Apple
Computers are still an important part of its mix, but these days music-related products are at the top of Apple's playlist. The company scored a runaway hit with its digital music players (iPod) and online music store (iTunes). Apple'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. 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. Apple announced availability of its television device, redubbed Apple TV, early the following year.
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 (now AT&T Mobility) 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. Early in 2007 the company finally unveiled a long-rumored Apple mobile phone that combines features of a high-end handset with those of an iPod. Its product line even further diversified, Apple also announced it would drop "Computer" from its name.
Once the world's top PC maker, Apple 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. 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 18% of its sales through its retail channel in fiscal 2006.
The company remains focused on product innovations that solidify its popularity in classrooms, Web design shops, and graphic arts studios. Apple generated 10% of its revenues in fiscal 2006 through its US education channel, a market where it has felt increasing pressure, 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. Late in 2006 Apple acquired UK-based Proximity, a developer of software used to manage digital audio and video assets.
Intel
Intel -- still #1 in semiconductors, and no longer complacent about holding the top spot. The company holds the lion's share in the market for microprocessors that go into desktop and notebook computers, and also into computer servers. Archrival AMD has eaten into Intel's market share in recent years, but the big guy has fought back with faster processors and advanced manufacturing technology. Intel also makes flash memories (where it has lost its former #1 spot to Samsung) and embedded semiconductors for the industrial equipment and networking gear markets. Most computer makers use Intel processors; PC giants Dell and Hewlett-Packard are the company's largest customers, together representing 35% of sales.
While remaining the world's largest semiconductor manufacturer, Intel has been humbled by a series of events, including increased competition in its core chip business, temporary shortages of chipsets, and unsuccessful forays into niche markets. The company has responded with aggressive cost cutting, corporate reorganizations and brand initiatives, and the rollout of new devices meant to re-establish not only its market lead, but also its manufacturing and technical pre-eminence.
In the wake of operational gaffes early in the 21st century, former CEO Craig Barrett launched companywide initiatives to refocus Intel on flawless execution. Among other changes, the company reorganized its communications chips units and R&D operations; terminated the online services (such as server farms and Web hosting) it had trumpeted not long before; and shuttered or sold some of its many acquisitions from the years of the tech boom.
Barrett won a sterling reputation as Intel's manufacturing chief before succeeding legendary CEO Andy Grove. Barrett handed over the CEO reins to president Paul Otellini in 2005. (Barrett succeeded Grove as chairman at that time.) Otellini is just the fifth CEO in the company's 39-year history, and the first non-engineer.
Intel's processor market share stands around 75%, but the company's long-running battle with AMD has heated up as that company's successful Athlon processor has taken market share away from Intel's Pentium models. AMD pulled off its coup through timely introductions of high-performance chips during a period in the early 21st century when Intel experienced uncharacteristic component shortages and manufacturing glitches. Intel struck back with rounds of price cuts and an unusually aggressive schedule for introducing faster Pentium models. AMD filed an antitrust suit against Intel in 2005, alleging that its rival has used improper subsidies and coercion to secure sales.
Intel fired a competitive volley in the summer of 2006 with the rollout of its Core 2 Duo microprocessors and deep cuts in price tags for older processor models. The Core 2 Duo line, initially launching with 10 different models, offers higher performance while consuming less electrical power. The company's Core 2 Extreme processor is targeted at gaming applications. The Core 2 Extreme is designed into high-end PCs from Alienware, Dell, and Gateway, among other manufacturers.
In late 2006 the company doubled down on dual-core processors by launching the Xeon 5300 processor for computer servers -- packaging four computing engines in one microprocessor. The four models in the Xeon 5300 line are roughly four times faster than single-core processors, yet use the same amount of electrical power.
Intel decided in early 2007 to build a 300mm wafer fabrication plant in Dalian, a city in northeast China. The $2.5 billion project, dubbed Fab 68, will be the company's first wafer fab in Asia. The facility is scheduled to begin production of chipsets in the first half of 2010.
The company already has semiconductor assembly and test plants at three sites in China, with a total of five factories, and an R&D center in Shanghai. It also is building a $1 billion assembly and test facility in Vietnam.