Apple Computer in 2004: Gearing up for Online Music

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Case Details:

Case Code : BSTA052
Case Length : 14 Pages
Period : 2004
Organization : Apple Computers
Pub Date : 2004
Teaching Note :Not Available
Countries : Global
Industry : Hardware, Music

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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In early 2004, CEO Steve Jobs (Jobs) looked confident about Apple Computer's future. His recent efforts had focused on positioning Apple as a provider of an integrating platform for a range of household digital devices like cameras, video recorders, music players, etc. Jobs called this the "era of the Digital Lifestyle."

Jobs had all along believed in carving out a unique niche for Apple. Apple had differentiated itself in the computer market, both through its creative marketing efforts and its expertise in developing state-of-the art products.

Apple also enjoyed a trusted and loyal customer base (25 million worldwide) that openly shunned the PCs offered by other leading players like Compaq, Dell and IBM. But due to its closed system, Apple's fan base comprised only a small percent of the total PC market. In fact, in late 2002, Apple held less than 3% of the $190 billion PC market1. Many felt Apple's market share would shrink further. (See Exhibit: I and Exhibit: II).

But with the emergence of the Internet in general and online music in particular, Apple seemed to have got the big break. The company looked well placed to leverage its strengths to emerge as the market leader. Meanwhile, sensing that Apple was moving ahead, archrival Microsoft was also increasing its commitment to online music. In the 1980s, Microsoft's Windows had beaten Apple's Macintosh convincingly in the battle of operating systems. Now, it remained to be seen who would emerge winner in the battle of digital music formats...

Excerpts >>

1] Megan Graham-Hackett, "Industry Surveys: Computer Hardware,"Standard & Poor's, 5th June 2003.


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