Apple Inc.

1
Apple Inc.

• Gwen Johnson, SJ Lee
• Michelle Middleton
• Nigel Ngai, Greg Palmeri
• BUSA Capstone

2
Apples Background Info

• Their Products
• Expanded from Computer to peripheral and digital
  entertainment industry
• Mission Statement Apple ignited the personal
  computer revolution in the 1970s with the Apple
  II and reinvented the personal computer in the
  1980s with the Macintosh. Today, Apple continues
  to lead the industry in innovation with its
  award-winning computers, OS X operating system
  and iLife and professional applications. Apple is
  also spearheading the digital media revolution
  with its iPod portable music and video players
  and iTunes online store, and has entered the
  mobile phone market with its revolutionary
  iPhone.
• Revenue in 2007 9.6 Billion

3
Problem Statement

• By March 2005, over 3 Millions Songs Downloaded
• Second to Wal-mart
• US4 Billion Loss to Piracy
• Consumers are reluctant to pay for songs and
  thus, Apple is losing customers to piracy, and
  code hackers its competitors who are offering
  music at a lower price.

4
The Marketplace Trend

• Destroying all the boundaries of each industry
• A MP3 player is not only the audio device
  anymore.
• Full-motion videos, data storing.
• A Mobile phone is also not only the tool for the
  calling/receiving.
• Digital camera, a carry-on PC for memory storing
  and internet, and an audio device as a radio/MP3
  player as well.

5
Strategic Analysis External (Porters Five
Forces)
6
Strategic Analysis internal (VRIO Assessment)
7
Strategy I - Streaming Music

• Create a streaming music system similar to
  Pandora for iPhone, iTunes, and future iPods.
• Charge on a monthly basis for this system.
• Continue selling songs for .99.

8
Feasibility

• Resources- Existing music database
  Wireless capabilities on future iPods
  Music Genome Project
• Economic- Gaining a new customer base
  vs. Cost of acquiring
  Pandora
• Organization- Easily assimilated into the Apple
  Inc.

9
Analysis
10
Strategy II - Closed Community

• All Encompassing Pricing Structure
• Security
• Dynamic Artist Offerings

11
Feasibility

• Resource- Secure Music Portal
  Artists Consumers
• Economic- Recording Industry
  Pricing Structure
• Organizational- Artist CommunityEmbody Ethical
  Purchasing

12
Analysis
13
Strategy Selection

• The Closed Community - Solves the main
  problems
• Trade offs
• VRIO Assessment - Sustainable in the long run

14
Sequence of Actions

• Research to set the ideal price for the monthly
  fee
• Finish major licensing negotiations
• Decide if advertising is needed
• Update iTunes online music store and encryptions
  to allow unlimited monthly access