Apple Computer, Inc., Capstone Project Example

Founded in 1997, Apple designs, manufactures, and markets a range of products including mobile communication devices, personal computers, portable digital music players, software, and other hardware products. The company’s products and services include Macintosh (“Mac”) computers, iPhone, iPad, iPod, Apple TV, iOS and Mac OS X operating systems, iCloud, and iTunes store. As of September 24, 2011, the company had a total of 245 U.S. retail stores and 112 international retail stores. The company opened 40 new retail stores last year out of which 28 were international markets (Apple Inc.).

Apple is probably the only technology company that remains highly profitable despite maintaining tight control over both the hardware and software. The company refuses to license its products even if it means sacrificing potential increase in market share. Apple has a very loyal customer base who do not mind premium prices for Apple’s products because Apple outcompetes its competitors in terms of product quality, design, innovative features, and ease of use. Instead of volume, Apple competes on the basis of product and service differentiation.

The company’s purpose is best defined by its official mission statement according to which the company designs the best personal computers as well as software in the world and leads the digital music revolution. In addition, the company has also reinvented mobile phone and tablet computer through whom it is shaping the future of mobile media and computing devices (Apple Inc.). In addition to providing the best hardware and software products to its customers, the company’s values also include minimizing the impact of its operations on the environment (Apple Inc.) and ensuring the highest standards of safe working conditions as well as respect for workers at the production facilities managed by its suppliers (Apple Inc.). Steve Jobs described Apple’s goals as accurately as possible in an interview that it is not to achieve maximum sales or become the biggest company but instead to make the best products (Bloomberg Businessweek, 2004).

Apple’s failures include early leadership style by Steve Jobs which led to non-productive working relationship with the management and eventually led to his departure from the very company he co-founded. In terms of products, Apple’s earliest commercial failure was Apple III computer is 1980 which was plagued by design issues, high price tag, and hardware problems. Another commercial failure was Power Mac G4 Cube which was a design success but its high price worked against it. Another failure was Motorola ROKR phone that was a joint project with Motorola. Even though Apple TV has been recently re-introduced but the first version was a failure due to poor performance and high price. Apple’s earliest success was the first Macintosh in 1984 which was accompanied by equally memorable super bowl commercial. After Steve Jobs returned in late 1990’s, the first success was probably iMac that caught customers’ eyes with catchy colors (SF Gate, 2011). The next few successes would be iPod, iPhone, and iPad that changed the company from being a computer manufacturer into a mainstream technology company.

Apple is now a market leader in numerous product and services categories that has probably never happened before to such a great extent in the technology sector. As of 2010, Apple’s share of the online movie market stood at 64.5% (WMPowerUser.com, 2011). At one point last year, Apple held a 54.65% of the mobile/tablet operating system market (Whitney, 2011). As of late 2010, Apple was estimated to be holding 75% share of the tablets market (BusinessInsider, 2011). Apple’s iPhone market share grew by 115% in the first quarter of 2011 (Dalrymple, 2011) and Piper Jaffray’s analyst Gene Munster expects Apple to double its market share of the smartphone market after the launch of iPhone 5 (Silicon Valley Business Journal, 2011). As of September 2009, Apple had already sold 225 million iPods and had a 73.8% of the portable music devices market. In contrast, its second closest competitor Sandisk had only 7.2% market share (Delahunty, 2009). Last year Apple also succeeded in breaking the 10% mark in U.S. PC market and surged to third position with 10.7% market share, up from 2010’s fifth position (Slivka, 2011). Apple’s performance has been amazing by any standard, especially taking into account the fact that Apple has done it without any outside help.

If we analyze Apple’s failures and successes, we reach the conclusion that the best strategy for Apple is to find an ideal balance between quality and price. Many Apple’s failures such as Lisa computer and G4 cube were revolutionary but failed due to high prices. Other failures such as first generation Apple TV also suffered due to poor quality. But Apple has found its greatest success in products that are revolutionary yet priced at levels that are within the reach of most consumers in its targeted market segments.

Steve Jobs’ role in the success of the company cannot be exaggerated. Jobs’ leadership style might have attracted criticism but his uncompromising stance on quality and intuitive design has served Apple well. Fortunately, many of Jobs’ closest aides such as revolutionary designer Jonathan Ive, and Marketing Chief Phil Schiller are still with the company. These people know how Jobs worked and thus, the company’s CEO Tim Cook should give them absolute freedom to do their work and encourage them to mentor rising talent in order to keep Apple’s culture of innovation alive. Apple should also allocate more resources to assist its employees plan their career path within the organization because the charismatic leadership of Jobs is not there anymore to keep the employees loyal to the company. The competitors are always on the hunt for Apple’s employees and will try to lure away employees who may be dissatisfied with their progress at Apple.

Apple should also continue to invest significant resources in employees’ training. One of Apple’s core competencies is a unique organizational culture as well as one-of-a-kind business model in the technology sector. Apple should require all of its employees to work in both hardware and software. Apple’s business model emphasizes a seamless integration between hardware and software which explains the company’s refusal to outsource either of them. A seamless integration is only possible if the hardware and software developers have experience in each other’s work and incorporate the learning into their respective tasks.

Apple has established a reputation for unbeatable quality and should branch out into low priced versions of its products such as iPhone and iPad just as it has done with iPod. This will help the company gain market shares in fast-growing economies like India and China and ensure continuous profitability for many years to come. Apple should also market more to businesses who often make huge purchases and update their products at regular time intervals.

One of the reasons why Apple was so successful under Steve Jobs’ leadership was that Jobs’ understood Apple’s strengths and weaknesses and focused only on the products in which he was sure Apple could do well. The new leadership should maintain Jobs’ strategy of focusing on few products but doing them really well. Apple has a premium brand and the temptation is always there to take advantage of the brand reputation and expand product lines. One way to ensure the management doesn’t stray off the right path is to regularly carry out critical analysis of the company’s human capital and seek ideas and feedback from everyone. This way the management will not venture into areas the company may be weak.

One last strategy the company’s management should pursue is to build research facilities in other major markets such as India and China. An innovative step maybe to develop specific products to suit the local markets with software written in local languages. A significant number of people in India and China are poor and still do not speak English or use technology regularly. By hiring local designers and programmers as well as developing the same organizational culture that exists in the U.S., the company could make significant inroads into some of the fastest growing economies in the world.

Apple is not led by Steve Jobs anymore and when Jobs was alive, no company was more closely associated with its leader than Apple was with Jobs. Jobs’ loss is huge but the company can overcome the loss by ensuring that the organizational culture Jobs built continues to thrive and the management takes good care of its human capital as well as take steps to attract the best talent. In addition, the management should continue to focus on controlled growth and remain aware of the company’s core competencies when considering new products.

 

 

Bibliography

Apple Inc. (n.d.). Apple Corporate Information. Retrieved January 21, 2012, from http://investor.apple.com/faq.cfm?FaqSetID=6

Apple Inc. (n.d.). Form 10-K. Retrieved January 21, 2012, from http://files.shareholder.com/downloads/AAPL/1646831833x0x512287/5a5d7b14-9542-4640-841d-e047ec28bb96/AAPL_10K_FY11_10.26.11.pdf

Apple Inc. (n.d.). Supplier Responsibility. Retrieved January 21, 2012, from http://www.apple.com/supplierresponsibility/

Apple Inc. (n.d.). The story behind Apple’s environmental footprint. Retrieved January 21, 2012, from http://www.apple.com/environment/

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Delahunty, J. (2009, September 9). iPod market share at 73.8 percent, 225 million iPods sold, more games for Touch than PSP & NDS: Apple. Retrieved January 21, 2012, from http://www.afterdawn.com/news/article.cfm/2009/09/09/ipod_market_share_at_73_8_percent_225_million_ipods_sold_more_games_for_touch_than_psp_nds_apple

SF Gate. (2011, August 26). Timeline: Apple’s greatest successes and failures. Retrieved January 21, 2012, from http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/08/26/apple_product_timeline.DTL

Silicon Valley Business Journal. (2011, August 3). Analyst: iPhone 5 may double Apple’s market share. Retrieved January 21, 2012, from http://www.bizjournals.com/sanjose/news/2011/08/03/analyst-iphone-5-may-2x-apples-share.html

Slivka, E. (2011, July 13). Apple Soars to Third Place in U.S. PC Market With 10.7% Share. Retrieved January 21, 2012, from http://www.macrumors.com/2011/07/13/apple-soars-to-third-place-in-u-s-pc-market-with-10-7-share/

Whitney, L. (2011, October 3). Apple’s iOS grabs record market share. Retrieved January 21, 2012, from http://news.cnet.com/8301-13579_3-20114825-37/apples-ios-grabs-record-market-share/

WMPowerUser.com. (2011, February 8). Microsoft Zune eating into Apple’s market share. Retrieved January 21, 2012, from http://wmpoweruser.com/microsoft-zune-eating-into-apples-market-share/