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Case 9 Apple Inc. in 2011: Can It Prosper Without Steve Jobs? John E. Gamble University of South Alabama Lou Marino The University of Alabama

Copyright © 2011 by John E. Gamble and Lou Marino. All rights reserved.

Despite the effects of ongoing poor economic conditions in the United States, Apple Inc. celebrated record quarterly revenues and profits during its third quarter of 2011, which resulted in its stock price catapulting to a level that made it the world’s most valuable company as measured by market capitalization. The record growth in revenues and profits came primarily from volume increases in the sale of iPhones and iPads, which increased by 142 percent and 183 percent, respectively, from the same period in 2010. The sales of Mac computers increased by 14 percent from the third quarter of 2010 to reach a record 3.95 million units. The only sales disappointment for the company was a 20 percent year-over-year decline in iPod sales. The company sold 7.54 million iPods during the third quarter of 2011 compared to 9.41 million units during the third quarter of 2010. The biggest disappointment for Apple shareholders and employees was the August 24, 2011 resignation of Steve Jobs. Steve Jobs had battled a variety of heath issues including pancreatic cancer since 2004 and had had taken medical leaves of C9-1

absence from his CEO position in 2004, 2009, and earlier in 2011, but despite his absence, HE had been able to provide inspiration for the company’s hottest new products like the iPhone, iPad, and iPod. During all three medical leaves, Apple’s chief operating officer, Tim Cook, took the helm of the company oversaw the successful launch of the company’s most successful new products while also revamping the company’s supply chain and improving overall operating efficiency. Tim Cook’s successful performance during Steve Jobs’ absences led to his appointment as successor to Steve Jobs as CEO of Apple Inc. But many challenges faced the new CEO and his chief managers as the company approached the end of 2011. Analysts were concerned with the general decline in iPod unit sales and worried that Apple might have to struggle to sustain its growth in the smartphone market. Continuing growth in iPhone sales were critical to the company’s financial performance, since iPhone sales accounted for $13.3 billion of the company’s third-quarter 2011 revenues of $28.6 billion. Apple’s iPad tablet computers were the company’s second largest contributor to total revenues with sales of more than $6 billion during the third quarter of 2011. The company’s success in smartphones and tablet computers had not gone unnoticed, with Google announcing in August 2011 its intention to enter the market for smartphone handsets and tablet computers through a planned $12.5 billion acquisition of Motorola Mobility. Google’s Android was the number-one smartphone platform in 2011, which would allow it to quickly begin production of smartphones and tablet computers running on the Android operating system. Also in late-2011, Research in Motion (the producer of BlackBerry smartphones and tablet computers), Nokia, Samsung, and HTC

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were introducing new models equipped with more powerful microprocessors and improved operating systems that might surpass the capabilities of the iPhone and iPad. Dell, HP, Acer, and other computer manufacturers were also rolling out new tablet computers to compete against the iPad. With competitive rivalry heating up and technological change accelerating, Apple’s new managers would be forced to work creatively and expeditiously to sustain the company’s success achieved under Steve Jobs.

Steve Jobs’ Strategic Leadership at Apple Steven Wozniak and Steven Jobs founded Apple Computer in 1976 when they began selling a crudely designed personal computer called the Apple I to Silicon Valley computer enthusiasts. Two years later, the partners introduced the first mass-produced personal computer (PC), the Apple II,...
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