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How Apple Is Organized for Innovation

  • Joel M. Podolny
  • Morten T. Hansen

apple case study business studies

When Steve Jobs returned to Apple, in 1997, it had a conventional structure for a company of its size and scope. It was divided into business units, each with its own P&L responsibilities. Believing that conventional management had stifled innovation, Jobs laid off the general managers of all the business units (in a single day), put the entire company under one P&L, and combined the disparate functional departments of the business units into one functional organization. Although such a structure is common for small entrepreneurial firms, Apple—remarkably—retains it today, even though the company is nearly 40 times as large in terms of revenue and far more complex than it was in 1997. In this article the authors discuss the innovation benefits and leadership challenges of Apple’s distinctive and ever-evolving organizational model in the belief that it may be useful for other companies competing in rapidly changing environments.

It’s about experts leading experts.

Idea in Brief

The challenge.

Major companies competing in many industries struggle to stay abreast of rapidly changing technologies.

One Major Cause

They are typically organized into business units, each with its own set of functions. Thus the key decision makers—the unit leaders—lack a deep understanding of all the domains that answer to them.

The Apple Model

The company is organized around functions, and expertise aligns with decision rights. Leaders are cross-functionally collaborative and deeply knowledgeable about details.

Apple is well-known for its innovations in hardware, software, and services. Thanks to them, it grew from some 8,000 employees and $7 billion in revenue in 1997, the year Steve Jobs returned, to 137,000 employees and $260 billion in revenue in 2019. Much less well-known are the organizational design and the associated leadership model that have played a crucial role in the company’s innovation success.

  • Joel M. Podolny is the dean and vice president of Apple University in Cupertino, California. The former dean of the Yale School of Management, Podolny was a professor at Harvard Business School and the Stanford Graduate School of Business.
  • MH Morten T. Hansen is a professor at the University of California, Berkeley, and a faculty member at Apple University, Apple. He is the author of Great at Work and Collaboration and coauthor of Great by Choice . He was named one of the top management thinkers in the world by the Thinkers50 in 2019. MortentHansen

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Apple Case Study

  • To find inspiration for your paper and overcome writer’s block
  • As a source of information (ensure proper referencing)
  • As a template for you assignment

Executive Summary

Introduction, measuring capability performance, options, recommendations and implementations, list of references.

Since Apple was established in mid 1970s, its popularity has become immense especially in computer technology industry. Its full potential was realised when it shifted its focus from marketing and promotion of computer products to development of innovative industrial design in modern electronics, unique hardwares, operation system and application softwares and services. It provides customers with new products and solutions that are easy to use and seamless integration.

The relevant competitive models chosen for this assessment includes the Michael Porte’s five forces such as entry of competition, threats to substitutes, bargaining power, power of suppliers and rivalry, SWOT and Industrial analysis as well as micro analysis in order to assess Apple Inc. strategic capabilities and suggest future directions for the business. Apple assessment also analyses the results of a study presented to examine how it utilises customer satisfaction data obtained from formal feedback mechanism.

Company background

Apple was founded in 1970s by Steven Jobs who then became the company CEO. Apple first started as a computer company in 1976 and was fast recognised for its intuitive adaptation approach of graphical user interface that saw the adoption of the first mouse and first onscreen windows.

Steven Job innovative approach focused more on specialised products and by 2001, its full inventions came into play with the introduction of iPod, a product that ranked top in the market leader in music players. Eventually, iPhone came into play in 2008, followed by iMac, iPad and iTunes which have also been widely successful. This meant that electronic products combined with eminent good customer support throughout its product base were slowly becoming the company’s primary objectives.

Summary of Macro Analysis

Macro analysis also known as PESTLE is an analysis of the external macro environment in which a business operates. PESTEL analysis includes factors such as political, economic, social, technological, legal and environmental issues. For a detailed analysis, the following table illustrates the macro environment of Apple Inc:

FactorImplications
Political factorApple’s operations in the United States were not affected by political regimes as the government was open to technological advancements. The company also tried to apart from politics & dealt with business operations only
Economic-The Apple’s 2007 strategy to change its name from Apple Computer to Apple Inc. did not have direct impact to the company’s sales but signified company’s long term strategy, clarified marketing messages and enabled investors to compare its products to other consumer electronic firms broadly that just computer makers

-The availability iTune software downloadable on any computer platform enabled Apple to sell million of copies online. It moved from 200,000 songs to 500,000 a day and iPod was the only music player in the market that could play iTune music

SocialApple has the network of cooperative suppliers & the base of loyal customers that support the company for the high quality of goods it offers
Technological-Apple keeps its customers updated in both the technology solutions it offers & software development

– Apple was honoured in BusinessWeek’s among the top innovative companies in the united States. The company has progressively improved in product innovation since 2004 and distinguished itself in revenues and margins. It was also reported that since 2007, Apple consistently recorded gross margins of 30% (Hesseldahl 2009).

LegalApple Inc. is a legal organization that pays taxes & is responsible for the quality of the goods & services it offers.
EnvironmentalApple production process is harmless to the environment. Moreover, the company supports the environmental initiatives in all the countries it operates in

Apple Case Analysis

Apple ranged top in customer satisfaction with phone-based technical support, feedback, face-to-face communication, email communication, and information exchange in the American Consumer Satisfaction index (ASCI) in the second quarter of 2009. These companies were credited for offering the best technical customer satisfaction service within the Personal Computers category with a base score of 77 on a 100 point scale and earned 83 points in the second quarter of 2006.

Business analysts have argued that the companies’ ability to focus on product innovation and customer satisfaction has won the company loyal customers compared to other PC vendors. Quality of customer service is always the determining factor for success of any company and not its products, and the three companies for this case have gained tremendously from such strategy.

Van Amburg, the managing director of the American Customer Satisfaction Index (ACSI) argues that customers from other service providers were very frustrated with company’s customer service despite the quality of its PC hence loss of loyal customers and the services continued to deteriorate as years went by (Moore & Knight 2010; Keizer 2009).

In ensuring quality satisfaction in information collection, Apple launched Consumer Privacy Policy that ensured the collection, use and disclosure of personal information regarding customer issues are kept at optimum security. The company pledges to safeguard personal information collected when visiting the company’s website, purchase of products and services and when a customer calls the sales team or support associates.

Personal information collected here is aimed at helping the company deliver higher customer service and provide convenient access to company’s products and services. Information collected from customer’s reviews also helps the company implement and post the latest product announcement on special offers, software and events (Apple 2010; Levitan 2004; Prasaad 2009).

Summary of Industry Analysis

Porter’s analysis focuses on the threat of new entrants, bargaining power of suppliers and buyers, power of substitutes and rivals on profitability in an industry.

The following table presents Porter’s five forces analysis of the micro environment of Apple Inc.

FactorImplications
Rivalry
Bargaining power of buyer
Threat of new substitute products
Bargaining power of suppliers
Industry Competition

The industry analysis of our company in the market displays strong competition in the computer technologies and electronics. Apple maintained its competitive edge by progressively innovating product designs and operational execution.

Its product lines were also diversified and supplied its products to retail stores and eliminated third-party retailers. The company also opened up to 247 stores including 19 internal locations averaging to $29.9 million in sales revenues. The company has numbers of loyal, & the customer base reports the permanent growth (Keizer 2009).

Suppliers have helped Apple diversify their products. Apple entered into a multi year agreement requiring its major key components that included dynamic random access memory DRAM, LCD displays, NAND flash memory and microprocessors that included partners such as Hynix Semi-conductor, Intel Corporation, Samsung, Micron Technology and Toshiba Corporation. It also partnered with other corporations internationally to ensure final assembly of its products are concentrated on quality issues (Keizer 2009).

On market research aspect, Apple was reported to collect personal information on various occasions for market research purposes. This information is aimed at gaining better understanding of customers needs, improve products and determine how best to provide useful information (Apple 2010; Hewlett-Packard Development Company 2010).

Apple partnered with other service vendors such as MobileMe and iTunes stores to help in collection of information by requiring customers to customer’s to create an “phone company ID” before purchase of products.

The ID is strategy is designed to help customers have easier access to web services and saves them time since they don’t have to give their personal information when requesting for services. The procedure requires creation of personal profiles by adding the name, phone number, email address or credit card number together with a suitable password that will be used to access the profile.

Once the signing up procedure is completed, the customer is allocated personal ID and a password that the system generates automatically. Therefore next time the customer enters the website to re-purchases products is welcomed by personal greetings by mentioning his name and is able to access up to date information regarding the product purchased which can be used wherever the client goes (Apple 2010).

In order to survive in the competitive environment, company’s have to device a number strategies to beat their competitors like changing the price of the product-which is in fact a temporary solution, improving product features- key to success, creatively using channels of distribution and exploiting relationship with suppliers. When we look at these examples, brand recognition seemed to cut down costs of advertisements.

On this perspective, Apple diversified to digital consumer electronics such as iPod, iPhone, iMac among others widened its product markets. Apple dominated computer markets introducing itself a premier provider of technology solutions for educators, web designers and graphic artists, to digital entrainment company. The software iPod was later integrated into windows version of iTunes making it easier for everyone one to purchase and use (Keizer 2009).

Apple introduction of feedback system and outreach programs enabled customers to report on defective machines and the company to attend to problems before they occur. For example, one of the Company’s products “iMac” was widely reported for to be giving clients problems and the company responded by giving 15% refund bonuses to all faulty 27 inch iMac in the UK and was also reported to extend $300 apologies to all its aggrieved customers in the US.

In resolving the issue, the company responded quickly by offering free repairs to all the affected machines and launched a support page where it described how minor problems could be resolved and the resulting warranty extension for each affected machine. The company also reimbursed customers who used their own money to repair the faulty machines and advised them take their drives to official Apple repair channels (Moore & Knight 2010; O’Reilly & Anderson 1980).

On bargaining power of suppliers’ aspect, Apple’s primary segments included America, Europe, Africa, Japan and Middle East and other retail divisions Italy, Canada and the United Kingdom. It offered its customers wide range of products and invested heavily on R&D year after year. Apple’s products were distributed all over US retail stores where customers could easily access and report of defective devices (Mank & Nystrom 2000, p.504).

Summary of Internal Analysis

Internal Analysis also known as SWOT analysis determines company’s competitors and develops sales & marketing strategies for the company that allow it to achieve its marketing & strategic objectives.

The SWOT Analysis of the Apple Inc. position in the market is necessary for the development of the marketing plan.

StrengthsWeaknesses
Products offered by Apple Inc. are unique:

Resources Analysis

Amidst the financial crisis, Apple continued to introduce strongest products lines, with most talented employees and best customers with sales revenue totalling to $10 billion in quarterly revenue of 2009 and $25 billion in cash safety bank with zero debt. Demographic & socio-economical factors like population distribution changes & increase/decrease in income levels of social group also affected the company to a considerable extent (Apple reports 2008; Hesseldahl 2009).

Dynamic Capability Analysis

Dynamic analysis refers to the innovative strategies a firm employs to gain competitive advantage over its competitors. In other words, what Apple is doing different that sets it apart from other companies. For instance, the company has progressively applied technological advancement and business diversification over the years.

Apple continues to diversify its product line from PCs inventions, to iPods, iPhones, iTunes and other peripherals. Also, the 2007 smart phone technology that saw the integration of wireless phone, music player, video player as well as internet browsing demonstrated how the company continues to diversify in our markets (Apple reports 2008).

Strategic Capability Analysis

Apple’s strategy to integrate Intel-based iMac desktop and the MacBook Pro portable softwares increased its company’s market share. Also, the introduction of feedback system and outreach programs that enabled customers to report on defective machines seemed to have gained the company a competitive edge over its competitors. The company also introduced support centre strategically designed to attend to software problems before they occur (Apple reports 2008).

Apple’s recent merger with software developers and leading voice-entry technology providers demonstrated its strong command and reputation in information technology. However, Apple should take adequate time in testing its products before rushing to introduce them to the markets like case for MacBook Air that left many customers disappointed (Apple reports 2008).

Gap analysis and assessment of current strategy

Gap analysis is a methodology that helps a company identify gaps and decide upon marketing strategies and tactics. The company has moved beyond personal computer industry to music, videos, movies, and television. Diversification is in it itself a good marketing strategy, but the company should concentrate on development of quality products to cut down on increased numbers of defective products and recalls.

Apples hiring John Sculley from PepsiCo spearheaded marketing and operations of the company while Steven Job focused on technology that lead to the introduction of more creative products like Macintosh in 1984. The new CEO enabled breakthrough in electronic products in terms of elegant design and easy use. The company should employ the same strategy in future to in employing competent workforce that will turn boost company sales revenues.

How does strategy match the macro environment?

For Apple, there is a large gap between product strategy and socio-economic and demographic changes. Keeping in pace with technology helped the company gain competitive advantage over its competitors and the uniqueness of goods and services offered facilitated the further strengthening of market position. However, its inability to adjust to socio-economic and demographic changes might undermine its market position in future.

How does strategy match the industry environment?

Apple engaged in a head to head competition with Dell in the computer markets with company CEO Steve Jobs claiming that market shares weren’t everything. This statement is in itself contradictory since company’s engage in business activities for profits. Dell was able to dominate the markets due to its efficient supply chain management although Apple outperformed it in inventions and other metrics. Apple should look into fixing sufficient price flexibility and adjustment to socio-economic changes.

Since compatible software were introduced in the markets, IBM prices dropped and Apples costs for R&D were higher industry costs since the company spend a considerable amount of its sales revenue on R&D. Scully innovative efforts were not enough to sustain the company’s poor performance. Apple could have taken time to study its markets demands before heavily investing in unprofitable deals. Since Michael Spindler came into play in 1993 introducing PowerMac, Apple moved to price-performance edge.

The new CEO’s strategy was to let other companies manufacture Mac clones, a strategy that saw many clones stealing 20% of the Macintosh unit sales. For this case, Apple should be seeking a CEO that upholds their key capabilities and strengths, whilst being able to improve in other areas that are deficient (Mank & Nystrom 2000, p.501).

Apple’s current strategy of launching more new products to expand the markets should be sustained. However, the company should also try to promote its products through media advertising and offering products at discounted price to increase the satisfaction level of the customers. Apple never seemed to experience intense competition since it had strong market power and had the ability to introduce new products.

Its strategies to beat the markets severely stretched its budgets that amounted to further losses. For example, when Macintosh was first introduced in the markets quickly became people’s favourite with large graphics but had slow performance and could not be integrated with many softwares in the markets. NeXT Computer introduced after Macintosh proved costly and did not yield the company any profits. For this case, Apple should incorporate through market analysis to avoid sipping in market shares.

Apple., 2010, ‘ Apple Customer Privacy Policy ’. Web.

Apple reports fourth quarter results, 2008. Quarterly results. Web.

Hesseldahl, A., 2009. Apple’s impressive quarterly numbers . BusinessWeek. Web.

Hewlett-Packard Development Company, 2010. Overcoming the no. 1 challenge in data center transformation . Web.

Keizer, G., 2009. Apple still can strive, sans Job. Computer World, 56 (2), pp.1-4.

Levitan, B., 2004. Improving customer loyalty through proactive communication. Consumer Interaction Solution . Web.

Mank, D. & Nystrom, H., 2000. The relationship between R&D spending and shareholder returns in the computer industry. Management of Society Proceeding , 20, pp.501-504.

Moore, C. & Knight, D., 2010. Apple Retains Lead in Customer Satisfaction, iMac Screen Problem Resolved, 64 GB for Mac Pro and More . Web.

O’Reilly, C. & Anderson, J., 1980. Trust and the Communication of Performance Appraisal Information: The Effect of Feedback on Performance and Satisfaction. Human Communication Research , 6, pp.290-298.

Prasaad, S., 2009. Establishing successful customer relationships through effective communication: An Indian perspective. Marketing and Management Communication , 64, pp.1-71.

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Stefan H. Thomke

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Table of Contents

Apple target audience , marketing strategy of apple, 5 key takeaways from apple marketing strategy, a case study on apple marketing strategy.

A Case Study on Apple Marketing Strategy

Breaking through with several inventions in the world of technology, Apple Inc. has been carving infinite milestones ever since its inception. Even though its innovations speak for themselves, this highly-valued giant corporation has invested heavily in its marketing team to soar high up as a tech maestro. Apple Inc. realized the role of brand marketing in the success of a venture from the start as a crucial way to connect with its target audience. This brand's marketing is so vigorously carried out and well-thought that it is often an inspiration and a place of research for marketing professionals. Here we bring you a well-curated case study on Apple's marketing strategy, the key takeaways to learn from this venture, and how to incorporate the same in your business and marketing strategies. 

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To understand its key strategies for marketing Apple products, let's first understand what Apple's target audience is like. Apple's target audience consists of middle-class and upper-class users who can pay higher for products that provide them with an incredible user experience. This means that these users have a higher disposable income and are willing to pay more for as high-priced products as Apple's. 

Let's take a look at Apple's target audience with this comprehensive analysis sourced from Business Research Methodology's report on Apple Segmentation :

Areas

Urban

Gender

All

Age

20-45

Life phase

Bachelors to Married both

Earnings

High

Jobs

Working professionals, managers & executive level workers

Besides this primary classification, Apple also explicitly targets professionals working in specialized software like music, video, photography and all kinds of design careers. These working professionals prefer Adobe’s Final Cut, Photoshop and related editing software which work well with Macbooks and IPads than other operating systems. 

Even better, business professionals prefer Apple products such as iPods and Macbooks for their day-to-day work. Products like iPads and Macbooks are lighter and portable, so they are often selected by students (upper-class), educational institutions and teaching. 

Now coming to the marketing strategy of Apple, it is a combination of well-designed products with the right user experience, promotional campaigns, distribution, and pricing. Let’s take a look at all these features of Apple marketing strategy in detail:

Focus on Finer User Experience

Apple’s branding strategy is based on its stylish, more straightforward and lush products that focus on providing a user interface that is very simple to use and learn. They are lighter, easy to carry as well as durable. This minimal look and user experience makes it a perfect sell to its target audience, which comes from the middle to upper class.

Suave Yet Simple Advertising

Storytelling is such an essential part of every Apple ad as well as a marketing campaign. Often these ads focus on minimal design as well as high-quality images. They are either blended with music or a simple story. Apple consciously ensures that its advertising and marketing don’t use too much jargon or filler language in its ads. Instead, it shines a light on the product to let it speak for itself without showing what the price is like or using complicated words for its features.

Targeting the Right Markets

Apple is excellent at tapping into its target audiences like a genuine tech witch who knows their aspirations, preferences and pain points! Its market research is always on-point and crystal clear in its products, curation, and features. 

Here are the major critical takeaways from Apple Marketing Strategy:

  • Tapping into your target markets and audience is the key to curating and selling user experiences that value the preferences of its people. 
  • With simplicity and finesse in design, the right products with minimal designs and features can create a perfect impact for your brand.
  • Incorporating emotion in your advertising and marketing can also help you connect with your audience better. 
  • Don’t exaggerate the copy and conceptualizing of your advertising and marketing campaigns and prefer the “less is more” approach. Create shorter yet emotional and empathetic ads to captivate your target audience.
  • When you create an international brand value through quality and minimal, sophisticated design, you don’t need to compete in terms of price. Instead, your price will set you apart for your user experience and design features.
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Case Study on Apple’s Business Strategies

Apple was founded by Steve Jobs and Stephen Wozniak in 1976; Apple Computers revolutionized the personal computer industry. Apple Computers Inc is considered to be one of the innovators in the computer industry . It brought about different changes to the industry; these changes are still visible in the present. The company’s products were used as a basis by other computer company’s in designing the specifications and physical characteristics of their product. It also serves as a meter of how products are designed. The company offers various products for the different market it targets. The products made by the company offer something different.

We can describe Apple’s business strategy in terms of product differentiation and strategic alliances.

Product Differentiation

DesktopG3iMac
PortablePowerBookiBook

In 2001, Apple hit another important historical point by launching iTunes. This marked the beginning of Apple’s new strategy of making the Mac the hub for the “digital lifestyle”. Apple then opened its own stores, in spite of protests by independent Apple retailers voicing cannibalization concerns. Then Apple introduced the iPod , central to the “digital lifestyle” strategy. Philip W. Schiller, VP of Worldwide Product Marketing for Apple, stated, “iPod is going to change the way people listen to music.” He was right.

Apple continued their innovative streak with advancements in flat-panel LCDs for desktops in 2002 and improved notebooks in 2003. In 2003, Apple released the iLife package, containing improved versions of iDVD, iMovie, iPhoto, and iTunes. In reference to Apple’s recent advancements, Jobs said, “We are going to do for digital creation what Microsoft did for the office suite productivity.” That is indeed a bold statement. Time will tell whether that happens.

Product differentiation is a viable strategy, especially if the company exploits the conceptual distinctions for product differentiation. Those that are relevant to Apple are product features, product mix, links with other firms, and reputation. Apple established a reputation as an innovator by offering an array of easy-to-use products that cover a broad range of segments. However, its links with other firms have been limited, as we will discuss in the next section on strategic alliances.

There is economic value in product differentiation, especially in the case of monopolistic competition. The primary economic value of product differentiation comes from reducing environmental threats. The cost of product differentiation acts as a barrier to entry, thus reducing the threat of new entrants. Not only does a company have to bear the cost of standard business, it also must bear the costs associated with overcoming the differentiation inherent in the incumbent. Since companies pursue niche markets, there is a reduced threat of rivalry among industry competitors.

A company attempts to make its strategy a sustained competitive advantage . For this to occur, a product differentiation strategy that is economically valuable must also be rare, difficult to imitate, and the company must have the organization to exploit this. If there are fewer firms differentiating than the number required for perfect competition dynamics, the strategy is rare. If there is no direct, easy duplication and there are no easy substitutes, the strategy is difficult to imitate.

There are four primary organizing dilemmas when considering product differentiation as a strategy. They are as depicted below.

apple case study business studies

Five leadership roles will facilitate the innovation process: Institutional Leader, Critic, Entrepreneur, Sponsor, and Mentor. The institutional leader creates the organizational infrastructure necessary for innovation. This role also resolves disputes, particularly among the other leaders. The critic challenges investments, goals, and progress. The entrepreneur manages the innovative unit(s). The sponsor procures, advocates, and champions. The mentor coaches, counsels, and advises.

Apple had issues within its organization. In 1997, when Apple was seeking a CEO acceptable to Steve Jobs , Jean-Louis Gassee (then-CEO of Be, ex-Products President at Apple) commented, “Right now the job is so difficult, it would require a bisexual, blond Japanese who is 25 years old and has 15 years’ experience!” Charles Haggerty, then-CEO of Western Digital, said, “Apple is a company that still has opportunity written all over it. But you’d need to recruit God to get it done.” Michael Murphy, then-editor of California Technology Stock Letter, stated, “Apple desperately needs a great day-to-day manager, visionary, leader and politician. The only person who’s qualified to run this company was crucified 2,000 years ago.”

Strategic Alliances

Apple has a history of shunning strategic alliances. On June 25, 1985, Bill Gates sent a memo to John Sculley (then-CEO of Apple) and Jean-Louis Gassee (then-Products President). Gates recommended that Apple license Macintosh technology to 3-5 significant manufacturers, listing companies and contacts such as AT&T, DEC, Texas Instruments, Hewlett-Packard , Xerox , and Motorola. (Linzmayer, 245-8) After not receiving a response, Gates wrote another memo on July 29, naming three other companies and stating, “I want to help in any way I can with the licensing. Please give me a call.” In 1987, Sculley refused to sign licensing contracts with Apollo Computer. He felt that up-and-coming rival Sun Microsystems would overtake Apollo Computer, which did happen.

Then, Sculley and Michael Spindler (COO) partnered Apple with IBM and Motorola on the PowerPC chip. Sculley and Spindler were hoping IBM would buy Apple and put them in charge of the PC business. That never came to fruition, because Apple (with Spindler as the CEO) seemed contradictory and was extraordinarily difficult in business dealings. Apple turned the corner in 1993. Spindler begrudgingly licensed the Mac to Power Computing in 1993 and to Radius (who made Mac monitors) in 1995. However, Spindler nixed Gateway in 1995 due to cannibalization fears. Gil Amelio, an avid supporter of licensing, took over as CEO in 1996. Under Amelio, Apple licensed to Motorola and IBM. In 1996, Apple announced the $427 million purchase of NeXT Software, marking the return of Steve Jobs. Amelio suddenly resigned in 1997, and the stage was set for Jobs to resume power.

A massive reversal occurred in 1997 and 1998. In 1997, Jobs overhauled the board of directors and then entered Apple into patent cross-licensing and technology agreements with Microsoft. In 1998, Jobs stated that Apple’s strategy is to “focus all of our software development resources on extending the Macintosh operating system. To realize our ambitious plans we must focus all of our efforts in one direction.” This statement was in the wake of Apple divesting significant software holdings (Claris/FileMaker and Newton).

There is economic value in strategic alliances. In the case of Apple, there was the opportunity to manage risk and share costs facilitate tacit collusion , and manage uncertainty. It would have been applicable to the industries in which Apple operated. Tacit collusion is a valid source of economic value in network industries, which the computer industry is. Managing uncertainty, managing risk, and sharing costs are sources of economic value in any industry. Although Apple eventually realized the economic value of strategic alliances, it should have occurred earlier.

“If Apple had licensed the Mac OS when it first came out, Window wouldn’t exist today.” – Jon van Bronkhorst, “The computer was never the problem. The company’s strategy was. Apple saw itself as a hardware company; in order to protect our hardware profits, we didn’t license our operating system. We had the most beautiful operating system, but to get it you had to buy our hardware at twice the price. That was a mistake. What we should have done was calculate an appropriate price to license the operating system. We were also naïve to think that the best technology would prevail. It often doesn’t.” – Steve Wozniak, Apple cofounder

“If we had licensed earlier, we would be the Microsoft of today.” – Ian W. Diery, Apple Executive VP, I am aware that I am known as the Great Satan on licensing…I was never for or against licensing. I just did not see how it would make sense. But my approach was stupid. We were just fat cats living off a business that had no competition.” – Jean-Louis Gassee, Be CEO and ex-CEO of Apple, admitting he made a strategic mistake.

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