Strategy in Practice

Apple’s Evolving Mission

When Steve Jobs and Steve Wozniak launched Apple in 1976, their primary purpose was to make great computers that people loved to use. Twenty-four years later, Apple was still essentially a computer company when it launched the iPod, a device that took the com- pany into the music industry.

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But did you know that Apple was not the first computer com- pany to make a small, handheld MP3 player with a mini-hard drive that could store your entire music library? That honor goes to Com- paq (later acquired by HP). Compaq developed an MP3 player before Apple, but the company decided this was not an industry and product market that it wanted to enter. Compaq decided not to pursue the MP3 business because it saw its mission as being a computer maker, and music players fell outside of that mission. Instead of refining the design and launching its MP3 player on the market, Compaq sold the technology to a Korean company. In contrast, Apple decided that this product market was not outside its mission.

Apple’s decision was influenced by its external analysis. Apple looked at the multibillion-dollar music business and quickly realized that no company was offering legal digital downloads—so the market was wide open because of the challenges of protecting the files from easily being copied. Apple’s leaders also considered its internal capabilities. Unlike Compaq— which only made computer hardware but not software—Apple had vast experience at writing software for Apple computers. It also had far greater design expertise than Compaq. In fact, the company had long been hailed for the cutting-edge designs of the iMac and some of its other computers. Apple decided to channel its internal capabilities at writing software to navigate an MP3 player. Apple’s software engineers came up with the innovative “flywheel” design for navigating the iPod. Likewise, it channeled its design capabilities toward designing a product that was elegant and small enough to fit in your pocket.

As a result of formulating a strategy to enter the MP3 player market—and subsequently the iPhone and iPad markets— Apple’s mission has broadened. The company no longer focuses on just being a computer maker. In fact, in 2007 it changed its name from Apple Computer Inc. to Apple Inc. to reflect this change in its mission.

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