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Apple Computer Inc.

Case Analysis

Julianne Carrido, Sami Hakimeh, Kyle Hayes, Frankie Lau

Thursday, May 31, 2006

Apple Computer Inc. is an American computer technology company. It leads the industry in innovation with its award-winning desktop and notebook computers, OS X operating system, iLife and its range of professional applications. Apple also spearheads the digital music revolution with its iPod portable music players and iTunes online music store.

Apple played a major role in the introduction of the personal computer in the 1970s, which eventually kicked off the personal computer revolution. It's first big hit, the Apple II, was introduced in 1977 and was a very popular with home consumers. Being the innovator that Apple is, it introduced the first graphical user interface (GUI) to the commercial personal computer. This technology is used on all of today's major computer operating systems such as Windows XP as well as Unix-like systems. Since then, the company has revolutionized the way people and computer companies think about aesthetic design of computers and consumer electronics alike as well as the security and operability of the operating system. In addition, Apple's unmatchable success with it's iPod mp3 player and revolutionary iTunes music store has left many companies struggling to keep up with the new wave of giving consumers the simplicity they desire in technology.

The recent announcement along with the release of new Apple computers using the Intel processor, rather than the faithful IBM PowerPc processor, has allowed the company to enter into an entire new realm of needed compatibility with it's desktop and portable computers. The Intel chip allows the new machines to run the Windows Operating System natively as well as OS X on the same drive. With the correct setup of virtualization software, these two operating systems may even run at the same time, and a couple of key commands would be able to instantly switch between operating systems. This development in technology now encourages users to switch to the very desirable Macintosh community without completely sacrificing the often thought needs of the PC.


Apple Computer Inc. is one of the oldest hardware manufacturers that control over the product by manufacturing both computers and their operation system. It is known that Apple has a high Quality product which makes Apple different than its competitors. Apple creates its product with unique designs to attract the consumer's eyes and increase its market share because Apple success is based on fulfilling customer's desires. Apple has one of the top brand names within the technology industry all over the world, and 54% of their profits are from foreign markets. Apple is dedicated to develop new products which will make the use of technology easier and more efficient. Apple always provides easy-use product to the hand of the consumers. Most of its products are light, small, and easy to carry around which make them more competitive. One of the great things about Apple is product diversification; Apple has a large number of product lines to target everyone in the world. In addition, there are a huge number of consumers who are loyal to Apple even though the prices of Apple products are higher comparing to its competitors. The attractiveness of Apple's products has created a brand of distinction in the computer industry. In 2005, Apple had reported a net income of 1,335,000,000 which equates to an increase of almost 400% from its net income in 2004. So far, the company has done quite well in 2006. There was an increase in quarterly earnings growth of 41.4%. Its stock price is the highest in the personal computer industry. Apple is financed mostly by its equity. In fact Apple does not have any debt, so investors would bear less risk by holding Apple's stocks. The company is loaded with extra cash that is ready to acquire any firm that could help enhance the value of the company.


Apple had difficulties on some of its products quality control. Some consumers reported faulty screens in the iPod Nano. When Apple first introduced the iPod, consumers faced problems with faulty batteries. Apple is ranked fourth by sales of hardware, and it is focusing on internal engineering more than the market. They must continue to impress the market with new products. This puts huge pressure for Apple to maintain its position as one of the industry leader. The computer industry is a fast-changing type industry where old products are constantly replaced by newer and more improved innovations. For Apple to remain profitable, they must invest huge amount of money in their product R&D which has been increasing steadily every year.

Even though Apple may seem so financially strong, its lack of debt may just be a fatal weakness. Apple is very vulnerable to a major stock acquisition by other groups or companies. In addition to the debt/equity issue, Apple has not issued any dividends to its shareholders for many years, which may cause the investors to lose their confidence in this company.

COMPUTER HARDWARE (US) RANKED BY SALESCompanySymbolPriceChangeMarket CapP/EInternational Business Machines Corp.IBM80.140.45%124.25B15.65Hewlett-Packard Co.HPQ32.27-0.31%91.27B34.89Dell Inc.DELL24.30.50%56.06B16.66Apple Computer Inc.AAPL64.331.56%54.71B32.46


Apple is known for its innovative thinking. They have developed a product line that is both functional and attractive. Their product line has recently expanded to another level. Their iPods will soon be able to communicate with specially designed Nike running shoes where you could receive data such as calories burned and distance ran. This project can benefit both companies and boost the demand for iPods. Apple's iPod line will have a clear advantage over all the other mp3 players in the market. In addition to Apple's integration with other products, many cars models from all major automakers have equipped their new models with iPod connectivity.

In regards to their desktop and notebook sectors, Apple has developed new lines that are less expensive while maintaining its high quality standards. These less-expensive computers should help increase sales in the future. Apple has also changed its chip supplier from IBM to Intel. This change would make Apple more compatible with other systems. It enables Apple to run the Windows operating system, which gives the user more flexibility.



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