` The Consumer The Consumer Products Products Industry & Industry & about apple about apple 1 md shadiqul azam sajid
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The Consumer The Consumer Products Products
Industry & about Industry & about apple apple
1md shadiqul azam sajid
Executive Summary
Computer Hardware Industry Computers & Media Are Converging
To thrive, companies must diversify their product lines and continually innovate to remain competitive
Apple Apple is making a comeback
The iPod is a runaway success
Can Apple Capitalize & Overcome Their Own Demons?
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`The Consumer The Consumer
Products IndustryProducts Industry
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Consumer Products
A Broad Topic
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Consumer Products – Three Categories
Cyclical Goods
Apparel/AccessoriesAppliance & ToolAudio & Video Equip.Auto & Truck PartsFootwearFurniture & FixturesJewelry & SilverwarePhotographyRecreational ProductsTextiles - Non ApparelTires
Beverages (Alcoholic)Beverages (Non-Alcoholic)CropsFish/LivestockFood ProcessingOffice SuppliesPersonal & Household ProductsTobacco
Computer HardwareComputer PeripheralsComputer ServicesComputer Storage DevicesSoftware & Programming
Non-CyclicalGoods
Technology
WIDE VARIETY OF PRODUCTS CROSSING MULTIPLE INDUSTRY SECTORS
Area of Focus
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Computer Hardware Industry
The Products The Players
Notebooks
Desktops
PDAs
MP3 Players
Routers
Servers
Storage Devices
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Apparel4%
Recreation6%
Other Goods & Services
4%
Housing41%
Food & Beverage
16%
Transportation17%
Education & Communication
6%
Medical Care6%
ComputerHardwareIndustry
0.19% of Typical Basket of Goods
Source: Dept. of Commerce
Computer Hardware Industry - Size
Source: Dec 2004 CPI Report from BLS
Typical Basket of Goods
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ComputerHardwareIndustry
$147.6 Billion in 2004
1.3% of GDP
Source: Dept. of Commerce
Computer Hardware Industry - Size
GDP
Consumer Products
Durable Goods
Computers &Peripherals
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Industry Size & Growth
GDP
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
To
tal
GD
P (
Bil
lio
ns)
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
Co
mp
ute
r H
W I
nd
ustr
y G
DP
(B
illi
on
s)
Total
Computer HW Industry
Source: Dept. of Commerce
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Industry Size & Growth% Growth: GDP vs. Revenue
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
GD
P
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Co
mp
ute
r H
W I
nd
ustr
y &
Ap
pleTotal
Computer HW Industry
Apple
Source: Dept. of Commerce & Apple, Inc.
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Market Structure - Oligopoly
Apple3%
Toshiba4%
Dell27%
H-P19%
Gateway6%
IBM5%
Other36%
Apple5%
Dell24%
H-P16%
IBM12%
Other32%
Toshiba11%
Desktop Market2002
Notebook Market2002
Source: U.S. Business Reporter 11md shadiqul azam sajid
Market Structure – Oligopoly or Monopoly?
iRiver2%
Creative3% Rio
3%
H-P4%
Apple88%
Hard Drive-Based Music Player Market 2004
Source: www.macobserver.com/article/2004/11/03.2.shtml
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Production & Cost Issues
Revenues
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000
Rev
enu
e (m
illio
ns)
IBM
H-P
Dell
Gateway
Apple
Sony
Toshiba
Source: www.hoovers.com
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Production & Cost Issues
Revenues per Employee
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Rev
enu
e (t
ho
usa
nd
s)
IBM
H-P
Dell
Gateway
Apple
Sony
Toshiba
Source: www.hoovers.com
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Production & Cost Issues
Net Income
-$5,000
-$3,000
-$1,000
$1,000
$3,000
$5,000
$7,000
$9,000
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Net
Inco
me
(mill
ion
s)
IBM
H-P
Dell
Gateway
Apple
Sony
Toshiba
Source: www.hoovers.com
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Economic Factors for the Industry
Non-Economic
Brand Image & Brand Loyalty
New Technologies/Obsolescence
Referral Marketing
Natural Disasters, War & Terrorism
Economic
Consumer Income
Consumer Confidence
Government Spending
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Apple’s Background
"So we went to Atari and said, 'Hey, we've got this amazing thing, even built with some of your parts, and what do you think about funding us? Or we'll give it to you. We just want to do it. Pay our salary, we'll come work for you.' And they said, 'No.'
So then we went to Hewlett-Packard, and they said, 'Hey, we don't need you. You haven't got through college yet.'"
--Apple Computer Inc. founder Steve Jobs on attempts to get Atari and H-P interested in his and Steve Wozniak's personal computer.
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Apple’s Background
Steve Wozniak creates Apple I
Steve Jobs sees potential and insists they sell it together -- Apple is born
Apple I is sold without monitor or keyboard (mini mac concept not new)
1976 The Beginning
1985 -1997The Missteps
1997 - PresentThe Rebound
Steve Jobs the CEO, take 2
A succession of hits– iMac– iBook – iPod– iPod Mini
Revolutionizes the Music Industry with iTunes
The GUI wars and the decision not to license the Mac OS
Leadership issues
Supplier issues
Left in the dust because of incompatibility
Failed products (Performa, Lisa, Newton)
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Apple’s History of Innovation
70’s 80’s
First Apple Computer
Apple Disk II
Apple III
Mac II
Mac
Powerbooks
Newton PDA
PowerMac
90’s
Performas
PowerMac G3 & Powerbook G3
iMac & iBook
5 consecutive quarters of profits. Turnaround is in
full swing
PowerMac G4 Cube
iTunesMac & PC
2000 - 2005New iMac
Source: www.apple-history.com20md shadiqul azam sajid
iTunes Music Store
PC and MAC Compatible
Auto Integration
Accessories
The iPod’s Success Factors
Design
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Apple’s Demand Factors - Income
Income
Apple’s products are normal goods
When income rises, demand for their products increases
Income
Quantity
As income of consumers fall, it puts downward pressure on Demand Curve for Apple’s premium products.
As Income of consumers rises, demand for Apple’s premium products increases.
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Apple’s Demand Factors – Prices of Related Goods
Prices of Related Goods
SubstitutesComputers made by
other manufacturers
ComplementsSoftwarePeripherals Internet service
Pri
ce
Quantity
Apple faces negative pressure on their demand curve when competitors reduce prices
Apple must continue to innovate in computers and add-ons to counter pricing pressure
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Apple’s Demand Factors – Taste
Taste
Industry leader in design and quality
Brand image
“Cool” factor
“Must have” gadgets
Pri
ce
Quantity
Apple faces negative pressure on their demand curve when competitors introduce products that attract consumers away from Apple products
Apple must continue to make the coolest and most stylish products to keep and attract customers
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Apple’s Demand Factors – Expectations
Expectations
Consumers expect the coolest products from Apple
Consumers expect to pay premiums for these products
Pri
ce
Quantity
Apple faces negative pressure on their demand curve when consumers decide to not purchase current products because they expect better products in the future
Apple must keep new innovations secret to avoid reductions in demand for current products
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Apple’s Demand Factors – Number of Buyers
Number of Buyers
Apple historically has catered to a niche market
It now wishes to attract the mass consumer market
Pri
ce
Quantity
Apple faces negative pressure on their demand curve when competitors are better able to attract customers (buyers)
Apple must continue to offer products that will attract new buyers to the Apple brand
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Apple’s Production & Cost Issues
QualityDefects in:
Design or Manufacturing =Decreased Sales
&Decreased Profits
InventoryHigh or Low Levels of product components =
Negative effects on Operating Results and
Financial Condition
Third Parties
High reliability on third parties to manufacture and transport products
=Lots of headaches and
potential negative effects on Operating
Results and Financial Condition
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Apple’s Market Power
Top Global Brand(Brandchannel.com)
Innovative Product Design
98 U.S. and 4 International Retail Locations
21 Online stores around the world
Over 17 Strategic Partnerships
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Stiff Competition
Music Download ServicesDigital Music PlayersComputers
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Strategies and Goals
Continue to Innovate
Maintain Digital Music Lead
Leverage Designs of Hardware and Software
Appeal to Mass MarketKeep Costs Low and
Quality High
Expand Distribution Network
Invest in New Product Areas and R&D
Apple is committed to bringing the best personal computing and music experience to students, educators, creative professionals, businesses and consumers around the world through its innovative hardware, software, peripherals and Internet offerings.
Apple Inc., ‘04 Annual Report
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EconomicEconomicEnvironmentEnvironment
++
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Apple Revenues
1997 1998 1999 2000 2001 2002 2003 2004Sales (millions)Macintosh Net Sales 5,671$ 4,862$ 5,082$ 6,885$ 4,403$ 4,534$ 4,491$ 4,923$ iPod - - - - - 143 345 1,306 Other Music Products - - - - - 4 36 278 Other Services & Products 1,410 1,079 1,052 1,098 960 1,061 1,335 1,772 Total 7,081$ 5,941$ 6,134$ 7,983$ 5,363$ 5,742$ 6,207$ 8,279$
Units (thousands)Macintosh Net Sales 2,874 2,763 3,448 4,558 3,087 3,101 3,012 3,290iPod - - - - - 381 939 4,416
Avg Sales PriceMacintosh Net Sales 1,973$ 1,760$ 1,474$ 1,511$ 1,426$ 1,462$ 1,491$ 1,496$ iPod n/a n/a n/a n/a n/a 375$ 367$ 296$
Gross Margin 19% 25% 28% 27% 23% 28% 28% 27%
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Apple Revenues
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
1997 1998 1999 2000 2001 2002 2003 2004
iPod
Other MusicProducts
Other Services &Products
Macintosh NetSales
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Apple Revenues
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Ap
ple
Rev
enu
es (m
illio
ns)
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Apple vs. GDP
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Ap
ple
Re
ve
nu
es
(m
illio
ns
)
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
GD
P (
bill
ion
s)
GDPConsumer Products
Durable Goods
Computers &Peripherals
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Apple vs. Consumer Products
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Ap
ple
Re
ve
nu
es
(m
illio
ns
)
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
Co
nsu
mer
Pro
du
cts (
bil
lio
ns)
GDPConsumer Products
Durable Goods
Computers &Peripherals
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Apple vs. Durable Goods
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Ap
ple
Re
ve
nu
es
(m
illio
ns
)
$0
$200
$400
$600
$800
$1,000
$1,200
Du
rab
le G
oo
ds
(bil
lio
ns)
GDPConsumer Products
Durable Goods
Computers &Peripherals
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Apple vs. Computer & Peripherals
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Ap
ple
Re
ve
nu
es
(m
illio
ns
)
$0
$20
$40
$60
$80
$100
$120
Co
mp
ute
rs &
Pe
rip
he
rals
(b
illio
ns
)
GDPConsumer Products
Durable Goods
Computers &Peripherals
38md shadiqul azam sajid
Apple’s Focus on R&D
“It took us three years to build the NeXT computer. If we'd given customers what they said they wanted, we'd have built a computer they'd have been happy with a year after we spoke to them - not something they'd want now. “Steve Jobs
R&D $
(millions)
% of Net Sales
Apple $489 6.0%
Dell $464 1.1%
HP $3,506 5.0%
IBM $5,673 5.9%
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Forecasts &Forecasts &ProjectionsProjections
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Forecasts & Projections
Computer Media
The Computer The Computer Hardware Hardware IndustryIndustry
&&
41md shadiqul azam sajid
Recommendations for Apple
Continue making “must have” products
Leverage the power of the iPod
Stay ahead of the competition
Partner with companies that complement the Apple brand
Expand retail footprint
Keep costs low and quality high
Increase market share in the education, business and government sectors
42md shadiqul azam sajid
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Md shafiqul azam sajid Iiuc BBA.BD.CTGEmail : [email protected] :+8801670404398
43md shadiqul azam sajid
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