-of-the-day-rd-for-tech-companies-20105?utm_source=Triggermail&utm_medium=email&utm_campaign=SAI_COTD_0525 10 [Accessed on the 18th August 2010] http://www.businessweek.com/news/2010-05-26/apple-overtakes-microsoft-inmarket-capitalization-update3-.html [Accessed on the 19th August 2010] http://seekingalpha.com/article/197583-apple-s-research-and-development-humblesother-tech-companies [Accessed on the 19th August 2010] Page | 23

Apple Computers – Strategic Management http://www.cellular-news.com/story/43707.php [Accessed on the 20th August 2010] http://www.ifoapplestore.com/stores/charts_graphs.html [Accessed on the 20th August 2010] http://wallstreetpit.com/33974-iphone-supply-chain [Accessed on the 20th August 2010] http://www.innosight.com/blog/96-rim-vs-apple-integration-vs-modularity.html [Accessed on the 22nd August 2010]

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Apple Computers – Strategic Management Appendix I

Figure 1

Figure 2

Figure1 http://www.appleinsider.com/articles/10/06/06/apples_iphone_market_share_three_times_greater_than _android_in_us.html Figure 2 http://www.appleinsider.com/articles/09/11/12/apples_iphone_captures_17_of_worldwide_smartphone _market.html (source from Gartner)

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Apple Computers – Strategic Management Appendix II

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Appendix III

Date March 2, 1988 June 7, 1988 June 27, 1988 July 11, 1988 January 3, 1989 February 7, 1997 September 2, 1997 January 8, 1999 November 3, 1999 January 7, 2000 April 11, 2000 May 11, 2001 July 9, 2001 December 31, 2001 February 1, 2002 April 4, 2002 June 11, 2002 June 20, 2002 July 1, 2002 April 2005 October 16, 2006 December 4, 2006 April 24, 2008 July 7, 2009 December 6, 2009 January 5, 2010 April 27, 2010 April 27, 2010 July 14, 2010

Company Network Innovations Orion Network Systems Styleware Nashoba Systems Coral Software NeXT Power Computing-CloneMaking Xemplar Education Raycer Graphics NetSelector Astarte-DVD Authoring Software bluebuzz Spruce Technologies PowerSchool Nothing Real Zayante Silicon Grail Corp-Chalice Propel Software Emagic FingerWorks Silicon Color Proximity P.A. Semi Placebase Lala.com Quattro Wireless Intrinsity Siri Poly9

Business Software Satellite communication systems Computer software Computer software Computer software Computer programming services Clone computers Software Computer graphic chips Internet software Software Internet service provider Graphics software Online info systems services Special effects software Software Digital effects software Software Music production software Gesture recognition company Software Software Semiconductors Maps Music streaming Mobile advertising Semiconductors Software Web-based mapping

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Appendix IV

http://www.geek.com/articles/apple/itunes-in-numbers-no-one-can-beat-the-superstore-20100226/ Accessed 19th August 2010

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Appendix V The Intel switch Few years ago apple used chips from other companies, such as Motorola and IBM, apple switched to Intel which has provided them with more power with its new Intel due core, perhaps without this move apple products would not have been as powerful they are now. 11 Apple - HP partnership Apple and HP formed a partnership to develop a HP branded music digital player based on iPod, this alliance benefited more Apple as all HP computers and notebooks will be preloaded with iTunes software and an icon to take customers to their music store. Apple - Goole partnership Apple joined forces with Google to take on Microsoft, Google helped apple developing the application of Google maps, application that comes preloaded on any iphone however this alliance has been threatened by the pure fact that now Goole wants to compete in the same market that apple, this will in fact create disruptions on previous collaborations between the two companies, strategic move? More for apple than Google12 . Apple – AT&T partnership Apple joined forces with AT&T to develop iPhone, apple took advantage of the AT&T telecommunications expertise and use it to help develop its product, apple needs the wireless technology and AT&T benefits from subscribers and some revenue from iTunes sales, although this cooperation seen as a co-opetition where both companies cooperate and compete among each other. This partnership has not been that successful due to the lack from AT&T of being able to process data more efficiently; this has cause the apple iPhone run into some difficult times.

11 12

http://www.apple.com/ http://www.mobile-computing-news.co.uk/industry-news/2273/google-and-apple-%E2%80%93-how-

an-alliance-collapsed.html

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Apple Computers – Strategic Management Apple Microsoft Partnership Apple and Microsoft are the archrivals, however, Apple strategic move to partnership with Microsoft is a step closer to compete with the giant dominant operating system vendor and be able to take some part in the operating systems market share, apple advantage is that not only has its own operating system but it builds its won computers and on top of that the diversification of products gives them the edge over his rival. Apple make Microsoft to write office software for macs and pocketed $150 million by promising Microsoft to drop any patent claims13 and adding to the switch to Intel meant that his Macs would be able to run Windows, and on top of that apple made a iTunes for windows which increase sales dramatically14.

13 14

http://www.businessweek.com/magazine/content/07_28/b4042058.htm http://www.apple.com/ca/press/1998/07/MSoftAnniv.html

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Appendix V

http://chitika.com/research/2010/mac-impressions-spike-in-april-the-ipad-effect/

http://chitika.com/research/2010/mac-impressions-spike-in-april-the-ipad-effect/

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Appendix VI

iMovie Image Units

iPhoto

iPod and iPhone Compatibility Icons

iTunes Distribution

Mac Logos

MobileMe Mini DisplayPort Connector Quicktime OpenCL

http://developer.apple.com/softwarelicensing/

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Appendix VII

http://gs.statcounter.com/#os-ww-monthly-200907-201008

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Appendix VIII

http://www.appscout.com/2009/04/iphone_dominates_mobile_ad_sha.php

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Appendix IX Digital Player iPod Nomad II Nomad II MG Nomad II c Nomad Jukebox Nomad Jukebox 20GB Nomad Jukebox C Novad MuVo Rio One Rio 500 Rio 600 Rio 800 Rio 900 Rio S10 Rio S11 Rio S30S Rio S35S Rio S50 Rio Chiba Rio Fuse Rio Cali psa]play 60 psa]play 120 SoundSpace 2 Manufacturer Apple Creative Labs Creative Labs Creative Labs Creative Labs Creative Labs Creative Labs Creative Labs SONICBlue/S3 SONICBlue/S3 SONICBlue/S3 SONICBlue/S3 SONICBlue/S3 SONICBlue/S3 SONICBlue/S3 SONICBlue/S3 SONICBlue/S3 SONICBlue/S3 SONICBlue/S3 SONICBlue/S3 SONICBlue/S3 Nike Nike Nakamichi Connection FireWire / USB USB USB USB USB USB USB USB USB USB USB USB USB USB USB USB USB USB USB USB USB USB USB USB

http://support.apple.com/kb/HT2172?viewlocale=en_US

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Appendix X

http://wallstreetpit.com/33974-iphone-supply-chain

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Appendix XI

http://www.phonesreview.co.uk/2008/06/20/where-does-apple-iphone-3g-components-comefrom-supplier-breakdown/

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Appendix XII

Ansoff matrix

Based on the matrix produced by Mr Igor Ansoff, apple's case is very interesting, due to the large range of products that currently apple markets, these products in many ways occupy different market/product combinations (4 Combinations) , it could be argued but it can be said that apple targets the four combinations given by this matrix.

Market Penetration Existing market – existing products, Apple penetrates the enterprise market with the iPhone 3GS, not only that, apple is gaining terrain on its computer rivals and is selling more and more computers.

Market Developmnet Existing Products-new markets, the iPhone not only for Mac-evangelists or for a niche market, this product has been extended to professionals, students, corporations etc.

Product Development Not only the iPhone was a product development when first introduced, but look at the iPad, this is something that experts say would revolutionised the computer world.

Diversification New products-New markets, the introduction of the Ipod clearly shows the diversified move from apple into the music(MP3) industry, also the launch of the downloadable music portal iTunes, where apple where not know and this market was dominated by Napster and others, not to mention the illegal peer to peer downloadable sites ie LimeWire, Ares among others.

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