On October 5, 2011, Steve Jobs tragically died of cancer. The recently retired CEO of Apple Inc. was a legend: he had changed Apple from a company on the verge of bankruptcy to one of the largest and most profitable companies in the world. Moreover, he had revolutionized several industries in the process. Few companies’ successes were so closely identified with its CEO. Jobs’s passing promised to usher in a new era at Apple. The new CEO, Tim Cook, had an extraordinary challenge: how to sustain Apple’s current successes in computers, MP3 players, phones, and tablets, while taking Apple to the next level. The company began as “Apple Computer,” best known for its Macintosh personal computers (PCs) in the 1980s and 1990s. Despite a strong brand, rapid growth, and high profits in the late 1980s, Apple almost went bankrupt in 1996. Then Jobs went to work, transforming Apple Computer into “Apple Inc.” with innovative non-PC products, starting in the early 2000s. In fact, Apple viewed itself as a “mobile device company.”
1 By 2011, Macintosh revenues were less than 20% of Apple’s $108 billion in sales2 (see Exhibits 1a through 1c for financial information and net and unit sales).
Meanwhile, Apple’s stock was making history of its own. Apple became the most valuable company in the world in 2012 (see Exhibit 2 for Apple’s share price over time).
The Term Paper on Apple Company
... downs. And introduced Jobs grew up. Jobs don’t like bundle, when he was a student. In 1985 Apple Company had the first computer they created. ... mini iPod encroach on apple’s profits, Mac computer sales profit rate is low, Former CEO Steve Jobs introduced the new iPhone in January ...
By almost any measure, Apple’s accomplishments in the prior decade had been spectacular. Yet Cook knew that no company in the technology industry could relax. Challenges abounded. iPod sales, for example, had been falling for four straight years by 2012. At the same time, Microsoft was set to introduce Windows 8, which the company promised would challenge Apple’s vaunted leadership in user interface. Even though Macintosh sales had grown faster than the industry in recent years, Apple’s share of the worldwide PC market had remained below 5% since 1997 (see Exhibit 3a for Apple’s PC market share, worldwide).
Many also wondered if the company could thrive without Jobs. Cook, Jobs’s former chief operating officer, had built Apple’s formidable global supply chain, but he came to the CEO job with a very different skill set. Finally, would the iPhone continue its march to dominate smartphones in the face of growing competition from companies such as Google and Samsung?
Professor David B. Yoffie and Research Associate Penelope Rossano prepared this case. This case derives from earlier cases, including “Apple Inc., 2008,” HBS No. 708-480, by Professor David B. Yoffie and Research Associate Michael Slind, “Apple Computer, 2006,” HBS No. 706-496 by Professor David B. Yoffie and Research Associate Michael Slind, and “Apple Inc., 2010,” HBS No. 710-467 by Professor David B. Yoffie and Research Associate Renee Kim. This case was developed from published sources.
HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2012 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
Apple’s History
Steve Jobs and Steve Wozniak, a pair of 20-something college dropouts, founded Apple Computer on April Fool’s Day, 1976.3 Working out of the Jobs family garage in Los Altos, California, they built a computer circuit board that they named the Apple I. Within several months, they had made 200 units and had taken on a new partner—A.C. “Mike” Markkula Jr., who was instrumental in attracting venture capital as the experienced businessman on the team. Jobs’s mission was to bring an easy-touse computer to market, which led to the release of the Apple II in April 1978. It sparked a computing revolution that drove the PC industry to $1 billion in annual sales in less than three years. 4 Apple quickly became the industry leader, selling more than 100,000 Apple IIs by the end of 1980. In December 1980, Apple launched a successful IPO. Apple’s competitive position changed fundamentally in 1981 when IBM entered the PC market.
The Essay on Apple Market
Apple changed its company name from Apple Computer to Apple Inc in 2007. And with this name change, the chief element of Apple strategy is to let consumer know, it is not just a computer company, but a company provide other products, such as iPod, iTunes, and iPhone. In Sculley Years, Apple’s chief element was to be versatile compare to IBM, and it will be the complete desktop solution with ...
The IBM PC, which used Microsoft’s DOS operating system (OS) and a microprocessor (also called a CPU) from Intel, was a relatively “open” system that other producers could clone. Apple, on the other hand, practiced horizontal and vertical integration. It relied on its own proprietary designs and refused to license its hardware to third parties. IBM PCs not only gained more market share, but also emerged as the new standard for the industry. Apple responded by introducing the Macintosh in 1984. The Mac marked a breakthrough in ease of use, industrial design, and technical elegance. However, the Mac’s slow processor speed and lack of compatible software limited sales. Apple’s net income fell 62% between 1981 and 1984, sending the company into a crisis. Jobs, who was often referred to as the “soul” of the company, was forced out in 1985.5 The boardroom coup left John Sculley, the executive whom Jobs had actively recruited from Pepsi-Cola for his marketing skills, alone at the helm.
The Sculley Years, 1985–1993
Sculley pushed the Mac into new markets, most notably in desktop publishing and education. Apple’s desktop market was driven by its superior software, such as Aldus (later Adobe) PageMaker, and peripherals, such as laser printers. In education, Apple grabbed more than half the market. Apple’s worldwide market share recovered and stabilized at around 8% (see Exhibit 3a).
By 1990, Apple had $1 billion in cash and was the most profitable PC company in the world. Apple offered its customers a complete desktop solution, including hardware, software, and peripherals that allowed them to simply “plug and play.”
The Term Paper on From Pepsi to Apple
... environment fully controlled by Apple, with Apple-trained staff and only Apple-compatible products, could the superiority of Macs be fully appreciated by ... in key positions. Recruitment of developers Just like Jobs, Sculley aggressively recruited developers. Jobs had created a corps ... August 1981, the IBM PC entered the personal computer market. It was the biggest threat yet to Apple, whose reputation ...
Apple also stood out for typically designing its products from scratch, using unique chips, disk drives, and monitors. IBM-compatibles narrowed the gap in ease of use in 1990 when Microsoft released Windows 3.0. Still, as one analyst noted, “the majority of IBM and compatible users ‘put up’ with their machines, but Apple’s customers ‘love’ their Macs.”6 Macintosh’s loyal customers allowed Apple to sell its products at a premium price. Top-of-the-line Macs went for as much as $10,000, and gross profit hovered around an enviable 50%.
However, as IBM-compatible prices dropped, Macs appeared overpriced by comparison. As the volume leader, IBM compatibles were also attracting the vast majority of new applications. Moreover, Apple’s cost structure was high: Apple devoted 9% of sales to research and development (R&D), compared with 5% at Compaq, and only 1% at many other IBM-clone manufacturers. After taking on the chief technology officer title in 1990, Sculley tried to move Apple into the mainstream by becoming a lowcost producer of computers with mass-market appeal. For instance, the Mac Classic, a $999 computer, was designed to compete head-to-head with low-priced IBM clones.
