Apple Case

Apple

Case Study

Background

Apple had undergone a financial turnaround since 1981. The return of Steve Jobs and a push for the company to move in a new direction had seen it reach record sales of $32 Billion in 2008, with profits of $4.7 billion. Share values had increased from a low of $6 to a present value of $270. Sales of personal computers had made Apple the third ranked company globally. The company had originally operated in the personal computer market but the return of Steve Jobs to the CEO position saw new innovations to the company product line, especially the iPhone and iPods, and by 2008 these were starting to have a positive effect on the company results. The company started to produce products that were both stylish and technically superior and this attracted the younger users who had grown up in a computer friendly environment.

The Problem

The main problem faced by the company was in continuing its growth. Steve Job was ill and much of the resurgence of the company could be traced to innovations which he had championed. It needed to maintain its position as the world's largest company in the sale of digital music players in the face of growing competition. To do this required constant upgrading of its operating system and this was both expensive in time and labour. Apple had negotiated a deal with Microsoft to allow applications such as Office to run on the Apple OS, but many other companies and independent program designers did not agree to adapt their software to work with Apple. Most of the personal computer companies were no longer doing their own R & D, but had chosen to buy parts from other suppliers. Although Apple was not facing a single competitor overall, it did face strong competitors in each of the fields of computer, phones and digital music players. Apple had to maintain its technological edge to continue to retain customer loyalty from the over 25 million apple users world-wide. Failure to do this would see these users switch to alternative platforms.

Reasons to consider the problem

Technology changes rapidly and the generation that is the main purchaser of Apple products is a younger age group that has grown up in a world of technology through schools and universities. These are consumers who are familiar with and want the latest gadgets and Apple has the reputation for delivering this. If Apple does not continue to innovate and develop new products and applications, the company could quickly slide back to their status in 1981 with the low share prices and falling profits. Technology companies that do not remain at the top of their field fail. To maintain the present growth rate in revenues and profits, Apple must be ready to look at the next generation of devices. This requires strong leadership.

Analysis

The new devices such as the iPod, iPad and iPhone were well accepted as the best available by both critics and the general public. In addition t the technology, the styling made them attractive to the end users. However, this came with a retail price point that placed Apple above many of its competitors