Research

Microsoft Game Studios

Description

While much of the usage of its Xbox Live service is by gamers looking to compete head-to-head in multiplayer options of popular games, Microsoft has strategically moved to use Xbox Live as a broader content distribution network. The company has signed a deal with Netflix to enable Netflix customers to access and view their movie queue via the Xbox Live service, as well as other content deals to make downloadable music and videos available to users.

Apple

Description

Apple aims for nothing short of a revolution, whether in personal computing or digital media distribution. The company'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 Mac Pro and MacBook Pro for high-end consumers and professionals involved in design and publishing. Apple scored a runaway hit with its digital music players (iPod) and online music store (iTunes). Other products include mobile phones (iPhone), servers (Xserve), wireless networking equipment (Airport), and publishing and multimedia software. Its FileMaker subsidiary provides database software.

Once the world's top PC maker, Apple has been relegated to relative niche status in a market dominated by Microsoft Windows-based PCs. But the company continues to lead the market in terms of design innovation. Apple's computers run its proprietary UNIX-based operating system, and the company cites the integration and interoperability of its hardware and software as the key advantage over Windows-based PCs.

The uniqueness of Apple's computers is a double-edged sword for the company. The graphical interface and form factor of Apple's computers reflect the aesthetic of co-founder and CEO Steve 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, despite market share gains made in recent years, Apple still trails far behind top Window-based PC vendors such as Hewlett-Packard and Dell.

Only Jobs may have expected the level of success the company's music-related products have enjoyed. Since debuting the iPod in 2001, Apple has provided regular feature updates to the line, including touch-screen displays and wireless capabilities. 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, movies, television shows, and other content. The company has also launched international versions of its music store. In 2008 Apple became the top music retailer by volume in the US market, surpassing Wal-Mart. The following year it rolled out a new demand-based price model (69 cents, 99 cents, $1.29) for music downloads; it also removed the digital rights management (DRM) protection that had essentially restricted the use of iTunes downloads on non-Apple devices.

Early in 2007 the company finally unveiled a long-rumored Apple mobile phone -- the iPhone -- that combines features of a high-end handset with those of an iPod. AT&T was named the exclusive carrier for the phone in the US market; international carrier partners include O2 and T-Mobile. Having already captured a significant share of the smart phone market (where it competes primarily with RIM), the iPhone received an update in 2008 that included faster network speed and a lower price tag. Likely looking toward the development of its iPhone, Apple purchased P.A. Semi, a fabless developer of low-power processors, in 2008. iPhones and related products accounted for 6% of Apple's revenues in fiscal 2008.