1. How is your focal firm dealing with current challenges?
    1. Challenges
      1. Industry players
        1. Challenges
          1. Computer manufacturers have the resources to compete against Apple and also the technology know-how
        2. Computer Manufacturers
          1. Asus
          2. Dell
          3. Dell enters smartphone market too
        3. Phone Manufacturers
          1. Motorola
          2. Nokia
          3. RIM (Blackberry)
          4. HTC
          5. LG
          6. Samsung
          7. Palm
          8. Palm launches Pre
        4. Software companies
          1. Microsoft
          2. Has Windows Mobile
        5. Others
          1. Google's Android phone OS
          2. Motorola doesn't have the cash to develop its own software anymore and is using Android for many of its low-end phones
          3. Symbian OS
      2. Reliance on partners
        1. AT&T has a crappy network and can't expand its network fast enough to match iPhone sales
          1. AT&T tries to respond with massive upgrade
          2. "Reports have already indicated that about half of the mobile data traffic AT&T handles is related to the iPhone. Web statistics from Net Applications also show that more than two thirds of all US mobile web data traffic is used by the iPhone, which also makes use of WiFi. "
          3. "Apple's exclusive mobile service provider in the US has already laid out plans to upgrade its 3G data network on multiple fronts. Last month AT&T CEO Ralph de la Vega said in an interview that "we have the infrastructure capability to go to 7.2 [Mbit/s], and we'll have the capability to go 14.4 and 20 in the next couple of years, so I think there's coverage we're going to improve, there's quality we're going to improve, and there's speed that's also going to get improved." "
        2. LG, Samsung have limited production
          1. Apple subject to commodity prices
          2. Apple subject to greater economic situation
        3. Retail problems
          1. Home activation
      3. Criticisms of functionality
        1. Battery life
          1. Only lasts a day
        2. Price
          1. It's expensive, especially unlocked ones
        3. Carrier selection
          1. In US, many people don't like AT&T
        4. Adobe Flash support
        5. Tethering
      4. Market response to iPhone
        1. Touchscreens
          1. e.g. Nokia launches its first touchscreen
      5. Regulatory
        1. Environmental
          1. e-waste regulations
          2. health risks - CANCER!
          3. Apple trying to be a green company
        2. Usage
          1. EU wants easily replaceable batteries
          2. Cannot have exclusive contracts
      6. Piracy
        1. IP protection not as strong internationally as in Western markets
        2. DRM apps, music, etc.
        3. Cydia and jailbroken apps
      7. Security
        1. Hackers!
    2. Actions
      1. Supply chain
        1. IP
          1. Apple owns its own IP
          2. Multi-touch patent owned by Apple
        2. Parts
          1. secures long-term contracts
          2. Secure supply of parts
          3. long-term supply contract with LG for touchscreens
          4. long-term supply for flash memory
          5. because Apple has tremendous cash reserves, it can lockdown these long-term contracts
          6. gets contract manufacturers to invest long-term
          7. has multiple suppliers
          8. has own chip-design firm
          9. has strategic partnership with Intel, others
          10. battery life
        3. Distribution
          1. sells iphone through Apple stores, AT&T, Best Buy, Walmart
          2. Apple: its own stores, they control the experiential
          3. AT&T: launch partner, owns the network
          4. Best Buy: computer experts, retail locations; expands existing retail/distribution agreements
          5. Walmart: Distibution network?
          6. Global sales
          7. needs to sell into China and India - biggest markets... but they can't afford the iPhone
          8. future Mac user market too!
          9. Half of iPhone 3Gs sold internationally
          10. Diversify beyond AT&T. Verizon is going LTE, like AT&T in a few years. Thus, network convergence will improve carrier coverage for iPhone
        4. Developers
          1. new agreement "forbids" jailbreaking
      2. Continues development of functionality
        1. e.g. iPhone 3.0 software
          1. Boosts revenue for developers
        2. continuous revisions to hardware and software package
          1. adds biometric security
        3. additions to iTunes
          1. Builds on iTunes ecosystem
          2. Additional revenue stream for iTunes
          3. iTunes App store
          4. "The new App Store will be the only retailer of Apple-sanctioned software programs for the iPhone family and the iPod Touch. It's an approach that breaks from tradition; typically the manufacturer of the phone doesn't sell software, said Rob Enderle, principal analyst at Enderle Group."
        4. Launches iPhone 3G
      3. Create a BUZZ!
        1. Limits iPhone 2G sales and distribution
        2. Create iPhone envy
        3. Advertising campaign
          1. Limited iPhone advertisements
      4. Respond to market demands
        1. sales of unlocked phones
          1. also circumvents people that want to jailbreak their phones
          2. but it costs you to be unlocked
    3. Results
      1. iPhone continues to build momentum
    4. Market opportunities created by the iPhone
      1. Grows the mobile advertising market
      2. Enabling GPS advertising
      3. What do iPhone users do?
  2. What strategic moves is the firm taking if any?
    1. Deeper integration into supply chain
    2. Market Segments
      1. Business
        1. Microsoft Active Exchange licensing
        2. Has great results against Nokia
        3. Has good results against RIM, but RIM is doing well too!
      2. Consumer
        1. App Store
    3. Enables App ecosystem
      1. Launches iFund with KCPB
  3. Include information on the firm’s structure, the presence/absence of CV Grid activities/functions, incentives, etc.
  4. Other Q's
    1. Why did Apple enter the smartphone market in the first place?
      1. To diversify from computers - had just 5% of PC sales
      2. Expands brand name recognition
      3. Leverages iTunes store
        1. App store stronger than iTunes store
        2. "Mobile software sales for the iPhone and iPod touch continue to grow faster than even iTunes' groundbreaking song sales growth, building a critical mass to attract both new iPhone buyers and additional Cocoa Touch software development for Apple's mobile platform."
        3. Jobs said Apple would sell the 200 millionth app in the iPhone App Store by tomorrow, double the number of apps Apple distributed over the previous two months since the store opened.
        4. Apple takes 30% of revenue for every App store purchase
      4. Has great margins
        1. 8GB iPhone 3G - 55% margin
      5. Leveraged existing OS software base
        1. Mobile Safari, etc.
        2. Extention of Mac "experience"
    2. What is iTunes?
      1. It wasn't a money maker for Apple for music nor video
        1. iPhone Apps are
    3. What is the Iphone's value?
      1. Utility
        1. Gaming
          1. Great gaming platform
          2. Also brings it into play against Sony
          3. "Essentially, Neil Young sees the iPhone as bringing together console, social, and PC gaming into one platform. The versatility of the iPhone not only makes it a great device for gamers, but also a ripe opportunity for budding developers."
        2. Apps
        3. Communication