Apple computer transformation towards gui
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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

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Apple Computer: Transformation towards GUI

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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

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

Strategic Group Map Pre-Windows

Premium

Sun

Apple

Price

Compaq

IBM

Clones

Low

Broad

Narrow

Strategic Focus - Differentiation


5 forces model of computer industry

5-Forces Model of Computer Industry

  • Potential

  • Entrants

  • Low Entry Barriers

  • Apple No Longer

  • Protected from Clones

(-)

(?)

  • Buyers

  • Price Sensitive

  • Mass Merchandisers

  • Mail Order

(-)

  • Suppliers

  • Apple owns O/S

  • Motorola / RISC Processor

  • Software Firms want to

  • write for largest installed

  • base

(-)

Rivalry

  • New Products

  • More Marketing

  • Price Cutting

  • Outsourcing

  • IBM Compatible Clones

  • Ability to Differentiate

  • Disappearing

  • Substitutes

  • Workstations

  • Palm-tops/ PDA’s

(-)


Threats to apple

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

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

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

Weakness

Strategic Group Map Post-Windows

Premium

Sun

Apple

Price

Compaq

IBM

Clones

Low

Broad

Narrow

Strategic Focus - Differentiation


Microprocessor volume millions of units

Weakness

Microprocessor VolumeMillions of Units


Apple s marketing costs vs rivals sg a to sales

Weakness

Apple’s Marketing Costs vs. RivalsSG&A to Sales (%)


Apple strengths

Apple Strengths

  • Best GUI O/S

  • Brand name loyalty


Revised mission

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

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

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

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

Target PC O/S Market

  • License System 7

    • Motorola-based clone sales

    • RISC-based clone sales

  • Create new brand: Apple “Core”


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

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

Projected Revenues, Costs, and Income(in $ millions)


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