Apple’s Transformation from a Device Maker to a Global Platform

Zankhana Desai and Sandy Leitao

Managerial Applications of Information Technology – IS535

Devry University, Keller Graduate School of Management

September 15, 2013

IS535 -Managerial Applications of Information Technology

Project Proposal

Topic

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.

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. Unless individuals in a business or household are already using Apple products, they will find no need to go out of their way to get one.

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 ecosystem and that ecosystem is arguably the greatest distinguishable advantage the company maintains in the highly competitive smartphone and tablet markets. In essence, their audience and influence is their competitive edge.

Business Problem Statement

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

High Level Approach (Need to expand and incorporate mobile devices)

We will discover and present how Apple can effectively address moderate gross margin.

cut cost: Apple has already addressed this issue by releasing the iPhone 5C along with the 5S. The 5S, like previous installments of the phone, has more memory, faster processing speeds, and other updates demanded by their clientele. The 5C is very similar in its upgrades and internal system, and even comes in various colors that the 5S does not, but is much cheaper due to its plastic case.

increase revenue: (Keep in mind that the lower cost of the 5C will not harm Apple, but instead will most likely help raise its revenue because of its wider reach to audiences that were turned off by the steep price of Apple’s products. Technologically advanced features like the 5C’s fingerprint scanner and 64 GB memory will draw in the usual audience and keep sales steady.)

General Benefits (Will expand)

A solution to increase product supply to advance the addressable market for application content and services will be recommended to management.