Case Study: Apple Inc

Case Study: Apple Inc.
Table of Contents
1. Introduction......................................................................................................................................3
2. Story of Apple Inc.............................................................................................................................3
1975-1984: Jobs and Woznaik...........................................................................................................3
The Apple I.........................................................................................................................................4
The Apple II........................................................................................................................................5
The Apple IPO....................................................................................................................................5
The Apple III.......................................................................................................................................5
Xerox PARC and the Lisa....................................................................................................................6
The release of the Macintosh and the 1984 commercial...................................................................6
1985-1997: Sculley, Spindler, Amelio................................................................................................7
The Apple II family of the 1980s........................................................................................................7
The early-mid 1990s..........................................................................................................................7
1997: The Return of Jobs...................................................................................................................7
1998- 2001: Apple's Renaissance.......................................................................................................8
The iMac, iBook, and Power Mac G4.................................................................................................8
Apple retail stores.............................................................................................................................9
2002 To present.................................................................................................................................9
3. Industry Overview –.........................................................................................................................11
4. Product line-up-...............................................................................................................................12
5. Financial Analysis of Apple Inc.........................................................................................................13
6. Apple Inc. from the lens of Innovation Theories..............................................................................15
Pitfalls for emerging technologies...................................................................................................15
Imitation to innovation....................................................................................................................17
Disruptive Innovation......................................................................................................................18
S- Shape curve.................................................................................................................................18
Innovator’s Dilemma.......................................................................................................................19
Innovator’s solution.........................................................................................................................19
Open market Innovation..................................................................................................................20
Technology speciation.....................................................................................................................22
Assessment of Emerging technology...............................................................................................24
7. Future Challenges in front of Apple.................................................................................................25
Management of Technology Final Report Page 2

8. Conclusion.......................................................................................................................................27
1. Introduction
Apple Inc., formerly Apple Computer, Inc., is an American multinational corporation which designs

and manufactures consumer electronics and software products. The company's best-known
hardware products include Macintosh computers, iPod portable media players, and the iPhone.
Apple software includes the Mac OS X operating system, the iTunesmedia browser, the iLife suite of
multimedia and creativity software, and Final Cut Studio, a suite of professional audio- and film-
industry software products. The company operates more than 250 retail stores in nine countries and
an online store where hardware and software products are sold.
2. Story of Apple Inc.
1975-1984: Jobs and Woznaik
Fig 1.1 Steve Jobs (right) Steve Woznaik (left)
The two young guys Steve Jobs and Steve Woznaik founded the apple Inc., Woznaik used to
be electronics hacker , as a kid Woznaik was too engrossed in mathematics that his mother
has to shake him to bring him back to reality . In 1975, Woznaik was working with Hewlett-
Packard and Jobs was working with Atari developing video games, they were good friends as
a good friend they used to discuss many technical things together. Woznaik was too keen to
develop his own computer so after release of MOS technology he created his idea on paper
as a BASIC and went at Homebrew Computer Club meetings to discuss with them there he
found his old friend Steve Jobs who was interested in potential emerging technologies .

The Apple I
Unlike Woznaik, Steve Jobs has a business potential with high technical calibre. In order to
start new business Jobs approached a local computer store, The Byte Shop and took the
order to deliver 50 assembled computers within 30 days then he went to Cramer Electronics
a major computer parts distributer that time and asked him to provide him parts of 50
computers on 30 days credit, after talking to The Byte Shop owner distributer agreed to
provide parts to the Jobs. The two jobs and their small team worked tirelessly and
successfully delivered computers. They got sufficient money to go ahead with their next
project and this is how seed of Apple computer is sown.
Although designed machine was too primitive but design brought plenty of reputation as a
master designer to the Wozniak. They used TV as their display, cassette interface to save
and load programs and included bootstrap code on ROM which made their system start
faster. They called Apple I.
Joined by another friend, Ronald Wayne, They started building and selling more Apple I
machines, Jobs managed to secure the parts needed while Wozniak and Wayne assembled
them. Eventually they successfully built 200 Apple I computers.
Fig 1.2 The very first Apple Computer logo, drawn by Ronald Wayne, depicts Isaac Newton
under an apple tree (Right), and Apple I computer (Left).

The Apple II
Fig 1.3 and Apple II computer (Left) and New Apple computers logo (Right)
After getting initial success and sufficient money Wozniak designed and developed
prototype version of Apple II which is improved version of Apple I. On April 17, 1977 Apple II
was presented to the public at West Coast Computer Faire, Jobs introduced his computer to
Japanese textile technician from textile company named Mizushima Satoshi who became
their first Apple dealer in Japan.
Steve Jobs, Wozniak and Wiamet "Mike" Markkula who co-signed a bank loan for US$
250,000 formed Apple Computer on April 1, 1976. Their prime competitor was Atari that
time. They launched Apple II in public it became instant hit, millions of pieces were sold
Apple became brand name in home computer market.
The Apple IPO
In December 1980, Apple issued its first IPO and got huge success it generated more money
than any other IPO after ford motor in 1956, many investors became millionaires (approx
300 people).
The Apple III

By the early 1980s Apple III was launched the main
competitor were IBM and commodore, Steve launched
Apple III without internal cooling fan he wanted to
dissipate generated heat from chassis of computer but this
idea failed many computers were recalled and new model
was introduced but damage are being done already.


Xerox PARC and the Lisa
Lisa
While Apple computer was working on Apple III another

department is trying to develop revolutionary Lisa project
which includes Graphical user interface (GUI) first time in
computer history GUI was going to introduce word like
mouse, icon, and desktop into the lexicon were introduced.
In December, 1979, Steve and his engineers negotiated and

got initial technology and guidance of GUI from Xerox PARC
laboratory and developed first GUI on computer Lisa. The
Lisa was introduced in 1983 at a cost of US$9,995. Although
idea was excellent but still Lisa failed to penetrate the market
because of its high cost. Two days after the 1984 ad aired,
the Macintosh went on sale. It came bundled with two applications designed to show off its
interface: MacWrite and MacPaint
The release of the Macintosh and the 1984 commercial

In October 1983, Macintosh 128k was introduced to press, company spent heavily on
advertising of new Mac platform. In 1984, They spent US$1.5 million on television
commercial considered masterpiece commercial. Apple introduced many schemes to make
easy purchase of Apple computers. Macintosh was slowly but warmly welcomed by public,
Macintosh became known as the de-facto platform for many industries including cinema,
music, publishing and the arts.
1985: Jobs leaves Apple
Steve Jobs became more and more angry and aggressive because of the continuing drop in
Macintosh sales (merely 2,500 units in March 1985). He blamed everyone for sales drop
including himself and new CEO John Sculley and even he tried to throw him out of the
company but with the help of cofounder Markkula and other board of directors they strip
down Steve from all of his powers, angered Steve sold all his Apple share and left the
company eventually and bought Pixar a visual effects company and found NeXT Inc., a
computer company.

1985-1997: Sculley, Spindler, Amelio
Macintosh SE
The Apple II family of the 1980s
Apple now had two separate platforms Apple II and Apple Macintosh; they kept selling both
brands to different targets Apple II for home and public schools and Macintosh for
universities, colleges and to knowledge workers.
The early-mid 1990s
In the late 1980s, Apple’s major competitors were Amiga, Atari ST and IBM PC; they were
winning the race thanks to comparable GUI of Microsoft Windows 3.0 .Apple’s response to
outpace them is by launching of Quadra, Centris and Performa but because of poor
marketing all these products failed to deliver performance.
In addition to computers, Apple has also produced consumer devices. In 1993, Apple
released the Newton, an early PDA. Though it failed commercially, it defined and launched
the category and was a forerunner and inspiration of devices such as Palm Pilot and Pocket
PC.
1997: The Return of Jobs
In 1996, the struggling NeXT company beat out Be Inc.'s BeOS in its bid to sell its operating
system to Apple. Apple purchased Steve Jobs' company, NeXT on December 20, 1996, and
its NeXTstep operating system. This would not only bring Steve Jobs back to Apple's
management, but NeXT technology would become the foundation of the Mac OS X
operating system.
On July 9, 1997, Gil Amelio was ousted as CEO of Apple by the board of directors after
overseeing a 12 year record low stock price and crippling financial losses. Jobs stepped in as

the interim CEO to begin a critical restructuring of the company's product line. He would
eventually become CEO and is serving in that position to the present day.
The Microsoft deal
At the 1997 Macworld Expo, Steve Jobs announced that Apple would be entering into
partnership with Microsoft. Included in this was a five-year commitment from Microsoft to
release Microsoft Office for Macintosh as well a US$150 million investment in Apple. It was
also announced that Internet Explorer would be shipped as the default browser on the
Macintosh. Microsoft chairman Bill Gates appeared at the expo on-screen, further
explaining Microsoft's plans for the software they were developing for Mac, and stating that
he was very excited to be helping Apple return to success. After this, Steve Jobs said this to
the audience at the expo:
1998- 2001: Apple's Renaissance
The iMac, iBook, and Power Mac G4
While discontinuing Apple's licensing of its operating system to third-party computer

manufacturers, one of Jobs's first moves as new acting CEO was to develop the iMac, which
bought Apple time to restructure. The original iMac integrated a CRT display and CPU into a
streamlined, translucent plastic body. The line became a sales smash, moving about one
million units a year. It also helped re-introduce Apple to the media and public, and
announced the company's new emphasis on the design and aesthetics of its products.
Mac OS X
Company headquarters on Infinite Loop in Cupertino

In 2001, Apple introduced Mac OS X, an operating system based on NeXT's NEXTstep and
the FreeBSD kernel. Aimed at consumers and professionals alike, Mac OS X married the
stability, reliability and security of UNIX with the ease of a completely overhauled user
interface. To aid users in transitioning their applications from Mac OS 9, the new operating
system allowed the use of Mac OS 9 applications through the Classic environment. Apple's
Carbon API also allowed developers to adapt their Mac OS 9 software to use Mac OS X's
features.
Apple retail stores
In May 2001, after much speculation, Apple announced the opening of a line of Apple retail
stores, to be located throughout the major U.S. computer buying markets. The stores were
designed for two primary purposes: to stem the tide of Apple's declining share of the
computer market, as well as a response to poor marketing of Apple products at third-party
retail outlets.
The iPod
In October 2001, Apple introduced its first iPod portable digital audio player. The iPod
started as a 5 gigabyte player capable of storing around 1000 songs. Since then it has
evolved into an array of products including the iPod Touch, the Shuffle, the iPod Classic, the
Nano, and the iPhone.
2002 To present
1. In early 2002, Apple unveiled a redesigned iMac, using the G4 processor. The new design
had a hemispherical base and a flat panel all-digital display supported by a swivelling neck.
This model was discontinued in the summer of 2004.
1. In 2002, Apple also released the Xserve 1U rack mounted server.
2. In mid-2003, launched the Power Mac G5, based on IBM's G5 processor.
3. They replaced the Power Mac G5 machines as the main building block of Virginia Tech's
System X, which was ranked in November 2004 as the world's seventh fastest
supercomputer.
4. A new iMac based on the G5 processor was unveiled August 31, 2004 and was made
available in mid-September. This new iMac, dubbed the iMac G5, is the world's thinnest
desktop computer, measuring in at around two inches.
5. On April 29, 2005, Apple released Mac OS X v10.4 "Tiger" to the general public.

Apple History Timeline (at glance) –

Industry Overview –
 Apple Inc. competes in the Technology Industry, Their focus is:
◦ Computers
◦ Cellular Phones
◦ Online music
◦ Software
◦ Computer accessories
 The Technology Industry is highly competitive and characterized by rapid

technological advances in both hardware and software.
 Because Apple participates in several components of the highly dynamic Technology

Industry, Apple’s strategy has been to be an Innovator rather than a follower.
 Apple’s greatest competitor in Operating system segment is the Microsoft

Corporation and others are Linux.
 Apple’s greatest Competitor in Smart phone industry is Nokia, Motorola, Blackberry,

Palm, and Windows Mobile.
Below are the graphs showing Competitors of Apple in different product segments and their
market share -
Operating System and Browser market Smartphone market share

share

Product line-up-
 Computers
 Cellular phones
 MP3 players
 Software
 Online Music Vendor
 Distributes third party computer Accessories
 “Apple TV” an online television adapter
Apple Inc. Revenue by Product –
Mac Desktop
Mac Portables
6% 17%
1% 5% Ipod
10% iTunes - Other Music
Related products &
Services
Iphone & Related
26% products and Serivces
Peripherals & other
hardware
35%
Software, service, and
other net sales

Price history of Apple Inc. (source : http://moneycentral.msn.com)
Financial Analysis of Apple Inc.
Price history of Apple Inc. from 1/8/1999 to 1/2/2009

Financial data of Apple Inc. and its competitors till Q3 2008
Apple and its competitors
AAPL DELL HPQ MSFT
Market cap 109B 44B 122B 263B
Forward P/E 19.65 12.58 12.48 13.44
Trailing P/E 27.16 14.91 17.72 16.05
P/B 6.39 6.28 2.94 7.63
PEG 1.08 1.13 0.82 1.32
LTG forecast 22.0% 12.4% 15.9% 11.5%
Implied LTG based on PEG and 18.2% 11.1% 15.2% 10.2%

forward P/E
Cash from operations / Net income:
Most recent year, t 156.5% 153.7% 132.4% 126.5%
Year t-1 111.6% 131.9% 183.2% 114.3%
Year t-2 190.9% 192.9% 334.8% 135.5%
Most recent quarter, q, earnings 0.23 -0.01 0.05 0.04

surprise
Quarter q-1 earnings surprise 0.20 0.01 0.04 0.06

Apple Inc. from the lens of Innovation Theories
Pitfalls for emerging technologies
If we see the history of Apple Inc. we can conclude that under the leadership of Steve Jobs
Company never fall into the traps of emerging technologies instead they are very successful
in identifying and using new emerging technology as their successes it is not exaggerated to
name them as a pioneer of many computer and non computer technologies. Steve jobs is
the one who identified the potential of GUI in computer world and put his engineers to work
to develop new GUI for Apple computers, they are the one who first launched the first GUI
computers with mouse capabilities.
Apple spent millions of dollars every year for Research and development of new
technologies and established themselves as a great innovation company. According to
Business Week and Boston Consulting Group Top 5 Most innovative companies in 2007 are -
1. Apple
2. Google
3. Toyota
4. General Electric
5. Microsoft
Apple not only launched computer based innovation but their product line up includes
Newton PDA, IPod, revolutionary IPhone, QuickTime, Apple TV, computer accessories
amazingly they are very successful in building their market in new product line, even they
changed the name of their company to Apple Inc. to Apple computers to cover all range of
products under their brand name. Apple Inc. is always committed to deliver best quality
product. Even in bad times and adverse results company never lose hope and kept
innovating new products and ideas. They are successful to do so because they followed
basic principles to avoid pitfalls of emerging technologies instead they are the one who used
these technologies to surpass other technological companies. Some of the principle they
followed are –
 Created learning culture within organisation.

 Encourage employees to come up with new ideas and given them independence to
express.
 Widening their peripheral vision.
 Managing real options.
 Experiment continually.
 Staying flexible in strategic ways.

Below charts in millions of dollars except R&D/Op % of Apple, Amazon and Cisco.
Investment in R&D by Apple is very tiny compared to its operating earnings. From 2003 to
2007, Apple spent 2991 million dollars while raking in 8818 million in operating income.
Apple's R&D is 34% of operating income. And as Apple's operating income rises, the
percentage of R&D/operating income plummets. 2004 saw R&D/operating income at 156%,
now Q1 2008 it's dropped to 12% on average; Apple's R&D has risen 13% a year, operating
income 881% a year over the last 5 years. Apple hasn't skimped on its R&D. It's been
growing but its operating income has been growing far faster. It's amazingly productive.
Think iPhone. Think iPod and iTunes, New Macs.

Imitation to innovation
Apple Inc. is pure product Innovation Company they never

imitated products from others they always come up with
new innovating ideas but if we look closely we can see that
they are process imitator instead. We could argue, in fact,
that to be a successful product innovator you need to be
an adept process imitator, and to be a winning process
innovator you need to be a good product imitator. It’s
difficult to be innovators in both fields.
Two process imitation examples I have seen in the history

of apple, when soon after Steve Jobs returned as CEO in
1996, for example, he hired an operations ace, IBM and Compaq veteran Timothy Cook, to
retool the company’s rusty supply chain. By copying the best practices pioneered by
companies like Dell, Mr. Cook dramatically reduced Apple’s in-channel inventory, and the
savings in working capital provided an immediate boost to profitability. On the distribution
end, Apple has successfully copied efficient direct-to-customer channels such as online sales
and dedicated stores.
Secondly, Apple opened exclusive stores for its apple products all around America is a
imitation of Gateway’s process innovation to build the reach to customer and create its
brand value .they launched expensive brand-advertising campaigns, invested aggressively
on the retailing end and try to be service imitator as well.
Apple Inc. slowly but eventually becoming a process innovator as well they are using
established “I-Product” line up to create unique kind of brand like IPhone, IPod, ITunes
these are the products from different types of usability but they all are carrying character ‘I’
with it as a unique identity of Apple Inc. and they are very successful in creating ‘I’ brand.
By reading above facts we can conclude that Apple Inc is becoming a Process Imitator to
Innovator eventually.

Disruptive Innovation
Apple Inc. is true Innovator Company they made billions of dollars by introducing row of
disruptive technologies they made the standards their strategy is to enter new market do
your best create new standards and lead market. Some of their
disruptive technologies are Apple II, IPod, IPhone and now they are
going to introduce revolutionary Mac Mini.
These 4 technologies they introduced are from different domain at

all
Apple II – Desktop PC - Apple II computer used most advanced GUI

and office software with mouse interface. This PC revolutionized
the way people used to communicate with computers.
IPod – Portable music player – IPod is small portable sleek MP3

player with a capacity of storing 1000 songs inside easy to carry
and easy to operate launched on October 23, 2001. It was so
popular it changed whole music industry and people’s way of listening music. Later
company launched video IPod which got huge success too.
iPhone – Revolutionary phone with many advanced features- The iPhone is an internet-
connected multimedia Smartphone with a flush multi-touch screen and a minimal hardware
interface. The device does not have a
physical keyboard, so a virtual keyboard is
rendered on the touch screen instead. The
iPhone functions as a camera phone
(including text messaging and visual
voicemail), a portable media player
(equivalent to an iPod), and Internet client
(with email, web browsing, and local Wi-Fi
connectivity). The first generation phone
hardware was quad-band GSM with EDGE;
the second generation also adds UMTS with
HSDPA.
Apple entered into mobile phone industry with the launch of this is the Smartphone iPhone
within one year it captured whole Smartphone market.

S- Shape curve
If we observe the Shape curve for Apple we can see that they are the innovators and
disruptive technology adopters . IPod and Apple II PC are the two products which gave new
direction the industry but IPhone and Macintosh are two products which proved to be
disruptive to the existing technologies (Smartphone, Windows OS).
Macintosh
IPhone
IPod Apple II PDA
Innovator’s Dilemma
When John Sculley was the CEO of Apple in the early 1990s. He actually had remarkably
clear vision about where the industry was heading. He had three priorities. First, he felt the
company needed to get its price down to $1,000, from $3,000 or $4,000 at the time. The
second thing was to open up the architecture, by selling the OS. And the third was that
handheld devices were going to be big. He was right on all three, but the culture of Apple
was just so strong that Sculley just couldn't change the direction of the ship and company
faced a huge loss year after year.
So then they bring Jobs back, he stopped trying to change the company. He wanted them to
do what they had always wanted to do: make cool products, based on proprietary
architectures this is how they are able to come out of Innovator’s Dilemma.
As such company never faced Innovative Dilemma under jobs leadership because he is too
dynamic and strong leader who can take risks and keep innovating new products.

Innovator’s solution
Apple Inc. always followed blue ocean strategy for themselves they never tried to imitate or
compete with others in any segment instead they created their own segment by introducing
totally new breed of products iPhone and iPod is best example. By introducing iPhone they
disrupted the Smartphone market. When you think about it, you are either in the market for
an iPhone, a smart phone or a mobile phone. They are three separate categories. That is the
key. We don't ask our self if we want a Blackberry, a Treo or an iPhone. We ask our self if we
want an iPhone or not. If the answer is no then we will decide if we want a Blackberry, Treo
or Windows Mobile device.
The iPhone has no direct competitors. When you have a new product class you have no
direct competition. This gives you the "Blue Ocean" to swim in where you have broad
pricing control and little influence from competitors. Apple has always followed this
strategy. we don't decide if we are buying a Mac, a Dell or an HP. we ask myself, am I buying
a Mac or not? If the answer is no then I move onto Dell or HP or one of the many other PC
manufacturers swimming in the red ocean.
The iPhone combines: - The tight integration of iTunes/iPod - A nearly fully functional
mobile web browser - The most important features of a mobile phone - The most important
features of a smart phone (email, calendar, etc.)
What they basically did was combine a few features from a desktop computer with those of
a smart phone. So, while the phone features may not be extremely robust (no voice dialing,
etc.) I, as a user am willing to sacrifice that because of the "closer to desktop" experience I
get when using the iPhone.
Will this situation last forever? No. Other manufacturers will start to make products that
more directly compete with the iPhone. Then the Innovator's Dilemma/Solution will come
into play. But until then, Apple is free to swim in the Blue Ocean it has created with the
iPhone.

Open market Innovation
Creating iPod is one of the best example of Apple strategy of Open market innovation.
Second example of open innovation is building a GUI by buying the rights to use the Xerox
PARC laboratory facilities for 3 days to understand code of GUI developed by Xerox
scientists in exchange of stocks of Apple .
Many of the hardware used by Apple in its machines are bought from different technology
companies like most of their system are based on Motorola microprocessors and in future
they are building their Macintosh on Intel microprocessors.
In today’s competitive environment no company can build everything they have to take
equipment, process, technologies, sometime infrastructure and knowledge to build their
products

Core competence
Apple, Inc. core competencies are:
 Technology innovation
 Product design
 Software design
Above words are not sufficient enough to

explain true core competency of Apple we
will take it one by one.
Technology Innovation – As I explained earlier that Apple is a company who loves to

surprise the world, It is not exaggerated to say that they the most innovative company of
the history, they not only define new standards but new products with new features for
example they reinvented and given new direction the digital music industry by introducing
iPod they destroyed whole Smartphone industry by introducing iPhone, by looking at
Apple’s history we can conclude that Keep technology innovation is their one of the core
competency.
Product Design - iPhone, IPod and Macintosh systems are one of the finest designed
products of technology making Apple Inc. products huge success. They are sleek,
lightweight, attractive and easy to handle products even naïve can handle them easily made
these products accepted all around the globe.
Software Design – Most of the Apples Products are based on Mac OS which is very stable
with attractive and efficient GUI operating system. Even their latest iPhone is also based on
Mac OS which gives them portability advantage. Mac OS is very advanced OS with all latest
features developed on NEXTstep OS base. They have QuickTime, Safari internet browser,
much other software which are very popular between computer users.
We closely observe the company then we can see that they are continuously updating their
operating system and hardware capability as their core competency and all other products
and ideas are coming out of it automatically. iPhone is based on Mac OS, Video iPod is based
on Audio iPod capabilities. So we can conclude that companies need not to worry about too
creating new products instead they have to work on identifying their core competency and
develop them, products and idea will generate from it automatically.

Technology speciation
Technology Speciation of iPhone is best example to explain speciation concept. iPhone is

developed on Mac OS which was originally developed for advanced computers but Apple
used this already developed OS in their Smartphone totally new domain for Mac OS. But this
process of speciation made revolution in Smartphone industry it changed the way people
used to communicate with their devices. iPhone is rich with new features, attractive,
lightweight.
Features included in iPhone are revolutionary some years back people even can’t think of this kind of
phone, Smartphone is not just phone or communicating device anymore it became small handheld
computers which is richer and faster than many of the computers some years back.
Second example is digital audio and

video Music player iPod which is result of
convergence of many technologies, like
mp3, memory chip, advanced software,
touch screen, video compression and
many more.

Assessment of Emerging technology
John Sculley former CEO of Apple knew that handheld devices are
going to be next big thing in technology market; he launched first
handheld PDA Newton with handwriting recognition but due to
underdeveloped complementary technology Newton failed to
penetrate market but this product open the doors to new emerging
technology for apple. Later they came with the idea of iPhone which
is bit similar concept as Newton with more advanced technologies
and it became hit all around globe.
Second Product was iPod which revolutionize the digital music

industry, Steve jobs a visionary assess the potential of digital music
industry and came with QuickTime and IPod and started selling music
and movies online, nobody before could be able to assess the
potential of this technology.
Third Product was new one of its kind of Smartphone which includes
most of the advanced feature of these days. When most of the big
telecom giants are busy with developing new features of mobile
phone Steve Jobs launched iPhone and capture whole Smartphone
market within short period of time this shows the power of
technology assessment on time.
Apple is still coming with new concepts and ideas every day like open source Operating
system, Safari multiplatform internet browser, and Video iPod.
Apple is lead by good leadership of Steve jobs who has capability to assess and create
products far before anyone can think of.

Future Challenges in front of Apple
It is always tough to replace a leader. And it’s the entire more tough, when the leader is an
icon like Steve Jobs: the man who signifies his company for most. Other than, may be Bill
Gates, no other CEO commands the following that Jobs has. Here are some of the critical
challenges that Apple will have to deal with without Steve Jobs.
1. Steve Jobs interim CEO as well and face of Apple Inc.
Steve Jobs is a face of Apple now, the biggest problem with Apple is Steve himself is interim
CEO of company. Steve co-founded Apple computers 33 years back, Jobs has successfully
attracted fervent devotion of his followers -- the Mac faithful, and more recently, iPod and
iPhone fanatics.
Apple's unmatched record of hit products has only been achieved under the famously
tyrannical leadership of Jobs, whose obsession with sleek design and the hard to define
"cool" factor of his gadgets is unique in the corporate world. Again and again, it is this
aesthetic, and Jobs' commercial success exploiting it, that has distinguished Apple products
from so many copycat competitors.
2. Investors –Too much dependence on Steve Jobs
The markets have forever been hyper about Steve Jobs. As some say: Jobs sneezes and
Apple's share prices drop. This time too the markets didn't respond any differently. The
company's share price dropped as much as 10 percent on the announcement of his medical
leave.
There are also speculations that Apple Inc probably will be sued by investors unhappy with
the company's about-face on the health of its visionary chief executive. Analysts and
investors complained that Apple was slow to disclose Jobs' true medical status and to form a
succession plan after his 2004 cancer treatment because of his crucial role in vetting the
company's forward-looking designs. Also, in case if Jobs is not back at the helm and he
misses Apple's own World Wide Developer Conference, analysts fear that share price will
again tumble.

3. Need a product blockbuster
This year's Macworld had little surprises for Apple lovers. According to an analyst in San
Francisco, "There were some innovative products, but no true blockbusters. People were
bullish going into it, and now they're kind of taking money off the table."
Also, many analysts believe that Apple has no breakthrough announcement to make after
the launch of its iconic device 3G iPhone. In 2008, Apple launched world's lightest and
slimmest laptop, Macbook Air, at MacWorld. However, this year's Trade show saw no big
unveiling and people are expecting more innovative product from Apple.
4. Recession
According to figures from analyst firm Gartner, Apple's share of the US computer market fell
to 8 per cent during the fourth quarter of 2008 from 9.5% in the third. It seems Apple is
losing out to cheaper models thanks to the global recession.
Also, shares have fallen from a May 2008 high of $192.24, on worries about Jobs' health and
the impact of the economic recession on demand for Apple's premium products.
Apple watchers are raising questions about what's really behind the swing in sentiment
about the nature of Jobs' treatment in such a short period of time. Only last week, Jobs told
Apple employees he was undergoing simple treatment, and he will stay on the job. A week
later, Jobs disclosed that his treatments are now much more complex than expected, and
require he take an extended leave of absence.
5. No succession plan
The Company remaining tight-lipped about a succession plan has only worsened the matter
further. Though Apple named chief operating officer Time Cook as Jobs' interim successor,
the paucity of details has not been taken too kindly by some Apple watchers.
Apple tried to answer the succession question during the recent Macworld developer
conference in San Francisco, but the effort fell flat. The keynote featured a bevy of
executives, most notably Senior Vice President Phil Schiller, who took over for Jobs as
keynote presenter, making him an instant heir-apparent to some. Meanwhile, more than a
dozen engineers and Apple vice presidents also got some stage time in one form or another.
Apple's behaviour of late has made analyst wonder whether Apple even has a succession
plan to begin. This despite the fact that the company is often praised by equity analysts for
its deep bench.

6. Falling sales
According to a recent report from research firm IDC, Apple has slipped from third place to
fourth in US PC market share. The Mac producer is estimated to have shipped about 1.25
million computers to the country, dropping it from its previous position and lowering it from
9.1 per cent market share in the summer to 7.2. The company's sheer unit growth has also
cooled from 32 percent year-over-year in summer to 7.5 percent.
However, Apple Inc reported a stronger-than-expected 26 per cent rise in quarterly profit in
October 2008, spurred by strong sales of its 3G iPhone.
Apple posted a six-fold increase in iPhone shipments during the September quarter, the first
since it released a faster, next-generation model. The company said it sold 6.89 million
iPhones during the quarter, outpacing Blackberry-maker Research in Motion Ltd.
Conclusion –
Apple Inc. is best Innovative Company of the century Business has never been better. The
iPhone, iPod, Macintosh, Apple TV are the revolutionary products which are already a hit .
They have penetrated the living room with their audio and video streaming devices. The
next big thing for Apple could be video game.
"One man can beat ten, so a thousand men can beat ten thousand."
Miyamoto Musashi, a book of five rings, The Fire Scroll
Since Steve Jobs became CEO of Apple Inc. the company changed dramatically share prices
has appreciated 1000 percent in 12 years. Apple has big market share in most of niche
markets like Personal computers, digital music player, Smartphone and digital music
download. They changed the way people listen music, concept of Smartphone. Company
then changed their name from Apple computers to Apple Inc. it is actually a redefinition of
Apple on the way to becoming a conglomerate along the lines of Sony Electronics
Corporation. Where is Apple going with their current line of products? What kind of
upgrades and products do we expect Apple fans to be lining up for in the next few years?
Will Apple dominate cell phones? And then again, is Apple only as good as the genius of
Steve Jobs, the man who turned it all around and has made Apple the darling of Wall Street?
Is Apple is real company of future? Does Apple fear the beginning of new product
development for other companies? All these questions are hanging around me while
finishing this Apple Inc. analysis document.

Case Study: Apple Inc

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Case Study: Apple Inc.

Case Study: Apple Inc.

Management of Technology Final Report Page 2

Apple Inc., formerly Apple Computer, Inc., is an American multinational corporation which designs

2. Story of Apple Inc.

1975-1984: Jobs and Woznaik

Fig 1.1 Steve Jobs (right) Steve Woznaik (left)

Management of Technology Final Report Page 3

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The Apple IPO

The Apple III

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Xerox PARC and the Lisa

While Apple computer was working on Apple III another

In December, 1979, Steve and his engineers negotiated and

The release of the Macintosh and the 1984 commercial

1985: Jobs leaves Apple

Management of Technology Final Report Page 7

1985-1997: Sculley, Spindler, Amelio

The Apple II family of the 1980s

The early-mid 1990s

1997: The Return of Jobs

Management of Technology Final Report Page 8

The Microsoft deal

1998- 2001: Apple's Renaissance

The iMac, iBook, and Power Mac G4

While discontinuing Apple's licensing of its operating system to third-party computer

Company headquarters on Infinite Loop in Cupertino

Management of Technology Final Report Page 9

Apple retail stores

1. In 2002, Apple also released the Xserve 1U rack mounted server.

2. In mid-2003, launched the Power Mac G5, based on IBM's G5 processor.

Management of Technology Final Report Page 10

Apple History Timeline (at glance) –

Management of Technology Final Report Page 11

 Apple Inc. competes in the Technology Industry, Their focus is:

 The Technology Industry is highly competitive and characterized by rapid

 Because Apple participates in several components of the highly dynamic Technology

 Apple’s greatest competitor in Operating system segment is the Microsoft

 Apple’s greatest Competitor in Smart phone industry is Nokia, Motorola, Blackberry,

Operating System and Browser market Smartphone market share

Management of Technology Final Report Page 12

 Online Music Vendor

 Distributes third party computer Accessories

 “Apple TV” an online television adapter

Apple Inc. Revenue by Product –

Management of Technology Final Report Page 13

Price history of Apple Inc. (source : http://moneycentral.msn.com)

Financial Analysis of Apple Inc.

Price history of Apple Inc. from 1/8/1999 to 1/2/2009

Management of Technology Final Report Page 14

Financial data of Apple Inc. and its competitors till Q3 2008

Apple and its competitors

AAPL DELL HPQ MSFT

Market cap 109B 44B 122B 263B

Forward P/E 19.65 12.58 12.48 13.44

Trailing P/E 27.16 14.91 17.72 16.05

P/B 6.39 6.28 2.94 7.63

PEG 1.08 1.13 0.82 1.32

LTG forecast 22.0% 12.4% 15.9% 11.5%

Implied LTG based on PEG and 18.2% 11.1% 15.2% 10.2%