Fluent Essays

I have a case study which is about apple.Its a group presentation. So I ONLY NEED TO DO THE SWOT part. Only Opportunity and threats. You dont need do strengths AND weakness.So, please be prepare 1 page double space 12 font paper which is about opportunity and threats. Please do not begin with the introduction. ONLY START WITH the opportunity and threats.And, please help me prepare 2 slides powerpoint, one page is opportunity and one page is threats.Please also help me prepare the presentation notes. Maybe half page, it need to be at least 3 minutes.In conclusion, you need do 1 page paper, presentation slide, and presentation notes.The requirement of the paper in the file. apple.pdf case_writeup_instructions__1_.doc Unformatted Attachment Preview For the exclusive use of M. Dai, 2020. UV1228 Rev. Mar. 15, 2010 THE APPLE IPHONE Introduction One percent market share equals 10 million units. This is a giant market. If you [sell] just 1\% market share, you are going to sell 10 million phones—this is exactly what we are going to try and do in 2008, our first full year in the market— grab 1\% market share and go from there. So we are going to enter a very competitive market, lots of players. We think we are going to have the best product in the world, and we are going to go for it, see if we can get 1\% market share—10 million units in 2008—and go from there. —Steve Jobs, January 9, 20071 The Rise and Fall of Apple Computer Until the 1970s, computers were too expensive for individual ownership. Only researchers in academia or industry had the opportunity to use a computer regularly. As components were miniaturized and mass-produced, it became possible for computer enthusiasts to assemble their own personal computers by purchasing kits from stores specializing in electronic components. Steve Jobs, a college dropout, started Apple Computer with his friend Steve Wozniak to preassemble personal computers for customers. Both Jobs and Wozniak belonged to a local hobby group called the Homebrew Computer Club. They built the first Apple computers by hand in borrowed space, such as Steve Jobs’s parents’ living room. These computers were sold at local stores in Silicon Valley. 1 Steve Jobs, keynote address, Macworld San Francisco, 2007. This case was prepared by James Mitchell (MBA ’08) under the supervision of Paul W. Farris, Landmark Communications Professor of Business, and Robert E. Spekman, Tayloe Murphy Professor of Business. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright  2008 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation. This document is authorized for use only by Mingjian Dai in Marketing 615 taught by KIMBER MADERAZZO, Pepperdine University from Jan 2020 to Apr 2020. For the exclusive use of M. Dai, 2020. -2- UV1228 As the mass market for preassembled personal computers began to grow, others introduced competing products. The best-selling competition was a line of computers made by Tandy Corporation and sold at Radio Shack, a national retail chain. Each line of computers specialized in a separate segment of the market, such as programming, using spreadsheets for finance, or maintaining databases. Word processing was still mostly done on mechanical typewriters, but a company called Wang built computerized systems that could share and store files between multiple users in an office setting. The market grew quickly enough to attract the attention of mainframe-manufacturer IBM. IBM’s first product, dubbed “PC,” was targeted toward business users. These users and purchasing agents were already familiar with IBM products and were generally more skeptical of upstart personal-computer manufacturers. The PC could use a regular television to display 16 colors at a resolution of 40 by 25 characters (effectively 320 by 200 pixels); most programs were text-based, and the keyboard was the primary means of user control. IBM quickly dominated the market, though some of its share went to compatible systems built by third parties, such as Compaq (Figure 1). Figure 1. IBM market domination. In 1983, Apple Computer hired John Sculley as CEO. A former president and CEO of PepsiCo Inc., Sculley was best known for creating the Pepsi Challenge. Supposedly, during the hiring process, Steve Jobs had asked him, “Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?” BusinessWeek labeled Sculley and Jobs Apple’s Dynamic Duo. Part of Apple Computer’s plan to take on IBM involved a breakthrough in personal computers called Macintosh. It was the first personal computer that used a graphic user interface and a “mouse” device for control. These two innovative ideas were actually developed by Xerox, but Apple Computer was the first to commercialize them. The first advertising for the Macintosh This document is authorized for use only by Mingjian Dai in Marketing 615 taught by KIMBER MADERAZZO, Pepperdine University from Jan 2020 to Apr 2020. For the exclusive use of M. Dai, 2020. -3- UV1228 was aired during the 1984 Super Bowl: “On January 24, Apple Computer will introduce Macintosh. And you’ll see why 1984 won’t be like 1984.” Though Jobs was credited with being the visionary behind Apple’s early innovations, his presence became increasingly disruptive as Apple Computer sought to expand the personalcomputer market while facing competitors such as IBM. After an internal power struggle, Jobs was ousted from the company in 1985. He spent the next 12 years starting a new computer company called NEXT. NEXT was a failure because its market never expanded beyond its targeted lead users—engineering professionals. Over the next 10 years, Apple Computer was particularly popular in educational markets and among graphic-design professionals; however, this popularity was confined to these market niches, so Apple Computer struggled with flat or declining market share. Apple’s new innovations, including a PDA called the Newton, which had handwriting recognition, failed to gain market acceptance. The market was dominated by so-called IBM-compatible computers that ran the Microsoft Windows operating system and used Intel microprocessors, two key differences from Apple’s products. By the late 1990s, most remaining customers were diehard loyalists, and Apple Computer was a company in crisis (Figure 2). Figure 2. Apple Computer in crisis. Source: Created by case writer. The Return of Steve Jobs In a dramatic role reversal, Steve Jobs returned as interim CEO of Apple Computer in 1997. Jobs took the helm and made bold strategic changes. For instance, Apple Computer settled pending lawsuits with Microsoft. Among the settlement terms, Microsoft promised to continue development of its Microsoft Office applications for the Apple platform and purchased This document is authorized for use only by Mingjian Dai in Marketing 615 taught by KIMBER MADERAZZO, Pepperdine University from Jan 2020 to Apr 2020. For the exclusive use of M. Dai, 2020. -4- UV1228 $150 million in nonvoting Apple Computer stock. The original operating-system architecture was abandoned for software developed at NEXT. Although the new operating system was not backward-compatible, it vastly improved performance. Apple opened a digital store followed by corporate-owned retail outlets. Later, Apple switched to Intel microprocessors, negating a major point of differentiation. In 2001, Apple Computer began manufacturing iPods, a line of digital music players. More than 100 million units were sold in the first six years, due in part to the introduction of a digital music store called iTunes in 2003. From 2005 through 2007, sales of iPods accounted for more than $20 billion in revenue (35.8\% of Apple’s total revenue). As Apple Computer continued to broaden its product lines beyond personal computers, it dropped Computer from its name in 2007. By 2008, iTunes was the leading retailer of music in the United States.2 The first iTunes-capable cell phone was released in September 2005.3 Built by Motorola, the ROKR was based on a preexisting hardware platform combined with iTunes-compatible software. As a convergence device, the ROKR was criticized as being neither notable as a cell phone or as a music player, especially compared with contemporary iPods. By September 2006, the iTunes store stopped supporting the ROKR. Introducing the iPhone iPhone is a revolutionary and magical product that is literally five years ahead of any other mobile phone. We are all born with the ultimate pointing device—our fingers—and iPhone uses them to create the most revolutionary user interface since the mouse.4 —Steve Jobs, speaking on January 9, 2007 At Apple’s annual trade show, Steve Jobs introduced the iPhone, a new iTunes-capable cell phone. The iPhone would be a convergent device that functioned as a cell phone, an iPod, and a Web browser. Rather than using physical buttons, the interface would be drawn on a screen depending on the particular function being used. The interface included a patented innovation: touch input from multiple locations. The iPhone also included an accelerometer, so if turned on its side, its screen would adjust orientation. The iPhone would be released on June 29, 2007, in a partnership with cellular-serviceprovider AT&T. The original relationship with AT&T was based on an exclusive agreement between the two companies. Exclusive deals between manufacturers and network operators were 2 3 “iTunes Store Top Music Retailer in the U.S.” Apple press release, April 3, 2008. “Motorola and Apple Launch the World’s First Mobile Phone with iTunes,” Apple press release, September 7, 2005. 4 Rachel McCarthy, “Does Apple’s iPhone Meet Expectations?,” http://programmersheaven.com/gadgets/2010 /09/06/does-apples-iphone-meet-expectations-essaytown/ (accessed December, 20, 2010). This document is authorized for use only by Mingjian Dai in Marketing 615 taught by KIMBER MADERAZZO, Pepperdine University from Jan 2020 to Apr 2020. For the exclusive use of M. Dai, 2020. -5- UV1228 rare but not unprecedented. Typically cell phones were distributed through three major channels. Phones were typically resold by mobile-network operators at a discount to contracted end-users (e.g., AT&T stores). In the second channel, some phones were sold by independent retailers, such as Wal-Mart or Best Buy. In some instances, service for these phones was prepaid (e.g., GoPhone). And finally, some phones were sold directly from the manufacturer through online stores (e.g., Motorola) or through vertically integrated retail outlets (e.g., Apple Stores). Before the iPhone even went on sale, lines of eager customers formed at many Apple and AT&T stores. The release was covered by local and national media. In the first weekend, 270,000 iPhones were sold; however, AT&T reported only 164,000 activations on its network. Economics It’s really hard to estimate precisely, and we don’t want to throw a number out. Unlocking is occurring, and it is significant, but our view is that this is—it’s just a clear interest in demand globally for the iPhone, and we think it—we are hearing reports of iPhones being used in many countries, and this is one of the things that gives us confidence in our goal of shipping 10 million in calendar 2008. —Apple CFO Peter Oppenheimer, April 23, 20085 As a matter of policy, Apple refused to comment on iPhone margins; however, industry analysts estimated the cost of an 8GB iPhone to be about $265, based on teardown analysis (Exhibit 1). Apple had a revenue-sharing arrangement with its carriers, but the exact details were confidential. News reports indicated that Apple and AT&T signed a five-year contract granting exclusivity in North America and monthly payments from AT&T to Apple. Presumably AT&T also received some retail margin for phones sold through its stores. All purchasers of an iPhone were required to sign a two-year contract. It was reported that the monthly payments from AT&T came in two types: payments for existing AT&T customers who upgraded their service and payments for new customers switching from other networks. About 40\% of iPhone customers were new to AT&T.6 There were a number of possible equivalent payment structures, such as a bounty for new users and a flat rate for sharing of incremental revenue. Several factors complicated the calculation of these rates based on publicly available information. First, Apple recognized the revenue from an iPhone over a 24-month period. Second, the phone was being sold in the United States, Great Britain, France, and Germany, so the exact terms could vary for each exclusive carrier. Piper Jaffray analyst Gene Munster 5 6 Peter Oppenheimer, Apple F2Q08 (March 29, 2008) Earnings Call, April 23, 2008. Paul Kedrosky, “Apple Conference Call Notes,” http://www.eurekahedge.com (accessed April 22, 2008). This document is authorized for use only by Mingjian Dai in Marketing 615 taught by KIMBER MADERAZZO, Pepperdine University from Jan 2020 to Apr 2020. For the exclusive use of M. Dai, 2020. -6- UV1228 originally estimated that Apple received $3 per month for existing customers and $11 per month for new customers. Later in 2007, he revised his estimate to $18 per month for both customer types. Price Drop and Apology The surveys are in, and iPhone customer satisfaction scores are higher than we’ve ever seen for any Apple product. We’ve clearly got a breakthrough product, and we want to make it affordable for even more customers as we enter this holiday season. —Steve Jobs, Apple press release, September 5, 2007 I have received hundreds of emails from iPhone customers who are upset about Apple dropping the price of iPhone by $200 two months after it went on sale… —Steve Jobs, Apology Letter on Apple website, September 6, 2007 Before the end of the fourth quarter, observers commented that the sales of iPhone were slowing. One group of analysts surveyed multiple stores and estimated that fewer than 9,000 iPhones were being sold per day, a more precipitous drop than expected following the strong showing on opening weekend. In preparation for the approaching holiday season, Apple discontinued the 4GB version of the phone and dropped the price of the 8GB version from $599 to $399. Within 24 hours, Apple issued an apology and a rebate to all initial customers of the iPhone (Exhibit 2). These early purchasers received a $100 credit at the Apple Store, redeemable for anything except iTunes digital media such as music or video. On September 10, 2007, Apple announced the sale of its one millionth iPhone. By November, Apple had signed exclusive contracts with carriers in Europe (24\% of the iPhones sold during the period ending December 29, 2007, were sold overseas). By March 2008, global sales topped five million (Table 1).7 Table 1. iPhone global sales to March 2008. Apple Report Q3 2007 Q4 2007 Q1 2008 Q2 2008 End Date June 30, 2007 September 29, 2007 December 29, 2007 March 29, 2008 Units Sold per Quarter 270,000 1,119,000 2,315,000 1,703,000 Units Sold Cumulative 270,000 1,389,000 3,704,000 5,407,000 Source: Apple Inc. quarterly report, 2008. 7 Quarterly Reports, Apple, Inc. Note: The company numbers quarters according to their place in the fiscal year. This document is authorized for use only by Mingjian Dai in Marketing 615 taught by KIMBER MADERAZZO, Pepperdine University from Jan 2020 to Apr 2020. For the exclusive use of M. Dai, 2020. -7- UV1228 Market Share According to the Gartner Group, a research and advisory provider, global manufacturing of mobile phones increased from 816.6 million in 2005 to 990.8 million in 2006.8 The top five manufacturers were Nokia, Motorola, Samsung, Sony Ericsson, and LG. Gartner observed that the global market grew another 16\% in 2007 (Table 2).9 Table 2. Global market growth of top five manufacturers in 2007. Nokia Motorola Samsung Sony Ericsson LG Others 2006 Units Sold (in thousands) 344,915.9 209,250.9 116,480.1 73,641.6 61,986.0 184,588.0 Total 990,862.5 2006 Market Share (\%) 34.8\% 21.1\% 11.8\% 7.4\% 6.3\% 16.3\% 2007 Units Sold (in thousands) 435,453.1 164,307.0 154,540.7 101,358.4 78,576.3 218,604.3 2007 Market Share (\%) 37.8\% 14.3\% 13.4\% 8.8\% 6.8\% 19.0\% 1,152,839.8 Another provider of research and analysis, Datamonitor, predicted a 17.7\% compound annual growth rate (CAGR) for the global market in the period 2006–11 (Exhibit 3); however, most of this growth was expected to occur outside the United States, as mobile phones were already prevalent in the United States, and consumer spending was expected to slow down during 2008. While there was no formal definition of a so-called smartphone, it was widely understood to be a mobile phone with advanced features that made it remarkably less voice-centric and more data-centric than traditional mobile phones. Because the iPhone supported email, Web browsing, and iPod functions, most observers considered it a smartphone. According to the research company Canalys, smartphones accounted for about 10\% of the global mobile phone market in 2007, which equated to about 115 million smartphones being shipped that year. Nearly 30\% of those smartphones were shipped during October, November, and December 2007. In North America, sales more than doubled from 10.3 million in 2006 to 20.9 million in 2007. Each quarter in 2007 saw a steady increase in smartphone shipments from the previous quarter. Similar to the global market, roughly 30\% of volume was shipped during the last quarter of the year in the United States.10 8 “Gartner Says Worldwide Mobile Phone Sales Grew 21 Percent in 2006,” Gartner Group press release, March 2, 2007. 9 “Gartner Says Worldwide Mobile Phone Sales Grew 16 Percent in 2007.” 10 “Smart Mobile Device Shipments Hit 118 million in 2007,” Canals press release, February 5, 2008. This document is authorized for use only by Mingjian Dai in Marketing 615 taught by KIMBER MADERAZZO, Pepperdine University from Jan 2020 to Apr 2020. For the exclusive use of M. Dai, 2020. -8- UV1228 Competitive Response All the major handset manufacturers announced iPhone look-alike products in 2007, but none attracted the attention of the market. Meanwhile, most smartphones, such as the BlackBerry, are still targeted to business users. Apple did not target the business market with the initial release of the iPhone. In fact, the iPhone lacked some typical features considered critical for business use, but some business users found a way around these limitations. On November 5, 2007, more than 30 technology companies announced the creation of the Open Handset Alliance. Most smartphone operating systems, including the iPhone’s, were proprietary. Led by Google, the alliance’s goal was to develop an open platform for smartphones called Android that was similar to Linux. As of summer 2008, no phones that supported Android had been commercially released. Shift to Business We’re excited about creating a vibrant third-party developer community with potentially thousands of native applications…iPhone’s enterprise features combined with its revolutionary Multi-Touch user interface and advanced software architecture provide the best user experience and the most advanced software platform ever for a mobile device. —Steve Jobs11 On March 6, 2008, Apple released a software development kit (SDK) and announced that third-party applications would be supported in the second version of the iPhone operating system. Called iPhone 2.0, the kit was intended to be released free of charge to all iPhone customers in summer 2008. Several new features specifically targeted the business market by improving support for business applications. These included compatibility with e-mail servers running Microsoft Exchange, secure networking using encryption software from Cisco, and the ability to remotely delete data on a lost phone; however, Apple had not maintained a dedicated sales or support staff for business clients since the late 1990s. After the return of Steve Jobs, Apple focused on products for individual consumers, not institutions. Would the iPhone provide a platform for S ... Purchase answer to see full attachment