Apple Team Case Analysis

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        Apple operates in the information technology sector and within the technology hardware Industry.  Apple was the product of the creative and technical genius of Steve Wozniak and the visionary genius of Steve Jobs.  In 1976 Wozniak created the first complete home computer.  Jobs saw the potential to market the home computer and sold the first 50 based on a prototype.

        In 1976 Apple Computer was created as a company and in 1977 they incorporated.  In 1980 Apple issued their IPO.  In 1983, disappointed with the direction of Apple, Wozniak departed to pursue entrepreneurship interests and John Sculley was brought on as CEO.  In 1985 Jobs left for similar reasons.  From that time AAPL hovered around $1.00.  

        In 1997 Apple purchased NeXT, the company Jobs founded after leaving Apple, and brought Jobs on to serve as CEO.  Steve Jobs leadership of Apple was nothing short of meteoric.  Apple introduced the Apple Store in 1997.  In 2001 Apple introduced the iPod, an iteration on the blossoming mp3 player technology.  For the next 15 years, they enjoyed a prime position as the desired brand for handheld technology.

        At the time leading up to, during and after the case, the environmental trends in Technology were highly favorable to the growth of Apple.  The technology market has had constantly increasing demand for more control (features) in smaller and smaller packages.  Steve Jobs was legendary for being able to observe the market trends and provide the greatest thing that the consumers needed before they ever knew they needed it.  The iPhone, for example, took the efforts of Palm Pilot and Blackberry and made them very sleek and much more user friendly.  Palm and Blackberry focused their innovations on functionality and efficiency.  Apple kept or improved on those points, while including entertainment features that made the iPhone highly effective for business purposes and highly enjoyable for personal purposes.

        The five forces model really shows what struggles Apple is facing today.  While Apple still sells home computers, their bread and butter products are their handheld technologies.  Recently Google has joined the battle for market control of the technology hardware industry, particularly with the introduction of their smart phone the Pixel.  Even though the industry is highly developed and probably nearing or in the early stages of the maturity phase, Google has been very successful with their launch.  Apple also faces very stiff competition from Microsoft, Samsung, Nokia and Sony, who each have their own products that could serve as substitutes to Apple’s products.  While the threat of new entrants to the market seems small, the Google case proves that the threat still exists.

        Additionally, Apple does not make or manufacture most of the component parts of their products.  Many parts that they purchase to manufacture their devices come from competitors such as Sony and Samsung.  That is a very disadvantageous place to be in terms of negotiating position.  However, they also serve as a very large revenue stream for those competitors which gives them strong negotiating power.  

        They are also losing negotiating power with their customer base.  In the Asian markets, Nokia and Samsung are not only seen as “cooler” than Apple, they are less expensive.  Apple is losing market share in the Asian market and will need to figure out a way to become relevant again, both in appeal and in price.  Their latest iteration on the iPhone was also poorly received compared to previous iPhone releases.  

        As mentioned, Apple’s main competitors include Microsoft, Samsung, Nokia, Sony, and now Google.  For a time, it was difficult to recreate the “magic” of the Apple handheld experience, perhaps because of the smoothness and multi-platform integration of the iPhone Operating System (iOS), but other manufacturers have been able to either produce their own operating systems (Microsoft) or integrate external operating systems like Android.  Apple has historically counted on their strategy of improving upon existing technology and selling the improved version at a premium.  The competition has responded to Apple’s success by successfully manufacturing viable substitutes and selling them at a less-expensive price.

        Steve Jobs was maximized on the external opportunities while developing his vision for Apple.  The external environment during the beginning of Apple’s success was one of unparalleled economic prosperity in the United States and the world.  The early 2000’s saw steady and major growth in most sectors.  The market was primed to purchase the premium next-best-thing.  At the same time, technology was progressing so quickly.  Computer Processors were getting more powerful than ever and smaller than ever.  The music industry was undergoing a revolution in demand since the birth and subsequent closure of the Napster music sharing platform.  Consumers demand was for instant access and greater portability of the music they loved.  Steve Jobs took full advantage of all these opportunities with the development of the iPod.  Another great opportunity for Apple would be to participate in the Virtual Reality revolution.  Though VR is not new, making it accessible to “Joe Consumer” is a major leap.  Apple could follow their original strategy of observing a technology market trend and put themselves at the very front of it if they were to develop a VR technology that was to VR what the iPod touch was to mp3 technology.

        The threats that Apple has faced have included steep, if not late, competition, privacy concerns and changing consumer demands.  As we have discussed, the competition for Apple is catching up in significant ways.  Apple has also faced implicit privacy issues as the US Government and other agencies around the world have sought to obtain backdoor access to Apple’s security programming.  Apple, for many years, kept up with or led the change of consumer demand.  In more recent years, however, under the direction of Tim Cook, Apple has taken more of a get-better-at-what-you-already-do-well approach and the speed of innovation seems to have stifled some.  The 7th iteration of the iPhone was not as successful as previous releases because of the removal of the headphone jack.  Many consumers see it as a “miss” in innovation because it requires the purchase of additional technology to enjoy one of the core features of the iPhone, personal music device.  While Bluetooth technology is prevalent, many iPhone users own corded headphones and are not ready to change.  Perhaps if headphone manufacturers had unanimously decided to stop making corded headphones before the release of the iPhone 7, it would have enjoyed much greater success, but as it stands, Bluetooth technology is considered a feature, not a fundamental function.

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