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Case Study 4 159

Apple has sold 25 billion songs through its iTunes online again. Sure, it’ll be around for a long time, but the days of its
store, 130 million books through its iBookstore, and a mere 60 incredible innovative leadership are most likely, alas, over.
billion applications downloaded through its App Store. Apple
is now the number-one PC software channel. 47 Questions
To encourage the development of iPhone and iPad apps, 4-12. Which of Porter’s four competitive strategies does
Apple shares its revenue with application developers. That Apple engage in? Explain.
would be more than $13 billion paid to developers over the
48
years! Developers responded by creating 1,000,000 iOS ap- 4-13. What do you think are the three most important factors
plications, and an army of developers are at work building in Apple’s past success? Justify your answer.
thousands more while you read this. 4-14. Steve Jobs passed away in October 2011. Until his death,
By the way, if you want to build an iOS application, what’s he had been the heart and soul of Apple’s innovation.
the first thing you need to do? Buy a Macintosh. Apple closed Today, 80,000 Apple employees continue onward in his
its development to any other development method. Adobe absence. A huge question for many investors is whether
Flash? No way. Apple claims that Flash has too many bugs, and the company can be successful without him. The current
perhaps so. Thus, Flash developers are excluded. Microsoft stock price would seem to indicate that the market does
Silverlight? Nope. Microsoft developers are out in the cold not. What do you think? What role did Jobs play? How
too. The non-Apple development community was furious, and can Apple respond to his loss? Would you be willing to
Apple’s response was, in essence, “Fine, we’ll pay our $2.5 invest in Apple without his leadership? Why or why not?
billion to someone else.”
The bottom line? Until Jobs’s death, every sales success fed 4-15. Microsoft took an early lead in the development of slate
every other sales success. Hot music fed the iPod. The iPod fed devices (like the iPad), and it had the world’s leading
iTunes and created a growing customer base that was ripe for operating system and applications for more than 20
the iPhone. Sales of the iPhone fed the stores, whose success years. Provide five reasons why Microsoft has not been
fed the developer community, which fed more applications, able to achieve the same success that Apple has. Most
which fed the iPhone and set the stage for the iPad, which industry analysts would agree that the skills and abili-
fed the App Store, which led to more loyal customers and, of ties of Microsoft’s 102,000 employees are as good, on
course, to more developers. average, as Apple’s.
4-16. Considering your answers to the four questions above,
Apple Without Steve Jobs if you had a spare $5,000 in your portfolio and wanted
It’s hard to see a happy future for Apple. It floundered when to buy an equity stock with it, would you buy AAPL
Jobs was fired in the 1990s, and it most likely will flounder (Apple)? Why or why not?

47 Apple presentation at the Apple Worldwide Developers Conference, June 6, 2011.
48 Nathan Ingraham, “Apple Announces 1 Million Apps in the App Store, More Than 1 Billion Songs Played on iTunes Radio,” October 22, 2013, accessed
May 17, 2014, www.theverge.com/2013/10/22/4866302/apple-announces-1-million-apps-in-the-app-store.