Apple Computer Case

Apple Computer Case

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Apple Computer, Inc.
Case Description:
This case basically walks you through the ups and downs in the history of the Apple Company. Steve Jobs and Steve Wozniak started the company in 1976 with the Apple I. In 1984, the company expanded with the Macintosh, which was the first affordable computer. After the introduction of the Macintosh, the company continued to grow and introduced the Mac II, Powerbook, iMac, and most recently the iPod line. Apple was the market leader up until the mid 1980's when IBM was introduced to the public. Gateway, Dell, and HP were soon to follow, and they too acquired some of the market share that had once belonged to Apple. Apple has consistently failed to gain market share over the past decade and has even posted quarterly losses- something unheard of in the beginning. Apple's recent initiatives in advertising and distribution seem to be successes, but the company must still endure the economic uncertainly that is in the marketplace today while simultaneously finding a way to compete with Microsoft and the other leaders in the computer industry.

Apple's consistent loss of market share and posted losses in 2001 and 2002 are signs that the company faces an underlying problem.
The issues facing Apple are wide ranged. First and foremost, they company needs to better its competitive strategies in order to gain back some of the market share that it has lost to corporations such as Dell, IBM, HP, and Gateway. Apple also needs to position itself to "steal" PC users and convince them that Apple software and operating systems are superior to those available on PCs.
SWOT Analysis:
Strengths -Apple has maintained a good reputation for quality.
-The company uses innovative advertising campaigns.
-Their new products are producing large revenues (iPod).
-They have a good balance in their distribution channels.
-Apple has the most stable operating system available.
Weaknesses -They lack the ability to convert PC users to their system.
-The company spends too much on advertising.
-Apples are seen as computers for professionals.
-The lack a good sales forecasting method.
Opportunities -Apple can expand with the switcher program and new stores.

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Related Searches

-New electronics allow them to serve a new market sector.
-Apple is positioned to be the future entertainment leader.
-They can continue to build on their integrated distribution.
Threats -Apple's market share is decreasing while others are increasing.
-The computer market is mature.
-Apple is facing very strong competition.
-Economic uncertainty is present in the market today.
Alternative Actions:
Apple has already made numerous efforts at recapturing the strength that they once had. They have continuously developed new hardware and software, spent more money on advertising, integrated their distribution systems, and outsourced certain areas to improve their operations. That being said, there is still ground left to be covered. Apple could revamp their ads and direct them more towards showing the benefits of the Mac OS system. The company could also continue to expand not only by opening more brick and mortar locations, but also by adding to their already successful consumer electronics line. Apple also needs to concentrate on developing software that is geared toward the PC user so that they no longer feel that going to Apple would be a "switch".
Proposal for the Future:
I do not believe that Apple will ever be the force that it once was simply because of the strength and number of competitors in t he market today. However, they can maintain, if not regain, market share by implementing new ideas. Apple needs to continue to appeal to young computer users. If an adolescent grows up on an Apple computer they will most likely remain loyal for life. The company also needs to spend time convincing consumers that Apple is superior to PCs. They need to showcase the fact that Mac OS is the most stable operating system available. Finally, I would suggest that Apple continue to add to its consumer electronics line with new products and accessories. This new segment brought in over $650 million in 2003- which was 12% of all revenues- and is poised to grow. Apple needs to take advantage of the opportunities that they have.

Teacher Questions:
Q: Why did the first mover advantage Apple had in the computing industry not provide a sustainable competitive advantage?
A: Apple indeed made the first move and enjoyed being at the top of the market for a period of time, but their competitive advantage could not withstand the formation of new companies. HP, Dell, IBM, and Gateway all entered the market with distinctive strategies that appealed to certain sections of the market. Apple failed to compete with these new initiatives and fell behind.
Q: Will Apple's reputation as a computer use by "content creation professionals" help of hinder its efforts to expand its market share?
A: I think this reputation will hinder expansion. Apple already sells to the majority of these professionals; therefore expansion within the professional world is limited. The market with high growth potential is that of the everyday computer user. These people are often intimidated by Apple's reputation and feel that a "professional" computer system is far too complicated and choose to stay with PC companies.
Q: What are the advantages and disadvantages of shifting into the consumer electronics field?
A: By expanding into a new division, Apple is now able to reach an entirely new group of customers and increase their markets. The sale of these electronics brought in $650 million in 2003- 12% of the companies revenues. This shows that their line has great potential. However, Apple is the new face in the electronics game and must work to build a name for itself as well as compete with the already trusted market leaders. It is also possible that Apple will lower the perceived value of its computers if the spread themselves too thinly through a number of other fields.
Q: Will selling over the Internet eliminate the need to worry about sales forecasting, inventory control, and logistics?
A: No. Apple is still selling through other channels of distribution in addition to the Internet and these other channels depend upon forecasting, inventory and logistics. As far as the Internet channel is concerned, inventory is not the foremost concern anymore, but success still depends on forecasting and logistics. Apple cannot turn its back on these key business components and expect to remain prevalent in the computer market.
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