APPLE Computers

Description

Computers are still an important part of its mix, but these days music-related products are at the top of Apple's playlist. Apple Computer's desktop and laptop computers -- all of which feature its OS X operating system -- include its Mac mini, iMac, and MacBook for the consumer and education markets, and more powerful Power Mac and MacBook Pro for high-end consumers and professionals involved in design and publishing. The company scored a runaway hit with its digital music players (iPod) and online music store (iTunes). Other products include servers (Xserve), wireless networking equipment (Airport), and publishing and multimedia software. The company's FileMaker subsidiary makes database software.

Only co-founder, CEO, and Apple crusader Steve Jobs may have expected the level of success the company's music-related products have enjoyed. In 2003 Apple announced the launch of an online music service called the iTunes Music Store that lets computer users purchase and download songs for 99 cents each. Apple has since expanded the offerings to include music videos, audiobooks, television shows, and other content. The store's catalog, which has helped spur sales of Apple's popular iPod digital music and video players, includes songs from the five largest record labels, as well as television content from ABC, NBC, and a number of cable networks. The company has launched international versions of its iTunes Music Store that serve Canada and European Union countries. Early in 2006 it began offering select television content on a subscription basis with a service called Multi-Pass. Later that year the company launched an online movie service, and previewed a device called iTV for watching downloaded content on televisions.

Since debuting the iPod in 2001, Apple has provided regular updates to the line, including color displays and and flash memory-based models. Late in 2005 Apple, Motorola, and Cingular Wireless announced the debut of a mobile phone with iTunes functionality. Apple also unveiled the iPod nano, an updated (and even smaller) version of its miniature iPod model, as well as an iPod capable of playing video. In 2006 Apple reached a settlement in a dispute with Creative Technology over technology used in digital music players; Apple agreed to pay the company $100 million in exchange for a license to use Creative's patent related to navigation and organization.

Once the world's top PC maker, Apple Computer has been relegated to niche status in a market dominated by "Wintel" machines (computers using Microsoft Windows software and Intel processors). Macintosh computers run Apple's own UNIX-based operating system. The uniqueness of Apple's computers is a double-edged sword for the company. The graphical interface and form factor of Macintosh computers reflect the aesthetic of Jobs, who has long championed the importance of visually attractive, user-friendly design. The features that distinguish Macs have allowed the company to maintain a loyal following willing to pay premium prices and overlook any interoperability issues with Windows (a factor that Apple largely addressed with its OS X operating system). However, Apple's market share has dwindled as prices for commoditized Windows-based machines continue to fall.

In addition to its proprietary operating system, a traditional differentiator for Apple had been its use of IBM's PowerPC processors (manufactured by IBM and Freescale). However, in 2005 Apple announced it would begin incorporating Intel chips into its PC lines. At the time of the announcement Adobe Systems and Microsoft both pledged continued development of their Macintosh applications. Apple debuted its first Intel-based computers early in 2006, and it completed the transition across its entire line later that year. The company also released software that allows its Intel-based computers to run Microsoft's XP operating system.

Apple shares a long and thorny history with Microsoft. Although it provides an alternative to Microsoft's omnipresent operating system, Apple's relative size and market share restrict its threat to the software giant's stranglehold. The companies have long maintained a working relationship; the Mac-compatible version of Microsoft's popular office suite is a key software title for Apple, and Apple has scored crossover hits with Windows-friendly editions of iPod and iTunes. Soon after Apple released its Safari Web browser, however, Microsoft announced it would cease development of the Apple version of its ubiquitous Internet Explorer.

In an effort to boost its appeal among consumers, the company has opened more than 100 Apple retail stores across the US; it also has stores in Canada, Japan, and the UK. Apple generated 17% of its sales through its retail channel in fiscal 2005.

The company remains focused on product innovations that solidify its popularity in classrooms, Web design shops, and graphic arts studios. Although more than a quarter of its sales are to schools, Apple has felt increasing pressure in that market, particularly from Dell. While Apple continues to roll out unique hardware offerings, the company has also looked to software development to drive sales. Many of the company's multimedia applications -- including iTunes, iMovie, and iPhoto -- are available for free, but the company charges for bundled versions of its software.

TEXAS Instruments

Description

Say hello to the big Texan. One of the world's oldest and largest semiconductor makers, Texas Instruments (TI) is the market leader in digital signal processors (DSPs). Over half the wireless phones sold worldwide contain TI's DSPs, which are also found in many other devices such as DVD players, automotive systems, and computer modems. TI jockeys back and forth with European chip giant STMicroelectronics to be the world's top maker of analog chips; both companies far outpace other analog rivals. TI's semiconductor offerings also include logic chips, microprocessors, and microcontrollers. The company also makes handheld calculators.

During the late 1990s and the early 21st century, the company sold off non-core businesses and made a series of acquisitions to focus on its analog and DSP lines. TI touts its combination of expertise in analog and DSP technologies as a key advantage in allowing it to deliver more highly integrated components for customers in areas such as wireless and broadband communications. The breadth of its offerings means that in some cases it can supply several different kinds of chips for a single electronic device, such as separate chips that enable the telephone and camera features in new wireless phones. The company is also banking on even larger markets for its DSPs in the future, as their use becomes more widespread in areas such as wireline communications and medical equipment.

TI completed its acquisition of Norway-based Chipcon, a developer of radio-frequency (RF) transceiver devices, for about $200 million early in 2006.

TI has sold its sensors and controls business to Bain Capital for $3 billion in cash. The business has been rechristened as Sensata Technologies. In selling the sensors and controls business, TI held on to its radio-frequency identification (RFID) tags business, making chips that are used in contactless payment systems, health care, manufacturing, retail supply chain management, and other applications.

TI derives more than four-fifths of sales from customers outside the US; cell phone giant Nokia accounts for about 10% of sales.