A Project report on brand marketing of Apple Inc.

What is branding
The American Marketing Association (AMA) defines a brand as a "name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of other sellers. Therefore it makes sense to understand that branding is not about getting your target market to choose you over the competition, but it is about getting your prospects to see you as the only one that provides a solution to their problem. The objectives that a good brand will achieve include:

Delivers the message clearly Confirms your credibility Connects your target prospects emotionally Motivates the buyer Concretes User Loyalty

To succeed in branding you must understand the needs and wants of your customers and prospects. You do this by integrating your brand strategies through your company at every point of public contact.

Your brand resides within the hearts and minds of customers, clients, and prospects. It is the sum total of their experiences and perceptions, some of which you can influence, and some that you cannot. A strong brand is invaluable as the battle for customers intensifies day by day. It's important to spend time investing in researching, defining, and building your brand. After all your brand is the source of a promise to your consumer. It's a foundational piece in your marketing communication and one you do not want to be without.

Introduction To Apple
Apple Inc. is an American multinational corporation that designs and manufactures consumer electronics and computer software products. The company's best-known hardware products include Macintosh computers, the iPod and the iPhone. Apple software includes the Mac OS X operating system, the iTunes media browser, the iLife suite of multimedia and creativity software, the iWork suite of productivity software, and Final Cut Studio, a suite of professional audio and filmindustry software products. The company operates more than 250 retail stores in nine countries and an online store where hardware and software products are sold. Established in Cupertino, California on April 1, 1976 and incorporated January 3, 1977, the company was called Apple Computer Inc. for its first 30 years, but dropped the word "Computer" on January 9, 2007 to reflect the company's ongoing expansion into the consumer electronics market in addition to its traditional focus on personal computers. Apple has about 35,000 employees worldwide and had worldwide annual sales of US$32.48 billion in its fiscal year ending September 29, 2008. For reasons as various as its philosophy of comprehensive aesthetic design to its distinctive advertising campaigns, Apple has established a

unique reputation in the consumer electronics industry. This includes a customer base that is devoted to the company and its brand, particularly in the United States. Fortune magazine named Apple the most admired company in the United States in 2008 and in the world in 2009. The company has also received widespread criticism for its contractors' labor, environmental, and business practices.

Apple played a major role in the introduction of the personal computer in the 1970s, which eventually kicked off the personal computer revolution. Its first big hit, the Apple II, was introduced in 1977 and was a very popular with home consumers. Being the innovator that Apple is, it introduced the first graphical user interface (GUI) to the commercial personal computer. This technology is used on all of todays major computer operating systems such as Windows XP as well as Unixlike systems. Since then, the company has revolutionized the way people and computer companies think about aesthetic design of computers and consumer electronics alike as

well as the security and operability of the operating system. In addition, Apples unmatchable success with its iPod mp3 player and revolutionary iTunes music store has left many companies struggling to keep up with the new wave of giving consumers the simplicity they desire in technology.

The recent announcement along with the release of new Apple computers using the Intel processor, rather than the faithful IBM PowerPc processor, has allowed the company to enter into an entire new realm of needed compatibility with its desktop and portable computers. The Intel chip allows the new machines to run the Windows Operating System natively as well as OS X on the same drive. With the correct setup of virtualization software, these two operating systems may even run at the same time, and a couple of key commands would be able to instantly switch

between operating systems. This development in technology now encourages users to switch to the very desirable Macintosh community without completely sacrificing the often thought needs of the PC.

HISTORY 19761980: The early years

The Apple I, Apple's first product. Sold as an assembled circuit board, it lacked basic features such as a keyboard, monitor, and case. The owner of this unit added a keyboard and a wooden case. Apple was established on April 1, 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne, to sell the Apple I personal computer kit. They were hand-built by Wozniak and first shown to the public at the Homebrew Computer Club. The Apple I went on sale in July 1976 and was marketpriced at $666.66. The Apple II was chosen to be the desktop platform for the first "killer app" of the business worldthe VisiCalc spreadsheet program. VisiCalc created a business market for the Apple II, and gave home users an additional reason to buy an Apple IIcompatibility with the office. According to Brian Bagnall, Apple exaggerated its sales figures and was a distant third place to Commodore and Tandy until VisiCalc came along.

198185: Lisa and Macintosh

Steve Jobs began working on the Apple Lisa in 1978 but in 1982 he was pushed from the Lisa team due to infighting, and took over Jef Raskin's low-cost-computer project, the Macintosh. A turf war broke out between Lisa's "corporate shirts" and Jobs' "pirates" over which product would ship first and save Apple. Lisa won the race in 1983 and became the first personal computer sold to the public with a GUI, but was a commercial failure due to its high price tag and limited software titles.

The Macintosh 128K, the first Macintosh computer. In 1984, Apple next launched the Macintosh. Its debut was announced by the now famous $1.5 million television commercial, "1984". It was directed by Ridley Scott, aired during the third quarter of Super Bowl XVIII on January 22, 1984, and is now considered a watershed event for Apple's success and a "masterpiece".

198693: Rise and fall Timeline of Apple II family and Timeline of Macintosh models

The Macintosh Portable was Apple's first "portable" Macintosh computer, released in 1989. Having learned several painful lessons after introducing the bulky Macintosh Portable in 1989, Apple introduced the PowerBook in 1991, which established the modern form and ergonomic layout of the laptop computer.[38] The same year, Apple introduced System 7, a major upgrade to the operating system, which added color to the interface and introduced new networking capabilities. It remained the architectural basis for Mac OS until 2001.

19941997: Attempts at reinvention

The Newton was Apple's first foray into the PDA markets, as well as one of the first in the industry. A financial flop, it helped pave the way for the Palm Pilot and Apple's own iPhone in the future. By the early 1990s, Apple was developing alternative platforms to the Macintosh, such as the A/UX. The Macintosh platform was becoming outdated since it was not built for multitasking, and several important software routines were programmed directly into the hardware. In addition, Apple was facing competition from OS/2 and UNIX vendors like Sun Microsystems. The Macintosh would need to be replaced by a new platform, or reworked to run on more powerful hardware. In 1994, Apple allied with IBM and Motorola in the AIM alliance. The goal was to create a new computing platform (the PowerPC Reference Platform), which would use IBM and Motorola hardware coupled with Apple's software. The AIM alliance hoped that PReP's performance and Apple's software would leave the PC far behind, thus countering Microsoft. The same year, Apple introduced the Power Macintosh, the first of many Apple computers to use IBM's PowerPC processor.[45] In 1996, Michael Spindler was replaced by Gil Amelio as CEO. Gil Amelio made many changes at Apple, including massive layoffs. After multiple failed attempts to improve Mac OS, first with the Taligent project, then later with Copland and Gershwin, Amelio chose to purchase NeXT and its NeXTSTEP operating system, bringing Steve Jobs back to Apple as an advisor. On July 9, 1997, Gil Amelio was ousted by the board of directors after overseeing a three-year record-low stock price and crippling financial losses. Jobs became the interim CEO and began restructuring the company's product line. At the 1997 Macworld Expo, Steve Jobs announced that Apple would join Microsoft to release new versions of Microsoft Office for the Macintosh, and that Microsoft made a $150 million investment in nonvoting Apple stock.

On November 10, 1997, Apple introduced the Apple Store, tied to a new build-to-order manufacturing strategy.

19982005: Return to profitability

Company headquarters on Infinite Loop in Cupertino, California. On August 15, 1998, Apple introduced a new all-in-one computer reminiscent of the Macintosh 128K: the iMac. The iMac design team was led by Jonathan Ive, who would later design the iPod and the iPhone. The iMac featured modern technology and a unique design. It sold close to 800,000 units in its first five months and returned Apple to profitability for the first time since 1993. Through this period, Apple purchased several companies to create a portfolio of professional and consumer-oriented digital production software. In 1998, Apple announced the purchase of Macromedia's Final Cut software, signaling its expansion into the digital video editing market. The following year, Apple released two video editing products: iMovie for consumers, and Final Cut Pro for professionals, the latter of which has gone on to be a significant video-editing program, with 800,000 registered users in early 2007. In 2002 Apple purchased Nothing Real for their advanced digital compositing application Shake, as well as Emagic for their music productivity application Logic, which led to the development of their consumer-level Garage Band application. iPhoto's release the same year completed the iLife suite.

The entrance of the Apple Store on Fifth Avenue in New York City is a glass cube, housing a cylindrical elevator and a spiral staircase that leads into the subterranean store. Mac OS X, based on NeXT's OPENSTEP and BSD Unix was released on March 24, 2001, after several years of development. Aimed at consumers and professionals alike, Mac OS X aimed to combine the stability, reliability and security of Unix with the ease of use afforded by an overhauled user interface. To aid users in migrating from Mac OS 9, the new operating system allowed the use of OS 9 applications through Mac OS X's Classic environment. On May 19, 2001, Apple opened the first official Apple Retail Stores in Virginia and California. The same year, Apple introduced the iPod portable digital audio player. The product was phenomenally successful over 100 million units were sold within six years. In 2003, Apple's iTunes Store was introduced, offering online music downloads for $0.99 a song and integration with the iPod. The service quickly became the market leader in online music services, with over 5 billion downloads by June 19, 2008. Since 2001 Apple's design team has progressively abandoned the use of translucent colored plastics first used in the iMac G3. This began with the titanium PowerBook and was followed by the white polycarbonate iBook and the flat-panel iMac. 2005present: The Intel partnership

The MacBook Pro (15.4" widescreen) was Apple's first laptop with an Intel microprocessor. It was announced in January 2006 and is aimed at the professional market. At the Worldwide Developers Conference keynote address on June 6, 2005, Steve Jobs announced that Apple would begin producing Intelbased Mac computers in 2006. On January 10, 2006, the new MacBook Pro and iMac became the first Apple computers to utilize Intel's Core Duo CPU. By August 7, 2006 Apple had transitioned the entire Mac product line to Intel chips, over 1 year sooner than announced. The Power Mac, iBook, and PowerBook brands were retired during the transition; the Mac Pro, MacBook, and MacBook Pro became their respective successors.. On April 29, 2009, The Wall Street Journal reported that Apple was building its own team of engineers to design microchips. Apple also introduced Boot Camp to help users install Windows XP or Windows Vista on their Intel Macs alongside Mac OS X.

Apple's success during this period was evident in its stock price. Between early 2003 and 2006, the price of Apple's stock increased more than tenfold, from around $6 per share (split-adjusted) to over $80. In January 2006, Apple's market cap surpassed that of Dell. Nine years prior, Dell's CEO Michael Dell said that if he ran Apple he would "shut it down and give the money back to the shareholders." Delivering his keynote at the Macworld Expo on January 9, 2007, Steve Jobs announced that Apple Computer, Inc. would from that point on be known as Apple Inc. The event also saw the announcement of the iPhone and the Apple TV. The following day, Apple shares hit $97.80, an all-time high. In May, Apple's share price passed the $100 mark. On February 6, 2007, Apple indicated that it would sell music on the iTunes Store without DRM (which would allow tracks to be played on third-party players) if record labels would agree to drop the technology.[76] On April 2, 2007, Apple and EMI jointly announced the removal of DRM technology from EMI's catalog in the iTunes Store, effective in May. On July 11, 2008, Apple launched the App Store to sell third-party applications for the iPhone and iPod Touch.[78] Within a month, the store sold 60 million applications and brought in $1 million daily on average, with Steve Jobs speculating that the App Store could become a billion-dollar business for Apple.[79] Three months later, it was announced that Apple had become the third-largest mobile handset supplier in the world due to the popularity of the iPhone.[80] On December 16, 2008, Apple announced 2009 would be the last year Apple would be attending the Macworld Expo, and that Phil Schiller would deliver the 2009 keynote in lieu of the expected Steve Jobs.[81] On January 14, 2009, an internal Apple memo from Steve Jobs announced that he would be taking a six-month leave of absence, until

the end of June 2009, to allow him to better focus on his health and to allow the company to better focus on its products.[82] Despite Steve Jobs' absence, Apple recorded its best non-holiday quarter (Q1 FY 2009) during the recession with a revenue of $8.16 billion and a profit of $1.21 billion.

SWOT analysis
Strengths:
Apple Computer Inc. is one of the oldest hardware manufacturers that control over the product by manufacturing both computers and their operation system. It is known that Apple has a high Quality product which makes Apple different than its competitors. Apple creates its product with unique designs to attract the consumers eyes and increase its market share because Apple success is based on fulfilling customers desires. Apple has one of the top brand names within the technology industry all over the world, and 54% of their profits are from foreign markets. Apple is dedicated to develop new products which will make the use of technology easier and more efficient. Apple always provides easyuse product to the hand of the consumers. Most of its products are light, small, and easy to carry around which make them more

competitive. One of the great things about Apple is product diversification; Apple has a large number of product lines to target everyone in the world. In addition, there are a huge number of consumers who are loyal to Apple even though the prices of Apple products are higher comparing to its competitors. The attractiveness of Apples products has created a brand of distinction in the computer industry. In 2005, Apple had reported a net income of 1,335,000,000 which equates to an increase of almost 400% from its net income in 2004. So far, the company has done quite well in 2006. There was an increase in quarterly earnings growth of 41.4%. Its stock price is the highest in the personal computer industry. Apple is financed mostly by its equity. In fact Apple does not have any debt, so investors would bear less risk by holding Apples stocks. The company is loaded with extra cash that is ready to acquire any firm that could help enhance the value of the company.

Weaknesses
Apple had difficulties on some of its products quality control. Some consumers reported faulty screens in the iPod Nano. When Apple first introduced the iPod, consumers faced problems with

faulty batteries. Apple is ranked fourth by sales of hardware, and it is focusing on internal engineering more than the market. They must continue to impress the market with new products. This puts huge pressure for Apple to maintain its position as one of the industry leader. The computer industry is a fast-changing type industry where old products are constantly replaced by newer and more improved innovations. For Apple to remain profitable, they must invest huge amount of money in their product R&D which has been increasing steadily every year. Even though Apple may seem so financially strong, its lack of debt may just be a fatal weakness. Apple is very vulnerable to a major stock acquisition by other groups or companies. In addition to the debt/equity issue, Apple has not issued any dividends to its shareholders for many years, which may cause the investors to lose their confidence in this company.

Opportunities
Apple is known for its innovative thinking. They have developed a product line that is both functional and attractive. Their product line has recently expanded to another level. Their iPods will soon be able to communicate with specially designed Nike running

shoes where you could receive data such as calories burned and distance ran. This project can benefit both companies and boost the demand for iPods. Apples iPod line will have a clear advantage over all the other mp3 players in the market. In addition to Apples integration with other products, many cars models from all major automakers have equipped their new models with iPod connectivity. In regards to their desktop and notebook sectors, Apple has developed new lines that are less expensive while maintaining its high quality standards. These less-expensive computers should help increase sales in the future. Apple has also changed its chip supplier from IBM to Intel. This change would make Apple more compatible with other systems. It enables Apple to run the Windows operating system, which gives the user more flexibility.

Threats
Apple faces pressure from its competitors such as Dell and HP. Dells low budget computers have given them the largest market share in personal computers. According to the available data, HP leads the industry with gross revenue of 88.89 billion dollars but Dell has the highest net income. Even though Apples stock price is higher than both Dell and HP, the difference in market share and revenues are far behind them.

The substitution effect is another threat for the computer industry. Since technology changes at such a rapid rate, the iPods and iMacs can possibly be replaced by other devices. However, this change would not result in the collapse of the company but it would certainly change the kind of role that Apple has in the industry. Apple will be forced to develop new products to keep this from happening. If another company comes out with a better product, Apple would lose its market share to that company. Another threat for Apple would be the exchange rates which can cause shifts in supply and demand. Since Apple has a huge international market, their revenues from foreign countries are directly related to exchange rates. The depreciation of US dollars could cause a decrease in their net receivables. On the other hand, an appreciation in US dollars would increase net receivables but decrease

future demand since price would increase.

Future Goals and Expectations Apple can definitely expect a prosperous future especially in the near future. Over the past five years, net sales have been steadily increasing with almost a 200% increase from 2004 and 2005.

Correspondingly, net earnings have been increasing as well. Apple owns over 80% of the market share with its iPod product. With such favorable trends, it is reasonable to assume that Apple will continue to increase in its sales, earnings, and market share just as long as it keeps developing and acquiring new strengths. For example, Apple has established its name as one of the leading, innovative forces in the computer industry that has a much diversified, high quality products that appeal to many markets. Competitors will find it difficult to compete against the company if Apple continues to strive for innovation, as it is its mission, continuing its well-

developed marketing plan, further developing more high quality products, and taking advantage of its opportunities. Thus, the threat of product substitution and high levels of competition would be decreased. However, although it seems that Apple is not in a position where its favorable future outlook is threatened, it is best that Apple works on its weaknesses so as to further increase its sales and decrease the possibility of losing its customers to its competitors. For example, Apple is known for its high quality products, which puts them into a competitive advantage. However some components of its products such as the iPod batteries and the iPod Nano screens are of lesser quality. Apple must increase its R&D efforts to really minimize the number of

products with faulty components. Thus, customers would not be lost and customer loyalty would be maintained. Another weakness that must be addressed is the high prices of its products. For example, the iPod nano ranges from $150 to $250 depending on the size, the iPod ranges from $300 to $400, and a Mac desktop is at least $1300. Such high prices discourage potential customers from purchasing Apples products. The solution to this weakness is to decrease the prices to the point where profits are still increasing. Likewise, the cost of sales should be decreased but only to the point where the quality of the products is not sacrificed. Another weakness that should be addressed is the lack of paying dividends. Although other computer companies do not pay dividends, they will eventually start paying dividends. Apple have not paid dividends since 1995 and because of its increasing earnings, the company has the ability to pay off dividends. Starting as soon as possible will put Apple in a better competitive advantage because it will definitely improve stockholder loyalty as well as allow for an increase in shares. With its already well-established name brand and its positive sales/market share growth, Apple will without a doubt continue to

increase their earnings and market share. However, by working on at least some of its weaknesses through minimizing the number of faulty components in its products, decreasing its prices, and paying dividends, Apple can tremendously gain a competitive advantage over its competitors.

Apple Marketing Mix

Apple, Inc originated from the friendship and mutual interests of Steve Wozniak and Steve Jobs. The Two collaborated in the development of the Apple I in the early 1970s. The Apple I was a step ahead of most computers of the time featuring a use of aTV as a display system and a cassette interface for recording programs. After obtaining financing for the development of Apple II, the Apple Computer Company was formed in 1970.As the growth of home computer use grew, Apple grew with it. In 1980 the company issued its initial public offering of investment stock. Apple next introduced the MacIntosh Computer in 1983 during the Super Bowl. The computers desktop publishing features provided the foundation for future innovations that have become standard for the company. Today Apple, Inc has more than 33,000 employees and revenues exceeding 42 million dollars.

Product

Portable Computers including Mac products such as Mac Book Pro, iMac, MacBook Air, Mac Mini, Xserve Servers including Xserve, Xsan, MacOS X Ser, MobleMe. Accessories including MagicMouse, Keyboard, Led Cinema Display. Wi-fi Based Stations - including Airport Express, Airport Extreme, Time Capsule. Developer including Developer Connection, Mac Program, iPhone Program. iPod including iPod Shuffle, iPod Nano, ipod Classic. iPhone including iPhone3GS, iPhone3G, iPad. iTunes including movies, TV shows, audio books, games. Periphal products including Printers, Storage devices, digital videos and cameras.

Price

Apple is a premium brand computer that does not attempt to compete on price. The company has reduced prices after some initial product launches. It uses skimming and preimuim pricing strategies. The AppleiPad is priced at a minimum of $499. The Apple iPhone costs begin at $99. The Apple iPod Classic is priced starting at $249. The Apple iPod Nano costs $149. The Apple Mac Book costs $999. The Apple MacBook Pro is priced at $1199. The Apple Quicktime Pro for Windows costs $29.99

Apples iPad pricing strategy includes the flexibility to lower the prices if consumer response dictates such action. This would be consistent with a similar $200 price cut on the iPhone in 2007. In 2009 Apple announced a reduced cost pricing structure for iTunes - songs will cost 69 cents, 99 cents or $1.29. He said the "vast majority" of the songs will cost 69 cents. Changes are said to be a response to a slower pace of music downloads.

Place

Apple, Inc Headquarters are located at is located at 1 Infinite Loop, Cupertino, California. The Apple Consultants Network includes independent professional service providers and technology consulting firms that specialize in Apple and third-party solutions. Certified on Apple technologies, these providers deliver on-site technology services and support to home users and businesses of all sizes. Apple service providers are certified technicians, who complete regular Apple training and assessments, and offer repair services, and exclusive access to genuine Apple parts. They are located in Asia/Pacific, Africa, the Middle East Europe and Latin America. Apple has over 200 retail stores worldwide including the US, UK and Canada. Apple recently opened a new retail store in Shanghai China.

Promotion

Apple, Inc offers special discounts on refurbished MacIntosh computers, iPod Nanos, and the 8GB iPod Touch. In each case a 1 year warranty is included on the all products. Apple, Inc authorized Training Centers are located throughout the U.S. each provides instruction in Mac systems, Mac OS X, and Apples professional applications. A wide range of certification

exams and courses offer innovative learning opportunities for IT and creative professionals, educators, and service technicians delivered exclusively by Apple Certified Trainers. The Apple Consultants Network website provides a search tool allowing visitors to locate nearby certified Mac product consultants in the U.S, Canada, and a number of international locations. The online Apple Store offers free shipping for orders over $50. The online Apple store offers iTunes gift cards. Apple provides a $100 rebate when you purchase a Mac or specific printers from the online store. Apple has packaged back-to-school offers, including some aimed at college students. People
o

Stephen P. Jobs is the Chief Executive Officer of the Executive Board at Apple, Inc Non Executive Board Directors include William V. Campbell, Millard S. Drexler, Albert Gore, Andrea Jung and Author D. Levinson. Key Senior Management team members include Timothy D. Cook, (COO), Scott Forestall, Jonathan Ivey, (Industrial Design), Ronald B Johnson (Retail), Robert Mansfield Mac Hardware Engineering), Peter Oppenhiemer (Chief Financial Officer), Mark Papermaster (Devices Hardware Engineering), Philip W. Schiller (Worldwide Marketing), Bertrand Serlet (Software Engineering), and D. Bruce Sewell (General Counsel). Some certified Apple service providers offer additional services beyond repairs and parts such as such as data transfer, data recovery, upgrade services, and onsite deployment and installation.

Every Mac, iPod, iPhone, and display comes with complimentary telephone technical support for 90 days after your purchase and a one-year limited warranty. The AppleCare Protection Plan extends your service coverage and gives you one-stop service and support from Apple experts. The AppleCare Professional Video Support gives you direct access to Apple's Professional Video Technical Support team via telephone and email 12 hours a day, seven days a week.

Physical Evidence
o

Apple Incs main website is located at http://www.apple.com The Apple logo has evolved from its original depiction of Sir Isaac Newton under a tree to the memorable rainbow apple to the present blue Apple with a bite taken out.

Process
o

Apple converts new customers and secures their loyalty through a corporate emphasis on customer service. Apple seeks to attract its target market through bold public relations events (such as the MacWorld Expo) as well as advertising imagery which borrows from contemporary modern art. Apple has expanded its distribution channels in recent years including the addition of Wal Mart

Vision Statement

"Man is the creator of change in this world. As such he should be above systems and structures, and not subordinate to them." Explanation of vision Apple lives this vision through the technologies it develops for consumers and corporations. It strives to make its customers masters of the products they have bought. Apple doesn't simply make a statement. It lives it by ensuring that its employees understand the vision and strive to reach it. It has put systems in place to enable smooth customer interaction. It has put objectives in place to continuously move forward; implemented strategies to fulfil these

objectives; and ensured that the right marketing, financial and operational structures are in place to apply the strategies. 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

The Future of Apple

Personal Computers A Shift in Strategy

Apple has historically taken a far different path than the traditional Windows and Intel combination. Microsoft provides the Windows operating system to separate downstream hardware producers such as Dell. Apple vertically integrated both the operating system software and hardware completely under Apple. A

consumer running Microsoft Windows can choose from a myriad of systems

based on the Intel processor, while a consumer running Apples OS X must purchase Apple hardware. Apple is adjusting this strategy by migrating their microprocessors from IBM and Motorola PowerPC to Intel. Analysts believe that the Intel-based Macintosh may be able to run Microsoft Windows applications by the end of 2006. (Burrows) In addition to switching processors, Apple positioned their computers as an immediate option for the traditional Microsoft Windows user. With Apple Boot Camp, users may now use Mac OS X or Windows on an Apple computer. (Sutherland).By allowing users to run Windows on an Intel Mac, Apple reduced the switching costs for traditional PC users. Apple may steal away customers that are willing to pay a premium for a system that runs both Windows and Mac OS X. Apple continues to retain a strategic option to license its technology to clone makers such as Dell. Past attempts at licensing Apple technology (to IBM, Many

Gateway, and others) failed on accord of Apples rigid demands.

technology leaders (such as a 1985 letter by Bill Gates to Apple CEO John Sculley) criticized Apple for keeping a closed architecture. Apple cofounder Steve

Wozniak criticizes this strategy, We had the most beautiful operating system, but to get it you had to buy our hardware at twice the price. That was a

mistake.Whether Apple would be willing to pursue this reversal of vertical integration is unclear. Although such a move would cannibalize a portion of Apples own hardware sales, it would also provide royalty-based revenue that could approach $1 billion annually. (Burrows) Jobs traditionally sided against licensing Apple technology. He referred to Mac clone producers as leeches and

he personally killed Power Computing (a Mac clone producer) by terminating their license in 1997.

External Aanalysis

Technological Environment Brand Awareness Style at a Premium Apples products are trendy and stylish. After Jobs returned in 1997, Apple retained designer Jonathan Ive to differentiate their computers from the typical beige box. Ives design of the iMac included clear colorful cases that distinguished Apple computers. Apples iPod (with the trademark white ear buds and simple track wheel) commands a 15%-20% premium over other MP3 players. Apple and Pixar limit the number of computer products and movies that they sell. Product differentiation with focused quality and style also extend to the Jobs Pixar Pixar's executives focus on making sure there are no B teams, that every movie gets the best efforts of Pixar's

brainy staff of animators, storytellers, and technologists. (Burrows, Grover, and Green) Apple positions its Macintosh computers as higher quality and higher price. HP, Dell, and other PC manufacturers are pricing many systems under the $1,000 threshold. Apple is struggling to meet demand for its new MacBook Pro laptop despite a $1,900 price tag that is nearly twice that of garden-variety rivals. Apple has only recently entered the low-end (below $500) consumer market with the Mac Mini. Although the Mac Mini is a base model with few features, it comes encased in a very small and distinctive package. Apple portrays this computer as Small is Beautiful. (Apple) Likewise, the iPod Shuffle was Apples first entry into the lower-end ($100 range) of flash-memory-based portable music players.

Technology and the Digital Lifestyle Apple not only dominates the music player market, its iLife suite provides consumers with easy-to-use software for music and video

composition. With podcast a household word, Apples Garage Band application makes the recording of podcasts and music very easy.

Industry Analysis Using Porters Five Forces Model

Apple operates in two primary industries: Computing - Hardware and Software Delivery of Entertainment and Media Apple has always been under intense competition within the computer, software, and entertainment industries. Looking to

2005...Every time that Apple had jumped into the lead in a product category during the past two decades, it had had difficulty in sustaining its leadership position. We use Porters Five Forces Model to understand why Apples industries are so competitive. Figure : Porters Five Forces Model

Threat of New Entrants Bargaini ng power of Supplier s Level of Threat in an Industry Bargaining power of Buyers

Threat of Substitutes

Figure : Summary of Industry Threats (Computer Equipment and Entertainment Distribution) Type and Organization Examples Severity of Threat Entry High Threat Verizon Streaming audio and video with V CAST.

Amazon Google

On demand online services to purchase music (similar to iTunes). They make everything.

The Next New entrants with disruptive technology. Google

Rivalry High Threat

Microsoft

Windows Operating System, Windows Media Player for playing music and video. Competition to Mac OS X Operating System. Online music sources alternatives to iTunes Music Store. HP, Alternate sources for computer hardware. Small, stylish MP3 Players.

Linux Napster, Rhapsody Dell, Lenovo iRiver, Samsung, Creative

DreamWorks Animated movies. YouTube.com Online video. Substitutes XM, Sirius Moderate Threat XBox, PS2 Various Satellite Radio for music.

Entertainment Media, Media and Music. Internet Streaming Radio and Podcasts.

Music CDs, Alternative means to acquire music. DVD-Audio and

SuperAudio CD Broadcast, Alternative sources for video. Cable, Satellite, NetFlix, TiVo, Theatres Suppliers Motorola, Suppliers of Processors and computer High IBM, Intel, memory. Threat Samsung Microsoft The Big Five BMG, EMI, Sony, Universal, and Warner Strategic Alliance / Supplier of Office for Mac. Sources of music. Will they raise prices and break the dollar per song model? Some in the record industry resent Apples distribution model. Apple reaps billions from selling its hit music player, but there are sparse profits from the songs being sold over the Net. (Burrows, Grover, and Green)

Disney, ABC, Suppliers of Television and Movies. Will NBC, CBS, they sign exclusive contracts with other Fox, Pixar, online services? Note that this threat is Sony reduced for Disney / Pixar.

Buyers Consumers Consumers share music using peer-to-peer Moderate and Illegal networks without paying for music. Threat peer-to-peer file sharing Distributors Apple retailers may pressure for lower prices or better terms. For example, the release of the Apple Store in 2001 infuriated longtime independent Apple retailers that didnt appreciate Cupertino cannibalizing their sales. (Linzmayer, 300)

Consumer Consumers or businesses may reduce Attitudes and spending on personal computers or nonBehaviors essential (potentially high elasticity of demand) music players if they fear economic downturns. Consumer Refresh Cycles Consumers and businesses may continue to use previous-model iPods and Macs rather than upgrade to current iPods, iMacs, or OS

The total industry threat for the industry space that Apple occupies (computer equipment and distribution of entertainment) is a high threat industry. Apple must continue to pursue product differentiation (i.e. the style and ease-of-use of an iPod) and economies of scope (i.e. offering ABC television shows on iTunes) to maintain their sustained competitive advantage in this industry.

Which External Threats are Most Significant Computer Hardware and Software: Open Source software such as the Linux Operating System and Open Office applications threaten both Apple and Microsoft. The low (often, free) cost of the software may allow it to overtake Apple and Microsoft, especially in developing markets such as China. Music Products: Major online retailers such as Amazon are

considering entry into the online music market. With a wide internet prese presene and a household name, Amazon could present a formidable challenge to Apple. If the major record labels (Universal, Sony BMG, EMI, and Warner) negotiate better terms with new competitors to iTunes, Apple may be unable to provide some of the music content that they currently offer. The major music labels dislike Apples dollar per song pricing. They

would prefer to earn higher profits with variable pricing. (Wingfield) With variable pricing, the most popular songs would be greater than $1, and less popular songs would be less than $1. Although the labels recently renewed their contracts with Apple, there may be provisions that allow future changes in the pricing model. (Wingfield and Smith) Suppliers: The recent shift to Intel processors could present a significant threat to Apple. With only two companies (Intel and AMD) producing Intel-compatible processors, there is a strong potential for tacit collusion and oligopoly power between these suppliers. Apple purchasing must now directly compete with HP, Lenovo, and Dell. If shortages or exclusive agreements

materialize, Apple could face problems with obtaining raw materials. Apple should consider additional sources such as

Advanced Micro Devices (AMD).

Figure: CPU Market Share

Additional External Threats Security Apple software, like all large software products, has security vulnerabilities that hackers may exploit. A significant exploitation in the future could damage many businesses and households using Apple computers. This would affect future customer purchasing decisions. Apple enjoys a competitive advantage, because their OS X is mature and stable due to its basis on BSD Unix. In fact, computer security folks back at FBI HQ use Macs running OS X. However, the increased use of Apple computers is prompting hackers to target the platform. In

February 2006, there was documentation of the first known Apple OS X worm. By using iChat instant messaging, it spreads to other users and deletes files from their Mac computers. If Mac OS X becomes as wide of a target as Windows, Apples perceived differentiation as the more secure platform may disappear.

Vertical Integration of Competitors

Sony is an example of a competitor with a unique position against Apple. Sony Music supplies Apple with many of the songs for iTunes. Sony also creates a version of the Walkman portable music player that is a direct competitor to the iPod. Sony is attempting to vertically integrate forward directly to the music buyer. Sony integrated their music system (Mora) into the Sony

Walkman. Sony is exclusively distributing certain songs on Mora. (Hall) Mora currently targets Japanese consumers. If Sony can gain additional momentum (such as collaborating with other record labels), their service could present a formidable challenge to iTunes in additional markets.

Value Chain Analysis

To determine where Apple developed distinctive capabilities, Porters generic value chain model provides a systematic framework for identifying Apples utilization of resources. Primary activities for Apple include Technology and Product Design, Production, Sales and Marketing, Customer Service, and Legal Services. Technology and Product Design This component represents the true core (no pun intended) of Apples capability. From being the first platform to run an electronic

spreadsheet (VisiCalc on the Apple II Plus) to the first to establish a digital lifestyle hub (the Macintosh product lines), Apples history is rich with cutting-edge technology development. Apple drives to be the

best, no simply the first. The Apple operating system is universally regarded as more stable and reliable than Windows, while the desktop publishing software bundles (iMovie, iPhoto, iTunes, etc.) are the most comprehensive available to end users. Ives best summarizes the

entrepreneurial culture within Apple by saying that its very easy to be different, but very difficult to be better. Production Because Apple had long refused to license its operating system to external entities, the bundled packages of Apple-developed hardware and software became the cornerstone of Apples production process. Apple achieved unparalleled performance via 64-bit architecture, integrated distinctive styling with the multi-colored translucent iMac cases, and redefined intuitive operation with the iPod. While every product introduction has not been a success (Lisa, Newton, etc.), Apple treats component production as a natural extension of the design process. Sales and Marketing We could simply title this section Steve Jobs. Since his return as CEO in 1997, Jobs personally unveils all new product introductions, reviews corresponding marketing campaigns, and approves new product

development guidelines. In a departure from their turbulent history, Jobs entered into patent cross-licensing and technology agreements with Microsoft. (Linzmayer, 290) After years of unimpressive market share growth and cannibalization of a loyal consumer base, the door to the expansive PC market was now more accessible to Apple than ever before. Apple continued to command a market premium for producing a better mousetrap throughout its history.

Customer Service How has Apple retained substantial cash reserves during the explosive growth and dominance of PCs worldwide? Apple created a virtual love affair with their customer base by delivering technically superior products (iPods vs. other MP3 players, Macs vs. PCs, etc.), and aggressively pursuing hardware and software updates. Apple

integrated their primary activities so well that it is transparent to the consumer where one activity begins and the other ends. A perfect example of this is Apples willingness to develop software to run Windows XP on its new Intel-based iMac and then post it online free to iMac users. (Wingfield) In such an environment, customer service

merely becomes the realization of receiving a little more than expected.Although Apple employs many resources and capabilities to

support their primary activities (human resources, supply procurement, etc.), the most strategically relevant would be Legal Services. Strategy We can describe Apples strategy in terms of product differentiation and strategic alliances. In each of these strategies, we examine what Apple did historically and then discuss alternatives for Apples future.

Product Differentiation Apple prides itself on its innovation. When reviewing the history of Apple, it is evident that this attitude permeated the company during its peaks of success. For instance, Apple pioneered the PDA market by introducing the Newton in 1993. Later, Apple introduced the easy-touse iMac in 1998, and updates following 1998. It released a highly stable operating system in 1999, and updates following 1999. Apple had one of its critical points in history in 1999 when it introduced the iBook. This completed their product matrix, a simplified product mix strategy formulated by Jobs. This move allowed Apple to have a

desktop and a portable computer in both the professional and the consumer segments. The matrix is as follows:

Professional Segment Desktop G3 Portable PowerBook

Consumer Segment iMac iBook

In 2001, Apple hit another important historical point by launching iTunes. This marked the beginning of Apples new strategy of making the Mac the hub for the digital lifestyle. Apple then opened its own stores, in spite of protests by independent Apple retailers voicing cannibalization concerns. Then Apple introduced the iPod, central to the digital lifestyle strategy. Philip W. Schiller, VP of Worldwide Product Marketing for Apple, stated, iPod is going to change the way people listen to music. He was right. Apple continued their innovative streak with advancements in flatpanel LCDs for desktops in 2002 and improved notebooks in 2003. In 2003, Apple released the iLife package, containing improved versions of iDVD, iMovie, iPhoto, and iTunes. In reference to Apples recent advancements, Jobs said, We are going to do for digital creation what Microsoft did for the office suite productivity. That is indeed a bold statement. Time will tell whether that happens.

Apple continued its digital lifestyle strategy by launching iTunes Music Store online in 2003, obtaining cooperation from The Big 5 Music companiesBMG, EMI, Sony Entertainment, Universal, Warner. This allowed iTunes Music Store online to offer over 200,000 songs at introduction. In 2003, Apple released the worlds fastest PC (Mac G5), which had dual 2.0GHz PowerPC G5 processors. Product differentiation is a viable strategy, especially if the company exploits the conceptual distinctions for product differentiation. Those that are relevant to Apple are product features, product mix, links with other firms, and reputation. Apple established a reputation as an innovator by offering an array of easy-to-use products that cover a broad range of segments. However, its links with other firms have been limited, as we will discuss in the next section on strategic alliances. There is economic value in product differentiation, especially in the case of monopolistic competition. The primary economic value of

product differentiation comes from reducing environmental threats. The cost of product differentiation acts as a barrier to entry, thus reducing the threat of new entrants. Not only does a company have to bear the cost of standard business, it also must bear the costs associated with overcoming the differentiation inherent in the

incumbent. Since companies pursue niche markets, there is a reduced threat of rivalry among industry competitors. A companys differentiated product will appear more attractive relative to substitutes, thus reducing the threat of substitutes. If suppliers increase their prices, a company with a differentiated product can pass that cost to its customers, thus reducing the threat of suppliers. Since a company with a differentiated product competes as a quasi-monopoly in its market segment, there is a reduced threat of buyers. With all of Porters Five Forces lower, a company may see economic value from a product differentiation strategy. A company attempts to make its strategy a sustained competitive advantage. For this to occur, a product differentiation strategy that is economically valuable must also be rare, difficult to imitate, and the company must have the organization to exploit this. If there are fewer firms differentiating than the number required for perfect competition dynamics, the strategy is rare. If there is no direct, easy duplication and there are no easy substitutes, the strategy is difficult to imitate. There are four primary organizing dilemmas when considering product differentiation as a strategy. They are as depicted below.

Inter-Functional Collaboration Too Much Slows (Lockstep) Connection to the Innovation Past Too Much (History as Stifles Constraint) Innovation Commitment to Market TooVision Much (Foresight) No Innovation Can Take Place Institutional Control Too Much Lack of Flexibility in Uncertain (Bureaucracy) Market

Organizing Dilemmas
Too Little (No Collaboration) No learning makes implementation difficult Too Little (No Lack of Direction in History) Innovation Too Little (No Fail to Exploit Historical Sight) Advantage Too Little (Chaos) Lack of Direction in Innovation

To resolve these dilemmas, there must be an appropriate organization structure. A U-Form organization resolves the inter-functional

collaboration dilemma if there are product development and product management teams. Combining the old with the new resolves the connection to the past dilemma. Having a policy of experimentation and a tolerance for failure resolves the commitment to market vision dilemma. Managerial freedom within broad decision-making guidelines will resolve the institutional control dilemma. Five leadership roles will facilitate the innovation process: Institutional Leader, Critic, Entrepreneur, Sponsor, and Mentor. The institutional leader creates the organizational infrastructure necessary for

innovation. This role also resolves disputes, particularly among the other leaders. The critic challenges investments, goals, and progress. The entrepreneur manages the innovative unit(s). The sponsor

procures, advocates, and champions. The mentor coaches, counsels, and advises. Apple had issues within its organization. In 1997, when Apple was seeking a CEO acceptable to Jobs, Jean-Louis Gasse (then-CEO of Be, ex-Products President at Apple) commented, Right now the job is so difficult, it would require a bisexual, blond Japanese who is 25 years old and has 15 years experience! Charles Haggerty, then -CEO of Western Digital, said, Apple is a company that still has opportunity written all over it. But youd need to recruit God to get it done. Michael Murphy, then-editor of California Technology Stock Letter, stated, Apple desperately needs a great day-to-day manager, visionary, leader and politician. The only person whos qualified to run this company was crucified 2,000 years ago. Since Jobs took over as CEO in 1997, Apple seems to have resolved the innovation dilemmas, evidenced by their numerous innovations. To continue a product differentiation strategy, Apple must continue its appropriate management of innovation dilemmas and maintain the five leadership roles that facilitate the innovation process.

Recommendations

For Company Lowering the cost of products and maintaining the same quality standards. Can form joint ventures. Knowledge Management. More number of retail stores for easy access. Continuous innovation to expand.

For Others Do not compromise on price for quality. Choose the products based on individual needs. Be unique and different.

Conclusion

We feel that Apple must focus on several key aspects to continue to grow and succeed. They must continue a stable commitment to

licensing, push for economies of scope between media and computers, and become a learning organization. Apple apparently made a commitment to licensing. Although it should continue, Apple may want to consider other forms of strategic alliances. An equity strategic alliance may offer Apple the opportunity to obtain additional competencies. An effective way for a company like Apple to accomplish this would be in the form of a joint venture.Apple should continue pushing the new line of media-centric products. Meanwhile, Apple should not lose focus on its computers. Macintosh computers were 39% of Apples sales in 2005. (Burrows) This very innovative company exploits its second-mover position. In the future, they will need to continue innovating to expand the boundaries of both media and computers.One persistent element of both competitive advantage and risk is Steve Jobs. He is both synonymous with Apples success and has a large equity interest in Apple and Disney. If he were to divest his leadership position, the reaction of both the market and consumers would be uncertain. Given his position within the

organization as well as the history of the company when he was gone, Apple must find a way to learn as an organization. This will allow the company to withstand a departure by Jobs. Based on the actions of the

organization, we feel that the mid-term performance of Apple will be strong. This period allows Apple time to overcome their challenges if they move swiftly. For this reason, we feel that they will continue to succeed and will continue to outperform their peers. Apple avoids competition If you look at the history of Apple, you'll see that instead of rising to competition, they often ignore it, or try to use legal means, or bundling clout, to erase it. When challenged by a larger market force, as with the IBM PC and its clones in the early 80s, and with Windows 3.0, 95 and then NT 4.0 in the 90s, they miss obvious marketing opportunities, ways to make their products stronger by participating in markets that others develop. This is an art that Microsoft has mastered, there's no reason Apple couldn't have learned the same lessons, but they didn't. And when dealing with smaller competitors, Apple routinely and often unconsciously forced them out of business by bundling, or declaring that they will bundle a competitive offering. When the Internet happened, Apple struggled against it instead of embracing it, preferring to invest in technologies that eventually ended

up on the scrap heap. A wasted lead in content development, developers going to Windows, a poor Java implementation on the Mac. The bottom line, the strategy of avoiding competition has been disastrous for Apple. But they want to do it again. The same old strategy The cloners, Motorola, Power Computing, UMAX, IBM and others, are poised to ship products that would take Apple out of the hardware business, because they're cheaper, faster, bigger, more powerful machines than Apple's new products. These are the computers that Mac users want and are, in my opinion, entitled to. Even though we haven't seen the license agreements with the cloners, it appears that Apple has the contractual right to forbid them to ship the computers, for any reason at all. Apple wants to keep their hardware business, so they exercise that right. I despise companies that use hardball tactics to put their competitors out of business. I admire companies that rise to competition. I happily buy new products when I have a choice. I don't like to buy products that I'm forced to buy.

Apple's Branding Strategy Apple Inc. uses the Apple brand to compete across several highly competitive markets, including the personal computer industry with its Macintosh line of computers and related software, the consumer electronics industry with products such as the iPod, digital music distribution through its iTunes Music Store, and more recently in the smart phone market with the Apple iPhone. Apple's product strategy is to create innovative products and services aligned with a "digital hub" strategy, whereby Apple Macintosh computer products function as the digital hub for digital devices, including the Apple iPod, personal digital assistants, cellular phones, digital video and still cameras, and other electronic devices. The Apple Brand Personality Apple has a branding strategy that focuses on the emotions. The Apple brand personality is about lifestyle; imagination; liberty regained; innovation; passion; hopes, dreams and aspirations; and power-to-thepeople through technology. The Apple brand personality is also about simplicity and the removal of complexity from people's lives; peopledriven product design; and about being a really humanistic company with a heartfelt connection with its customers. Apple Brand Equity and Apple's Customer Franchise The Apple brand is not just intimate with its customers, it's loved, and there is a real sense of community among users of its main product lines. The brand equity and customer franchise which Apple embodies is extremely strong. The preference for Apple products amongst the "Mac community", for instance, not only kept the company alive for much of the 90's (when from a rational economic perspective it looked like a

dead duck) but it even enables the company to sustain pricing that is at a premium to its competitors. It is arguable that without the price-premium which the Apple brand sustains in many product areas, the company would have exited the personal computer business several years ago. Small market share PC vendors with weaker brand equity have struggled to compete with the supply chain and manufacturing economics of Dell. Apple has made big advances in becoming more efficient, particularly in logistics and operations, but would still find it difficult to make a profit at the price levels Dell transacts at. The Apple Customer Experience The huge promise of the Apple brand, of course presents Apple with an enormous challenge to live up to. The innovative, beautifully-designed, highly ergonomic, and technology-leading products which Apple delivers are not only designed to match the brand promise, but are fundamental to keeping it. Apple fully understands that all aspects of the customer experience are important and that all brand touch-points must reinforce the Apple brand. Apple is expanding and improving its distribution capabilities by opening its own retail stores in key cities around the world in upmarket, quality shopping venues. Apple provides Apple Mac-expert retail floor staff staff to selected resellers' stores (such as Australian department store David Jones); it has entered into strategic alliances with other companies to co-brand or distribute Apple's products and services (for example, HP who was selling a co-branded form of iPod and pre-loading iTunes onto consumer PCs and laptops). Apple has also increased the accessibility of iPods through various resellers that do not

currently carry Apple Macintosh systems (such as Harvey Norman), and has increased the reach of its online stores. The very successful Apple retail stores give prospective customers direct experience of Apple's brand values. Apple Store visitors experience a stimulating, no-pressure environment where they can discover more about the Apple family, try out the company's products, and get practical help on Apple products at the shops' Guru Bars. Apple retail staff are helpful, informative, and let their enthusiasm show without being brash or pushy. The overall feeling is one of inclusiveness by a community that really understands what good technology should look and feel like - and how it should fit into people's lives. Apple Brand Architecture From a brand architecture viewpoint, the company maintains a "monolithic" brand identity - everything being associated with the Apple name, even when investing strongly in the Apple iPod and Apple iTunes products. Apple's current line-up of product families includes not just the iPod and iTunes, but iMac, iBook, iLife, iWork, and now iPhone. However, even though marketing investments around iPod are substantial, Apple has not established an "i" brand. While the "i" prefix is used only for consumer products, it is not used for a large number of Apple's consumer products (eg Mac mini, MacBook, Apple TV, Airport Extreme, Safari, QuickTime, and Mighty Mouse). The list of Apple's Trademarks reflects something of a jumbled past. The predominant sub-brand since the introduction of the Apple Macintosh in January 1984 has always been the Apple Mac. Products whose market includes Microsoft computer users (for example

MobileMe, QuickTime, Bonjour, and Safari) have been named so they are somewhat neutral, and therefore more acceptable to Windows users. Yet other product have been developed more for a professional market (eg Aperture, the Final Cut family, and Xserve). The iPod Halo Effect Though Apple's iPhone and iTunes music business is profitable in its own right, Apple's venture into these product areas was based on a strategy of using the music business to help boost the appeal of Apple's computing business. Apple is using iPod, iTunes, and now iPhone to reinforce and reinvigorate the Apple brand personality. At the same time, these product initiatives are growing a highly relevant, appealing brand image in the minds of consumer segments that Apple has not previously reached. In a so-called iPod halo effect, Apple hoped that the popularity of iPod and iTunes among these new groups of customers would cause these segments to be interested in Apple's computer products. This does seem to have happened. Since the take-off of the iPod there has been a dramatic rise in Apple's computer sales and market share. A couple of years ago, Apple's aspirations for the iPod halo effect was was highlighted most strongly when it used the slogan "from the creators of iPod" in its promotion of iMac G5 computers. In this instance, the Apple brand came full-circle - having been built into a branding system that originates in the personal computer market, then leveraged into the consumer electronics market, and then back into the consumer personal computer market. Apple Brand Strength Now Creating Financial Success

So far, Apples' branding strategy is bearing fruit. For example, Apple reports that half of all computer sales through its retail channel are to people new to Macintosh, the company's sales and margins have been growing strongly since 2006, and Apple has achieved several "best ever" quarterly financial results during the past couple of years. Leveraging the success of the iPod, Apple launched the iPhone (released in July 07) to extend the brand even further. Apple's buzz marketing efforts in the first half of 2007 were truly superb, culminating in the release of one of the most highly anticipated products for many years - and launching apple into a completely new market: mobile handsets. By July 2008 the buzz about the 3G iPhone resulted in over 1 million units being sold in the first 3 days of its release in over 20 countries around the world. Apple Re-entering the Corporate Market via the iPhone Halo Though no-one at Apple would say so today, the next phase of Apple's strategy seems focused on the Corporate marketplace. A long time ago, Apple had a fairly strong market share in large companies. A long, long time ago (at the end of the 1970's) the first spreadsheet program (VisiCalc) was launched on the Apple II. The first PC (the IBM PC) to run a Microsoft operating system (PC DOS) did not appear until 1981. When Microsoft launched its Excel spreadsheet in 1984 it appeared first on the just-released Apple Mac, such was Apple's presence among accounting and finance departments. Even though Apple effectively stopped competing for corporate business during the 1990s, the Apple Mac is still used in some corporate environments. Microsoft still has a vigorous applications development team totally dedicated to writing business software for

the Apple Mac. New versions of Microsoft Office for Apple Mac still come out approximately 2 years before similar functionality is placed in the next version of Microsoft Office for the Windows operating system. Over the next few years it seems likely that Apple will re-focus on the Corporate marketplace: Apple has announced that "Snow Leopard" (the next version of the Apple Mac operating system, due in 2009) will include features allowing Mac computers to fully support Microsoft Exchange. This will enable corporate IT departments to support business users who wish to use Apple Macs for their main email clients. Also, Microsoft continues to bring out advanced versions of Microsoft Office for Apple Mac, and - very significantly - in mid-2008 Apple announced a software upgrade for the iPhone which allows iPhones to be fully supported by Microsoft Exchange email servers. Corporate IT departments can now include iPhones as email clients. Apple's strategy seems clear: to use the popularity of the iPhone to break back into large corporations, and ultimately have Apple Macs on the desks of large businesses (or more probably - in the laptop bags of middle and senior managers in most large businesses. The Macbook Air is also clearly aimed at this type of market). As we say; no one in Apple will currently admit to such ambitions, but this is clearly where Apple's branding strategy is headed. Apple's Original Apple Macintosh Marketing Strategy Stanford University has published contemporary records and original documents of the marketing strategy for the Apple Macintosh launch in 1984, including the original Apple marketing strategy and the Apple Macintosh product introduction plan written by Regis McKenna. It is now 25 years since the launch of the Apple Macintosh (on January 24, 1984). Having proven itself and already gained considerable

popularity with the Apple II, Apple chose to announce the Apple Mac in one of the most famous-ever commercials, aired during the third quarter of Super Bowl XVIII on 22 January 1984. In addition to the innovative Apple Mac graphical user interface (based on concepts from Xerox PARC), the Mac's industrial design - shown below - was revolutionary for the time. Interestingly, it share's the same screen size (9 inch) as the latest popular PC format: NetBooks.

The first Mac (above) had just 128KB of RAM and a 400KB 3.5-inch floppy disk drive, and a 9-inch, 512x342 pixel monochrome display.

The original Mac graphical user interface was revolutionary in its day. It introduced the use of the mouse and features such as icons, fonts, folders, and audio to

APPLE PRODUCTS

Current products Mac and accessories See also: Timeline of Macintosh models, List of Macintosh models grouped by CPU type, and List of Macintosh models by case type

The Mac mini, low-cost desktop computer.

Mac mini, consumer sub-desktop computer introduced in January 2005. iMac, consumer all-in-one desktop computer that was first introduced by Apple in 1998. Its popularity helped revive the company's fortunes. Mac Pro, workstation-class desktop computer introduced in August 2006, it was previously known as the PowerMac. MacBook, consumer notebook introduced in 2006, available in white, it was previously known as the iBook. MacBook Air, ultra-thin, ultra-portable notebook, introduced in January 2008. MacBook Pro, professional portable computer alternative to the MacBook, available in 13, 15, and 17 inch variants, introduced in January 2006, it was previously known as the PowerBook.

Xserve, rack mounted, dual or quad core, dual processor 1U server.

Apple sells a variety of computer accessories for Mac computers including the AirPort wireless networking products, Time Capsule, Cinema Display, Mighty Mouse, the Apple Wireless Keyboard computer keyboard, and the Apple USB Modem. iPod

iPod Nano On October 23, 2001, Apple introduced the iPod digital music player. It has evolved to include various models targeting the needs of different users. The iPod is the market leader in portable music players by a significant margin, with more than 100 million units shipped as of April 9, 2007.[84] Apple has partnered with Nike to offer the Nike+iPod Sports Kit enabling runners to synchronize and monitor their runs with iTunes and the Nike+ website. Apple currently sells four variants of the iPod.

iPod Classic (previously named iPod from 2001 to 2007), portable media player first introduced in 2001, currently available in an 120 GB model.

iPod Nano, portable media player first introduced in 2005, currently available in 8 and 16 GB models. iPod Shuffle, digital audio player first introduced in 2005, currently available in 1 and 4 GB models. iPod Touch, portable media player first introduced in September 2007, currently available in 8, 16, and 32 GB models.

i iPod Touch

2nd generation iPod touch with iPhone OS 3.0 Manufacturer Apple Inc. The iPod Touch (trademarked and marketed as iPod touch) is a portable media player, personal digital assistant, and Wi-Fi mobile

platform designed and marketed by Apple Inc. The product was launched on September 5, 2007 at an event called The Beat Goes On.[4] The iPod Touch adds the multi-touch graphical user interface to the iPod line and is available with 8, 16, or 32 GB of flash memory. It includes Apple's Safari web browser and is the first iPod with wireless access to the iTunes Store. It also has access to Apple's App Store. The second generation iPod Touch, featuring external volume controls, a built-in speaker, a contoured back, built-in Nike+, and Bluetooth support, was unveiled on September 9, 2008 at the Let's Rock keynote presentation. iPod Nano

4th Generation iPod Nano The iPod Nano (marketed lowercase as iPod nano) is a portable media player designed and marketed by Apple Inc. It is the midrange model in Apple's iPod family. The first generation was introduced in 2005. [1] It uses flash memory, like the iPod Shuffle, but with a 2-inch (diagonal) QVGA display and the "click wheel" found on the iPod Classic. The iPod Nano has gone through four models, or generations, since its introduction. Supported audio formats

AAC (16 to 320 kbps) Protected AAC (from the iTunes Store)

MP3 (16 to 320 kbps, including variable bitrate files) Audible (formats 2, 3 and 4) Apple Lossless AIFF WAV

iPod Shuffle

From left to right, the three generations of the iPod Shuffle. The iPod Shuffle (trademarked as iPod shuffle) is a digital audio player designed and marketed by Apple Inc. It is the budget model in Apple's iPod family. It was announced at the Macworld Conference & Expo on January 11, 2005, using the tagline "life is random". Instead of storing data on a hard disk, it was the first iPod to use flash memory. The current third generation model, introduced on March 11, 2009, weighs 10.7 grams (0.38 ounces).The iPod Shuffle is the smallest digital audio player ever produced by Apple

iPod Classic

iPod Classic 6th generation The iPod Classic (trademarked as iPod classic and known before its sixth generation as simply the iPod) is a portable media player marketed by Apple Inc. To date, there have been six generations of the iPod Classic, as well as a spin-off (the iPod Photo) that was later reintegrated into the main Classic line. All generations use a 1.8-inch hard drive for storage.

The "Classic" retronym was introduced with the introduction of the sixth-generation iPod Classic on 5 September 2007;[1] prior to this, an iPod Classic was simply referred to as an iPod. iPhone At the Macworld Conference & Expo in January 2007, Steve Jobs revealed the long anticipated[85] iPhone, a convergence of an Internetenabled smartphone and iPod.[86] The original iPhone combined a 2.5G quad band GSM and EDGE cellular phone with features found in hand held devices, running a scaled-down versions of Apple's Mac OS X (dubbed iPhone OS), with various Mac OS X applications such as Safari and Mail. It also includes web-based and Dashboard apps such as Google Maps and Weather. The iPhone features a 3.5-inch (89 mm) touch screen display, 4, 8, or 16 GB of memory, Bluetooth, and Wi-Fi (both "b" and "g").[86] The iPhone first became available on June 29, 2007 for $499 (4 GB) and $599 (8 GB) with an AT&T contract.[87] On June 9, 2008, at WWDC 2008, Steve Jobs announced that the iPhone 3G would be available on July 11, 2008.[88] This version added support for 3G networking, assisted-GPS navigation, and a price cut to $199 for the 8 GB version, and $299 for the 16 GB version, which was available in both black and white. The new version was visually different from its predecessor in that it eliminated the flat silver back, and large antenna square for a curved glossy black or white back. Following complaints from many people, the headphone jack was changed from a recessed jack to a flush jack to be compatible with more styles of headphones. The software capabilities changed as well, with the release of the new iPhone came the release of Apple's App Store; the store provided applications for download that were compatible with the iPhone. On April 24, 2009, the App Store surpassed one billion downloads. [89] On June 8, 2009, at Apple's annual worldwide developers conference, the iPhone 3GS was announced, providing an incremental update to the

device including faster internal components, support for faster 3G speeds and video recording capability.

iPhone 3G, currently available in an 8 GB model. iPhone 3GS, currently available in 16 and 32 GB models.

Apple TV At the 2007 Macworld conference, Jobs demonstrated the Apple TV, (previously known as the iTV), a set-top video device intended to bridge the sale of content from iTunes with high-definition televisions. The device links up to a user's TV and syncs, either via Wi-Fi or a wired network, with one computer's iTunes library and streams from an additional four. The Apple TV originally incorporated a 40 GB hard drive for storage, includes outputs for HDMI and component video, and plays video at a maximum resolution of 720p. On May 31, 2007 a 160 GB drive was released alongside the existing 40 GB model and on January 15, 2008 a software update was released, which allowed media to be purchased directly from the Apple TV. Products & Services CinemaView HD TV and Data Displays Announced PR: Collins America announces a group of display and TV products engineered to radically expand the capabilities of today's Apple computer systems. The new products include 24" and 47" HD LCD displays, both with native Mini DisplayPort connections, and a full featured headless TV system with full HD TV features, as well as Mini DisplayPort connections both in an out.

CinemaView believes that tomorrow's graphics and video experiences simply are not going to be the same as yesterday's, and that Apple will continue to lead and define the path forward for consumer video entertainment. An investment made into a display product to day should lead to many years of easy integration with your home video lifestyle. With Apple's implementation of Mini DisplayPort connectors on its computers, and with HDMI on its Apple TV, these two interfaces define the future of Apple-centric video. The two new CinemaView displays have the 16:9 cinematic aspect ratio and 1920 x 1080 resolution that is well suited for viewing either movies, HD TV, or data. One of these displays makes a terrific companion to a Mac, connecting by Mini DisplayPort, and routing USB 2.0 through the same cable from the Mac to the display's four port USB 2.0 hub. Our CinemaView TV product turns a CinemaView display into a fullblown HD television system, in addition to enabling direct connection to both a Mac and an Apple TV, too. Plug a 24" or 47" CinemaView display into the Mini DisplayPort output, connect your favorite TV peripherals by HDMI, composite, or component links, connect your Mac to the Mini DisplayPort input and your Apple TV to an HDMI input. CinemaView TV has dual cable-ready HD tuners with picture-in-picture, and includes easy-to-use onscreen controls, and an RF wireless remote. Inserting a CinemaView TV box between a Mac and either an Apple LED LCD Cinema Display or a CinemaView display turns any new Mac system into a complete HD home television system.

Software Apple develops its own operating system to run on Macs, Mac OS X, the latest version being Mac OS X v10.6 Snow Leopard. Apple also independently develops computer software titles for its Mac OS X operating system. Much of the software Apple develops is bundled with its computers. An example of this is the consumer-oriented iLife software package that bundles iDVD, iMovie, iPhoto, iTunes, GarageBand, and iWeb. For presentation, page layout and word processing, iWork is available, which includes Keynote, Pages, and Numbers. iTunes, QuickTime media player, Safari web browser, and Software Update are available as free downloads for both Mac OS X and Windows. Apple also offers a range of professional software titles. Their range of server software includes the operating system Mac OS X Server; Apple Remote Desktop, a remote systems management application; WebObjects, Java EE Web application server; and Xsan, a Storage Area Network file system. For the professional creative market, there is Aperture for professional RAW-format photo processing; Final Cut Studio, a video production suite; Logic, a comprehensive music toolkit and Shake, an advanced effects composition program. Apple also offers online services with MobileMe (formerly .Mac) that bundles personal web pages, email, Groups, iDisk, backup, iSync, and Learning Center online tutorials. MobileMe is a subscription-based internet suite that capitalizes on the ability to store personal data on an online server and thereby keep all web-connected devices in sync.[94]

Announced at MacWorld Expo 2009, iWork.com allows iWork users to upload documents for sharing and collaboration. Software iPhoto to Disk Freeware Image Management Utility PR: If your iPhoto library contains thousands of photos and movies organized in hundreds of events, retrieving your media files may be a challenging experience. That's where iPhoto To Disk can help.

Whether you need to export your photos or movies for use in other applications or you just want to archive a part of your library, iPhoto To Disk makes it easy. iPhoto To Disk exports your media files to a well-structured folder hierarchy. You probably don't want the thousands of photos and movies in your library to all be exported to a single folder. Using iPhoto To Disk you can automatically organize your export by "event" or by "year and event" in a hierarchical folder structure. iPhoto To Disk allows flexible naming of your media files. You can keep your original media file names, but they are most probably meaningless (they typically depend on your camera settings). Did you spend time defining relevant names for your iPhoto events? Of course! Did you

label your photos and movies with titles? Great! Then, with iPhoto To Disk, you can use this valuable information to automatically rename the exported media files. iPhoto To Disk is simple. All features are available in a single window, as shown in the screenshot below. To retrieve your media files, select iPhoto events in your library, drag your selection to the export basket, choose your export preferences and click the "Export" button. Done!

Headquarters Main article: Infinite Loop (street)

Apple Inc., 1 Infinite Loop, Cupertino, CA. Apple Inc.'s world corporate headquarters are located in the middle of Silicon Valley, at 1 Infinite Loop, Cupertino, California. This Apple campus has six buildings that total 850,000 square feet (79,000 m2) and was built in 1993 by Sobrato Development Cos.[114] In 2006, Apple announced its intention to build a second campus on 50 acres (200,000 m2) assembled from various contiguous plots. The

new campus, also in Cupertino, will be about one mile (1.6 km) east of the current campus. Advertising Since the introduction of the Macintosh in 1984 with the 1984 Super Bowl commercial to the more modern 'Get a Mac' adverts, Apple has been recognized in the past for its efforts towards effective advertising and marketing for its products, though it has been criticized for the claims of some more recent campaigns, particularly 2005 Power Mac ads and iPhone ads in Britain. Logos Apples first logo, designed by Jobs and Wayne, depicts Sir Isaac Newton sitting under an apple tree. Almost immediately, though, this was replaced by Rob Janoffs rainbow Apple, the now-familiar rainbow-colored silhouette of an apple with a bite taken out of it. Janoff presented Jobs with several different monochromatic themes for the "bitten" logo, and Jobs immediately took a liking to it. While Jobs liked the logo, he insisted it be in color, as a way to humanize the company. The original hand drawn logo features Sir Isaac Newton, and one theory states that the symbol references his discoveries of gravity (the apple) and the separation of light by prisms (the colors). Another explanation exists that the bitten apple pays homage to the mathematician Alan Turing, who committed suicide by eating an apple he had laced with cyanide.Turing is regarded as one of the fathers of the computer. The rainbow colors of the logo are rumored to be a reference to the rainbow flag, as a homage to Turing's homosexuality. In 1998, with the roll out of the new iMac, Apple discontinued the rainbow theme supposedly at the insistence of recently returned

Jobs and began to use monochromatic themes, nearly identical in shape to its previous rainbow incarnation. However, no specific color is prescribed throughout Apple's software and hardware line. The logo's shape is one of the most recognized brand symbols in the world, identifies all Apple products and retail stores (the name "Apple" is not even present) and has been included as stickers in nearly all Macintosh and iPod packages through the years.

The "glass"themed The Apple logo, monochromeused from themed logo The The Aqua-2003 to maintained the original themed Applepresent. It The rainbowsame shaped as Apple logo, used fromfirst appears "bitten" logo,the rainbow logo 2001 to 2003 onon Mac OS X used fromtheme it featuring packaging andPanther and late 1976replaced. It is Isaac advertisements, also on startuntil replacedstill used and Newton and on earlyup of the in 1998 byoften appears in under the versions of MaciPhone, iPod monochrome various colors on fabled OS X beforeTouch, fifth themes. various apple Panther.[citation generation products, suchneeded] tree. video iPod, as packaging and iPod Nano, advertisements and all in 2003. subsequent versions of

these products. Slogans Apple's first slogan, "Byte into an Apple", was coined in the late 1970s. From 19972002, Apple used the slogan Think Different in advertising campaigns. The slogan had a lasting impact on their image and revived their popularity with the media and customers. Although the slogan has been retired, it is still closely associated with Apple. Apple also has slogans for specific product lines for example, "iThink, therefore iMac", was used in 1998 to promote the iMac, and "Say hello to iPhone" has been used in iPhone advertisements. "Hello" was also used to introduce the original Macintosh, Newton, iMac ("hello (again)"), and iPod.[citation needed] Apple TV

Apple TV on display pre-release at the Macworld 2007 conference Apple TV is a digital media receiver manufactured, marketed and sold by Apple. It is a small form-factor network appliance designed to play digital content originating from the iTunes store, YouTube, Flickr, MobileMe or any Mac OS X or Windows computer running iTunes onto an enhanced-definition or high-definition widescreen television. Apple TV can function as either a home theater-connected iPod device or a

digital media receiver, depending on the needs of the user. It was first announced at a special press event in San Francisco, California on September 12, 2006, by Apple CEO Steve Jobs. The devices started shipping on March 21, 2007. This initial version shipped with 40 GB of storage. A second version with a larger 160 GB hard disk started shipping on May 31, 2007. Features AppleTV is a network device that allows consumers to use an HDTV set to view photos, play music and watch video that originates from an Internet media service or a local network. Internet media services include the iTunes Store, YouTube, Flickr, or MobileMe. By connecting directly to the iTunes Store, users can buy and rent movies, buy television shows, songs, albums, and music videos and subscribe to video and audio podcasts, much of the content in high definition. Consumers can browse and view YouTube videos and Flickr or MobileMe photo albums.[10] Apple TV can also sync or stream photo, music and video content from a network-connected computer running iTunes.[11] Apple TV includes enhanced remote control and AirTunes capabilities.[2] Apple plans to continue offering new features through automatic software upgrades, leaving the door open to further utilization of its hardware capabilities and new software developments. Internet media services Apple TV offers basic media services with movie previews and YouTube videos. The Apple TV provides YouTube integration by receiving direct streams from YouTube.[16][17] A YouTube account is not required to browse and view YouTube videos, but it is good to configure for personalized options, such as viewing favorites.[18]

With the 'Take 2' software update announced by Steve Jobs at Macworld 2008, Apple TV became capable of acting as a pure standalone device, no longer requiring a computer running iTunes on Mac OS X or Windows to stream or sync content to it. Jobs stated, "Apple TV was designed to be an accessory for iTunes and your computer. It was not what people wanted. We learned what people wanted was movies, movies, movies."[19] Users can access the iTunes store directly through Apple TV to purchase movies, music, music videos, and television shows.[20][21] Customers can also use Apple TV to rent regular or HDquality movies[22] Until mid-March, 2009, iTunes HD movies could only be purchased from Apple TV.[23][24] Consumers can browse and view podcasts from the iTunes store, saving podcasts as favorites.TWiT's Leo Laporte notes that the podcast support in the Apple TV puts podcasts on the same level as other media,[25] and this was substantiated by the fact that the standard podcast subscription process no longer applies with Apple TV. It is seen by industry experts as changing podcasts to video on demand services.[26] Internet photos can be viewed from MobileMe and Flickr accounts. [18] Apple TV will display the photos in a slide show, with automatic crossdissolve transitions. The Ken Burns effect can also be configured for transitions.[27]
Parental controls allow consumers to limit access to Internet media service content. Internet media is split into 4 categories: "Internet Photos", "YouTube", "Podcasts", and "Purchase and Rental ". Each of the 4 categories is configured by a parental control of "Show", "Hide" or "Ask" to prompt for a 4-digit preset code. In addition, Movies and TV shows can be restricted based on rating as well as explicit music and podcasts.[18]

Remote control Apple TV comes with the standard Apple Remote,[6][31] Out of the box, the default setting is unpaired which means any Apple Remote works with the device. Apple TV can optionally be paired with one particular remote to prevent conflicts from

other IR-capable devices.[32] The remote control allows for adjustment of playback volume, but for music only.[2][33][34] Because the Apple Remote is a standard infrared remote, mainstream universal remotes have been updated for use with Apple TV and can be used to control volume.[34][35][36] The Apple TV can be programmed to recognize commands from virtually any infrared remote control.[37] On July 10, 2008, Apple released, in the App Store, Remote, a free application that allows for a Wi-Fi-based remote control of the iTunes library on the Apple TV and computers of the Mac line using Apple's line of devices with iPhone OS 2.0 (currently the iPhone and iPod Touch).[38][39] Remote's touch and gesture features are similar to the multi-touch interface used on the iPhone and iPod Touch "Music" app.[40] The commands provided on the AppleTV handheld remote are: "play/pause", "menu", "+", "-", "back", and "next". The "play/pause" button will also send the unit into standby mode when held for approximately 5 seconds, however in newer versions of software you must be in the main menu for this to work. Pressing the menu button multiple times may not consistently get you to the main menu, and it has been mentioned that in certain versions of software pressing and holding the menu button will get you to the main menu directly. If the unit is already in standby then any of the buttons on the remote appear to wake the unit. There appears to be no way to discretely turn ON or OFF the device with any infrared codes or get to any sub-menu (music, movies, pictures, etc). The use of multiple functions for individual buttons or infrared codes is problematic, especially for home automation/control systems and universal remotes. Look and feel

The Apple TV's software is based on Front Row used on Mac OS X. Apple TV presents an interface based on the Front Row software for Mac OS X 10.5 (Leopard) computers. Initially, Apple TV software version 1.0 was based on an enhanced OS X 10.4 Front Row. Apple TVs interface was merged back into OS X 10.5 in late 2007, but since then, major Apple TV enhancements ("Take Two" and later) have not been included in the OS X version of Front Row.[54] Apple TVs Content is organized into six groups (Movies, TV Shows, Music, YouTube, Podcasts, and Photos), and is presented in the initial menu along with a "Settings" options option for Apple TV configuration, including software updates.[55][56] These initial menu options then lead to other submenus.[18] The included Apple Remote is used to navigate through the menus by using the up or down buttons and selecting options with the play button. The left/right buttons are used to perform rewind and fast-forward functions while viewing video content, but also perform previous song/next song functionality when selecting audio-only content.[31] Aside from "Movies" and "TV Shows" content, the "TV Shows" options allows the user to sort contents by show or date and the "Movies" option also allows the user to view movie trailers for new releases, just as the Front Row software does on a Mac. All video content, including movies, TV shows, music videos, and video podcasts, includes bookmark functionality. Apple TV automatically bookmarks video content midstream to continue playback at a later time.[57] The "Music" submenu offers similar options to those found on an iPod, presenting the available music sorted by Artist, Album, Songs, Genres, and Composers, as well as offering a shuffle option and listing available audiobooks. As categories are selected with the remote, animated album art is displayed on the side of the display for the contents of the selected category. While playing "audio-only" content such as music and audio podcasts, Apple TV periodically moves album art and content info on the TV display to prevent burn-in on video displays.[57]

Rear connectors including power, USB for firmware updates, Ethernet, HDMI, component video and audio, and optical audio.

Processor Graphics Memory Hard drive

Intel[1] Pentium M 1.0 GHz "Crofton" Processor[3] NVIDIA GeForce Go 7300 (64 MB VRAM)[66] 256 MB of 400 MHz DDR2 SDRAM[4] 40 or 160 GB hard disk[1][4]

Connectivity

USB 2.0 (officially for diagnostic use only, though hackers have managed to allow connectivity of hard disks, mice, and keyboards)[67] infrared receiver HDMI Component Video.[1] Video and audio cables are not included with Apple TV. 10BASE-T/100BASE-T Ethernet 802.11 b, g, n wireless networking (AirPort)[1] 1080p/1080i 60/50 Hz (but maximum video resolution is 720p)[1] 720p 60/50 Hz[1] 576p/576i 50 Hz (PAL)[1] 480p/480i (480i is unofficially supported) 60 Hz[1][14] digital optical audio RCA analog stereo audio[1]

Networking

Output

Audio Power Dimensions Weight Software Updates[2]

Built-in universal 48W power supply[1] 197x197x28 mm (7.7x7.7x1.1 in)[1] 1.09 kg (2.4 lb)[1] 1.1 (June 20, 2007) YouTube integration, slideshow screensaver, parental controls, framework updates, security updates,[68][69]

photo priority and browsing other iTunes stores.[70] iTunes 7.3 (June 29, 2007) Apple TV Photo Streaming[71] 2.0 aka "Take Two" (Feb 12, 2008) Standalone iTunes Store features (directly from Apple TV through the Internet): rent standard and HD movies with Dolby Digital 5.1 surround sound, buy TV Shows, music and music videos. Content automatically syncs back to the user's computer. Podcast directory of over one hundred thousand video and audio podcasts. View photos from .Mac and Flickr galleries. Play iTunes content on the audio system connected to the Apple TV via AirTunes,[72] limited Internet radio support,[44][45] show everything or only synced content, TV show display tweaks, iPhoto events, and enhanced parental controls.[42] 2.1 (July 10, 2008) Movie Wish List, Support for Remote application, AirTunes receiver, Photo browser, MobileMe protected albums, Podcasts browsable by video and audio, Security fixes.[73] 2.2 (October 2, 2008) HD TV shows, Movie browsing by actor and director, Chapter selection, alternate audio and subtitles, Movie description, Genius playlists, On-The-Go playlists, Music videos in playlists, Apple TV standby mode, Security fixes.[74] 2.3 (November 24, 2008) AirTunes Streaming from Apple TV, Third-party Remote Controls, Playlists, Music Volume Control.[33][34] 2.3.1 (February 25, 2009) Network Test[75] 2.4 (June 24, 2009) Remote app directional control, Flickr Search, New view options, Updated transport and chapter modes.[76] Modifications and hacks Hacks for the Apple TV were available within days of the unit's release. Particular attention was paid to the device's operating system, which had been described by Walt Mossberg before the release as "a modified version of the Mac operating

system".[77] Users created solutions for remote access, enhanced codec support, installing a full blown copy of Mac OS X Tiger, USB hard drive access, web browsing, support for enhanced remotes, and the ability to download metadata from the IMDB.[78] The end result was a group of "unofficial" commercial and community-supported add-ons for the Apple TV.[79][80] Apple is not currently preventing users from installing Apple TV modifications, but users are warned that applying hacks may void the product's warranty.[81] The Apple TV system software updates will typically remove any software hacks that are installed. Major ATV hacks are updated on a regular basis and the Apple TV device can easily be re-hacked.[68] Most Front Row plugins are minor and have not been updated to work with Apple TV 2.x. AwkwardTV reports 10 plugins out of 32 have been certified to be compatible with the "Take Two" update.[82] Limitations Functionality Concerns have been expressed about the lack of personal video recorder capabilities on Apple TV.[31][58] Apple TV does not contain a TV tuner, but a tuner and PVR capability can be applied on the connected home computer through a third party. The PVR software will connect to iTunes, enabling scheduled HDTV recordings to automatically appear on Apple TV for playback.[89] One such PVR idea says that Apple should buy TiVo and another mentions that Apple should go a step further and turn Apple TV into a fully-functional cable box.[90][91] Critics against the DVR/TiVo idea mention that the DVR market is dead and call the DVR the "PDA of the living room".[92] Industry experts feel that the Front Row interface is lacking standard iTunes functionality, including rating items, synchronizing from more than one computer,[93] full Internet radio support,[35][92] and games.[94] After the success of the iPhone SDK and the App Store, it has been mentioned that Apple TV should provide the same functionality so that programmers can provide third party applications using Apple TVs interface without having to hack the Apple TV device. The Movies "Search" feature only searches iTunes Store movies, not search local network movies (i.e. "My Movies").[96] The website Apple TV Junkie was created to "list of all new HD & SD rental titles released on a daily basis", something which the Apple TV interface does not provide today.[97]

Movie rentals on iTunes can be transferred to any video-enabled iPod, iPhone or Apple TV for playing, but any movie rented on Apple TV must be watched on Apple TV.[22][98] To copy a movie purchased on Apple TV to a video-enabled iPod or iPhone, the movie must first be transferred to an iTunes-enabled computer on the network.[99] Apple TV/itunes is "not designed" to sync or stream content from networked drives to Apple TV. Content which can be synced or streamed to Apple TV has to be on the local drive or an external drive directly connected to the iTunes-enabled computer. Hardware Apple TV content cannot be used with older televisions, although 480i is unofficially supported as long as the TV supports component video connectivity. RCA/composite video and F/RF connectors are not included on the Apple TV device. Reviewers have noted that Apple is "future-proofing", and "if you do not have HDTV now, you will in the future". The Apple Remote can control volume, but only for Music on Apple TV. Apple TV comes with only a power cable. Apple has teamed up with a third party to provide cables for its customers.[112] A USB port is included on the device, but it is reserved for service use only. The Apple TV device runs "very hot",[35] sometimes reaching 44 C (111 F).[106][113] According to Apple, this is normal.[114] There is no off button or function on the Apple TV (although there is a sleep function) so the only way to cool the Apple TV is to unplug it in sleep mode.