Apple Case Study

Please divide Apple's history into periods and trace the changes in business models that took place over these periods. Apple history is explained in the case history from 1972 – 2006. Apples history is described below, reflecting on the changes In Business Model (how the company generated revenue). The Beginning years, 1976 – 1 985: Apple was founded In 1976 and they built a computer circuit board named the Apple l. Within span of 4 years they went to PIP with the help of Venture capitalist Markup, Jar. Its original business model was based on selling a computer that could e used straight out of the box with a closed platform.In 1981 IBM introduced a Microsoft's DOS operating system and it's an open system and easily cloned, whilst a lack of compatible software on Macintosh (Mac) made net income fall 17%. Steve Jobs was removed from his operational role by the board. Jobs left Apple to find a new company NeXT. The sculls years, 1985-1993: In 1985 John Sculls was appoin ted as CEO. Sculls was an operations and marketing expert from Pepsi. Scull's strategy was focused on taking Apple into the corporate world, which he did successfully, making Apple a well-known brand name.During the Sculls years Apple was able to monopolize on the â€Å"love affair† for Macs by selling at a premium. In 1990 Sculls changed the business model to sell their computers at lower prices to get more market share, while also delivering new ‘hit products' every 6-12 months. Apple embarked on a Joint venture with MOM to create a new operating model, multimedia applications, etc. Sculls also reduced headcount by 10% and moved much of the manufacturing to contractors. Sculls also made himself Technology officer despite having no skills In this area.He was then relinquished of his duties In 1993. The spindled years, 1993 – 1995: Spindled was an engineer and had successfully headed Apple Europe and changed the business model once more to focus on education and publishing. He killed the plan to put the SO on Intel and instead he would license other companies to produce MAC clones. He focused on international growth I. E china. Spindlier business model also focused on the fact that the new operating model would save the company. Like Sculls, Spindled had to slash costs but Apple still had problems.In first quarter of 1996, apple reported $69 million in losses and more layoffs and Spindled was replaced. Amelia years, 1996 – 19971 ND a high pricing / differentiation strategy and slash payroll. Amelia wanted to turn apple back to its premium price differentiation strategy. He cancelled the next generation Mac SO, which had already cost $mom in R&D. Instead apple would acquire Next along with Steve Jobs. Amelia brought NeXT and brought Jobs as an advisor. Apple still suffered financially and Amelia was forced out. Steve Jobs became the temporary CEO. 997- Steve Jobs era: Steve Jobs re-joined the company in 1996 after Apple acquired NeXT. He made several drastic changes; investment into Apple, a commitment to develop core reduces, ended the Mac licensing program while buying the assets of the leading clone maker, consolidated the product ranges, and launched the Apple website to sell products directly. Jobs' business model turned the company around. He agreed that Microsoft would invest in core products for MAC ii office. Also he rationalized product range from 15 to 3, research projects by 70% and reduced staffing and outsourcing.Comment on what you learn about business model and business model change from this case. When evaluating Apple's business model, it's useful to think in terms of the pre-1996 era and the post-1996 era. Apple has always been and continues to be a manufacturer of computers and electronics with a focus on complete hardware and software integration. Prior to 1996, the company focused almost exclusively on personal computers in the Macintosh line, with the occasional foray into innovative produ cts like the Newton.When Steve Jobs re-joined the company in 1996, that mission evolved beyond personal computing into products like the pod, phone, and pad. Apple is positioned well for the future, and it's not a company that's willing to settle for current success. Unafraid of centralization, the company continues to churn out Phones that make the pod look like a hobby, as well as the pad Mini that unashamedly steals market share from its big brother. Notoriously secret, the company reveals little about the product pipeline, but it's believed that Steve Jobs has left a product roadman for more than a decade.How do other theories of strategy such as capability theory fit with this story? Apple was unable to maintain any strategy over this period since every CEO inconsistently changed the business model and strategy of Apple. Apple's most important resources and capabilities are Steve Jobs, and the integrated system of hardware and software hat the firm has developed and successfull y marketed to derive value. Steve brought Apple back to tremendous success following a decline in relevance and heads the continued creation of billions of dollars of value.While Apple's designers, programmers, and engineers each represent key resources, the ability of the firm to exploit their abilities to create their entire software/hardware ecosystem is the firm's Apple Stores – Retail Locations The introduction of Apple stores has provided the company with an important physical presence to act as both a sales location and an advertisement. Apple tops any retailers in in-store sales, generating $4,032 per retail square foot per year, beating other retailers like Tiffany & Co. At $2,666 and Best Buy at only $930.Relationship with Moms Apple has outsourced all of its manufacturing processes to MEMO partners in China, like Foxing and Hon.. Ha Precision Industry while focusing on design internally. The relationships between Apple and their MEMO partners are very close to prov ide Apple with excellent service and high quality products. Industrial Design Capability Apple's incredible industrial design capability is a function of their innovative design names, led by Jonathan Eve, senior vice president of industrial design, and the firm's parameterization of design and outsourced production.Talented Software Development Teams Apple's software developers are carefully selected and talented programmers. They've produced industry award winning software and the highly regarded iterations of Macintosh SOX operating system. Tailored Hardware/Software Systems One of Apple's most important capabilities is their ability to develop and build highly integrative systems with software designed specifically for the hardware it runs on. Apple Case Study A. The PC industry is much older than the MP3 player industry. As it is an older market, its structure is also more consolidated with only a few builders accounting for the majority of the market. On the other hand, the first MP3 players only surfaced less than ten years ago. While Apple’s Ipod may dominate the market, there are much more MP3 player manufacturers compared to PC manufacturers.Another difference between the two industries is that PCs tend to be commodity products as opposed to MP3 players which are seen as lifestyle or luxury products. This means that PCs for the most part are considered disposable items, especially to bulk buyers like firms or educational institutions. As such, value for money is a premium for PC manufacturers and the trend for the industry is to have better products per new generation at a lower price.Compare this to MP3 players which are for the most part used for personal entertainment. The popularity of the Ipod has cemented the MP3 player as a fashion accessory in addition to a consumer electronics product. Consumers also tend to be more concerned with the form of their MP3 players as opposed to the form of their PCs.Both industries are also experiencing the trend of convergence with PCs having more and more features oriented towards entertainment and MP3 players having more features geared for productivity. Additionally, the cellphone is also encroaching on both products. Smartphones are slowly gaining more PDA and laptop like features. These same devices are also starting to gain more and more entertainment features with newer models coming equipped with the ability to snap pictures and play music.B. Apple products have always been known for its innovation, ease of use and high price. One could say that while PCs in general are a commodity product, Apple computers are marketed like luxury items. Apple computers look better than the competition, are easier to use than the competition, and cost more than the competit ion. As opposed to its PC competitors who used different strategies to be able to offer the lowest prices possible, Apple’s offerings have always been about function and form first, cost second.Apple’s initial foray into the MP3 market touted ease of use as its main strategy. The Ipod featured a thumbwheel that simplified the access of thousands of songs stored in the player. The Ipod’s ease of use was essential to its adoption by newcomers who were unfamiliar to MP3. Secondly, ITunes was very innovative in the way that it simplified the process of legally obtaining music over the internet.Apple made possible a new distribution method for music through ITunes wherein the customer can access exactly the tracks he wants, anywhere in the world and the music is delivered directly to him. Lastly, the success of the Ipod has allowed Apple to leverage its brand strength as a key strategy for the Ipod. Apple successfully marketed the Ipod as a lifestyle accessory and a successful marketing campaign has made an Ipod (not an MP3 player, an Ipod) a must have.C. One key strength for Apple has been its brand. Successful products in the past have infused the Apple Brand with the values of ease of use, innovation and style. This is best seen through the cult of Apple fanaticism with Apple devotees preaching the values of Apple products to their peers. Like whole foods, the Apple brand has formed its own following that serves to promote the values of Apple products.While marketing strength may be a great strength of Apple, their culture of innovation allows them to maintain a lead over their competitors in terms of ease of use and new features. The key to Apple’s innovation is their focus on satisfying the needs and uses of the customer as opposed to simply cramming their products full of gadgetry.This is best seen during the years before Apple switched to Intel processors. While relegated to using the antiquated PowerPC processor from Motorola, Ap ple was able to maintain interest in their computers by innovating on the software side, coming out with the much acclaimed OS X operating system and its succeeding incarnations.Apple PCs have also been known to be better in design related applications. Macintosh computers are seen by many to be better suited for creative applications such as image processing, music creation and video editing. Apple itself has invested heavily in these areas with their free, pre-installed versions of these types of programs being far better than the offerings of their competitors.Lastly, Apple’s policy of being tight with its technology has allowed it to keep a high level of control over products associated with Apple products. Unlike other PC manufacturers whose technology is available to all OEMs, Apple technology is shut out to third party manufacturers. For the most part, Apple controls who makes Apple peripherals.While this limits the expansion of Apple and keeps the cost of its peripher als high, it has allowed Apple to maintain a high level of quality for its peripherals and its own products as their computers are less likely to crash due to shoddy third party products.