Case 1 - Apple Computer

Chester L. Miller Case 1: Apple Computer TM583 – Strategic Management of Technology November 2, 2009 Founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne in California, Apple Computer, Inc., now Apple, Inc., has experienced a roller coaster like existence over the years. Shunning industry norms for the creation of its inventions, Apple Inc. has become a success story late in its existence due to the reimergence of Steve Jobs as leader of the multinational corporation. Prior to Jobs return, Apple was on the brink of dissolution causing many industry insiders to write it off as one of the great companies that lost its way. Over the years, Apple experienced great successes and tremendous failures in key markets segments. Of their most publicized failures was the Lisa when it made its debut in 1983 amid internal wars with fellow inventors for a competing low cost personal computer. The Lisa was the first personal computer to market with a GUI (Graphical User Interface), but with a high price tag and limited software titles it became a commercial failure. The Machintosh Portable computer, which came to market in 1989, another failure, was Apple’s first attempt at a battery powered. At a heavy 15.5 lbs and a $6500 price tag, the Machintosh Portable computer found few customers. Moreover it suffered from design flaws in the battery supply which caused harsh criticism from the industry. This resulted in Apple learning a valuable lesson from key mistakes and returning with a more popular model a few years later. In an effort to address the Personal Digital Assistant market or PDA, Apple introduced the Newton in 1993. The Newton suffered from project slippage and poor customer education, a term coined scope creep. Scope creep occurs when the scope of a project is not properly defined, documented or controlled. Another of Apple’s biggest failures was its most notable changes in leadership over the years. The internal struggles between CEO John Scully and Steve Jobs caused Apple to lose its sense of direction. Steve Jobs eventually resigned from the company and started NeXt. With subsequent failures in Taligent, Apple’s futuristic operating system with a new graphical user interface, a huge reduction of its workforce resulted causing Apple to undergo reinvention in the 90’s. Failed alliances with IBM and Motorola for the creation of a new platform for its outdated Machintosh coupled with changes in leadership, Apple suffered a tumultuous existence throughout the 90’s. As Apple’s failures placed the company on the brink of failure and caused many to believe they would eventually fade away like a bad sunset, they endured and persevered with notable successes which led the industry in innovation. Noted successes include the Machintosh which debut in Jan. 22, 1984. It’s clever ad campaign during Superbowl XVIII made it a big hit. It was the 1st affordable computer to offer a graphical user interface. Its creation along with supporting software applications and advanced graphical cabilities was responsible for creating the desktop publishing market. Following the failure of its first attempt at a portable labtop, Apple introduced the Powerbook 100 on October 21, 1991. It was much lighter than its ancestor, the Machintosh portable, at 7lbs and had a battery life of 3hours. The Powerbook was innovative in that with several major revisions and redesigns, often being the first to market incorporating the latest features allowed it to become the standard for competing laptops. One of the greatest successes in Apple’s storied history is the IMac. Introduced in August of 1998, the all in one design available in different colors sold over 6 million. The IMac was the product which largely caused Apple’s return to profitability in the mid 90’s. With the unveiling of MacOS X in March of 2001, Apple reasserted itself in the OS

market with a stable counterpart to the Windows OS. Mac OS X combined stability, reliability, power and security based on a platform of the Unix operating system. With the advent of the Ipod in November 2001, Apple reinvented itself from a computer company to an electronics company. Apple became a formidable player in the music down load business. It is notable to add that Steve Jobs was at the helm of Apple during this reinvention as a consultant and soon returned as the CEO of the company. Steve’s inventions while at start up, NeXt, were used to improve Apple products and reinvigorate its product line and innovation. From the Ipod came Itunes, Apples music download store in August 2003. Rounding out its successes is the Iphone, introduced in January 2007; Apple revolutionized the smartphone market and turned the industry upside down. It was named the invention of the year by Time magazine and has made Apple an industry leader in key markets. Much of Apple’s success and failure is congruent with its culture. Bucking traditional trends and definitions of what a corporation should be in terms of organizational structure and corporate attire, Apple and other companies on the West Coast in the Silicon Valley corridor embraced individuality and creativity in its culture. This resulted in the many innovations which were industry firsts, setting the bar for the industry and forcing its competitors to play catch up. It is this corporate environment which attracts the brightest talents fostering excellence. Apple is credited with putting Silicon Valley on the map and creating the hardworking yet corporate-casual environment. With its rebel spirit and innovative masterpiece commercial, “1984”, representing the coming of the Macintosh computer, the commercial served as a means of saving humanity from “conformity.” It is these efforts which highlight Apple’s rebellion and empowerment of the PC user from the products produced by its competitors, Microsoft and IBM. Steve Jobs stated once, “It’s better tobe a pirate than join the navy.” addressing concerns that IBM was creating a stuffed shirt atmosphere with its corporate culture. Apple’s culture, today, reflects a continued intense work ethic and casual dress code. According to Apple’s workplace surveys, employees often leave the impression that there’s no better place to work than Apple. “Funny, brillian, relaxed” co-workers and “modern, spacious, beautiful” offices “filled with comfortable couches and huge picture windows make time a pleasure.” “I can’t imagine any reason not to work here.” Standing as a rebel bucking trends and shunning industry norms created by IBM and Microsoft has enabled Apple to be innovative. In closing, Apple’ss actions apply directly to the TCO’s. With TCO-A, Apple’s history has provided a wealth of information and insight into its ability to be innovative and compete in the personal computer and consumer electronics market. Apple’s history of licensing and lack thereof is a direct reflection of its ability to protect its technological innovations. With TCOB, once Apple realized it was losing money and market share with better products from licensees, Apple backed away from the licensing strategy enabling it to protect its innovations. Apple’s core technological competencies, TCO-C, were evident as a personal computer company prior to 2000. It changed its name to Apple, Inc. to reflect its foray into the comsumer electronics market. TCO’s D, E, and F show how Apple has been able to build alliances with Intel, IBM, Motorola, and others to reflect its desire to gain market share and become a more formidable competitor. Realistically, it was a slight turn from its original corporate culture of being a rebel. To become more successful in the PC market, Apple had to embrace Intel and the Pentium achitecture and run Microsoft software products on its machines. Apple’s successes and failures has provided many lessons that will teach others regarding strategies facilitating the success of a technologically driven organization.

Work Cited 1. “Apple Inc.”, http://en.wikipedia.org/wiki/Apple_Computer#CEOs, Wikipedia.org 2. Linzmayer, Ronald W. (1999), Apple Confidential: The Real Story of Apple Computer, Inc. 3. Rosmarin, Rachel (2006), Apple’s Biggest Duds, http://www.forbes.com/2006/03/30/newton-apple-lisa_cx_rr_0331APPLEDUDS.html? boxes=custom 4. Ewalt, David M. (2006), 20 Great Moments in Apple History, http://www.forbes.com/2006/03/30/apple-historyjobs_cx_de_0331APPLEHISTORY.html?boxes=custom