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Apple Computer 1999 Case Study



In 1998, Apple CEO Gilbert Amelio was ousted, and Steve Jobs triumphantly returned asinterim CEO-iCEO, as he referred to himself. Jobs took immediate control of Apple


forging a surprising relationship with Microsoft, which included releasing a Macintoshversion of Microsoft's popular office software. To protect Apple's declining market share,Jobs rescinded the licensing of the Macintosh operating system from chief imitator Power Computing.Apple also implemented other cost saving measures, including canceling the Newtonhandheld device and the production of printers. In addition, Jobs streamlined Apple's productline. Pryor to Jobs's return, Apple produced 12 versions of the Macintosh computer, none profitably. Jobs refocused Apple to concentrate on two markets: consumer and professional.The professional series of Macintosh computers would have the prefix "Power," such as thePowerMac desktop series and the powerBook laptop series. The consumer series would havethe prefix "i" for Internet, such as the iMac desktop series and the iBook laptop series.Steve Jobs's real value for Apple has been his willingness to be innovative. Shortly after hisreturn as CEO, Jobs oversaw the introduction of the iMac line of personal computers.The iMac, with its innovative all-in-one design and choice of five colors, was a herald of changes and products to come. In a world that had seen the personal computer becomeanything but personal, the iMac was a sensation. Under Jobs, Apple is again the innovator of the computer market. His leadership has led to the adoption of USB and, later, Firewire portsfor digital connection of the computer to peripherals.It was Apple's introduction of the


that heralded the coming of wirelessinterconnectivity. Apple's current line of products and services ranges from the tiny MacMinito the ultrapowerful PowerMac GS. Introduction of the iPod digital music player and theiTunes music site have again put Apple at the forefront of the digital computing age.

Internal Issues

Vision Statement

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinventedthe personal computer in the 1980s with the Macintosh. Apple is committed to bringing the best personal computing experience to students, educators, creative professionals, andconsumers around the world through its innovative hardware, software, and Internet offerings.

Mission Statement

Apple Computer is committed to protecting the environment, health and safety of our employees, customers and the global communities where we operate. We recognize that byintegrating sound environmental, health and safety management practices into all aspects of our business, we can offer technologically innovative products and services while conservingand enhancing resources for future generations. Apple strives for continuous improvement inour environmental, health and safety management systems and in the environmental quality of our products, processes and services.

Apple Computer has agreed to settle Federal Trade Commission charges that its "Apple Assurance" advertising campaign was deceptive. Apple Assurance offered consumers who purchased Apple products free access to technical support personnel for as long as they owned their Apple product. Apple, however, subsequently began charging these consumers $35 for such access, the agency said. The proposed settlement agreement would require Apple to reinstate its promise to Apple Assurance customers and provide live, free technical support for as long as they own their Apple products. The agreement also would require Apple to reimburse each Apple Assurance consumer who paid a fee for technical support.

"For prospective purchasers of computer products, free access to live technical support is especially enticing," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "Companies that make such offers have to live up to their promises."

According to the FTC's complaint outlining the charges, from September 1992 to April 1996, Apple offered Apple Assurance for most of its hardware products sold in the United States. In October 1997, Apple began charging these consumers a $35 fee for access to technical support. Accordingly, the complaint alleges that the company falsely claimed that Apple Assurance customers would have access to Apple technical support personnel, at no charge, for as long as they owned their Apple product.

The proposed settlement, which was announced today for public comment, would require that the company reinstate its promise to Apple Assurance customers and provide live, free technical support for as long as they own their Apple products. The company would provide this support to the original owner (and that owner's immediate family) of Apple products sold in the United States between September 1992 and April 1996. The proposed consent order also would require Apple to reimburse each eligible person who has wrongly paid any fee for technical support as a result of Apple's actions. Pursuant to the order, Apple would have to send a "Notice of Refund" to each such person. The Notice of Refund must include either a refund check or a notification of a credit to the customer's credit card account for the full amount paid for technical support services.

The Commission vote to accept the proposed consent agreement was 4-0.

An announcement regarding the proposed consent agreement will be published in the Federal Register shortly. The agreement will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaint, the proposed consent agreement and an analysis of proposed consent order to aid public comment are available from the FTC's web site at: and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. 9823005)