Apple Inc.
, 2015
1. CASE BACKGROUND (Activity 1)
A. Introduction
In the world of business, Apple is the second-largest company and world’s largest
corporation based on a market capitalization of about $650 billion, approximately
$200 billon more than Exxon. Founded in 1976 by Steve Jobs and Steve Wozniak,
Apple began as a personal computer company providing desktop computers for
businesses and the home. (page 545, History, par 1)
The company designs, manufactures, and markets the world’s single-most popular
smartphone, the iPhone, even though Apple has only about 15 percent of the
global market share in smartphones. Apple also produces the iPad, iPod, iCloud,
Mac computers, and other accessory devices. Headquartered in Cupertino,
California, Apple owns iTunes, the popular app and store where customers can
download music. (page 545, www.apple.com, Aapl, par 1) Apple currently operates
450 Apple stores and employs 98,000. Apple’s iPhone 6 and 6+ offer larger
screens to better compete with Samsung. Initial sales of the iPhone 6 and 6+ broke
records, with the higher margin 6+ doing best of all. (page 545, www.apple.com,
Aapl, par 2)
NAME: Christine Jade S. Arellano
Apple announced record financial results for 2015 fiscal first quarter that ended in
December 2014. Total revenues and profits were $74.6 and $18 billion,
respectively, up from $57.6 and $13.1 billion in first quarter 2014. In addition,
international sales accounted for 65 percent of total revenue as the iPhone is now
the most popular phone in China. International sales would have been significantly
higher if not for a significant rally in the U.S. dollar against other foreign currencies
over much of 2014. (page 552, Future, par 1)
B. Vision and Mission Statement
There is no statement labeled such as mission and vision in the Apple’s website,
either in Form 10k, however, there are statements perhaps serves as their vision
and/or mission:
1.“We strive to provide users of Apple products the best experience possible
though innovative product designs and software.” (page 546, Internal Issues, par
1)
2. “Apple designs Macs, the best personal computers in the world, along with OS
X, iLife, iWork and professional software. Apple leads the digital music revolution
with its iPods and iTunes online store. Apple has reinvented the mobile phone
with its revolutionary iPhone and App Store, and is defining the future of mobile
media and computing devices with iPad.” (page 546, Internal Issues, par 2)
NAME: Christine Jade S. Arellano
C. Significant Events
• Founded in 1976 by Steve Jobs and Steve Wozniak, Apple began as a
personal computer com pany providing desktop computers for businesses
and the home. (page 545, History, par 1)
• The Apple II was first sold in 1977 and had the first major piece of business
software, VisiCalc, a spreadsheet product. (page 545, History, par 1)
• Apple went public in 1980 for $22 a share and generated more money on
its IPO than any firm since Ford Motor Company 25 years earlier. (page
545, History, par 2)
• Following a dispute with the board, Steve Jobs resigned from Apple in 1985
and started a new firm. Apple experimented with various other products,
including CD players, digital cameras, speakers, and others. (page 545,
History, par 2)
• Throughout the 1990s, Apple experimented with several different product
lines of personal computers, with limited success. (page 545, History,par 2)
• By 1996, Apple was struggling immensely and the firm acquired Steve Jobs’
firm, NeXT. (page 545, History, par 3)
• In 1997, Jobs was back, acting as interim CEO of Apple. In the same year,
Jobs identified Jonathan I’ve, made him the Senior VP of Design, and the
two started working to rebuild Apple’s products and brand name. (page 545,
History, par 3)
NAME: Christine Jade S. Arellano
• In 2001, Apple upgraded Mac and created new software products such as
iMovie. Also introduced the iPod and the firm sold 100 million units in 6
years. (page 545, History, par 3)
• The year 2003 brought about the iTunes store, which synced $0.99
downloads to iPods and remains an industry leader. (page 545, History, par
3)
• Apple launched the iPhone in 2008. (page 545, History, par 3)
• They also launched the iPad in 2010. (page 545, History, par 3)
• In 2011, Steve Jobs passed away and current CEO Tim Cook now leads
Apple. (page 545, History, par 3)
• For years Apple had no long-term debt on its balance sheet. But in 2013,
the firm, for the first time since 1994, used debt to finance operations, and
reported $17 billion in long-term debt, and then reported $29 billion in long-
term-debt in fiscal 2014, with varying maturity dates out as far as 2044.
(page 549, Finance, par 1)
• In summer 2014, Apple discontinued making its classic iPod 160gb device
on claims they could no longer get the parts. (page 548, Segment Data,par
3)
• Apple was late in producing a larger screen smartphone, but did so with the
launch of the iPhone 6 and 6+ in October 2014. (page 546, Strategy,par 1)
• Apple invests heavily in R&D, over $6 billion in 2014 alone, up nearly 100
percent from 2012. In addition, Apple is expanding its retail stores around
the world. (page 546, Strategy,par 4)
NAME: Christine Jade S. Arellano
• During 2014, Apple acquired several firms, including Beats Music and Beats
headphones. Apple obtained a subscription streaming music service and a
headphone firm in the process. (page 546, Strategy,par 5)
• The back-to-school sales were strong enough to boost Mac revenues to
$6.6 billion in Q4 of fiscal 2014, more than iPad’s revenue of $5.3 billion.
(page 548, Segment Data,par 2)
• During its first month in operation (July 2015), Apple Music obtained 11
million trial members, giving the App store a record-breaking month. Did a
record-breaking $1.7 billion in transactions. (page 552, Geographic
Outlook,par 2)
D. Competitors
Apple competes in a highly competitive and rapidly changing industry that is often
associated with strong customer loyalty. Apple and rival firms typically roll out new
smartphones, computers, and tablets annually. Many of Apple’s rivals have prices
50 to 70 percent lower on comparable products. However, in the tablet and phone
market, top rival Samsung prices its top products in line with Apple prices.
Competition for Apple should only increase in the future as rival firms are better
able to duplicate Apple’s products or even better able to persuade customers their
products are just as good but significantly cheaper in price. Top competitors for
Apple are Samsung and Lenovo in the smartphone, tablet, and PC markets.
However, Apple faces significant competition from various other PC providers such
as Dell, Sony, and Toshiba. (page 549, Competitors, par 1)
NAME: Christine Jade S. Arellano
