Apple Computer Case
- Length: 1171 words (3.3 double-spaced pages)
- Rating: Excellent
Apple Computer, Inc.
This case basically walks you through the ups and downs in the history of the Apple Company. Steve Jobs and Steve Wozniak started the company in 1976 with the Apple I. In 1984, the company expanded with the Macintosh, which was the first affordable computer. After the introduction of the Macintosh, the company continued to grow and introduced the Mac II, Powerbook, iMac, and most recently the iPod line. Apple was the market leader up until the mid 1980's when IBM was introduced to the public. Gateway, Dell, and HP were soon to follow, and they too acquired some of the market share that had once belonged to Apple. Apple has consistently failed to gain market share over the past decade and has even posted quarterly losses- something unheard of in the beginning. Apple's recent initiatives in advertising and distribution seem to be successes, but the company must still endure the economic uncertainly that is in the marketplace today while simultaneously finding a way to compete with Microsoft and the other leaders in the computer industry.
Apple's consistent loss of market share and posted losses in 2001 and 2002 are signs that the company faces an underlying problem.
The issues facing Apple are wide ranged. First and foremost, they company needs to better its competitive strategies in order to gain back some of the market share that it has lost to corporations such as Dell, IBM, HP, and Gateway. Apple also needs to position itself to "steal" PC users and convince them that Apple software and operating systems are superior to those available on PCs.
Strengths -Apple has maintained a good reputation for quality.
-The company uses innovative advertising campaigns.
-Their new products are producing large revenues (iPod).
-They have a good balance in their distribution channels.
-Apple has the most stable operating system available.
Weaknesses -They lack the ability to convert PC users to their system.
-The company spends too much on advertising.
-Apples are seen as computers for professionals.
-The lack a good sales forecasting method.
Opportunities -Apple can expand with the switcher program and new stores.
How to Cite this Page
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Apple Computer Market Share Steve Jobs New Products Distribution Channels Steve Wozniak Operating System Losses
-New electronics allow them to serve a new market sector.
-Apple is positioned to be the future entertainment leader.
-They can continue to build on their integrated distribution.
Threats -Apple's market share is decreasing while others are increasing.
-The computer market is mature.
-Apple is facing very strong competition.
-Economic uncertainty is present in the market today.
Apple has already made numerous efforts at recapturing the strength that they once had. They have continuously developed new hardware and software, spent more money on advertising, integrated their distribution systems, and outsourced certain areas to improve their operations. That being said, there is still ground left to be covered. Apple could revamp their ads and direct them more towards showing the benefits of the Mac OS system. The company could also continue to expand not only by opening more brick and mortar locations, but also by adding to their already successful consumer electronics line. Apple also needs to concentrate on developing software that is geared toward the PC user so that they no longer feel that going to Apple would be a "switch".
Proposal for the Future:
I do not believe that Apple will ever be the force that it once was simply because of the strength and number of competitors in t he market today. However, they can maintain, if not regain, market share by implementing new ideas. Apple needs to continue to appeal to young computer users. If an adolescent grows up on an Apple computer they will most likely remain loyal for life. The company also needs to spend time convincing consumers that Apple is superior to PCs. They need to showcase the fact that Mac OS is the most stable operating system available. Finally, I would suggest that Apple continue to add to its consumer electronics line with new products and accessories. This new segment brought in over $650 million in 2003- which was 12% of all revenues- and is poised to grow. Apple needs to take advantage of the opportunities that they have.
Q: Why did the first mover advantage Apple had in the computing industry not provide a sustainable competitive advantage?
A: Apple indeed made the first move and enjoyed being at the top of the market for a period of time, but their competitive advantage could not withstand the formation of new companies. HP, Dell, IBM, and Gateway all entered the market with distinctive strategies that appealed to certain sections of the market. Apple failed to compete with these new initiatives and fell behind.
Q: Will Apple's reputation as a computer use by "content creation professionals" help of hinder its efforts to expand its market share?
A: I think this reputation will hinder expansion. Apple already sells to the majority of these professionals; therefore expansion within the professional world is limited. The market with high growth potential is that of the everyday computer user. These people are often intimidated by Apple's reputation and feel that a "professional" computer system is far too complicated and choose to stay with PC companies.
Q: What are the advantages and disadvantages of shifting into the consumer electronics field?
A: By expanding into a new division, Apple is now able to reach an entirely new group of customers and increase their markets. The sale of these electronics brought in $650 million in 2003- 12% of the companies revenues. This shows that their line has great potential. However, Apple is the new face in the electronics game and must work to build a name for itself as well as compete with the already trusted market leaders. It is also possible that Apple will lower the perceived value of its computers if the spread themselves too thinly through a number of other fields.
Q: Will selling over the Internet eliminate the need to worry about sales forecasting, inventory control, and logistics?
A: No. Apple is still selling through other channels of distribution in addition to the Internet and these other channels depend upon forecasting, inventory and logistics. As far as the Internet channel is concerned, inventory is not the foremost concern anymore, but success still depends on forecasting and logistics. Apple cannot turn its back on these key business components and expect to remain prevalent in the computer market.
- Player: Robin Olivier
- Company: Digicape
- Position: Co-founder and MD.
- Launched: 1999
- Turnover: R240 million
- What they do: Apple Premium Reseller and customised business solutions provider
- Visit: digicape.co.za
From a young age Robin Olivier knew he was going to be an entrepreneur. He’d grown up in a single-parent household, and although there was always food on the table, there wasn’t money for luxuries. Robin’s mother had managed to get him into a local semi-private school, and although she wasn’t always able to cover his school fees, he received a good education and a clear view of life on the other side of the fence. Then and there, he promised himself he would make something of his life. And that would be through business ownership.
The problem was that he knew nothing about business. His mother couldn’t share business advice with him, and he didn’t have a father to mentor him. He also didn’t have a business idea. Surfing was his passion and he competed for Western Province.
“I instinctively knew that I didn’t have enough life experience. Passion is critical, but without an idea and some understanding of business, I knew I needed to go out and learn from other people who were running their businesses,” he says.
This is exactly what he did, putting his hand up for any job that needed doing, or skill that needed to be figured out. Robin had one goal: To prepare himself for business ownership. Along the way he not only picked up those skills, but also a passion for Apple computers. By the time he was 29, he was ready to take the plunge with two partners he’d managed in their work servicing Apple products. He had the idea, he knew what he was passionate about and he’d acquired skills. What the three partners didn’t have was money, but they more than made up for that with bravado.
Robin’s only obstacle was convincing his wife, who was six-months pregnant, that it wasn’t a harebrained scheme, and that they would still be able to pay for their bond each month. “I promised her that we were investing in our future. It wasn’t completely honest; I had no idea what would happen. But I worked tirelessly until I made it true.”
And so, with R5 000 between them after their bills had been paid, Robin and his two partners, Ashley Legg and Roberto Ferreira, launched Coza Digital in 1999. They bought a hard drive, which they needed to back up and service client machines, and a toolkit each. They needed to make enough to each pay their bills by month end. And so, they got to work.
For the love of Apple
Today Robin Olivier is the MD of one of two Apple-certified resellers and repair centres in South Africa. Robin’s high school had a computer lab, which meant he was one of a small percentage of South Africans in the late 80s who had some computer skills — but he hated computers.
“Computers didn’t make sense to me. I found them brutal,” he recalls. His first exposure to Apple Macs would be a completely different experience. Coming out of 18 months of mandatory service in the Navy, Robin couldn’t afford university. A friend was studying graphic design; it was 1991, and the course was based on Apple Macs. “I was nervous, because my experience with computers wasn’t great, but I needed to do something, and I didn’t have any better options. Plus, this sounded like fun.”
Robin soon discovered that he loved Apple. “They were easy and intuitive. A whole new world opened up to me.” And even though his first job was in Port Elizabeth as a designer, it was the Apple Mac he worked on that got his attention.
“There were only two Apple Macs in PE at the time. If something went wrong, you were forced to figure things out, and so that’s what I did. I started understanding how the system worked — and it made sense to me.”
Soon, Robin became known as the ‘mac’ guy, an in-house guru who others called for advice. “I ended up being head-hunted by a company that sold and serviced macs. There was a serious shortage of Apple Mac technicians in South Africa, so they picked up anyone who understood the product.”
Robin hadn’t forgotten his earlier ambition to run his own business. He prepared himself for that goal by learning as much as he could about all facets of business. “I recognised that no-one was going to hand me my dream, or the skills I needed. I had to make it happen for myself, and so I put my hand up for everything. I was fearless in that way — I still am. I jump into everything with both feet and then figure it out — that’s how you learn. I spent a few years at the same company, and learnt about tech, sales processes, and how to sell products as solutions. It was never about moving boxes, but walking a path with our customers. The lessons and insights I gained are integral to our business model and sales strategy today.”
By 29 Robin thought he had learnt enough to blaze his own trail, and he found two partners with similar ambitions. “We were cocky, arrogant and ambitious — all we saw were dollar signs,” he says. “We would have taken on the world. We had no idea how tough it would actually be.”
And it was tough. Robin learnt first-hand what he’d always suspected — that without passion it’s difficult to push through the tough times. “We were earning enough to pay our bills and hire a receptionist and book-keeper, but there were months where things were touch and go, and we had to make trade-offs about which bills to pay.
“We had secured a good relationship with an Apple distributor while we were employed, and they were looking for more resellers and partners. If we were prepared to go for it, they would back us to a point. No one asked us for a business plan — thank goodness, because we didn’t have one — and they agreed to give us kit on consignment, which we could pay for when our clients paid us. Without this relationship, we wouldn’t have survived the first six months. We were servicing clients, but we couldn’t afford to provide products that required upfront payment.
“We worked hard to make enough money to pay the bills. We knew our customers would support us because we were skilled. It also helped that in those days everyone was a digital immigrant.”
Curveballs and growth curves
Coza Digital’s first big growth curve happened in 2000. The business had been operational for over year, and an opportunity arose to merge with another firm.
“It was a very similar business to ours, focused on Apple support. The owner wanted to exit without abandoning his team. By merging with us, he ensured their job security. The merger doubled our turnover, but it also increased our costs. We now had 15 employees, and their livelihoods were linked to our own. It was a lot more responsibility.”
In 2001, Apple approached Coza Digital and suggested the business merge again. “Apple had launched the iPod — a complete game changer. They wanted the brand to be more mainstream, not only an underground brand for creatives. They launched their first retail store in San Francisco and were focusing on more exposure and presence in international markets.
“In South Africa, businesses that offered Apple support were small and fragmented. There were no big players, and Apple saw this as an issue. They wanted our businesses to grow and be more impactful, and one way to achieve this was through consolidation.
“We started a conversation with Syntech. We were mirrors of each other: Same service and product offerings, similar annual turnovers and staff complements.”
Both companies saw the benefits of merging, and in December 2001 Digicape was launched. “We saw the merger as like for like. Neither of our brands was strong enough to justify keeping the name, so we created a new brand.”
Within weeks they were questioning the move. “While our combined turnover was R8 million, in our first month together we made only R350 000. December is a quiet month, but this was a disaster. What had we done?” On paper, the deal looked good. Both Coza Digital and Syntech had separate and secure client bases.
“We needed to look forward. We had a bad month; it happens. It’s not the best foot to begin a merger on, but it doesn’t mean you throw in the towel.”
Coza had come into the merger with three shareholders, and Syntech had four. But you cannot have seven decision-makers — not if you want an agile, successful business. “We made the decision that there would be two managing partners, one from each business, myself and Graham Greathead Graham, a CA with an MBA — and the only shareholder with a business degree — was MD and I headed up marketing and sales.
“We agreed that being a shareholder didn’t guarantee employment, or a managerial role. Every decision would be for the good of the business, not based on previous positions or current shareholding. Graham and I managed the business and this allowed us to be nimble and swift in our decision-making.”
With these foundations in place, rapid growth started three months into the merger. “We had recognised that we couldn’t bring our old cultures into this new business and expect success. We needed a new culture, and although it took longer than three months to develop and entrench across the organisation, the foundations we were laying stimulated that early growth.
“By the close of 2002 our combined turnover had almost doubled to R14 million.” The growth and change of culture was not without consequences. One of Coza’s founding partners exited. “We had entered a period of hockey-stick growth, and he didn’t want to be in that type of growth-focused environment. We now had six shareholders instead of two blocks of shareholders from the businesses that had merged.”
Wins and losses with the move into retail
One year into the merger, Digicape entered the retail space. Apple had recently launched its first retail store in San Francisco, and the model was untested in South Africa. “We had a lot of bravado,” admits Robin. “But we understood it was a risk we needed to take if we wanted to continue on our growth curve.”
Robin and his partners recognised that they were selling time. Their value was based on expertise and customer service, but ultimately they were limited by the hours in a day. This is one reason why service-based businesses struggle to increase their margins when they scale — more work equals more hours equals a higher salary bill.
The solution is to also sell products. “We could make the same revenue as six or seven hours of tech service time in minutes with the right sale,” says Robin. In its first month of opening the store, Digicape’s turnover doubled. But, product sales can quickly become commoditised, and Apple product margins are low. This means you need high volumes, and superior support service as a foundation. Time might be limited, but the margins are better, and the barrier to entry is much higher. “Our foundations remain in consulting,” says Robin.
“We understand the importance of our relationships with our customers and the service we provide them. The investment in computers is high, particularly if you run Apples. Downtime is also expensive. As a one stop shop, with a skilled team and support service, we offer exceptional value.
“We also made the decision to invest in Apple accreditations. This is costly and the courses are tough. We send people overseas for training, and pay for them to write their accreditation exams. Apple has deliberately set the bar high. Sometimes it takes two or three attempts to pass an accreditation, and you pay for each attempt.”
The result is that Digicape is one of only two organisations in South Africa that can do warranty repairs on Apple products.
The move into retail also had its downside. In 2008, Digicape opened its first retail store in Johannesburg. The bottom had dropped out of the market, the store’s location was wrong, and it cost the business millions.
The result wasn’t just the loss of millions, but an organisation that was becoming rudderless. At the time, a decision was made to keep all employees on, despite the losses.
“We made the decision rather to work through the challenge. It was an emotional decision and not the best for the people in the business, even though at the time we thought it was.”
The cumulative result was an unhappy, toxic business. Employees were leaving, Graham retired and Robin was voted MD by his fellow directors. He realised Digicape urgently needed to address company culture.
“I wanted to feel energised and happy at work. If we could create a company we wanted to work for, our employees would want to be there too, making magic happen.”
Changing a company’s culture does not happen overnight, particularly when you are a R140-million organisation with 110 employees, and no HR manager.
Building a business to last
“The old school way of thinking is that you get a salary in exchange for work,” says Robin. “That doesn’t work today. Talented people expect more.
“Customers benefit most when your employees are empowered and engaged. And happy customers are loyal customers, willing to pay more for the value they receive. That benefits the business.”
How do you get employees more engaged and empowered? That’s the question so many business owners struggle with.
“We had to make promises we could deliver. Our people are our biggest assets — it’s a cliché, but for a reason. We needed to make it a promise: You are the most important thing in this business, and we value you. We will show you how much by providing a culture that is healthy and allows you to make mistakes and learn from them.
“It was a big change for us. We needed to be transparent right down to financial performance. It took two years to see a real shift, as trust is built over time and has to be top down. We had to give first, so that our people saw us delivering what we promised.”
For Robin, the aha moment came when he read Liz Wiseman’s book, Multipliers. “The biggest lesson was that leadership is not about having the best answers. It’s about having the best questions and letting people answer those questions themselves.
“As MD, I had taken on the responsibility of being the person with all the answers. But once I understood the principles behind multipliers, I found that you can empower people to be better versions of themselves, and lessen your burden as well. When leadership coaches and mentors, people respond well and manage themselves. This realisation shifted our business.”
By 2015, Digicape experienced its most profitable year. This was tripled in 2016. The bottom line speaks for itself.
The Success Formula
Robin has a simple formula for success. He calls it the Temple of Success. The foundation is organisational culture. This is the organisational DNA, values and core purpose. Resting on this foundation are three pillars: Finance, strategy and data.
Finance is critical. “We’ve been through cash flow situations. We operate on thin margins. 90% of our product is Apple, and there’s very little room for error. We need to be extremely good at forecasting and targets because cashflow is the lifeblood of our organisation and requires attention and investment in resources.”
Strategy is essential. “Understand the difference between your strategy and your goals. One is the roadmap, the other is how you’re going to get there.” Data pulls it all together.
“One of the things that put us back on the growth path in 2010 was transparency — but in order to achieve this we needed measurement tools to check performance. We were managing accounts after the month ended — you need to do this first. You need to focus on lead indicators, instead of lag indicators. Look forward — not only backwards and where you went wrong or right. What is measured improves, and so you need to ensure that you monitor your business and key metrics. We do this hourly, across the organisation. This means we can react fast and deal with things as they arise — not three months down the line.”
In business, learn by looking backwards, but grow by looking forwards
Not everything will work out as planned. After their first merger, Robin, his partners and their new co-owners found themselves with a much lower turnover and higher costs than anticipated. If they’d allowed this to derail them, the business wouldn’t have survived. Instead, they looked forward, focused on integrating the businesses and managed to achieve hockey-stick growth three months later.
Sometimes, bravado beats experience
Throughout Digicape’s launch and growth, Robin and his partners have made bold decisions to move into new spaces without necessarily having the right back-up or experience. They’ve taken the chance, and worked hard to achieve their goals.
Leadership is about letting others be the best versions of themselves
Leadership is not about having the best answers. It’s about having the best questions and letting people answer those questions themselves.
- The Navy taught me to be attentive to detail. I wasn’t a neat freak when I went in, but I was when I came out. That attention to detail has been invaluable in everything I’ve done, particularly with Apple and retail.
- The Navy also forced us to recognise our faults, which helped me to internalise my strengths and weaknesses. You don’t need to go to the Navy to learn this, but it is a valuable skill. As a business leader or manager you will never be good at everything. If you recognise that, you can focus on your strengths, and delegate the things you aren’t good at to others.
- If you’re serious about personal growth, put your hand up for anything and everything. I’ve always been fearless in that way. I jump into everything with both feet and then figure it out — that’s how you learn.
- You have to be passionate about what you do. Passion gets you through the dark times, and there will be dark times. Why are you doing this? Without passion you can’t answer that question when you need it most. Profit is the ideal outcome, but should never be the goal.
- Make decisions for the majority, not the minority, and don’t allow pride to cloud your judgement. We’ve needed to make difficult calls, but not making them has hurt the business more. We needed to consolidate. It took us too long to realise that, but once we had, the business and our employees were far better off. Putting off the tough choice just made things tougher for everyone.
Listen to the podcast
Matt Brown interviews Robin Olivier and discusses how DigiCape was launched, the challenges they’ve faced along the way, how entrepreneurs can become better leaders and the steps to building a large-scale organisation. To listen to the podcast, go to mattbrownmedia.co.za/matt-brown-show or find the Matt Brown Show on iTunes or Stitcher.