Apple Computer: Transformation towards GUI
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Transcript of Apple Computer: Transformation towards GUI
Apple Computer: Transformation towards GUI
Analysis and Revised Strategy
presented by
Walter J. Ferrier, Ph.D.
CEO, Thoroughbred Consulting Group
Apple’s Historical Competitive Advantage
• Unique, Proprietary Software
• GUI Interface
• Graphics/desktop publishing software
• WYSIWYG Screen-Printer Interface
• Networking Capabilities
• Multimedia Capabilities
Strategic Group Map Pre-Windows
Price
Premium
Low
Strategic Focus - Differentiation
Broad Narrow
Apple
IBM
Sun
Clones
Compaq
5-Forces Model of Computer Industry
Suppliers• Apple owns O/S • Motorola / RISC Processor• Software Firms want to write for largest installed base
Buyers• Price Sensitive• Mass Merchandisers• Mail Order
Substitutes• Workstations• Palm-tops/ PDA’s
Potential Entrants• Low Entry Barriers• Apple No Longer Protected from Clones
Rivalry
• New Products• More Marketing• Price Cutting• Outsourcing• IBM Compatible Clones• Ability to Differentiate Disappearing
(?)
(-)
(-)
(-)
(-)
Threats to Apple
• Windows 3.0– Narrowed the interface “performance gap”– Cheap clones now almost as good as Mac
• Lack of Application Software– Largest applications vendor is Microsoft– Independent vendors want to write for O/S with
largest installed base
Opportunities
• Attack operating system market for Intel and RISC processors
• Alternative technologies requiring GUIs– Office machines (copiers, FAX, etc.)– PDAs – Telephone switchboards– Home electronics/appliances– Robotics
Apple Weaknesses
• Level of uniqueness is eroding
• Inability to keep pace with R&D spending– IBM’s R&D = $6,644 mil– Apple’s Revenues = $6,309 mil
• Small installed base vs. IBM “compatibles”
• Lack of dominant market share position
• High SG&A to Sales
Strategic Group Map Post-Windows
Price
Premium
Low
Strategic Focus - Differentiation
Broad Narrow
Apple
IBM
Sun
Clones
Compaq
Weakness
Microprocessor VolumeMillions of Units
0102030405060708090
100
Installed Base Units Shipped
Intel
Motorola
Weakness
Apple’s Marketing Costs vs. RivalsSG&A to Sales (%)
0
5
10
15
20
25
30
35
40
SG&A (%)
Apple
IBM
Compaq
Dell
Weakness
Apple Strengths
• Best GUI O/S
• Brand name loyalty
Revised Mission
• To position Apple as the world leader in man-machine interfaces though the development of ergo- and cerebro-nomic software and interface devices required for electronic and electromechanical applications.
Goals
• 20% ROS by 1994
• 40% Share of O/S Market by 1994
• Develop 3 New Interface Devices by 1994
• Achieve full interoperability with– Intel and RISC microprocessors by 1993– Top 4 Software Vendors by 1993
Revised Strategy• Milk Mac
• Target O/S Market– License System 7 - – Pursue “open system” Pink
• Interface Devices– Copiers– Manufacturing Automation– Medical Equipment– Aerospace
Milk Mac
• No new manufacturing and R&D investment in existing hardware products
• Outsource next 3 years’ production to Malaysia:– Send VP Mfg. and 3 Engineers on “Sourcing
Mission”
Benefit: Decrease COGS from 53% to 33%
Target PC O/S Market
• License System 7– Motorola-based clone sales– RISC-based clone sales
• Create new brand: Apple “Core”
Apple Core• “Open system” O/S (a.k.a. Pink)
– not processor specific– head-to-head with Windows– increase installed base– increase ISV applications
• Shift 80% of R&D budget to Core
Benefit: Increase ROS from 5% to 20%(NOTE: O/S production has COGS average 19% percent of sales vs. 66% in hardware manufacturing.)
Interface Software and Devices• Form product development alliances with:
– Canon (copiers)– Sharp/Casio (PDAs)– Northern Telecom (PBXs and cell phones)– Kawasaki (Robotics servers and teach pendants)– Volvo (Automated material carriers)– Honeywell (Avionics and flight control equipment)– GE (Magnetic resonance imaging equipment)
• Devote 20% of R&D budget to new products
Benefit: New interface device products.
Projected Revenues, Costs, and Income(in $ millions)
0
1000
2000
3000
4000
5000
6000
7000
1991 1992 1993 1994
Revenue
COGS
R&D
Net Income