Apple ComputersAvimanyu Datta, Doctoral candidate,

College of Business, Washington State University

Timeline of the Apple Computers (History, Present,& Future)

History of the Apple Computer. From the beginning which was in 1976

through the present 2007. Prediction of the near future and new

Apple Computer products to be released.

The Beginning “1976”

Steven Paul Jobs, Stephen Gary Wozniak and Ronald Gerald Wayne founded Apple Computer.

In 1976, Ronald Wayne resigned from Apple Computer with only a one time payment of $80.

Hewlett Packard grants Gary Wozniak the permission to create the Apple I.

History of “1977”

This was the year that Apple was incorporated.

Rob Janov designed the Logo which is still used today.

Mark Makula invests $92,000 in the company

Michael Scott becomes the first President of Apple.

The Apple I is released for $1,295.

History of “1978”

Apple and Xerox sign an invest agreement.

Xerox invest one million dollars in Apple stocks.

Apple engineers were allowed to study Xerox’s PARC’s graphical user interface.

The PARC operating system was the 1st OS for the public market with GUI.

It was commercially unsuccessful.

History of “1979” Jef Raskin worked on a

computer concept involving:› Design› Implementation

philosophy› Human usability over

execution & speed Raskin named his

concept after his favorite type of apples: McIntosh.

Apple begins working on Lisa, originally a $2000 business computer.

History of “1980”

Apple goes public. Stocks’ value increases by 1700%. The new Apple is released. Apple sold it for $4340 to $7800

depending on the configuration.

History of “1981-1982”

Steve Wozniak is injured in a plane & takes time off from Apple and does not return to the Macintosh project.

Michael Scott resigns as president of Apple.

Mike Markkula succeeds Scott. The Lisa’s development is officially

finished. Apple Computer, Inc. & Apple Corps

(recording company of the Beatles) enter a secret agreement.

History of “1983 – 1984”

The Lisa is released. Apple becomes the fastest growing

company in history. John Sculley, former president of Pepsi

Co., becomes president & CEO of Apple Computer, Inc.

The Macintosh is released-retailing for $2495.

History of “1985 – 1986” Apple lays off 1200

employees. Stephen Jobs officially resigns

as chairman of Apple. Apple sues Steve Jobs. Apple drops suit against Jobs

& he founded NeXT, Inc. Apple tries to make Mac

more attractive by releasing “Macintosh Office”.

History of “1987 – 1988”

Apple’s 10th Anniversary. The Mac SE & the Mac II are

introduced. Apple sues Microsoft & Hewlett Packard

accusing them of violating copyrights of Apple.

History of “1989 – 1990”

Apple Corps sues Apple Computer accusing it of violating the terms of the agreement in 1981 by producing synthesized music.

History of “1991 – 1992”

IBM, Motorola & Apple form an alliance.› Motorala makes Processors for Apple

Apple Computer, Inc. pays Apple Corps $26.5 million.

The lawsuit between the two is settled.

History of “1993 – 1994” Michael Spindler replaces

Sculley as CEO. Sculley resigns as chairman of

Apple. Apple releases the first PDA

(Newton Message Pad). Release of 1st Power Macintosh desktop computer & system 7.5

Apple starts licensing the MacOS.

Apple announces Pippin, a multimedia system

History of “1995 – 1996”

Apples’ 20th Anniversary. The PowerPC 603e is announced

Apple Computer, Inc. takes over NeXT Computer, Inc. for $430 million.

History of “1997 – 1998”

Jobs returns to Apple due to the NeXT Computer, Inc.

Apple starts buying back all licenses from Mac-clone manufacturers.

The Power Macintosh G3 & The Apple Store are introduced at “Apple Event”.

The iMac becomes the fastest selling PC in history, being reordered over 150,000 times.

History of “1999 – 2000”

Jobs becomes permanent CEO. Chief sales executive Mitch Mandich

steps down.

History of “2001 – 2002”

Opens first Apple retail store in McLean, VA.

Apple acquires fire wire company Zayante.

Former executive John Couch returns.

Larry Elisson resigns from Apple board.

iPod, OS X , iMac G4 all introduced.

History of “2003 – 2004”

iTunes music store opens. Tibco sues Apple over

trademark. Apple launches iTunes

Canada. iMac G5

History of “2005 – 2006”

Raskin dies at 61. Software development

Avie Tavanian leaves. Video iPod launched & 1

million videos sold from iTunes.

“2007”

January of 2007 Apple dropped “Computer from its corporate name.

Apple employs over 20,000 permanent & temporary employees currently.

Worldwide annual sales in its fiscal year 2007 (ending September 29, 2007) are US $24.01 billion.

“2007” The Apple iPhone was released

on June 29, 2007.

It is a multimedia, internet phone and has a multi-touch screen with virtual keyboard and buttons.

On October 26, 2007 Apple released a new operating system Mac OS X 10.5 Leopard.

It is a Unix based operating system

The recently released iPod Touch has all the capabilities of the iPhone except it can’t be used as a phone.

“2007” Google released beta version of Google gadgets

for Mac.

Google Gadgets are mini applications similar to Apple's own Dashboard Widgets

Google's Gadgets for Mac are now integrated and installable into Apple's Dashboard in Mac OS X.

This makes them functionally indistinguishable from Dashboard Widgets.

Google Gadgets comes integrated with Google Desktop, a desktop search application also available from Google.

Future Products of Apple Inc.

Rumors are floating around that a new Mac book will be released in early 2008.

The new ultra portable Mac Books are to be aluminum clad, 50% lighter and "strikingly slimmer" to the existing 15" Mac Book. They are also expected to incorporate NAND Flash memory to improve battery life and boot times.

Future Products of Apple Inc.

AT&T Inc. Chief Executive Officer Randall Stephenson confirmed that the 3G version of the iPhone would be made available in 2008.

Steve Jobs stated that a 3G iPhone is coming, but that the delay is due to excessive battery life consumption with existing 3G chipsets.

The iPhone presently uses the EDGE network for its data connectivity.

4 major issues

Historically what are Apple’s Competitive Advantages?

Structure of PC industry Apple’s Strategy since 1990 Has Jobs finally solved Apple’s

longstanding problems? Is i-pod any different?

Apples Competitive Advantages

Ease of Use Traditional strength in Desktop publishing, GUI Buyer Loyalty Proprietary Systems (Supports higher margins,

creates barriers to entry and limits direct imitation)

Brand Plug and Play (related to ease of use-

components and peripherals can be added to a Mackintosh fairly easily as compared to a PC)

PC industry Sophisticated powerful buyers

› Buy products in truckloads, › Know what they want› Wont pay a lot for it› Will find some other company to sell at lower price

Vicious Rivalry› Open Standards: PCs are commodities , Manufactures

compete on price, pushing down margins› Fragmented: No market leader to provide price stability› Rapid technology Obsolesce› Strong buyers with great sophistication› Summary: very tough industry and not attractive

PC Industry Fragmented: No market leader to provide price stability

PC industry Low barriers to entry

› Technology: One can assemble a PC with a screw driver

› Standardized components are available› Plant/ garage: Can be done in a garage› Distribution: Cheap. Over the Web on a

classified AD. › Customers: Price sensitive SOHO.

Summary: Barriers to Entry are low-Harder to think of another Industry where it is lower.

PC industry Lots of Potential Substitutes

› PDAs, Smart Phones› TV Set-top boxes› Video game Consoles. › Summary: Existence of Substitutes Push PC

prices further down. Average price of the substitutes are $300.

Complements have been fueling demands (only the bright spot)

PC industry

Complements have been fueling demands (only the bright spot)› Customer still pay for PC because of

software functionalities that runs on PCS› Software, printers, scanners propel the

demand. › Summary Complements are only the

bright spot in the industry.

PC industry Suppliers are appropriating most of

Industries residual profits› Suppliers of components such as Disk drives

have no power over PC manufacturers. › Intel/ Microsoft: Together Intel and Microsoft

earned more than 20billion in 2005. Net profit from PC industry remained at $6 billion with 3% of sales.

› How can two suppliers earn more that the whole customer base? DOMINANT WIN-TEL ARCHITECTURE BRAND (Intel Inside. Windows)

PC industry: SUMMARY Sophisticated powerful buyers Vicious Rivalry Lowe barriers to entry Lots of Potential Substitutes Complements have been fueling

demands (only the bright spot) Suppliers are appropriating most of

Industries residual profits

Apple’ Strategy since 1990: Key Problems

PCs and Macs were substitutes. So decline in price of PCs put pressure on Apple’s Prices and Margins.

Macs and PCs have different software complements. Industry was moving toward PC (Wintel).

Software developers were not interested in writing codes for a small Mac market.

Who is the largest software vendor for Mac other than Apple? › MICROSOFT Win-Win Strategy for them. Even when

Mac Sells, Microsoft becomes wealthier.

Apple’ Strategy since 1990: Key Problems

Takes 1$billion to make an OS. AUP for XP was $45-$60. Sold 17

million in 8 weeks , thus breakeven in 8 weeks.

Apple cannot have that speed in sales, and they are priced higher.

With these economies it was impossible for Apple to survive. They needed to change.

Apple’ Strategy since 1990: The Sculley Approach

Strategy› High Volume Low price› JV with IBM to develop a new OS.

Logic› Create big installed base› Increase Differentiation› Create a new standard to compete with Wintel and share

development cost of new OS Assessment

› IBM could not deliver the higher end performance chips to compete with Wintel.

› Customers wanted Intel, so Apple had to re-write its OS top work with Intel.

› First two logic were conflicting› Apple and IBM could not leapfrog Microsoft and Intel.

Apple’ Strategy since 1990: The Jobs Approach

Strategy› Focus on traditional customer base› Design and marketing to get a price premium.› Shift to owned retails: Apple Stores. › Shift to Intel CPUs.

Logic› Re-affirm your commitment to loyal customers and get big

premiums for your product. Assessment

› As of 2006 Jobs did not raise Apple Market Share› Share is declining› Key to driving traffic for i-Pod and possible spillovers to Mac› Opens Apple for potential windows Users.

The iPod Business Imitation

› Apple’s barrier to imitation has been a steady stream of innovations: Video ipod, ipod nano, mini ipod.

› Successfully fulfilled all major price points.

Switching Costs› Locks current users with sales from i-tunes.

Cost Leadership› Has long term contracts with leading suppliers of

flash memory, which reported to give 40% discount to Apple off list prices.

The iPod Business Hold up

› Apple sells i-pods at premium and gives away songs at less than a dollar.

› Music companies have pressurized apple to raise prices.

› But market share of Apple was able to retaliate.

Substitution (2006 Questions)› Will Mp3 remain an independent category? › Will PDAs and Cell phones incorporate mp3

capabilities?› Should Apple enter phone business against NOKIA,

Motorola and Samsung?

Broader lessons Huge difference between product advantage and

competitive advantage.

Companies must look broadly at economies and driving forces of their industries. Apple was too insular.

Multiple standard co-exist when there is a huge gap between them. Difference between Mac and Windows diminished and it became hard to justify two standards, when one is clearly cheaper.

Timing and Windows of opportunities.

Questions? Comments