Apple Inc.: product portfolio analysis.
Mallin, Michael L. ; Finkle, Todd A.
CASE DESCRIPTION
This case assesses a company's product line mix relative to
two marketing environmental factors and explores four product line
growth strategies using a product portfolio analysis approach. The case
provides a history of the Apple Computer Company and its key product
lines. An approach to analyzing a company's product portfolio is
reviewed and applied to Apple's product lines. Students will be
able to see how each Apple product line fits within the portfolio
analysis tool and will be asked questions relative to possible
strategies for Apple's product portfolio. The case has a difficulty
level 2 and is designed to be covered within one (75 minute) class
period. The required preparation time is about 2 hours. It is
appropriate for marketing principles, marketing strategy, strategic
management, and corporate entrepreneurship classes. The purpose of this
case is to illustrate to students one approach to making decisions about
a company's line of products. The case also stimulates critical
thinking in regards to the future direction of a company's product
portfolio.
CASE SYNOPSIS
The Apple Computer Company is arguably one of the most innovative
technology companies to emerge in the last three decades. Apple, Inc. is
responsible for bringing to market such products as the Macintosh
desktop and the portable computer, iPod and iTunes, and most recently,
the iPhone. The success of the company can be traced to the ingenuity of
their founder and CEO, Steven Jobs. His philosophy has always been to
create products that consumers find easy to use and integrate innovative
technology. Throughout Apple's history it has accomplished these
goals. However, with a growing line of products, a competitive market
landscape, and an unpredictable technology lifecycle curve, the company
faces challenges as to the direction of its product lines. The case
gives an overview of a tool that is used to analyze a company's
product line portfolio and applies it to Apple, Inc.'s array of
products. Questions for discussion are provided to enable students to
use critical thinking skills in applying the case material.
INTRODUCTION
Apple, Inc. stands for innovation in personal computing and digital
media distribution. The company aims for nothing short of a revolution
when designing, developing, and distributing its line of products
(www.Hoovers.com). Apple's products range from a host of desktop
and portable computers geared for the consumer and education markets,
digital music players (iPod), online music store (iTunes), and
SmartPhone (iPhone). Applications are designed for user convenience and
productivity.
Competition for market share in any one of Apple's product
offerings is fierce and top competitors come from a formidable list
which include Dell, Hewlett Packard, Microsoft, and Nokia (to mention a
few). Users of Apple's products can be fickle, which causes a
revolutionary product like the iPod to give way to newer technologies
like the iPhone within the span of five years. Thus, the ability to
accurately assess and forecast the market demand for products can mean
the difference between corporate profit and loss.
At the helm of these important decisions is Apple's visionary
CEO, Steven Jobs. Jobs understood that given the competitive landscape
and market growth opportunities for Apple's products, it is
critical for him and the company to periodically assess its product line
portfolio. This case provides the background of Apple Inc., its core
product lines, and presents the feasibility of utilizing a product line
portfolio tool to assist Jobs and Apple in identifying strategies to
hold, build, harvest, or divest their product lines.
HISTORY OF APPLE, INC.
The Apple Computer Company was founded by two college dropouts
Seven Jobs and Steven Wozniak in 1976. Within 2 months of building their
first computer circuit board in their garage, they had sales orders for
200 units. The venture was capitalized from money raised by the sale of
Job's van and Wozniak's HP calculator and the company was
named after a 220 acre farm in Oregon that Jobs was part owner (Wozniak
and Smith, 2006; Young and Simon, 2005). Working as a team, Wozniak was
the technical genius and Jobs was the visionary whose mission was to
bring an easy-to-use computer to the market (Yoffie and Slind, 2008).
Fueled by the successful launch of the Apple II computer (a simple
machine that people used straight out of the box), which sold more than
100,000 units, Apple began selling publicly offered stock by the end of
1980.
Jobs was forced to leave Apple in 1984 after the company sustained
net income losses of 17%. In the years leading up to this crisis, Apple
introduced the Macintosh computer ("Mac") which, despite its
sleek and user friendly design, sales lagged. The estimated reasons for
the collapse in sales were the slow processing speeds and incompatible
software.
Jobs was replaced by John Scully, whose focus was to improve the
Mac design to lead the computer industry in desktop publishing and
provide a more user friendly alternative to users of IBM compatible
machines. Under Scully, Apple was able to drive down costs by shifting
much of its manufacturing to subcontractors. But because gross margin on
Apple products fell to a 10 year low in 1993, Apple's board decided
to appoint a new company president. This move prompted Sculley to leave
Apple. From 1993 to 1997, Apple cycled through two more company heads,
Michael Spindler and Gilbert Amelio.
Spindler's focus was on the education (K-12) and desktop
publishing markets which Apple held 60% and 80% market share
respectively. Expansion internationally was a priority under Spindler
since 45% of 1992 sales came from outside the U.S. To slash costs,
Research and Development spending was cut and 16% of Apple's
workforce was reduced (Yoffie, 2005).
Despite these efforts, Apple's customers became disloyal. A
1995 Computerworld survey revealed that almost half of Apple's
users expected to buy an Intel-based PC (Yoffie, 1996). This consumer
sentiment was realized as Apple reported a $69 million loss for its
first fiscal quarter of 1996 (Kehoe, 1996). Gilbert Amelio, an Apple
director replaced Spindler as CEO in 1996. He saw the need to update the
Mac operating system and announced that Apple would acquire NeXT
Software Company to refresh the Mac OS. NeXT founder, Steve Jobs was
hired on as part time advisor and ultimately returned as the interim CEO
of Apple when Amelio was released due to poor company earnings under his
leadership (Apple lost $1.6 billion during this period).
In 1997 Apple was once again under the control of Steve Jobs and he
wasted little time in turning the company turnaround. He arranged for
Microsoft to invest $150 million in Apple. He was committed to making
Apple's products compatible with Microsoft Office, a move that
pleased many users (Moisescot, 2008). Products such as the iMac were
introduced allowing consumers to "plug and play" peripherals
compatible with Windows-based machines. During this period, Jobs changed
Apple's image to a "hip" alternative to other
brands--computers that offered a cutting-edge, tightly integrated user
experience (Edwards and Burrows, 2007). The company thrived under
Job's visionary leadership. By the new millennium, digital
convergence of the personal computer with other consumer electronics had
become a reality and in 2010, Jobs was named Fortune Magazine's
"CEO of the decade" (November 5, 2009). However, to continue
this trend of innovative product offerings, Jobs and Apple Inc. needed
to remain in front of the demand curve by strategically designing and
marketing new products to capture the productivity, communication, and
entertainment needs of a very loyal customer base.
APPLE PRODUCT LINES AND BUSINESS STRATEGY
Since 2001, Steve Jobs worked to make Apple, Inc. a household name
and a cultural force (Deutschman, 2000). Apple offers a range of
personal computing products including desktop and portable personal
computers, related devices, and peripherals. Software products include
the Mac OS X (proprietary operating system software for the Mac), server
software and related solutions, professional application software,
consumer education, and business oriented application software. Apple
also designs, develops, and markets to Mac and Windows users its family
of iPod digital music players and its iPhone mobile communication
devices, along with related accessories and services, including the
online distribution of content through the Apple iTunes Store. This
array of product offerings has made Apple Inc. one of the most
financially successful technology companies of the last decade. Exhibit
1 illustrated the annual net sales revenue of Apple products since 2005.
Apple's business strategy is to "bring the best personal
computing, portable digital music and mobile communication experience to
consumers, students, educators, businesses, and government agencies
through innovative hardware, software, peripherals, services, and
Internet offerings." (Apple Inc. Annual Report, 2008). This
strategy allows Apple to leverage its unique ability to design and
develop its own operating system, hardware, application software, and
services to provide its customers new products and solutions with
superior ease-of-use, seamless integration, and innovative industrial
design. Continual investment in research and development is believed to
be the key to capitalizing on the convergence of the personal computer,
digital consumer electronics, and mobile communications market. However,
like many companies that offered a broad spectrum of product and service
lines, some means to periodically assess and adjust the product/service
portfolio is necessary. The following section describes a tool that Jobs
and Apple could utilize to examine and make some strategic decisions
relative to their line of products.
PRODUCT PORTFOLIO ANALYSIS BACKGROUND
Utilizing a product portfolio analysis, Jobs and his management
team could potentially evaluate the various Apple products to determine
which are expected to be the most profitable to the firm in the future.
Such an analysis would be important because it would impact the
allocation of resources, the amount of cash available to fund other
Apple ventures, and signal to shareholders the direction of the company.
Typically, a portfolio analysis is performed at the product line
level of the firm and each product line usually represents a strategic
business unit (SBU) within the scope of the company (Ingram, LaForge,
Avila, Schwepker, and Williams, 2009). Although each SBU should have an
independent management structure responsible for a single product
line's profits and losses, it could be tailored to a company like
Apple where a single set of marketing and sales goals are common to the
entire corporation.
For firms like Apple with multiple brands or product lines, a
product portfolio analysis is necessary to determine where resources
should be applied or reallocated to ensure the maximum profitability of
the corporation. Maintaining product lines that commanded a substantial
share of a competitive and growing market is the ultimate goal while
deciding to divest or sell off products lines that lag in growth and
competitive market share. However, such decisions are not easy or
apparent for firms. This is because forecasts for product demand are not
always accurate (take for example the quick obsolescence of Apple's
iPod shuffle--or in earlier years entertainment technologies like the
laser disc, mini CD, and VHS Camcorders). These examples suggest that
even the best business and marketing plans may not account for rapidly
easing of demand for such products. In addition, many competitors
marketed the same or similar products, which impact a product
line's successful contribution to profit margin. To account for
both the market growth rate (demand) of a product line and its market
share strength (share compared to its largest competitor), the Boston
Consulting Group (BCG) developed a product portfolio analysis tool.
BCG GROWTH-SHARE MATRIX
The BCG Growth/Share matrix emerged as a popular portfolio analysis
methods used by industry practitioners. It is a tool that could be
applied to Apple's array of products. This tool enabled firms to
classify all of their product lines in a 2 x 2 matrix according to the
dimensions of relative market share and market growth rate. An example
can be seen in Figure 1.
The dimension of relative market share (horizontal axis) is defined
by the product line's market share as compared to its largest
competitor in the industry (Farris, Bendle, Pfeifer, and Reibstein,
2006). For example, in the personal computer industry, Apple's
largest competitor was Dell (with 26% market share). Therefore,
Apple's (9%) share of the personal computer market relative to Dell
was approximately .34 (9/26). Thus, the delineation between low and high
relative market share for a particular product line is 1.0. Market
growth rate (vertical axis) is a measure of how attractive a particular
market is to the firm and is quantified by the annual growth rate
(usually expressed as percent growth) for that product line. For
example, the projected growth rate of the entire personal computer
market would be predicted by industry analysts like the Gartner group
(www.gartner.com) and based on market research, forecasting, and expert
opinion.
Given the estimates of relative market share (low-high) and its
market growth rate (lowhigh), a product line can be categorized in one
of the four cells illustratively named for the amount of resources
generated from and required from the firm (Grewal and Levy, 2010).
Figure 1 illustrates that a product line that is considered to be a star
is one where the expected market demand (growth) is high and relative
market share is also high. Resource requirements for stars suggested
that a heavy investment in production and promotion are required.
Financial resources to fund these activities typically come from product
lines that generated cash (i.e., cash cows).
Product lines that are in low-growth markets but have high relative
market share are cash cows. Such product lines had been stars at some
point in time but because of a decrease in product demand (e.g., due to
market saturation, new product introductions, etc.), financial resources
are unnecessary for research and development and new production
facilities. Instead, cash could be harvested from these product lines to
fund new up and coming product lines in higher-growth markets (i.e.,
question marks). Question marks are product lines that are in
high-growth markets but do not overcome the larger competitors due to
higher levels of relative market share.
To compete more aggressively, significant financial resources are
needed to market and promote these product lines. Ideally, the strategy
is to build question marks into stars, however based on the question
mark's position in the portfolio analysis matrix, it could move
left and become a star (if market share increased) or it may move south
(if demand for the product line decreased) and divestiture of the line
becomes an option (i.e., dogs). Dogs are product lines with low market
growth rates and low relative market share. Unless the firm has a
compelling reason to keep these product lines in the product portfolio
(e.g., they are needed to complement another product or service) strong
consideration should be given to divesting them. The likelihood that
dogs will become stars is low and the resources needed to sustain these
product lines needs to be taken from others that contribute to the
company's revenue and profit goals.
ASSESSING APPLE'S PRODUCT LINES
Desktop and Portable Computers
Steve Jobs and Steve Wozniak built Apple, Inc. from the development
of its flagship line of desktop personal computers, known as the
"Mac" (Kahney, 2004). Since its introduction in 1984, the Mac
computer had undergone many transformations but had always been known
for its stylish design, high performance levels, and competitive price
(Linzmayer, 2004). Today's version of the iMac desktop computer,
targeted at consumer, education and business customers features two duo
processors running at up to 3.06GHz, up to 4GB of SDRAM memory, a faster
graphics card option, built-in sight video camera, wireless networking,
and Bluetooth compatibility. Over the last decade, the desktop computer
market has been dominated by a few large Apple competitors. Exhibit 2
illustrates that currently, over 60% of the market is shared by Dell
Computer (26.2%), Hewlett Packard (25.7%), and Apple (8.8%)
(www.gartner.coma). The industry outlook for desktop computer demand
shows a downward trend, as last year, desktop computer sales (in units)
registered only a modest increase of 2.9% and the forecast for 2010
suggests a decline of about 20.2% (www.physorg.com). This trend is
illustrated in Exhibit 3.
However, Apple's outlook for its line of laptop personal
computers is a bit brighter. Jobs introduced the first laptop (notebook)
computer in 1991. The original "PowerBook" line was very
successful and evolved over the next 18 years to the current version
known as the MacBook. This portable computer was designed specifically
for consumer and education users; included a 13-inch widescreen display,
a built-in video camera, and a magnetic power adapter. Newer MacBook
models featured an all-metal enclosure, LED-backlit glossy widescreen
display, Intel Core 2 Duo processors running at up to 2.4GHz, built-in
wireless networking and Bluetooth capabilities (Kahney, 2008).
Although Apple continues to chip away at market share from its
biggest competitor (Dell), it still lags behind (see Exhibit 2). But,
the market forecast for portable computer (laptop/notebook) sales
suggests that it is a growing segment with industry experts predicting
an annual (2009-2010) increase upwards of 50%, a trend primarily driven
by the demand for smaller devices and ubiquitous internet access
(www.gartner.com (a)).
iPod
Jobs and Apple were late to enter the MP3 market. In 2001 they
began selling their line of iPods (versions included a full size, mini,
nano, and shuffle). The iPod was released to compete with traditional
MP3 players and its major advantages were its compact size, large
storage capacity, and speed of uploading music. The original iPod was
sleek and small, weighing only 6 V2 ounces. It had the ability to hold
up to a thousand songs in its huge five gigabyte hard drive and could
load one thousand songs in as little as ten minutes. Its battery could
hold a charge for up to 10 hours and it was simply integrated with its
popular iTunes online music store.
Apple's iTunes was the first to introduce an online store for
selling music downloads and quickly gained market share as consumers
quickly took to this new and innovative way of obtaining music (Boddie,
2005). For as little as 99 cents per song, consumers could choose music
from the major record labels and thousands of independent ones (Yoffie
and Slind, 2008). Today, the popularity of the iPod since its inception
puts it on track to become the all time largest selling consumer
electronics product (Mark and Crossan, 2005).
To date, over 71% of all industry MP3 player sales are Apple iPods
relative to Scandisk's 11% share and Microsoft's 4%. Exhibit 2
illustrates Apple's dominance in this market (Van Buskirk, 2009).
However, demand for MP3 players is shrinking (see Exhibit 3) and based
on other devices that can provide music playing capabilities, there are
risks that the MP3 player is due for a market freefall (Hesseldahl,
2008). Sales of 2009 MP3 player units registered about 9.9 million, down
16.2% from 2008 (Elmer-Dewitt, 2009). However, projections for 2010,
suggest a more modest decline of about 2.1% over 2009 sales. Some
reasons for the slowing decline are the introduction of more
feature-rich models like the iPod touch, which includes a touch screen
and wireless access to the internet and thousands of "apps".
iPhone
In 2007 Apple joined forces with AT&T and introduced the
iPhone. Marketed as the most sophisticated "smart phone", the
iPhone featured music playing capabilities, a 3.5 inch high quality
interactive touch screen, a 2 mega-pixel camera, GPS capability, and
access to thousands of Internet applications. Alliances with Yahoo!,
YouTube, and Google provided popular services and video applications.
The original iPhone models sold for between $399 and $499 and despite
its initial selling price, iPhone sales exceeded 270,000 in the first 30
hours of its U.S. debut. The iPhone was a big hit! However, the
introduction of the iPhone was not without its challenges. Users
complained that the network access was slow, battery was not
replaceable, and memory capacity could not be increased. In response to
such customer feedback, Apple released a newer and faster version in
2008 that addressed some but not all of the problems. Upon releasing its
fourth generation (G4) of the iPhone, Apple users once again experienced
problems--this one stemming from a poorly designed antenna that would be
blocked when users handled the phone. In response to this latest
"hiccup", Apple provided consumers a case, at no cost as a
remedy.
The iPhone's shortcomings allowed competitors to maintain
market share in the smart phone industry. Recent industry market share
estimates indicated a surge in iPhone sales between 2008 and 2009 (from
2.8% to 14.4%) (www.gartner.comb). Despite this rapid increase in
demand, Apple's share of the smartphone market still lags relative
to industry leaders Nokia (36.4%) and Research in Motion (19.9%)
(O'Brien, 2009). The good news for Apple is that the growth and
demand outlook for the smartphone market remains strong as industry
experts predict the attractiveness of this market continuing for the
next few years (Sutherland 2009).
MARKETING AND DISTRIBUTION STRATEGY
Apple's overwhelming success can be attributed to the
marketing and distribution strategies for the iPod and iPhone (arguably
its two most innovative products). Steve Job's overall approach to
marketing Apple products is to produce fresh and imaginative products
that have a great style and design with sleek and enticing
communications direct to the consumer (http:Wwww.vertygoteam.com). An
effective advertising strategy for Apple was to depict their products as
trendy, cool, and hip (e.g., silhouettes of young people dancing with
iPod headphones, iPhone user talking with friends while simultaneously
accessing popular phone "apps"). It was cool and prestigious
to own Apple products.
Both the iPod and iPhone entered markets that were already mature
and saturated. Portable music devices such as the "walkman"
enabled users to listen to music on the go as early as the 1980's.
However, the iPod's early ability to store and retrieve up to 1000
songs revolutionized the portable music product line. By 2008, the iPod
was responsible for Apple's rapid success as a company. Not an
instant success, when the iPod was introduced in 2001 it was initially a
flop. Some say it was a product ahead of its time. But one factor (and
early iPod "hiccup") was that internet connections were
initially very slow and until broadband became more common, high speed
music downloads were problematic. In addition, Apple invested very
little in the original communication and advertising of the iPod,
relying mostly on word of mouth and "buzz" communication.
The iPhone also entered the saturated mobile phone market but not
as a direct competitor to other phones designed to make phone calls or
send text messages. Apple managed to develop a revolutionary product
that some hailed as 5 years ahead of its competitors. The iPhone's
touch user interface and sleek/trendy design guaranteed its position as
a one of a kind product crossing between a mobile communication devise
and a laptop computer (http://www.vertygoteam.com). The prestige of
owning and using an iPhone has become a motivating factor in consumer
adoption of the product ("there's an app for that"). Its
success and rapid growth in share has sparked other companies to mirror
its functionality (e.g., the Android). There were however, several
marketing glitches in Apple's introduction of its iPhone. For one,
the introductory price of the first iPhone was $599. Within 3 months of
the product launch, the price was reduced to $399. Although rebates were
made available to early adopters, Apple's most faithful customers
might have felt betrayed and exploited. A second mistake was forcing
customers to sign with AT&T, the exclusive carrier of the iPhone. An
oversubscribed AT&T network caused users to experience dropped
calls, poor reception, and prevented consumers under contract with other
mobile providers to obtain an iPhone.
The primary distribution strategy for Apple products are retail
stores. These stores are known as "tech shrines" because they
provide a space where consumers can see feel and touch all of the Apple
products. Similar to Best Buy's version of the "Geek
Squad", retail consultants are available to answer questions about
the products and consumers can consult experts at the Apple store's
"genius bar". Apple stores are a place where users of Apple
products can get service and all consumers can try out new products and
get excited about what the company has to offer. If imitation is the
best form of flattery then Apple is doing something right with its
instore distribution strategy. Heavy hitting tech firms like Microsoft
and Sony have begun to mirror Apple's retail store environments.
SUMMARY
Steve Job's business strategy for Apple Inc. centers on its
ability to provide innovative computer, portable digital music, and
mobile communication products to its customer base. Such markets are
characterized by rapid technological advances in both hardware and
software resulting in the frequent introduction of new products with
competitive price, feature, and performance characteristics. Price
competition in these markets has been intense. Apple competitors who
sold personal computers based on other operating systems aggressively
cut prices and lowered their product margins to gain or maintain market
share. In addition, as the personal computer industry and its customers
placed more reliance on the Internet, an increasing number of Internet
devices that were smaller, simpler, and less expensive than traditional
personal computers were emerging.
The mobile communications industry is also highly competitive and
includes several large, well-funded and experienced companies. Jobs and
Apple anticipate that competition for SmartPhone customers will
intensify as others attempt to imitate the iPhone's functionality
and applications. Apple's music products and services face
significant competition from other companies promoting their own digital
music and content, including those offering free music and video
services. Competitors with substantial resources may be able to provide
such products and services at little or no profit or even at a loss to
compete with Apple's iPod offerings.
Steve Jobs understands that the future of Apple Inc. rests with its
ability to continue its strategy of offering new and innovative
products. So far Jobs has done exactly that. Unlike other technology
companies who hold focus groups and conduct market research, "Apple
does not ask people what they wanted, it tells them what they were going
to want next" (Grossman 2010, p 37). The main challenge for Steve
Jobs, the visionary, is to be able to periodically and accurately assess
their product line portfolio and to remain competitive and maximize
Apple's corporate earnings. This case demonstrates how Apple might
use the BCG Growth-Share portfolio analysis tool to accomplish this
task.
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Michael L. Mallin, The University of Toledo
Todd A. Finkle, Gonzaga University
Exhibit 1: Apple Inc. Net Sales by Product Line 2005-2010
(in millions of dollars)
Product Line 2005 2006 2007
Desktop Computers (a) 3,436 3,319 4,020
Portable Computers (b) 2,839 4,056 6,294
iPod 4,540 7,676 8,305
Other music products (c) 899 1,885 2,496
iPhone and related products NA NA 123
Peripherals and other hardware (d) 1,126 1,100 1,260
Software, services, and other sales (e) 1,091 1,508 628
Product Line 2008 2009 2010 *
Desktop Computers (a) 5,603 4,324 1,532
Portable Computers (b) 8,673 9,535 2,228
iPod 9,153 8,091 1,861
Other music products (c) 3,340 4,036 1,327
iPhone and related products 1,844 13,033 5,445
Peripherals and other hardware (d) 1,659 1,475 472
Software, services, and other sales (e) 2,207 2,411 634
* Quarter ending March 27, 2010.
Sources: Apple financial statements (www.apple.com),
Yoffie and Slind (2008).
(a) Includes iMac, eMac, Mac Mini, Mac Pro, Power Mac, and Xserve
product lines.
(b) Includes MacBook, iBook, MacBook Pro, and PowerBook product
lines.
(c) Includes sales from iTunes Music Store, iPod-related services,
and iPod related accessories.
(d) Includes sales of Apple-branded and third-party displays,
wireless connectivity and networking solutions, and other hardware
accessories.
(e) Includes sales of Apple-branded operating system, application
software, third-party software, AppleCare Services, and Internet
Services.
Exhibit 2: Top competitors by Product Line 2008-2009
(% share of units sold)
Product Line 2008 2009
Desktop and Portable Computers
Apple 8.6 8.8
Dell 29.9 26.2
Hewlett Packard 26.0 25.7
MP3 Players
Apple 72.0 71.0
Scandisk 10.0 11.0
Microsoft 3.0 4.0
SmartPhones
Apple 2.8 14.4
Nokia 47.4 36.4
Research in Motion 17.3 19.9
Sources: Van Buskirk (2009), www.gartner.com (a),
www.gartner.com (b), www.gartner.com (c), Hefflinger (2008),
Schonfeld (2010).
Exhibit 3: Industry Growth Estimates by Product Line 2008-2010
(in millions of units sold)
% Growth
Product Line 2008 2009 ('08-'09)
Desktop Computers (a) 133.7 137.6 2.9
Portable Computers (b) 141.6 168.2 18.8
MP3 players 11.8 9.9 (16.2%)
SmartPhone/related products 139.3 172.4 23.8
% Growth *
Product Line 2010 * ('09-'10)
Desktop Computers (a) 109.8 (20.2)
Portable Computers (b) 256.3 52.4
MP3 players 9.7 (2.1)
SmartPhone/related products 250.5 45.3
* Projected Sources: www.physorg.com, Southerland (2009),
Elmer-Dewitt (2009), Schonfeld (2010), Purdy, J. (2009).
Figure 1: Boston Consulting Group--Growth Share Matrix
Market Relative Market Share
Growth
Rate High Low
High Star Question Mark
* High growth and share * High growth, low share
* Profit potential * Build into stars or phase out
* May need heavy investment * Requires cash to hold
to hold/sustain position
Low Cash Cow Dog
* Low growth, high share * Low growth and share
* Established and successful * Low profit potential
product line
* Source of harvesting cash * Consider divesting product
for other product lines line
