Steve Jobs was a pioneer marketer and one of the best business strategists in history. He was able to see the huge market in personal computers, MP3 players, smartphones, and tablet computers. He was creative, had passion for business, and loved what he did.
During 1986 – 1996, before Steve Jobs’ leadership, Apple had been struggling to establish their market position because Apple’s top managers had failed to generate proper growth strategies. It was clear that Apple had better technologies than its competitors; however, Apple had no other advantages beyond its technologies. After the brief success of Power Book in 1989-1991, Apple launched a number of products, none successful. In 1997, a former CEO of Apple, Gil Ameilo, described that Apple was like a treasure ship with a big hole in it. Ameilo said that he had to concentrate to get everyone to row in the same direction. Here we see that Apple’s top managers knew that they had valuable technologies but did not have a clear vision for the company and were busy maintaining the status quo.
Steve Jobs, the strategist After Steve Jobs came back to Apple in 1996, he persuaded the board of directors to remove Amelio who brought back Steve Jobs to Apple. Apple’s stock price dropped to a 12 year low, influencing the board’s decision. The drop in stock price was mainly due to a single sale of 1.5 million share of Apple stock by an anonymous party. Later, it was confirmed that Steve Jobs was this anonymous party. Jobs got what he wanted; he become the CEO of Apple in 1997 replacing Amelio. This is one of the many examples of Steve Jobs’ strategic behaviors.
After Steve Jobs returned to Apple in 1996, he tried to capture new value for Apple. Manufacturing consisted of five main processes 1) Research and Development (R&D), 2) Part Development, 3) Manufacturing and parts assembly, 4) Sales, and 5) After Sales. As Stan Shih, founder of Acer, proposed (see Figure1), both ends of the value chain have the highest value. While Steve Jobs invested heavily in R&D to maintain technology advantage in the industry, he decided to take a forward integration strategy by opening Apple stores. The Apple store is the marketing and sales front end and covers the other side of the high value segment in the manufacturing business. Apple also generated after sales revenue streams such as the iTunes store and the App Store. Another recent attempt is iCloud.
While Steve Jobs concentrated on developing value chains that would give Apple better profits, he dropped some of the value chains that may not have yielded substantial profit, such as assembly and manufacturing process. Apple is currently outsourcing all of its assembly processes to Foxconn and Inventec.
Figure 1. Smile Curve
Create Innovative Technology
Innovative technologies are not necessary requirements of inventive and cutting edge technologies.
During 1997 – 2000, Steve Jobs restructured business, simplified production lines, and dropped many cutting-edge technology development projects. He led the R&D team to concentrate on developing sellable technology and started his famous i-series products. Apple launched the user friendly and stylish iMac in 1998. This fancy looking all-in one featured computer was sold at reasonable price, $1,299. This successful launch turned around business.
The iPod was beginning of Apple’s huge success. In 2001, there were many MP3 players and was considered a saturated, small market. Some company used flash memory based technologies while some used hard drive technology. Flash memory technology was considered new and cutting edge technology at the time. As a new comer, Apple decided to use hard drive instead flash based technology. When the Apple launched the ipod, there were several concerns about Apple’s decision to use hard drive technology. First of all, hard drive MP3s are slower than flash-based player. Also, the