2. The Company &
What Key Happenings Company
Happened Offerings &
Target Market
Strategy
Recommendation Marketing &
Q&A Business
Apple, Inc.
Critical Issue
In 2010 Industry &
& Analysis Competition
Alternate 5-Factor
Identification Problem
& SWOT
Statement
2
3. Situation Audit – The Company
• US-based High Tech Multinational Company
Mission Statement:
• Designs Macs, the best personal computers in the world,
along with OS X, iLife, iWork and professional software
• Leads the digital music revolution with its iPods and
iTunes online store
• Reinvented the mobile phone with its revolutionary
iPhone and App Store, and is defining the future of
mobile media and computing devices with iPad
3
4. Situation Audit – Company Offerings
PC – Mac Desktop, Portable
Retail Stores
MP3 Player
iPod
Peripherals &
Accessories SmartPhone
iPhone
Application SW
iLife, iWork Tablet
iPad
OS
Content Provider
iOS, Mac OS X
iTunes, AppStore
4
7. Situation Audit – Target Market
Individuals
Governments
Home Users
DIVERSE NEEDS
Computing
Communicating
Entertainment
Creative Educators
Professionals Students
Enterprises SMB
7
8. Situation Audit – Marketing Strategy
PRODUCT PRICE
Simplify & Beautify ordinary items Premium - Skimming Strategy
Superior design
High user-experience
Complete Solution
PLACE PROMOTION
Online Publicity
Own Retail Store Student Discount
Big-box Retailers, Service Providers Value-add Services
iTunes - Content
App store - 3rd party Apps
8
9. Situation Audit – Business Strategy
• VISION: Committed to bringing the best user experience to its
customers through its innovative hardware, software,
peripherals, services, and Internet offerings
• Superior and well-integrated digital solutions
• Continuous new offerings
• Ecosystem for the products
• Retail Strategy
• Digital Hub Strategy
9
10. Situation Audit – Industry
Frequent Rapid Intense
Large
Product Technological Competition
Players
Introductions Advances Price cuts
Rapid Economies Price
High
Product, Tech Of Scale Sensitive
Utility
Imitation Customers
10
12. The Company &
What Key Happenings Company
Happened Offerings &
Target Market
Strategy
Recommendation Marketing &
Q&A Business
Apple, Inc.
Critical Issue
In 2010 Industry &
& Analysis Competition
Alternate 5-Factor
Identification Problem
& SWOT
Statement
12
13. Porters Five Factor Model
PC - MAC MP3 Player - iPOD Mobile - iPHONE
LOW LOW LOW
Differentiation: Differentiation: Differentiation:
Unique Design Unique Design Unique Design
Vertical Integration iTunes – Easy Music AppStore – Download on
Strong Brand Download, Sync with PC Phone
Threat of Accessories Accessories
Entry Patents Patents
(Potential
Competitors)
Cost Advantage: Cost Advantage: Cost Advantage:
Proprietary Tech Proprietary Tech Proprietary Tech
Access to Raw Access to Raw
Economies of Scale:
R&D, Setup cost high High Market share R&D, Setup cost high
LOW LOW LOW
Buyer Customer increasing Customers decreasing Customers increasing
Power Switching cost high Switching cost high for Switching cost high for
for differentiated prd differentiated prd differentiated prd 13
14. Porters Five Factor Model
PC - MAC MP3 Player - iPOD Mobile - iPHONE
HIGH MODERATE HIGH
Threat of Few Strong Large Competing firms Large Competing firms
Rivalry Competitors
(Existing
Competitors)
Large White-box
Players
MODERATE MODERATE LOW
PDA, Tablets, SmartPhone, Landline - Home,
Threat of
SmartPhone Radio, CD Players Public, IM
Substitute
Provide only some Outdated technology Do not provide
function of PC portability
MODERATE HIGH MODERATE
Software, MP Memory, Content MP, Apps
Supplier Supplier of Supplier of Component Supplier of Component
Power Component Power to Impact Price Power to Impact Price
Power to Impact Price ContentProviders control
Price and availability
14
15. SWOT - Strengths
Revolutionary High Quality WellIntegrated
Product
Differentiated & User PlugNPlay
Breadth
Product Experience Intuitive
Fast High Charismatic
High
Innovation Customer Visionary
Margins
Pace Loyalty CEO
Strong Brand Financially Innovation
Patents
Halo Effect Strong Culture
15
16. SWOT - Weakness
MAC: Low Reliance on iTunes: Low iPhone:
Market Suppliers for Limited to
Margin
Share MP,App,Mem Single SP - ATT
iPhone: Innovation Some High
Lacking limited to key Product Investment in
Features Personnel Failure R&D
Inventory Overseas Content
Closed
Cost Less Market Provider
Systems
Adv Purchase Presence Relations 16
17. SWOT - Opportunities
Capitalize on
iPod-iPhone Tablets iTunes
Growth
Global
iPhone
Additional Demand
Feature
for Cons
Limitation Cellular N/W
Electronics
17
18. SWOT - Threats
Rapid Highly Free
Imitators Technology Competitive Content
Changes Markets Availability
HW, SW, Global
MP3 Dying New Entrants Content Economic
Market Google Suppliers Crisis
18
19. The Company &
What Key Happenings Company
Happened Offerings &
Target Market
Strategy
Recommendation Marketing &
Q&A Business
Apple, Inc.
Critical Issue
In 2010 Industry &
& Analysis Competition
Alternate 5-Factor
Identification Problem
& SWOT
Statement
19
20. Problem Statement
1. What, historically, have been Apple’s
competitive advantages?
2. How sustainable is Apple’s competitive position
in PCs?
3. How sustainable is Apple’s competitive position
in the MP3 arena?
4. How do you assess Apple’s competitive position
in smartphones?
5. What are the prospects for the iPad?
6. Can Apple thrive without Steve Jobs?
20
21. Competitive Advantage
R&D Superior
Complete
Rapid Quality
Solution
Innovation
Large
Appealing Brand Customer
Design Reputation Base
21
22. The Company &
What Key Happenings Company
Happened Offerings &
Target Market
Strategy
Recommendation Marketing &
Q&A Business
Apple, Inc.
Critical Issue
In 2010 Industry &
& Analysis Competition
Alternate 5-Factor
Identification Problem
& SWOT
Statement
22
23. Identification of Alternative
• Option-I: International Expansion
– Emerging Markets, APAC with lot of consumers, provides high growth
opportunity
– Use Retail Strategy – Apple presence alone can do the trick
– iTunes & AppStore – Introduce worldwide content
• Option-II: Open up
– Introduce iPhone on other reliable carriers
– License MacOS & iOS for running on non-Apple Hardware
• Option-III: Price Differentiation
– Extend product line to provide some products with lower price point
• Option-IV: Complete Inhouse Development
– Develop MProcessor, Software rather than rely on Intel, Microsoft
• Substantial & Incremental Innovation required for all strategies
23
24. Critical Issues
• PC – Mac
– Less Market Share (Market Opp)
• MP3 - iPod
– iPod Sales declining (Market Opp)
• SmartPhone – iPhone
– Threat from new entrants with open OS – Google Android (Strength/Weak)
– More App Developers willing to work on new OS (Strength/Weak)
– Tie-up with single network operator with not reliable services (Mkt Opp)
– Feature limitation – Battery Life, Keyboard, Flash technology (Mission)
• Tablet – iPad
– Usage Model (Mkt Opp)
– Threat from new entrants – HP, Dell (Strength/Weak)
• Content
– Low Margins & Tense Relations
• Sustainability
– Profitability & Growth (Financial Position)
24
25. Financials
100% Gross Margin HP
80% Dell
Lenovo
60%
Intel
40% Microsoft
20% Nokia
RIM
0%
Google
2006 2007 2008 2009 Apple
25
26. 2006 Android
0%
Other Worldwide
Linux 3%
Mac OS X
0%
18% SmartPhone
Microsoft
10% MarketShare (%)
Symbian
RIM
62%
7%
Linux
0%
Android 2009
4%
5% Other
Mac OS X 1%
14%
Symbian
47%
Microsoft
9%
RIM
20%
26
28. 2006 Net Sales by
Geography (B,%)
RoW
7.8
40% US
11.5
60%
2009
RoW US
20.6 22.3
48% 52%
28
29. 2006 Asia-Pac Net Sales by
0
0%
Japan
Retail
3.2 Geography (B,%)
18%
1.2
7% Americas
9.4
Europe 52%
(EU,ME,Af)
4.1
23%
2009
Retail
6.7
Asia-Pac
16%
3.1 Americas
7% 19
Japan
44%
2.3
5%
Europe
(EU,ME,Af)
11.8
28%
29
30. 2006 Peripherals &
HW Software
Net Sales by
iPad
0
iPhone
0% 0
1.1
6%
1.2
6%
Mac
Product (B,%)
Music Rel Prod
0% 1.9 7.4
10% 38%
iPod
7.7
40%
Peripherals &
iPad HW 2009
Software
0 1.5
2.4
0% 4%
6% Mac
13.8
iPhone 32%
13
30%
iPod
Music Rel Prod
8
4
19%
9%
30
31. The Company &
What Key Happenings Company
Happened Offerings &
Target Market
Strategy
Recommendation Marketing &
Q&A Business
Apple, Inc.
Critical Issue
In 2010 Industry &
& Analysis Competition
Alternate 5-Factor
Identification Problem
& SWOT
Statement
31
33. Recommendation
We recommend, Apple should:
• Employ Market Expansion
– Emerging markets using Retail store strategy
– Worldwide contents on iTunes
• Employ Market Penetration
– More cellular carriers
– License MacOS & iOS to be used on non-Apple products
• Continue on R&D to Innovate for Product Development
– Feature-rich iPhone & iPad
• Continue delivering well-integrated & superior products
• Advertise - iPad usages
– Hospital, Schools/Universities, Professionals
• Put in place Replacement plan for Steve Jobs
33
35. The Company &
What Key Happenings Company
Happened Offerings &
Target Market
Strategy
Recommendation Marketing &
Q&A Business
Apple, Inc.
Critical Issue
In 2010 Industry &
& Analysis Competition
Alternate 5-Factor
Identification Problem
& SWOT
Statement
35
36. What Happened – 2012
SmartPhone
PC
MP3 Player More model with feature
More MAC model with
More iPod model with additions
reduced price points
features from iPhone,iPad iPhone on other Carriers -
Apple has not increased
Sales continue to Verizon
its global marketshare
decline, Apple still leading iPhone sales skyrocketed
HP leads
Android OS leads
Apple
Loss of Steve Jobs
Tablet
Retail New Head
More model with feature
More new stores around Largest Technology
addition & price points
the world company (Rev & Profit)
New Entrants – Microsoft
Strategy successful Gross Margins increase
iPad is huge success
Strategy imitated Stock Price High - $700
Apple leads
100B+ in cash/eqvt
36
37. What Happened
Net Sales by Geography
Net Sales by Geography - 2009 Net Sales by Geography - 2012
US US
22.3 61
52% 39%
RoW RoW
20.6 95.5
48% 61%
37
38. What Happened
Overall Company Growth
Overall - Company - 2009 160
Overall - Company - 2012
45
40 140 156.5B
35 42.9B
120
121.3B
30
100
33.9B
25
80
20
60
15
40
41.7B
10
20
5 8.2B
0
0
Net Sales Net Income Cash & Cash
Net Sales Net Income Cash & Cash Eqvt Eqvt
38
39. What Happened
Net Sales by Product
90
80.5 2009
51%
80 2012
Net Sales by Product (B)
70
60
50
40 32.4
21%
30 23.1
15%
20 17.1 13.8 13
32% 30%
8 8.5
9.5
19% 5.6 4
5%
10
4.3
6 4% 1.5
2.8 2.4 3.5
9%
4%
2% 6% 2%
0
0
Desktops Portable Mac iPod Music Rel Prod iPhone iPad Peripherals & HWSoftware
39
40. What Happened
SmartPhone Market Share
2009 Linux
Android 0%
4% Other
5%
Mac OS X 1%
14% Symbian
47%
Microsoft
9%
2012 Microsoft
RIM 0
20% Symbian, 7% 0%
Other,5%
RIM, 6%
Mac OS X, 23%
Android, 59%
Linux
0
0%40
41. What Happened
2009 PC Market Share
Hewlett-
Packard
Others
20%
41%
Dell
13% 2012
Hewlett-
Acer Packard, 15%
Apple Lenovo 13% Others, 43% Dell,10%
4% 9%
Acer, 11%
0%
0% 0% 0%
2012 0%
0% 0% Linux0% 0%
Apple,6% Lenovo, 15%
1% Mac OS Toshiba
WinVista 6%
0% 0 0 0 0
6% Windows XP0% 0% 0% 0%
43%
Windows 7
43%
41
42. What Happened
Gross Margins Compared
90%
80%
HP
70%
Dell
60% Lenovo
50% Intel
40% Microsoft
30% Nokia
20% RIM
Google
10%
Apple
0%
2006 2007 2008 2009 2010 2011 2012
42
43. What Next – Beyond 2012
• Product Innovation
– Blow-out NG iPhone
– iTunes Radio
– Apple TV – Large Screen TV
• Opening up of Apple TV for App Developers
• Overseas Market Growth Opportunity
– Strategic Deals – China Mobile
43