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Apple Computer:The iPod, the iMac and the Business Lessons of Closed Systems

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Presented by

Hasan Ibrahim BIT0208

Iftekher Ahmed BIT0220

Khaza Moinuddin Mazumder BIT0234

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Apple► An American multinational

corporation► Established on April 1,1976 in

California, USA by Steve Jobs, Steve Wozniak and Ronald Wayne

► Designs and sells consumer electronics, computer software and Personal Computer

► Consumer Electronics are electronic equipment intended for everyday use, most often in entertainment, communications and office productivity. e.g.- Personal computers, cell phones, mp3 players, digital cameras

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A Few Facts About Apple

► World’s third largest mobile phone maker after Samsung and Nokia

► Largest publicly traded company in the world by market capitalization

► Largest technology company in the world by revenue and profit, more than Google and Microsoft combined

► On August 20, 2012, Apple surpassed Microsoft to become the largest company in human history by market capitalization.

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Apple and Closed System

► Apple products are considered as closed systems.e.g. – iMac, iPod, iPad

► Closed System is an computing environment (usually an operating system) that, Prevents interference from third-

party software Prohibits third-party software

from being installed Keeps third-party hardware off

from interoperating with it Prevents third-party

enhancements from improving the product

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Apple’s Business Problem

Apple’s closed system comprised of iMac desktop with proprietary software and hardware support

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Apple’s Business Problem (cont.)

► Apple’s rival in desktop market, Microsoft Replicated the basic features of

Mac OS Encouraged developers to write

app for Windows Licensed Windows to mass-

market PC manufacturers like Dell, HP and IBM

► So users started preferring desktops with Windows

► Apple captured a bare minimum of 3.2 percent of the US desktop market and shrank to a niche player from an industry leader

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Apple’s recovery strategy

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Apple’s recovery strategy (cont.)

► Steve Jobs decided to launch iPod, predicting it to have impact on Apple’s weakened desktop market

► Apple introduced iPod in October, 2001

► iPod quickly grabbed 73 percent market share of portable music players

► Jobs cut a deal with the top five music companies in US to sell music on iTunes

► Apple created FairPlay, its Digital Rights Management (DRM) software to copy-protect music in iTunes store

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Apple’ recovery strategy (cont.)

► Apple denied licensing FairPlay to Yahoo, eMusic, Napster and its other competitors

► Apple’s competitors turned to Microsoft for copy-protection of music in their stores

► Microsoft’s copy protection software had disadvantages Music could be played in portable

music players made by Samsung and SanDisk, but not on the wildly popular iPod

So buggy that lots of subscribers gave up listening song on portable music players other than iPod.

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iPod’s Impact on Apple’s problem

► Apple sold 75 percent of all digital songs through iTunes

► Apple’s Increasing sale of iPod effected its desktop and portable products market as Steve Jobs predicted

► Since the arrival of iPod, Apple’s share of the desktop and portable computer market in the US almost doubled by early 2006

► With more iPod sold, Apple’s desktop market inched upwards

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Sales growth for iPod over the years

Source: http://www.stopmusictheft.com

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Sales and profit graph for Apple (1995-2008)

Source: http://www.theregister.co.uk

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Apple’s introduction of Boot Camp

► By early 2006, Apple introduced Boot Camp software

► Boot Camp assists iMac users to easily install Windows on it and partition drives

► It also enables iMac users to easily run applications software for both Mac OS X and Windows

► Boot Camp lured even more Windows users as well as iPod owners to try Apple’s Mac computers

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Case Study Question 1

Do you agree with the sources in this case that Apple will dominate the digital music market for years to come? Why or why not?

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Case Study Question 2

Can the key technology and business strategies Steve Jobs implemented with the closed system of the iPod be applied successfully to the iMac and other Apple closed-system computer products? Define your answer with several examples of what could or could not be accomplished for Apple’s computer products line.

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Case Study Question 3

Will the cachet of the iPod and the capabilities of Boot Camp and the Leopard version of Apple’s OS X lure many more Windows PC users to the Mac lineup of desktops and portables? Why or why not?

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References

► [ Wikipedia.org ]

Apple Inc., Consumer Electronics

► [ answers.com ]

[ geekinterview.com ]

Closed system

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