Principle of Management

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Apple Inc. Report

Core Business

1 Major products

Apple’s products focus on computers, mobile phones and other electronic devices. Its largest product lines are:

Mac: Personal desktop and portable computers include MacBook, MacBook Pro and MacBook Air.

iPad: multi-purpose device that can browse the web, sending email, listening to music, reading e-books…

iTune is a digital music management software that allows user to play, download and manage digital audio and video. iTune is integrated with iTune Stores, a service that has become dominating in the field of music distribution. With iTune Store, customers can find, rent, purchase or download third-party digital books, music, movies, games…

iPhone: Smart phones that combine mobile functions, widescreen and touch controls. With iPhone, a user can make and receive calls, browse the web, reading e-mails, playing games, searching maps… all with a single product.

iPod: Handheld products with widescreen and multi-touch user interface, act as media players for portable digital music.

2 Business generate most revenue

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Graph 1: Apple’s Sales by Product Lines, Data from Apple’s 2010 annual report.

According to Apple’s annual report filed on 10/27/2010, the iPhone series generate the most revenue for Apple in 2010, racking in $25,179 million, accounting for 39% of Apple’s total revenue. Revenue from Mac ranked the second, accounting for 27%, reaching $17,479 million.

In the long history, Mac was the product that brings Apple most revenue; however its role has been gradually taken over by iPhone. This can be viewed in the following Graph. Since the revenue from iPad only started to appear in 2010, I will only take in to view Apple’s three most significant product lines: Mac, iPod and iPhone.

[pic]

Graph 2: Product lines in Apple’s revenue, Data from Apple’s 2007 - 2010 annual report.

The proportion of iPhone in Apple’s revenue had increased significantly since the introduction of iPhone 3 and iPhone 4, as in 2008, the percentage of iPhone was only 18% while this number was 38% with Mac.

3 Business generate most profit

Apple doesn’t say which product line is most profitable. However many analysts said that the iPhone series brought the company most profit. When iPhone 3G was out in 2008, Carl Howe, an analyst at Yankee Group Research Inc. said that he assumed iPhone 3G could be Apple’s most profitable product. According to an article at the EE Times (Rick), David Carey, president of Portelligent, a division of TechInsights, the publisher of EE Times had assumed that the parts cost of iPhone 3G were only $100 when the price of iPhone 3G was $199. If Portelligent was true in its assumption, iPhone 3G could be the most profitable product for Apple at that time. In 2010, according to an article of the New York Times (Helft), iPhone 4 remained Apple’s most profitable product.

4 Business that will drive growth in the next decades

In my opinion, smart phones would be the core of Apple’s growth in the next decades. These products had brought Apple a very high increase in sales and gathered for themselves a wide base of fans. The series’ vitality was almost unmatched. In the first quarter of fiscal year 2011, Apple had sold 16.24 million iPhones, gaining an 86% unit growth compared to the same quarter of the previous year, despite the whole controversy around iPhone 4’s faulty antenna.

Steve Jobs, Apple CEO predicted that the phone market will see a transition from non-smartphones to smartphones, creating large opportunities for iPhone to rack in revenue if Apple can still keep its differentiate advantages. The series iPad also have a promising future, however Apple hasn’t “pushed it real hard in business”, according to Steve Jobs.

5 Success since 2007

Since 2007, the company has become increasingly successful. At the end of September...
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