Apple 2008

Apple Inc. 2008: An Innovative Strategic Position

Apple Inc. was founded in the late 1970's by Steve Wozniak and Steve Jobs and has obtained its market share with extensive investment in research and development of innovative new products in personal computers, smart phones, and digital music players industries, experiencing both successes and failures. Though the Apple has had a bumpy road with the exit of many top executives and some failed products through the 1980's and 1990's, it has always been a leader in innovation. At the end of 2007, the company's net profit was $3.496 million and Apple had successfully broken into both the emerging industries of smart phones and digital music players through a closely monitored company strategy.

Apple still primarily sees itself as a computer company but with the recent success with smart phones and MP3's and the increasing market trends towards portable devices, the company's primary focus has to be reevaluated to continue to compete.

Market Environment

In the second quarter of 2008, the global PC market grew by 16% compared to the second quarter of 2007 to 71.9 million units mostly due to notebook PC's. The United States market grew by 4.2% with Apple having the highest growth rate (38.1). Seventy-nine percent of the U.S. market was composed of five competitors, which accounted for 55.2% of the international market, for which Apple only represented 3%. The personal media player industry also continued to grow with Apple's market share at 40 and 70 percent for flash memory and hard drive MP3 players respectively. Lastly, the smart phone industry has emerged with Apple leading with the release of the iPhone.

No. Of Rivals:

In the second quarter of 2008 the market shares of the computer industry consisted of Dell, Inc. (31.9), Hewlett-Packard (25.3), Apple (8.5), Acer (8.5), and Toshiba (5.5). The iPod faces rivalry from Creative, iRiver, SanDisk, and Microsoft and the iPhone was other emerging smart phone and mobile phone competitors such as Motorola and Nokia.

Scope of competitive rivalry:

The scope of rivalry is global for all three industries. Personal mobile technology is booming with innovations in laptops, smart phones and MP3's being produced around the world.

Degree of product differentiation:

The degree of product differentiation is high with design, style, and capabilities of a product all highly variable as well and quality and pricing.

Product innovation:

All three markets have high product innovation as competitors are trying to increase market share by developing new products. This is particularly the case in the digital media players and smart phone industries as they are still relatively new and competitors are still emerging.

Pace of technological change:

In all three industries technological change is very pertinent and happening relatively fast to keep up with the rapid innovation and development of new products for each industry.

Vertical integration:

Apple has strong vertical integration in relation to the designing, building, and retailing all apple products and the exclusive accessories and support software needed allowing for synergy between products in the different industries. At the same time this also allows for horizontal integration of Apple products to be used for their different purposes with ease of transition.

Economies of scale:

Economies of scale is relevant with larger companies having a cost advantage and the industries being characterized in the manufacturing and distribution of their products.

Learning/experience curve effects:

Learning/experience curve effects are hard to consider because of how rapidly the industries change to accommodate new technology and innovations but companies can benefit from longer experience in emerging markets by understanding the market trends and gaining market share.

1. How well has Steve Jobs done as Apple's CEO? Has he done a good job of performing the five tasks of strategic management discussed in Chapter 2? Why or why not? What grade would you give him?

Regardless of a rocky history between co-founder Steve Jobs and Apple, Inc., Jobs was able to return to Apple in 1997 after a string of CEO's were run through and replaced and the company was losing money. Since his return, Jobs has taken Apple from reporting quarterly losses to introducing new and innovative product lines, such as the iPod music player which has become