Issues and Outlook:

1999 and Beyond

Is Apple successful?
Past/current strategy?
What are the main concerns/issues that
confront Apple?
Where is Apple headed in the future?

Comparative Market Share (%)

by Revenue
25

IBM
Packard-Bell

20

Dell

Apple
Compaq

15
10
5
0
1988

1989

1990

1991

1992

1993

1994

1995

1996

Revenue Comparison (in $millions)

$30,000
Dell
Compaq
Intel
Microsoft
Apple

$25,000
$20,000
$15,000
$10,000
$5,000
$0
1991

1992

1993

1994

1995

1996

1997

Profit Comparison (ROS %)

40

Dell

Compaq

Intel

Microsoft

1994

1995

Apple

30
20
10
0
(10)
(20)
1991

1992

1993

1996

1997

Actual Results: 1991-97

$12,000

Revenue

Net Income

R&D

Cost of Sales

$10,000
$8,000
$6,000
$4,000
$2,000
$0
-$2,000
1991

1992

1993

1994

1995

1996

1997

Rebound?

External Analysis

Influences from Remote Environment

Influences from Competitive Environment
Promoters of / Barriers to Change
SWOT Summary
Competitor Analysis

Analysis of the Competitive Environment

Threat of
Threat of
New
New
Entrants
Entrants

Bargaining
Power of
Suppliers

Rivalry Among
Competing Firms
in Industry

Threat of
Substitute
Products

Bargaining
Power of
Buyers

Apples Business Level Strategy

Source of Competitive Advantage

Breadth of
Competitive
Scope

Cost

Uniqueness

Broad
Target
Market

Cost
Leadership

Differentiation

Narrow
Target
Market

Focused
Low Cost

Focused
Differentiation

Strategic Group Map

Pre-Windows
Premium

Sun
Apple

Price

Compaq
IBM
Low

Clones
Broad

Narrow

Strategic Focus - Differentiation

Strategic Group Map

Post-Windows
Premium

Sun
Price

Low

Apple
Compaq
IBM
Clones
Broad

Narrow

Strategic Focus - Differentiation

Value Chain Analysis

Firm Infrastructure

Technological Development

Primary Activities

M
A
R
G
IN

Service

Marketing
& Sales

Outbound
Logistics

Operations

Procurement
Inbound
Logistics

Support
Activities

M
A
RG
IN

Human Resource Management

Revised Mission/Intent Statement

Apple ..

Definition of Industry
Description of Core Values
Description of Basic Strategic Approach
General Identification of Customer Base

Revised Mission
To position Apple as the world leader in
man-machine interfaces though the
development of ergo- and cerebro-nomic
software and interface devices required for
electronic and electromechanical
applications.

Goals

20% ROS by 1994

40% Share of O/S Market by 1994
Develop 3 New Interface Devices by 1994
Achieve full interoperability with
Intel and RISC microprocessors by 1993
Top 4 Software Vendors by 1993

Milk Mac
No new manufacturing and R&D
investment in existing hardware products
Outsource next 3 years production to
Malaysia:
Send VP Mfg. and 3 Engineers on Sourcing
Mission

Benefit: Decrease COGS from 53% to 33%

Apple Core
Open system O/S (a.k.a. Pink)

not processor specific

head-to-head with Windows
increase installed base
increase ISV applications

Shift 80% of R&D budget to Core

Benefit: Increase ROS from 5% to 20%
(NOTE: O/S production has COGS average 19%
percent of sales vs. 66% in hardware manufacturing.)

Apples Recent Actions

1993
Cut Mac prices 26%
down from a 20-40% premium

PowerPC with IBM and

Motorola
PowerMac
PowerBook laptop

Overseas expansion; Japan

(2% to 15%)
Newton (PDA)

1994
Layoffs and Mfg.
Rationalization
Pushed Pink
H-P joined Apple and
IBM

Sculley resigns;
Spindler is new CEO

Recent Actions (cont.)

1995
Attack educational and
desktop pub markets
License Mac O/S (aka
Copeland)
Record revenues; $69
million net loss
Fujitsu starts price war
in Japan

1996-98
Terminated Taligent
and Kaleida
Jobs and Woz are back
Accepted $150 million
from MSFT
Intros iMac

New Products