Company Name: - APPLE

Project Failure: Apple misses power mac demand Year: - 1995 Mission Statement Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings .

Apples Supply failure

Its Power Macintosh line of personal computers just celebrated a banner first year. Its most recent earnings blew the socks off Wall Street. And it sold more multimedia PCs past year than anyone else in the business. So why has Apple's stock dropped 17 percent since mid-February 1995? A big part of the reason has been Apple's inability to meet demand for its Power Macs, the computers based on the big-muscled PowerPC chip. Since their introduction in March, 1.2 million Power Macs have been sold, but Apple has fallen behind in production, with customers reporting waits of up to two months for high-end machines. As a result of the delays, analysts say sales of Power Macs in the current quarter may be no greater than in the past three months of 1994 -- about 325,000 units. Chief executive Michael Spindler, talking to reporters in London yesterday, confirmed the problem, saying, "We were a little timid" in forecasting sales of the computers. As a result, he said, "We left some money on the table." Investors just hate it when that happens. There's nothing worse than having a hot product, and not being able to get it into customers' hands. (IBM has had the same problem with its popular Thinkpad laptop computers and its Aptiva PCs in 1994.) As word of the shortage began to spread , at least two New York brokerage analysts cut their ratings on Apple, and the stock went down 8 percent in one day, to $35 a share. However, other factors also may have contributed to the malaise: -- Apple is off to a slow start in getting other computer makers to clone Macs. So far, only three companies have taken up Apple on its offer to license the Macintosh technology (Spindler said yesterday a fourth had been signed, but did not disclose who it is). And the ones that have been announced don't include a major U.S. PC manufacturer. Until Apple gets an IBM or a Motorola on board, there won't be enough clones out there to give the Macintosh platform a meaningful boost. -- With Windows 95, Microsoft may finally deliver an operating system that's as easy to use as the Macintosh. In an effort to put a stick in Microsoft's spokes, Apple has sued its rival over video technology and taken sides against Microsoft in its antitrust battle with the government. But so far, it looks as if the new Windows will come out on schedule in August. Otherwise they'll have to rename it Windows 96. -- Apple's profits for its first quarter ended December 30 may have appeared rosier than they actually were. Some analysts contend that without some factors like a big drop in

research and development spending, earnings per share would have been well below the $1.55 the company reported. In addition, Apple's backlogs increased only marginally in the September- December period, indicating a possible slowdown in sales. -- No matter how hard it tries, Apple can't seem to compete on price with other PC makers. That's because: 1. companies such as Compaq and Packard Bell are constantly cutting prices, and 2. Intel makes it a point to drive chip prices down every three months. The bottom line is that a PC using an Intel Pentium is several hundred dollars cheaper than a comparable Power Mac, a situation that's not likely to be remedied. Even the rumor mill seems to be working against Apple. Speculation that Hewlett-Packard would buy Packard Bell for its move into the home market helped depress Apple's stock last week, even though analysts poured cold water on it. David Wu of S.G. Warburg in New York estimated chances of such a merger at 100-to-1, adding, "It's about as likely as Oracle's Larry Ellison buying Apple." By the way, Ellison apparently still is interested in acquiring Apple, and according to one Silicon Valley industry watcher, he has been trying to persuade IBM to join him in a bid. Asked about Ellison's intentions, Oracle President Ray Lane advised people not to hold their breath.

Reasons behind the Failure Incorrect Demand forecasting Conservative inventory strategy .Slower production schedules. Failed to take suppliers into account in forecasting.

Consequences Apple loses PC market share to rivals Microsoft, which it never really recovers and stock
dropped 17 %. Loses millions of dollars in revenues

References:
http://www.sfgate.com/business/article/Power-Mac-Shortage-Bruises-Apple-3040630.php.

Supply chain digest, Jan 2006