Apple Inc in 2012

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REV: AUGUST 14, 2012

DAVID B. YOFFIE PENELOPE ROSSANO

Apple Inc. in 2012
On October 5, 2011, Steve Jobs tragically died of cancer. The recently retired CEO of Apple Inc. was a legend: he had changed Apple from a company on the verge of bankruptcy to one of the largest and most profitable companies in the world. Moreover, he had revolutionized several industries in the process. Few companies’ successes were so closely identified with its CEO. Jobs’s passing promised to usher in a new era at Apple. The new CEO, Tim Cook, had an extraordinary challenge: how to sustain Apple’s current successes in computers, MP3 players, phones, and tablets, while taking Apple to the next level. The company began as “Apple Computer,” best known for its Macintosh personal computers (PCs) in the 1980s and 1990s. Despite a strong brand, rapid growth, and high profits in the late 1980s, Apple almost went bankrupt in 1996. Then Jobs went to work, transforming Apple Computer into “Apple Inc.” with innovative non-PC products, starting in the early 2000s. In fact, Apple viewed itself as a “mobile device company.”1 By 2011, Macintosh revenues were less than 20% of Apple’s $108 billion in sales2 (see Exhibits 1a through 1c for financial information and net and unit sales). Meanwhile, Apple’s stock was making history of its own. Apple became the most valuable company in the world in 2012 (see Exhibit 2 for Apple’s share price over time). By almost any measure, Apple’s accomplishments in the prior decade had been spectacular. Yet Cook knew that no company in the technology industry could relax. Challenges abounded. iPod sales, for example, had been falling for four straight years by 2012. At the same time, Microsoft was set to introduce Windows 8, which the company promised would challenge Apple’s vaunted leadership in user interface. Even though Macintosh sales had grown faster than the industry in recent years, Apple’s share of the worldwide PC market had remained below 5% since 1997 (see Exhibit 3a for Apple’s PC market share, worldwide). Many also wondered if the company could thrive without Jobs. Cook, Jobs’s former chief operating officer, had built Apple’s formidable global supply chain, but he came to the CEO job with a very different skill set. Finally, would the iPhone continue its march to dominate smartphones in the face of growing competition from companies such as Google and Samsung? And would Apple’s newest creation, the iPad, continue to dominate the tablet market, or would new competitors, ranging from Amazon to Samsung, steal share and drive down profits? ________________________________________________________________________________________________________________ Professor David B. Yoffie and Research Associate Penelope Rossano prepared this case. This case derives from earlier cases, including “Apple Inc., 2008,” HBS No. 708-480, by Professor David B. Yoffie and Research Associate Michael Slind, “Apple Computer, 2006,” HBS No. 706-496 by Professor David B. Yoffie and Research Associate Michael Slind, and “Apple Inc., 2010,” HBS No. 710-467 by Professor David B. Yoffie and Research Associate Renee Kim. This case was developed from published sources. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2012 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

Purchased by Rosario Faraci (rosario.faraci@gmail.com) on October 05, 2012

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Apple Inc. in 2012

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