Case Apple

APPLE COMPUTER TARGETS DESKTOP ENGINEERING ASWIN C. 2008A18

OBJECTIVE To decide whether it can make a formal entry into the engineering workstation market.

JUSTIFICATION OF OBJECTIVE Apple has been an established player in the home computing, business and higher education market. Through its superior network structure, Apple identified the engineering workstation market as a lucrative target for future. Its objective was to secure a strong foundation in both the segments and once it could establish itself as a major workstation manufacturer, it can expand its objective to include all UNIX environments and applications.

PROBLEM STATEMENT

SITUATION ANALYSIS FACTS ON APPLE COMPUTER ➢ Apple manufactured and marketed two principle lines of personal computers, related software, and peripheral products: Apple II product line and Macintosh product line. ➢ Apple’s organizational structure was designed to meet the corporate objective of maintaining the entrepreneurial spirit of a small company. ➢ It considered itself to be a “third wave” company that would not only see the future as an extension of the past focusing on ritual but also focus on the individual. ➢ Introduced a machine called Macintosh 2 which was equal to or better than the high performance machines offered by IBM, Compaq etc. ➢ It offered superior colour graphics extremely fast processing speed and 32-bit architecture to run several OSs.

TARGET MARKET ➢ Apple’s target market were higher education, business, government,K-12 education and international. The target market was divided into two groups- Engineering workplace and engineering higher education. ➢ Multilocal focusing which was Apple’s term for regionalizing corporate communications as well as ability to customize the product line for the end user strengthened its international presence. ➢ Market research has indicated that over the time periods, Apple’s “share of year-ahead planned purchases” has grown consistently while IBM’s has been faltering.

For Apple Computer to enter into the workstation market, the following factors need to be considered: 1. An extensive SWOT analysis of Apple Computer. STRENGTHS: ✔ ✔ ✔ ✔

Very High Earnings and Cash at Hand. Established player in the home computing market. Ability to innovate and be ahead of other players. No term loans (fixed liabilities)

WEAKNESS: ✔ Perception that sophisticated software is not available to match the hardware. ✔ Poor image as a serious business machine. ✔ Not a well established dealer network. ✔ No previous experience of using UNIX. ✔ Impact of OS in workstation market. OPPORTUNITIES: ✔ Image building as a sophisticated system provider. ✔ Competitive pricing of Apple. ✔ Unmet needs in the potential workstation market. THREATS: ✔ ✔ ✔ ✔

Already established Engineering workstation market. Fierce competition from IBM’s full line of computers. Sun’s competing brand in the workstation segment. Wrong perception and image of Apple in the minds of consumers.

1. Competitor Analysis The list of competitors for Apple Computer in the market is as follows: IBM: ✔ It has a full range of products, software and services, and hence can be seen as multifocus company. ✔ The Model 80 had a proprietary hardware set up to reduce the cloning potential. ✔ Institution of IBM’s tough quotas for its dealer network resulted in wholesale pricing reducing from $10,000 to $7000. SUN:

✔ It is one of the fastest growing computer manufacturers. It produces the machines with widely accepted computing standards like Ethernet network protocols, Motorola’s 68000 series etc. ✔ Sun, by using off-the-shelf components were able to take advantage of technological breakthroughs as they reached the market. Customers chose Sun for its pricing (lower price over its competitors) and cuttingedge technology. ✔ It has followed Triad strategy of having three different computers and user friendly graphic interface similar to Mac. ✔ It has also entered into an agreement with AT&T with a sale of 20% block of its stock which led the market to think that UNIX won’t be “open” to all computer systems. ✔ The 386i allowed DOS to be run within UNIX OS software giving the user access to all programs within IBM world. APOLLO COMPUTER: ✔ It has been the pioneer of workstation market and now it has been witnessing decreasing sales ✔ Has a low-end workstation DN 3000 but it could not withstand the recent competition and witnessed declining sales. DIGITAL EQUIPMENT COMPETITION (DEC): ✔ It has been considered the world’s second largest computer systems supplier. ✔ It sold its VAX Cluster which offered high reliability through uninterrupted running and additional VAX units for incremental for higher processing power. ✔ However, increasing power of PC manufacturers which offered better communications software could form an alliance against VAX cluster. ✔ It also entered into an agreement with Apple Computer but rather focussed on the low-end products like PC clones and a full line of workstation micros based on RISC technology. COMPAQ: ✔ It is seen as the next best alternative to IBM as It offers greater performance but consistently reduced prices as compared to IBM. ✔ The threat to it is IBM’s PS/2 touted as a new standard. Also, the 386 machine was successfully positioned as superior in performance, quality and value to IBM models. HEWLETT PACKARD: ✔ HP spectrum with higher running capabilities which can run both UNIX and DOS but the interface is a subject of contention and HP has been fighting a lawsuit filed against it by Apple because of the interface of HP spectrum.

NeXT: ✔ It is seen as the next leap in technology. The machines used separate microprocessors for input- output, video, audio resulting in faster information handling and will target higher education and possibly even business market. ✔ It has entered in a license agreement with IBM UNIX for the use of its graphic interface and programming environment in all IBM machines.

1. Evaluation of alternatives that facilitate the implementation to enter the workstation market.