Case Study of Apple Inc: “Think Different”

Steve Jobs and Steve Wozniak founded Apple on April 1, 1976.  The two Steves, Jobs and Woz (as he is commonly referred to – see woz.org), have personalities that persist throughout Apple’s products, even today.  Jobs was the consummate salesperson and visionary while Woz was the inquisitive technical genius.  Woz developed his own homemade computer and Jobs saw its commercial potential.  After selling 50 Apple I computer kits to Paul Terrell’s Byte Shop in Mountain View, CA, Jobs and Woz sought financing to sell their improved version, the Apple II.
They found their financier in Mike Markkula, who in turn hired Michael Scott to be CEO.  The company introduced the Apple II on April 17, 1977, at the same time Commodore released their PET computer.  Once the Apple II came with Visicalc, the progenitor of the modern spreadsheet program, sales increased dramatically.  In 1979, Apple initiated three projects in order to stay ahead of the competition: 1) the Apple III – their business oriented machine, 2) the Lisa – the planned successor to the Apple III, and 3) Macintosh.
In 1980, the company released the Apple III to the public and was a commercial flop.  It was too expensive and had several design flaws that made for less-than-stellar quality.  One design flaw was a lack of cooling fans, which allowed chips to overheat.  In late 1980, Apple went public, making the two Steves and Markkula wealthy – to the tune of nine figures.  By 1981, the Apple III was not selling well and Scott infamously fired 40 people on Feb 25 (“Black Wednesday”).  Scott’s direct management style conflicted with the culture Jobs and Markkula preferred, and Scott resigned in July.  Markkula stepped into his position as CEO. In August 1981, IBM released their PC. Unimpressed and unafraid, Apple welcomed IBM to the PC market with a slightly smug full-page ad in the Wall Street Journal. It would not be long before IBM’s PC dominated the market.
The Xerox Alto was the inspiration for Apple’s Lisa.  Apple employees were able to examine the Alto in exchange for allowing Xerox to invest in Apple before Apple’s initial public offering (IPO).  Apple released the Lisa in January 1983 and was notable for being the first computer sold to the public that utilized a Graphic User Interface (GUI).  Unfortunately, the Lisa was not compatible with existing computers, and therefore came bundled “with everything and a list price to match.” At $9,995 (over $21,000 in 2005 dollars), the Lisa missed its target market by a wide margin.
Jobs attempted to control the Lisa project.  Scott, unimpressed with the performance of Jobs on the Apple III project, had Jobs head up the dog-and-pony show for the pending IPO.  Jobs, looking for a project to lead, inserted himself into the Macintosh development team.  Using his considerable influence, Jobs was able to procure the resources to produce a computer that was faster than Lisa, used a GUI, had a mouse, and sold for ¼th of Lisa’s price.  Apple introduced the Macintosh with great fanfare during the 1984 Super Bowl.  The Orwellian-themed commercial (directed by Ridley Scott, of ‘Alien’ fame) portrayed IBM as Big Brother and embodied Macintosh and Apple as freedom-seeking individuals breaking away from this oppressive regime.The commercial was largely successful and sales for the Mac started strong.  However, Mac sales later faded. John Sculley left PepsiCo to join Apple in April 1983.  He was famous for engineering the “Pepsi Challenge”, in which blinded testers tasted both Coke and Pepsi to unveil the ‘truth’ of the taste of Pepsi.  In response to lagging Mac sales, Sculley contrived the ‘Test Drive a Macintosh’ campaign.  In this promotion, prospective users could take home a Macintosh with only a refundable deposit on their credit card.  While lauded by the public and the advertising industry, this campaign was a burden on dealers and significantly impeded the availability of Macs to serious buyers.  In 1985, Apple tried to have lightening strike twice with their ‘Lemmings’ commercial during the Super Bowl.  In what was becoming Apple’s typical patronizing fashion, this commercial insulted current PC users by portraying them as witless lemmings, unthinkingly doing harm to themselves.  Although Jobs attempted to overthrow Sculley, the board backed Sculley.  Jobs left Apple to form NeXT computer. After Jobs left in 1985, sales of the Mac “exploded when Apple’s LaserWriter met Aldus PageMaker.” Apple dominated the desktop publishing market for years to come.  Under Sculley, Apple grew from $600 million in annual sales to $8 billion in annual sales by 1993.  Apple introduced Mac Portables in 1989 and the first PowerBooks in 1991.  By 1992, PC competition ate into Apple’s margins and earnings were falling.  Sculley was under pressure to have Apple produce another breakout product.  He focused his energy on the Newton – Apple’s introduction of the Personal Digital Assistant (PDA).  Despite Sculley generating substantial demand for Newton, it did not live up to the hype due to it being severely underdeveloped.  Sculley resigned in 1993 and Michael Spindler replaced him.
Spindler spent most of his time and energies on regaining profitability, with the end goal of finding a buyer for Apple.  Over the next several years, Spindler shopped Apple to Sun Microsystems, Eastman Kodak, AT&T, and IBM.  Meanwhile, Apple was unable to meet the growing demand for its products due to supplier problems and faulty demand predictions.  To add insult to injury, Microsoft released Windows 95 with great fanfare in 1995.  After significant quarterly losses in 1996, the board replaced Spindler with Dr. Gil Amelio, CEO of National Semiconductor. Dr. Amelio tried to bring Apple back to basics, simplifying the product lines and restructuring the company.  One of Apple’s most pressing issues at the time was releasing their next generation operating system (code named “Copland”) to compete with Windows 95.  Amelio and his technology officers found that Copland was so behind schedule that they looked outside the company to purchase a new OS.  Ultimately, and somewhat ironically, they decided to purchase NeXT computer from Jobs.  Naturally, Apple welcomed Jobs back into the fold.  The board became increasingly impatient with Amelio due to sales not rebounding quickly enough.  Apple bought out Amelio’s contract after just 1 ½ years on the job. Jobs eventually claimed the CEO position.  Then, he cleaned house by revamping the board of directors and even replacing Mike Markkula (who had been with the company since the beginning).  Jobs simultaneously put an end to the fledgling clone licensing agreements (which created a few Mac clones) and entered into cross-licensing agreements with Microsoft.  On May 6, 1998, Apple introduced the new iMac, a product so secret that most Apple employees had never heard of it.  The new iMac was a runaway success with its translucent case, all-in-one architecture, and ease of use.  It brought Apple to a new market of users – those who had never owned a computer before.  Jobs further simplified the product lines into four quadrants along two axes:  Desktop and Portable on one, Professional and Consumer on the other.  Apple completed the matrix with the introduction of the consumer-based iBook in 1999.
The year 2001 was an important year for consumers of Apple products.  Apple opened their first 25 retail stores (totaling 163 stores in 4 countries as of May 2006).  In September 2001, Apple introduced the new iMac featuring a screen on a swivel.The new iPods (portable music players) were a tremendous success.  Apple sold so many that Apple’s dependence on Mac sales was significantly less.  This was no small feat considering that the 2001 iMac became Apple’s best-selling product “by a long shot”. Apple offered iTunes (a free application) to help their consumers organize music on iPods and Macs.
In 2003, Apple expanded iTunes by 1) opening the iTunes music store to allow Mac users to purchase music online and 2) expanding iTunes to Windows users.  Sales of iPods skyrocketed and currently provide the bulk of product sales to Apple. In 2005, Apple announced that it would start using Intel-based chips to run Macintosh computers.  In April 2006, Apple announced Boot Camp, which allows users of Intel-based Macs to boot either Mac or Windows OS.  This functionality allows users who may need both OSs to own just one machine to run both, albeit not simultaneously.
The three major competitors of Apple are Dell, Hewlett-Packard and IBM, however Apple also competes with Microsoft in software industry. Dell is the largest computer manufacturer with extremely low cost production strategy. Dell has entered the in the line of music against Apple by its Jukebox. Hewlett Packard is a big brand name and leading provider of technology. Apple combined with IBM enjoyed profit jointly but now Lenovo took over IBM and become a competitor of Apple.
Apple’s new products like speech recognition program will help take industry into a new age of computers and is according to the company’s motto and it is hoped that it will double the profit margin in the near future. Overall, Apple is continuously growing and its future seems bright. With the slight change in their strategies, they can become giants in technology industry.