Course Project: Applied Information Technology Project

Course Project: Applied Information Technology Project

Course Project Table of Contents (10-15 pages, 225 points, due week 6)
Cover Page
Table of Contents
1. Abstract – This should be written after the paper is complete. It contains the teasing summary of what the paper is about without giving away the ending—kind of like a trailer to a movie.

2. Brief Company background -

Introduction

One of the greatest advances in technology adoption occurred in the early 1980's with the "PC Revolution." The personal computer led to great leaps forward in enterprise and personal productivity. 30 years later, the global PC market is in a state of economic decline.

Company

Apple, a company that claims to have ignited the personal computer revolution in the late 70's and early 1980's was nearly left for dead by the mid-1990's as less expensive personal computers based on the Windows operating systems flooded the market. Apple returned to remarkable levels of success in 2003 following the opening of the iTunes Music Store and iTunes for Windows. The company is now the world's largest distributor of commercial music. The company's market cap reached above one-half trillion dollars in 2012 due to the success of the iPhones and iPad product lines accompanied by broad enterprise adoption of the products. The iPad and other tablet products are replacing the role of PCs in many enterprises and smartphones have become de rigueur for enterprise and personal communication.

Following three years of torrid revenue and earnings growth, Apple is now challenged by a lower-cost tablet and smartphone products flooding the market running the Android operating system.

With dramatically slower rates of revenue and unit sales growth in the company's current fiscal year, Apple's fastest growing revenue segment is iTunes/Software/Services. The revenue segment underpins the company's expansive eco-system and that eco-system is arguably the greatest distinguishable advantage the company maintains in the highly competitive smart phone and tablet markets.

3. Discussion of business problem(s) - The current situation (what does today look like?). For example, inefficient processes, slow product development, obsolete technology. What are the complaints? You should have at least 3 problems.

Business Problem Statement

Apple's business problem is a dramatic drop in the rate of revenue growth as competing commodity grade products flood the market.

After comparing global IT trends, I came upon a suggestion that I would leave Apple’s head management team to do with as they please; they should be revising their budgets, products’ costs, and expenditures. In the first fiscal quarter of this year (the December quarter), gross margin (the inverse of cost of sales) fell to 37.5%, close to a 10-point drop from the last fiscal year. The gross trend must be reversed to return the company to strong rates of net income growth. Management is guiding to gross margin between 36% and 37% in the current fiscal quarter, down from 40% in the prior-year period.

Although the gross margin decline concerns Wall Street analysts and Apple investors, there are conspicuous reasons for Apple's recent gross margin decline and corresponding reduction in net income. Make no mistake. Apple remains one of the most profitable enterprises on the planet and the company’s cash production remains the envy of CEO’s around the globe. However, over-engineering, such as the original iPhone 5’s enclosure and the design of the new iMac have contributed to unnecessary production constraints, product shortages and higher product costs.

In the March quarter Apple took an extraordinary $1.551 billion warranty reserve and charge to gross margin due in part to high return rates on the iPhone 5 and issues with the Retina displays on the MacBook Pro.

The emergence of the iPad mini and its lower gross margin on revenue also dampened gross margin. The average selling price of iPads has fallen over $100 this fiscal year due to the popularity of the diminutive iPad model. When the iPhone was released in 2007 there was nary a competitor in the smartphone market delivering a distinctly different device. Elasticity of demand or price sensitivity has created competition for the iPhone from competitors offering lower-cost devices. In a challenging economic environment and particularly in emerging markets such as India, lower prices can trump the allure of a thoughtfully designed device. 4G/LTE is not readily available in all areas of the world and carriers such as China Mobile are challenged to deliver a profitable sales and services model on handsets that require modern cellular infrastructure to deliver high quality content and services.

Competitors such as HTC, Lenovo and Samsung are more adept at adapting products for emerging markets. In the recent June quarter more iPhones were activated on AT&T and Verizon in the United States than all other makes and models combined. Japan’s love affair with the iPhone has made that country the fastest growing revenue region for Apple this fiscal year. But Apple is struggling to remain competitive in more price sensitive sectors of the global market.

Apple's sales continue to grow, but not at the fast rates of growth realized in the three prior fiscal years. Because of less expensive product alternatives running the royalty-free Android operating system combined with iPhone 5 production problems during the handset’s peak selling season, unit sales have been a “yawner” for Wall Street analysts. The declining average selling price for the iPad line has also negatively impacted the rates of revenue growth. Combined, these factors have produced two consecutive quarters of negative net income growth and produced first fiscal quarter net income growth of a negligible $14 million.

4. High level solution - Brief paragraph of the solution. This is NOT detailed. Before you discuss the benefits, this gives the reader a sneak peek at what the solution will be. The details will be in section 6.

5. Benefits of solving the problem - This is the target (what does tomorrow look like?). This should describe the new world after you put in the new technology.

If management makes reducing their products’ prices and marketing newer products their main concerns, it may further help them improve and increase their gross profit margin. Even with our suggestions in mind, however, Apple’s experience would not be the same, as they are no longer the sole producer in the smartphone and tablet markets. Their innovation helped them achieve and maintain their status as the number one profit-earning business for close to a decade. I would think it will not be the same as they had monopoly in Wall Street in staying number one profit earning business for close to decade.

These suggestions may attract customers back to Apple.

6. Business/technical approach - How will your technology resolve EACH problem you described in section 3?

7. Business process changes - This is optional. Describe any processes that will be changing, based on your solution. (What is the impact to the business?) If there are no business process changes, then explicitly state it here.

8. Technology or business practices used to augment the solution - Describe your technology (independent of your solution). This section should not talk about your problems or solution. This is a technical section that talks specifics about your technology and what it is. Remember to define technical terms and acronyms. Write this as if your reader is novice and has no idea about this technology.

There are several technologies Apple deploys to grow revenue and reduce costs.

In the first three quarters of the current fiscal year, Apple's fastest growing revenue segment was iTunes/Software/Services.

This revenue segment is rising at about a 25% year-over=year pace and will reach $20 billion in FY2014.

iTunes billings (inclusive of the pass-through of revenue to developers and content providers Apple does not recognize as its own revenue) will also reach $20 billion next fiscal year.

There are well over one-half billion iTunes accounts backed by credit cards.

Additionally, Apple operates on a global scale one of the most highly trafficked e-commerce sites on the planet. Apple's massive data centers are increasingly powered by renewable energy sources to keep to the company's aggressive environmental objectives:

Content delivery and Internet-provided services are provided by server technology from HP & other enterprise solutions providers:

The recently released promotional video for the iPhone 5C indicates Apple is deploying more advanced automated solutions for the production of its newest iPhone handsets. Greater automation provides for lower costs and faster ramp times to reduce costs and to better meet consumer demand:

Automation technologies have provided Apple to expand manufacturing partnerships beyond Hon Hai (Foxconn) to include Pegatron for device manufacturing and assembly.

Although Apple's global network of retail stores has the highest revenue per share foot of any major retail chain on the planet:

The company is using its own iPod touch devices to aid customer flow and wait times for customer check out at the stores. By deploying handheld transaction devices, square footage does not need to be removed from product display space to accommodate retail sales:

9. Conclusions and overall recommendations - Recap / Executive summary (problems and benefits). Many executives jump to this section so, although be brief, write this as if they haven't read the paper. You can use parts of this section (reworded slightly) as your abstract without the solution.

It is essential for Apple to change their marketing strategy and revised their cost and budget planning to improve their gross profit margin and in order for them to again create high competitiveness.

10. High-level implementation plan - How are you planning on implementing this solution? This is not intended to be a project plan, but gives the reader an idea what the intended implementation plan will be.

References