Apple Inc. is riding high. In the last quarter, it shipped almost 1.8 million Macintosh computers, sold 9.8 million iPod music players and its iPhone—a revolutionary new product that went on sale in June after an almost hysterical media blitz—is expected to reach sales of more than 1 million within the next three months, according to a recent Apple press release.
Apple also claims that it has sold more than three billion songs—downloaded from its iTunes music software—and has five million songs, 550 television shows and 500 movie titles for purchase, more than those offered by Amazon.com and Target.
"We are thrilled to report the highest June quarter revenue and profit in Apple's history, along with the highest quarterly Mac sales ever," said CEO Steve Jobs in a recent press release.
Alongside the company's resurgence, Apple's stock (NASDAQ: AAPL) has also enjoyed high returns. At the end of 2002, its stock hovered around $14 a share. It jumped to around $65 a share by the end of 2004. At the end of 2006, Apple was trading at $85 a share, eventually moving up to more than $120 by May of this year.
Taking the Hint
Harvard Business School has followed Apple's fortunes and misfortunes since 1992 and included the company as a case study in its MBA curriculum. The case has been revamped five times, including a video lecture from John Sculley, former Apple CEO (1985 – 1993), going over blunders he should have avoided.
"This is a case where you can focus on strategic success as well as strategic failure," said Harvard Professor David B. Yoffie, in the article "HBS Cases: The Evolution of Apple," published last month. He continued, "There aren't many instances where you have both sides so nicely paired [the ups and downs of a company]."
The Apple case study resonated well with Harvard students and generated deep discussions. When Apple was in the dumps, everyone said that they saw it coming, but when it was doing well, students were confounded when Yoffie pointed to problems in the making.
"Student opinion of Apple tends to be excessively positive or excessively negative, depending on the company's current fortunes," suggested Yoffie.
The case study's latest version, "Apple Computer, 2006," discusses in details the strategies used by former Apple CEOs, the reasons behind the strategies and why a given strategy was ineffective.
"The company always looks a little different, yet many of the core issues that pose challenges for it remain constant," indicated Yoffie.
Yoffie suggested three different strategies in the 2004 "Where Does Apple Go from Here?" article. The most drastic change was to "build their business off of the digital home, the iPod, iTunes, iPhoto, etc.," said Yoffie. He also suggested that Apple restructure from a computer manufacturer to a consumer electronics firm. He proposed to use Macintosh computer sales as a cash cow and build up the other products.
Another suggestion was to once again start licensing the Macintosh operating system (OS), which was stopped after Jobs took over the CEO position. A window had opened into the software market, with Microsoft products becoming pricy for consumers.
Lastly, Yoffie suggested out of self-interest (he held board membership in chipmaker Intel) to throw in the towel on its own OS, license Microsoft Windows and become a big-time computer manufacturer.
Jobs, who assumed the CEO position in 1997, must have followed the Harvard discussions closely. Apple went innovative under his leadership, as it introduced the iMac, iPod, and iTunes. The OS X operating system and iPhone appeared and sourcing chips from Intel panned out. At the same time, to emphasize the new direction as a consumer electronics manufacturer, Apple ditched the word "Computer" from its official name.
Customer Voices
Apple's products are some of the most sought-after, and its retail stores are often crowded with customers. When the latest product, the iPhone, hit the market on June 29, media reported long lines in front of Apple stores of consumers waiting to buy the phone. The lines had formed a few days before the event and people had brought mattresses and food, just so they would be one of the first to get the iPhone.
"Apple brings several things [to the market]: really sleek cool hardware, great software and a cool hip image," said Eric Clemens, professor at the University of Pennsylvania's Wharton Business School in a recent Wharton publication.
Additionally, Apple is the current front-runner as a "technology leader of the digital living room," Clemens added.
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