 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.
 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.
 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.
 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.
 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.
 Apple goes public.
 Stocks’ value increases by 1700%.
 The new Apple is released.
 Apple sold it for $4340 to $7800
depending on the configuration.
 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.
 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.
 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”.
 Apple’s 10th Anniversary.
 The Mac SE & the Mac II are introduced.
 Apple sues Microsoft & Hewlett Packard
accusing them of violating copyrights of
Apple.
 Apple Corps sues Apple Computer
accusing it of violating the terms of the
agreement in 1981 by producing
synthesized music.
 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.
 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
 Apples’ 20th Anniversary.
 The PowerPC 603e is announced

 Apple Computer, Inc. takes over NeXT

Computer, Inc. for $430 million.
 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.
 Jobs becomes permanent CEO.
 Chief sales executive Mitch Mandich
steps down.
 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.
 iTunes music store opens.
 Tibco sues Apple over
trademark.
 Apple launches iTunes
Canada.
 iMac G5
 Raskin dies at 61.
 Software development Avie
Tavanian leaves.
 Video iPod launched & 1
million videos sold from
iTunes.
 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.
 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.
 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.
 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.
 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.
 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?
 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)
 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
 Fragmented: No market leader to provide price stability
 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.
 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)
 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.
 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 $6 billion with 3% of
sales.
› How can two suppliers earn more that the whole
customer base?
 DOMINANT WIN-TEL ARCHITECTURE
 BRAND (Intel Inside. Windows)
 Sophisticated powerful buyers
 Vicious Rivalry
 Lowe barriers to entry
 Lots of Potential Substitutes
 Complements have been fueling
demands (only the bright spot)
 Suppliers are appropriating most of
Industries residual profits
 PCs and Macs were substitutes. So decline
in price of PCs put pressure on Apple’s
Prices and Margins.
 Macs and PCs have different software
complements. Industry was moving toward
PC (Wintel).
 Software developers were not interested in
writing codes for a small Mac market.
 Who is the largest software vendor for Mac
other than Apple?
› MICROSOFT Win-Win Strategy for them. Even
when Mac Sells, Microsoft becomes wealthier.
 Takes 1$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.
 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.
 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.
 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.
 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?
 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.