Apple Computer Overview and Historical

Apple Computer

Overview and Historical Perspective

Apple Computer was founded in April 1976 by college drop outs Steve Wozniak and Steve Jobs. The Macintosh computer finally moved Apple into the business office, and by 1988, over one million Macintosh's had been sold. Now, Apple designs, develops, produces markets and services microprocessor-based personal computers, related software and peripheral products, including laser printers, scanners, compact disk read-only memory drives and other related products; and manufactures communications products that connect Apple systems to local area networks, connect the Macintosh to other computers and integrate the Macintosh into various computing environments. One of Apple's most successful new products is considered by many to be the current "ultimate" smart phone -- the iPhone, capturing over 40 million sales in 2010 alone, and almost 20 million in Q1 2011 alone. Combined with the I-Pod, Apple remains a global icon and technological force (Garside & Arthur 2011). In fact, with Apple guru Steve Jobs' passing, Apple and Jobs now receive almost "superstar" mythology (Schaefer 2012).

Current Situation and SWOT

At the forefront of the situation is the battle between operating systems (OS) that has been likened to the Coke v. Pepsi Wars. Since the advent of the Macintosh Operating System in 1984, there has been a battle resembling the Coke and Pepsi War, this time between the Macintosh/Apple OS and Windows. The battle is less over design and style, although that has been a robust part of it for decades, and now more about the Operating System (OS) and philosophy.

The PC market has literally hundreds of manufacturers and branded labels. PC actually stands for "personal computer," meaning that an Apple Computer is also a PC. However, PCs differentiated from Apple with the MS-DOS vs. The Macintosh OS, and now with the Intel/Windows environment vs. Macintosh. PCs are more customizable for user preference and can be built to order (e.g. more RAM, larger hard drive, better graphics card, etc.), while Apple systems have options, but are typically more static in hardware. Apple systems are proprietary, and may only be serviced or repaired by authorized Apple dealers or licensed repair shops. PCs may have dozens of different parts manufactured by dozens of vendors, and are not proprietary for repair. As of this writing, though, the Windows (Microsoft) OS dominates the market, largely because it is compatible with a wide range of manufacturers and hardware / software environments. Windows holds about 91% of the market share, while Mac has 5% and the other 4% by systems like Linux or UNIX (Case file; Krimly, 2012). Ironically, the battle has also bled over to the new electronic revolution of the 21st century -- the Smart Phone. This time, it is a three part battle between Apple's I-Phone, Google's Android OS, and Windows Mobile. Thus, with so little market share, but so many fans, Apple is faced with the issue of how to bring its products to the marketplace in the most cost effective manner.

Strengths

Weaknesses

Opportunities

Threats

Global corporation and branded products

Low market share

Innovate more wireless and mobile devices

Extreme competition

Synergistic in products, mission and profile

Proprietary hardware and software code

Outsourcing to save costs

Fiscal performance is tied to global financial situation

Strong media content

Perception of too expensive

Key markets in education, textbook delivery and iPhone

Lawsuits, proprietary code

Strong fan base

Loss of Steve Jobs

Roll out more integrated systems

Leadership and employee confidence.

Central Issues

Apple's central issues are dual: capturing more market share (volume to reduce costs) and remaining profitable. The growth of the iPod, iPhone, and iTunes market has been a huge success story for Apple, and promises to help gain both market share and competitive edge. However, Apple faces legal issues on its outsourcing policies, charges of collusion and price fixing in its iTunes niche, and some media issues on the iPhone 4 regarding reception (Case Study, C-154). Too, Apple has limited editions because of their proprietary operating system with a corporate attitude of "one size fits all" and "ours is the best, just use it." From a legal perspective, this arrogance often translates into a media-inspired view of strong arming, when in fact compared to other players in the industry (Microsoft, for instance), Apple has a very light touch.

Alternatives and Solutions

Clearly, Apple is a successful, multidimensional and global corporation. Sales have more than doubled between 2005 and 2009 domestically and more than tripled internationally. The company has adequate income to fund R&D, but could reduce cost of sales considerably and funnel those funds into future projects and/or advertising. Solutions for their issues may be broken down into four general areas: Reduction of COG through outsourcing, Improving Market Share by boosting iPhone line, and Soft Push Advertising Campaign to Improve Global Image, and Improving Strategic Partnerships:

Reduction of COG - When Jobs was still at the helm, Apple said that American workers were no longer "flexible" enough to assemble their products at a cost-effective rate. Switching to a Chinese manufacturing base could save millions; instead of spending money on new domestic factories, use lower wages, government (Chinese) incentives and tax breaks to build iPhone, iPad and other Apple products at 1/3 the cost of domestic production, even after shipping is included.

Improving Market Share -- the Macintosh platform continues to grow internationally, and the way to grow Apple brand demand is through the iPhone. Focusing on the ability to have a phone, pad, and computer device that are all interconnected and can handle any conceivable business situation is paramount. Further, updating the iPhone and continually pushing the envelope with new editions keeps the market price elastic, competitive, and ensures continued sales and new customers. Rumors abound about Apple introducing a new, compatible HD Television platform, which would certainly increase visibility and market share.

Advertising -- Apple has traditional focused on innovation and design as their primary advertising message. However, they must improve their image as a globally responsible and sustainable corporation that thinks globally, not just locally. They need to push their proprietary system as something special that deserves protection, and come out looking like the hero rather than the villain. Finally, Apple needs to push towards its strengths.

Strategic Partnerships - Finally, Apple needs to push towards its strengths. Apple is not, nor has never wanted to become, a manufacturing company. Instead, Apple is an innovator of electronic devices, and they wish to retain that expertise. Partnering with other organizations that are more focused on manufacturing allows Apple to retain its core knowledge, its proprietary technology.

Implementation Plan

Portion of Plan

2010

2011

2012

2013

Decreasing COG

Meet with Chinese officials; work to establish core factory groups that are market sensitive.

Implement strategic Out-sourcing plan with iPhone and iPad.