APPLE

COMPUTER

INC.

Preliminary

Confidential

Offering

Memorandum

Any

reproduction

or

distribution

of

this

offering

memorandum,

in

whole

or

in

part,

or

the

divulgence

of

any

of

its

contents,

without

the

prior

written

consent

of

Apple

is

prohibited.

Copy

of

_

APPLE

COMPUTER

INC.

Preliminary

Confidential

Offering

Memorandum

150,000

shares

of

Common

Stock

at

$

per

share

with

a

par

value

of

$0.00

per

share

The

information

contained

herein

is

deemed

confidential

by

the

company,

has

not

been

released

publicly

and

is

disclosed

for

the

sole

purpose

of

evaluation

by

a

potential

purchaser

of

the

company's

Common

Stock.

Any

estimates

or

projections

as

to

events

that

may

occur

in

the

future

(including

projections

of

income,

expense

and

net

income)

are

based

upon

the

best

judgment

of

company

management

as

of

the

date

of

this

prospectus.

Whether

or

not

such

estimates

or

projections

may

be

achieved

will

depend

upon

the

company

achieving

its

over-all

business

objectives,

including

availability

of

funds

resulting

from

the

sale

of

the

shares

offered

herein.

The

shares

are

offered

to

a

limited

number

of

individuals

qualified

as

sophisticated

investors,

and

as

a

private

placement

without

regis-

tration

under

the

Securities

Act

of

1933

in

reliance

upon

specific

exemptions

under

that

act

relating

to

transactions

not

involving

a

public

offering

or

solicitation.

Transfer

of

the

shares

is

subject

to

all

of

the

requirements

of

the

Federal

and

California

Securities

Act.

THE

SALE

OF

THE

SHARES

WHICH

ARE

THE

SUBJECT

OF

THIS

OFFERING

HAS

NOT

BEEN

QUALIFIED

WITH

THE

COMMISSIONER

OF

CORPORATIONS

OF

THE

STATE

OF

CALIFORNIA.

THE

ISSUANCE

OF

SUCH

SECURITIES

OR

THE

PAYMENT

OR

RECEIPT

OF

ANY

PART

OF

THE

CONSIDERATION

THEREFOR

PRIOR

TO

SUCH

QUALIFICATION

IS

UNLAWFUL.

THE

RIGHTS

OF

ANY

PARTY

TO

THIS

OFFERING

ARE

EXPRESSLY

CONDITIONED

UPON

SUCH

QUALIFICATION

BEING

OBTAINED.

THE

COMMISSIONER

OF

CORPORATIONS

DOES

NOT

RECOMMEND

OR

ENDORSE

THE

PURCHASE

OF

THESE

SECURITIES.

SUMMARY

OF

PROPOSED

OFFERING

Number

of

Shares

Offered

The

maximum

number

of

shares

offered

will

be

150,000

shares

at

$

per

share

with

maximum

proceeds

to

the

company

of

$

Apple

retains

the

option

to

close

the

offering

at

100,000

shares

at

per

share

with

proceeds

of

i i

Risk

Factors

Operating

History:

Apple

Computer

Inc.

is

a

new

company

which

has

not

established

a

long

history

of

operation

upon

which

to

base

opinions

of

accuracy

of

forecasts,

financial

projections

or

operations

efficiency.

Manufacturing:

Apple

has

experienced

extreme

difficulty

in

obtaining

its

custom

injection

molded

cases.

There

is

no

assurance

that

this

problem

will

be

solved

through

establishing

additional

sources

of

supply.

Cash

Flow

vs

Rapid

Growth:

Apple

management

expects

that

rapid

growth

and

potential

market

fluctuations

may

present

severe

cash

flow

management

difficulties.

Management:

Apple

Computers'

Management

team

is

young

and

relatively

in-experienced

in

the

high

volume

consumer

electronics

business.

iii

TABLE

OF

CONTENTS

Introduction

and

Summary

1

Product

and

Marketing

Plan

1

The

Market.......................

4

Product

Plan

15

Marketing

Plan

19

Competi

tion

21

Operating

Plan

Organization

and

Staffing

25

Manufacturing

Plan..............

32

Financial

Plan..................

34

Appendix

INTRODUCTION

AND

SUMMARY

Apple

Computer

Inc.

began

as

Apple

Computer

Co.,

a

partnership,

in

January

of

1976.

The

company

was

operated

from

Los

Altos,

California,

supplying

Apple

I,

a

single

board

hobby

computer,

until

January

of

1977.

Apple

I

was

successfully

accepted

among

the

then

embryonic

computer

hobbyist

community

and

several

hundred

systems

were

sold.

During

the

latter

part

of

1976

it

became

evident

to

the

two

founders

that

a

much

larger

and

more

profitable

market

would

come

into

existence

as

small

computers

moved

from

the

hobby

market

into

the

home

(consumer)

market.

By

January

of

1977,

a

third

member

was

identified

who

also

supplied

$250,000.00

initial

financial

backing,

and

the

company

was

incorporated;

a

second,

more

consumer

oriented

product,

Apple

II,

was

defined,

and

production

and

marketing

plans

were

laid

for

1977.

Shipments

of

Apple

II

began

in

late

May.

By

the

end

of

September,

cumulative

revenues

were

$756,391

with

a

net

retained

earnings

of

$48,882

Three

new

mainframe

products

and

new

peripherals

had

been

defined

and

scheduled

for

introduction

from

October

'77

to

June

'79,

over

180

authorized

dealer

locations

had

been

signed

up

and

stocked,

and

a

separate

European

distribution

company,

Eurapple,

had

been

structured

and

staffed.

The

current

business

plan

indicates

the

company's

revenues

for

fiscal

78

will

be

in

excess

of

13

million

with

earnings

of

2

million.

Capital

needs

will

be

approximately

3

million*

which

the

c9mpany

intends

to

raise

from

a

combination

of

equity

financing,

profits,

and

long

term

debt.

PRODUCT

AND

MARKETING

PLANS

THE

MARKET:

The

Personal

Computer

Market

is

defined

to

include

all

computers,

related

peripherals

and

software

to

be

sold

for

non-business

uses.

Non-business

uses

are

defined

as

uses

not

specifically

economically

justified

in

a

strictly

business

environment,

e.g.

a

computer

sold

specifically

to

keep

inventory

and

financials

for

a

one

owner

hardware

store

would

be

defined

here

as

a

business

use.

A

computer

sold

to

a

doctor

for

use

at

home

to

maintain

and

update

a

personal

diagnostics

data

base

which

he

mayor

may

not

use,

promote,

charge

for

in

his

practice

is

defined

as

part

of

the

personal

computer

market.

*

Note:

An

additional

2

million

will

be

needed

by

2nd

quarter

to

pay

deferred

'78

income

taxes.

-1-

The

market

for

Apple's

products

is

young,

growing

rapidly

(approximately

250%/yr),

diverse

in

character,

highly

dependent

on

new

technology,

and

subject

to

the

whims

of

the

general

consumer.

It

is

generally

true

that

new

technology

is

applied

in

the

consumer

market

long

after

it

has

been

developed

and

used

in

the

military

or

industrial/commercial

markets.

Such

is

the

case

with

computer

technology.

The

average

consumer

today

is

aware

of

the

benefits

and

problems

that

extensive

use

of

computers

has

brought

to

the

business

world,

but

has

very

little

concept

of

the

functions

he

can

perform

or

the

resultant

benefits

to

be

obtained

from

operating

his

own,

personal,

home

computer.

Some

of

these

benefits

are

listed

below:

personal

pleasure

and

enjoyment

increased

variety

of

entertainment

time

saved

money

saved

better

financial

decisions

increased

leisure

time

complete

security

of

personal

information

elimination

of

wasted

paper,

energy

and

storage

space

increased

personal

comfort

improved

standard

of

living

increased

learning

efficiency

increased

knowledge

of

computers

and

related

technology

protection

from

fire,

theft,

and

personal

injury

non-verbal

communications

ability

reduced

pollution

The

following

table

provides

a

perspective

of

the

relative

size

of

the

personal

computer

market

as

compared

to

other

consumer

oriented

electronic

products.

(See

Table

I)

Apples'

overall

strategy

for

attacking

(developing?)

this

market

is

to

simultaneously

maintain

a

posture

of

both

product

and

quality

leadership.

As

is

the

case

with

all

new

markets,

the

advantage

of

being

first

is

immensely

important,

and

may

result

in:

1.

Large

market

share ....

35%

long

term.

2.

Competition

edge

-

competitors

must

copy

and

therefore

lag

in

product

availability

and

cost.

3.

Greater

ability

to

determine

proper

new

product

directions

through

more

extension

customer

contact

and

feedback.

-2-

MARKET

SIZE

BY

PRODUCT

TYPE

Table

II

forecasts

the

personal

computer

market

place

segmented

into

mainframes

and

peripherals.

Units,

retail

selling

price

and

total

dollars

are

included

for

both.

The

technique

used

to

forecast

the

value

of

the

peripherals

market

consists

of

estimating

the

aged

dollar

expenditure

for

existing

and

future

products

as

a

percentage

of

the

original

purchase

price.

For

example,

an

average

1976

system

such

as

an

IMSAI

8080

will

have

approximately

two

times

its

purchase

price

spent

for

peripherals

over

the

useful

lifetime

of

the

system.

Apple

management

has

estimated

that

this

ratio

will

increase

to

2.5

through

1985

and

then

begin

decreasing

again.

This

occurs

because

of

the

embryonic

nature

of

the

market

and

its

expected

rapid

growth.

Initially,

large

numbers

of

various

peripherals

will

be

developed

and

offered

for

sale

as

"add-on"

items.

As

the

market

develops

some

of

these

devices

will

become

standard

items

sold

with

every

mainframe.

As

these

"standard"

items

are

determined,

they

will

be

incorporated

into

the

mainframe,

thereby,

reducing

the

ratio

of

peripheral

to

mainframe

dollars.

In

addition,

as

the

market

matures,

we

expect

that

several

specific

appli-

cations

or

groups

of

applications

will

become. large

enough

segments

of

the

market

that

systems

specifically

tailored

to

these

segments

will

be

offered,

again

incorporating

various

peripherals

into

the

mainframe.

Each

of

these

factors

was

considered

in

estimating

the

ratios

shown

in

Table

III.

Table

IV

shows

the

total

peripheral

sales

for

the

personal

computer

market

as

estimated

by

Apple

Computer

Incorporated.

The

personal

computer

market

(non-business)

may

be

segmented

as

follows:

Hobby

Market

-

computer

technology

used

on

a

personal

basis

in

the

home

by

a

relatively

sophisticated

person

who

is

capable

of

de-

signing,

constructing

and

programming

his

own

equipment.

This

market

began

developing

in

1975

as

a

result

of

the

development

of

the

single

chip

microprocessor.

Entertainment

Market

-

The

first

truly

large

market

(;:;;;$500

million

in

1978)

is

currently

comprised

of

video

games

such

as

pong,

hockey,

etc.

The

application

of

microprocessor

tech-

nology

to

this

market

provides

the

user

with

the

ability

to

create

his

own

games

(both

audio

and

video)

and

expand's

the

users

horizon

to

creating

computer

color

graphic

displays

and

computer

generated

music.

Apple

expects

to

-4-

participate

only

in

the

"top

end"

of

the

video

games

market

and

to

be

a

dominant

factor

in

the

color

graphics

and

music

markets.

Programmable

Personal

Calculator

Market

-

This

market

is

comprised

of

the

current

users

of

prpducts

similar

to

the

TI

SR-52

and

the

HP

67/97

calculators.

Apple

estimates

the

market

to

be

in

excess

of

$100M

in

1977.

Our

products

offer

increased

capability

and

more

care

of

use

features

than

any

of

the

portable

products

currently

available.

It

is

felt

that

Apple

products

although

truly

portable,

are

not

sufficiently

small

in

physical

size

to

gain

a

dominant

share

of

this

business.

We

do

not

intend

to

expend

a

major

effort

to

penetrate

this

business,

but

expect

that

the

advantages

of

our

product

will

capture

the

top

end.

Educational

Market

-

The

institutional

education

market

for

computers

is

estimated

at

$150M

annually

today

with

essentially

no

participation

(~.6%)

from

small

(less

than

$5000.00)

systems.

It

is

expected

that

governmental

sluggishness

will

prevent

an

extremely

rapid

change

over

to

small

systems,

resulting

in

a

growth

from

about

$lM

in

1977

to

approximately

$35M

in

1982.

Home

Market

-

The

major

distinguishing

characteristic

of

the

true

home

computing

market

is

the

relative

lack

of

technical,

mathematical

or

scientifically

related

interest

of

the

user.

In

addition,

due

to

a

general

lack

of

knowledge

of

the

benefits

offered

by

the

computer,

most

potential

customers

of

1980

do

not

have

even

the

slightest

desire

to

purchase

one

today.

It

will

therefore

be

necessary

to

educate

the

market

regarding

the

benefits

derived

from

ownership.

(See

Page

2

for

a

partial

list)

It

is

forecasted

that

indeed,

by

1985,

a

household

using

a

computer

will

have

sig-

nificant

advantages

over

one

that

doesn't.

Some

examples

of

these

are:

-5-

1.

Better

financial

decision

and

controls

with

complete

privacy.

2.

Better

security

from

theft

and

fire.

3.

Better

environmental

control

with

attendant

energy

cost

savings.

4.

More

free

time

for

any

purpose.

leisure

or

profit.

5.

Better

educational

opportunity.

especially

for

school-age

family

member.

6.

Lower

cost

communications.

7.

Immediate

access

to

all

family

records.

financial.

medical.

educational.

etc.

8.

Increased

family

interaction

through

the

entertainment

aspects

of

the

machine.

The

process

required

to

develop

this

market

will

be

expensive

and

time

consuming.

Simply

communicating

with

75

million

households

is

an

expensive

proposition.

let

alone

educating

each

one

about

the

benefits

of

owning

a

computer.

Apple's

limited

experience

with

existing

products

indicates

that

a

minimum

of

two

hours

of

one-on-one

disucssion

is

needed

to

convince

"Joe

Average"

that

he

needs

a

computer.

Mass

media

such

as

radio.

TV

and

consumer

magazines

will

be

em-

ployed

to

accomplish

much

of

this

"educational"

goal.

Tables

V

and

VI

delineate

the

relative

sizes

of

'the

five

market

segments

as

defined

above;

Figure

4

illustrates

graphically

the

growth

of

each

segment.

Table

V

also

projects

Apple's

market

share

of

each

segment.

-6-

I-'

Rev

$8M

Units

10K

Fig.

1

Market

Forecast

Main

Frames

100

10

FASP

$200

FASP

$200

Rev

$4M

Units

20K

Fig.

2

Peripherals

Market

100

10

$

lB

$

100M

$

10M

PERSONAL

COMPUTER

MARKET

TOTAL

REVENUE

-13-

80

81

Fig.

Market

Segments

as

a

%

of

total

Market

Entertainment

20%

Hobby

Year

-14-

Home

80

81

PRODUCT

PLAN

Mainframes

Apple

II

-

(Manufacturing

cost~$400.00

to

$300.00)

A

single

board

computer

based

on

the

6502

micro-

processor.

The

system

includes

a

structural

foam

injected

molded

case,

a

high

efficiency

switching

power

supply

and

a

typewriter

style

keyboard.

A

complete

operational

system

requires

an

additional

display

device,

CRT,

printer,

LED,

LCD,

etc.,

and

an

optional

magnetic

tape

bulk

storage

device.

The

most

common

system

configuration

is

an

Apple

II,

a

common

home

color

TV

an

inexpensive

(~$20.00)

RF

modulator,

and

an

audio

cassette

tape

recorder.

With

the

above

configuration,

the

user

may

~tore

programs

and

data

permanently

on

tape

or

conversely.

retrieve

them.

These

programs

may

be

either

written

by

the

user

or

purchased

from

Apple

Computer

Incorporated.

Typical

applications

include

home

financial

analysis,

home

environmental

controls

and

color

video

games.

Apple

II

has

several

features

which

are

not

characteristic

of

competitive

products.

The

most

important

of

these

are:

1.

Color

graphics

capability

in

two

modes.

a)

40x48

Array

in

15

colors

b)

280x192

Array

in

4

colors

2.

Four

Analog-to-Digital

inputs

for

controllers,

sensors

or

game

paddles.

3.

Fast,

extremely

powerful,

BASIC

programming

language

in

Read-Only-Memory

(ROM).

4.

Eight

peripheral

connectors

for

maximum

ease

of

expandability.

5.

Quiet,

cool,

fan-less

operation.

6.

True

portability

in

size

and

weight

(less

than

pounds).

7.

Minimum

parts

count

and

fully

socketed

board

for

maximum

reliability

and

ease

of

service.

Combined,

these

features

put

Apple

II

approximately

12

months

ahead

of

current

competitive

entries.

Apple

II

A

-

(Manufacturing

cost~$300.00

to

$225.00)

Functionally

equivalent

to

Apple

II

with

6

color

High

Resolution

graphics

and

full

floating

point

BASIC

in

ROM.

Maximum

cost

reduced

implementation

accomplished

mainly

by:

1.

lower

cost

keyboard

2.

soldered-in

components

3.

lower

cost

case

4.

high

volume

materials

purchases

-15-

Apple

IIA

prlclng

will

be

announced

in

January

1977

at

the

Consumer

Electronics

Show

in

Las

Vegas.

The

product

will

be

sold

as

a

$995.00

ensemble

including

cassette

recorder

and

color

TV

monitor,

Apple

lIS

-

(Manufacturing

cost

$250.00

-

150.00)

Functionally

equivalent

to

Apple

IIA

with

improved

floating

point

BASIC,

and

somewhat

reduced

flexibility.

FCC

approved

for

use

with

any

standard

TV.

Drastically

reduced

component

count

through

the

use

of

1

to

3

custom

LSI

chips.

"Cartridge"

type

peripheral s

such

as

music

syn-

thesize~

voice

recognition

system,

telephone

interface,

etc.

Specific

jacks

for

modular

peripherals

such

as

the

Apple

printer

and

Floppy

Disc.

Completely

redesigned

case.

Apple

II

B

will

be

announced

at

the

June

'78

CES.

First

shipments

are

planned

for

September

'78.

The

retail

price

will

be

between

$600.00

and

$700.00

at

announcement.

Apple

III

-

(project

leapfrog)

Currently

defined

to

incorporate

all

features

of

Apple

II

B

plus

significantly

improved

programming

language,

built

in

printer

interface,

built

in

bulk

storage

(Bubble

memory?),

and

major

advance

in

input

technology.

Voice

and

character

recognition

are

both

being

considered

as

built

in

features.

Possibility

of

UHF

very

short

range

transmitter

for

wireless

display

capability

depending

on

FCC

approval.

Ultra

low

cost

LSI

design.

PERIPHERALS

OCT

'll

NOV'll

1.

Hobby

Board

-

prototyping

board

for

computer

hobbyist.

2.

Printer

Board

-

a

general

purpose

parallel

printer

interface

board.

3.

Model

33

Teletype

Interface

-

a

cable

with

a

potted

DIP

connector

on

one

end

and

a

teletype

connector

on

the

other

end.

For

use

with

20

mA

current

loop

teletypes.

4.

Terminal

Board

-

100

and

300

baud

serial

interface

board

for

telephone

communications

via

standard

acoustic

couplers.

-16-

DEC'??

DEC'??

JAN'78

5.

RS232

Serial

Printer

Board

-

General

purpose

serial

board

with

software

selectable

speed

up

to

9600

Baud.

6.

PROM

Programmer

&

Personality

Board

-

2716

PROM

programmer

with

personality

sockets.

7.

Telephone

Interface

Board

-

Hard

wire

touch

tone

generator

with

operating

system

to

automatically

dial,

send

messages,

and

answer

using

standard

Bell

system

phone

lines.

JAN'78

8.

Printer

-

low

cost

electro-resistive

printer

($250.00

retail)

High

speed,

40

or

80

characters

per

line,

4"

wide

print

out.

JAN'78

9.

Color

TV

Monitor

-

l3"""diagonal

picture

tube

direct

video

input

jack,

$300.00

retail

price.

JAN'78

10.

Audio

Cassette

Recorder

-

Panasonic

RQ309,

$40.00

retail

price.

1st

Half

'78

11.

Clock

and

Calendar

Board

-

Battery

operated

time

and

date,

firmware

date

calculation.

1st

Half

'78

12.

Isolated

Power

Control

Board

-

Provides

convenient

control

for

24

VAC

to

110VAC

solenoids,

small

appliances,

etc.

1st

Half

'78

13.

Voice

Recognition

System

-

Designed

and

manufactured

by

Heuristics

Inc.,

64

word

vocabulary.

1st

Half

'78

14.

AC

Remote

Control

System

-

Designed

and

manufactured

by

Mountain

Hardware,

Inc.

Uses

standard

110

VAC

house

wiring

for

RF

transmission

of

control

and

polling

signals.

Remote

receiver

has

relay

isolation

for

solenoid

and

small

appliance

control.

1st

HALF

'78

I5..PAL

&

SECAM

Conversion

Board

-

Designed

and

manufactured

by

Eurapple.

Converts

Apple

II

video

output

to

PAL

or

SECAM

standards

for

Europe,

Arabia

and

other

countries.

-17-

1st

Half

'78

16.

220

VAC

Power

Convertor

-

Step

down

transformer

with

various

plug

configurations,

converts

European

50

,

220

VAC

line

voltages

to

Apple

II

compatible

supply

1st

Half

'78

17.

IEEE

Interface

Board

-

For

interfacing

laboratory

instruments.

UNSCHED.

UNSCHED.

UNSCHED.

UNSCHED.

UNSCHED.

UNSCHED.

Memory

MAY

'77

MAY

'77

JAN

'78

18.

Bar

Code

Reader

19.

Optica1

Character

Reader

20.

Music

Synthesis

System

21-

Voice

Synthesis

System

22.

Light

Pen

23.

Acoustic

Coupler

1.

4K

Byte

Add-In

memory

2.

16K

Byte

Add-In

memory

3.

Floppy

Disc

JAN

'78

4.

Floppy

Disc

Memory

-

Dual

density

mini-floppy

with

minimal

operating

system.

1st

Half

'78

5.

Software

Controlled

Cassette

-

Inexpensive

substitute

for

floppy

disc

where

speed

is

not

important

(15

sec

max

access).

Retail

price

$350.00.

Accessories

MAY

'77

l.

Vinyl

Carrying

Case

MAY

'77

2.

Misc.

Cables

&

Power

Cords

MAY

'77

3.

Apple

II

Operators

Manual

-

Fina1

version

in

December

'77.

MAY

'77

4.

Game

Paddles

1st

Half

'78

5.

Joy

Sticks

-18-

MARKETING

PLAN

Merchandising

Due

to

the

broad

scope

of

the

marketplace,

no

single

merchandising

tool

can

provide

adequate

overall

coverage.

Apples'

strategy

is

to

use

several

avenues

to

reach

both

dealers

and

potential

customers.

Media

-

our

current

advertising

program

will

be

increased

to

run

in

computer

hobby

books,

consumer

electronics

books

and

other

consumer

and

professional

periodicals

such

as

Scientific

American.

At

least

3

separate

ads

will

be

produced

for

this

purpose.

Final

media

selection

will

be

based

on

market

trends

and

1977

responses.

Co-op

Advertising

-

a

budget

of

5%

of

sales

will

be

allocated

for

individual

dealers'

use

in

support

of

local

advertising

and

merchandising

programs.

Apple

will

provide

(at

Apples'

expense)

some

materials

to

dealers

for

this

purpose.

Point

-

of

Sale

-

Posters,

free

software,

brochures,

display

racks,

personal

visits,

and

seminars

will

all

be

used

to

assist

dealers

in

selling

Apple

products.

Public

Relations

-

major

efforts

will

be

directed

toward

obtaining

massive

editorial

coverage

through

editor

visits,

industry

show

participation,

such

as

CES,

and

free

support

of

radio

and

TV

coverage.

(We

have

already

been

featured

on

both

NBC

and

ABC

news

specials

in

California

and

Texas.

We

also

received

nearly

5

minutes

of

air

time

on

CBS.

In

addition,

our

Marketing

System

Evaluation

Program

will

be

continued.

This

program

provides

editors

and

other

key

figures

with

a

"loaner"

system

for

their

use

and

evaluation.

Five

systems

have

currently

been

allocated

for

this

purpose.

Direct

Mail

-

a

semi-monthly

publication

will

be

produced

similar

to

the

HP

Personal

Calculator

Digest.

It

will

be

in

a

slick

magazine

format,

4

color

cover,

2

color

interior

with

one

or

2-4

color

interior

pages.

The

piece

will

be

mailed

to

all

Apple

owners

and

dealers

and

as

a

response

to

ad

inquiries.

-19-

The

contents

of

the

book

are

as

follows:

I.

"Testimonial"

letters

to

the

editor

II.

Product

data

sheets

III.

A

minimum

of

one

application

note

IV.

A

minimum

of

one

documented

program

listing

V.

Updated

listing

of

the

Apple

Software

Bank

VI.

New

products

VII.

Updated

dealer

listing

Each

issue

will

be

a

"special"

issue

on

one

of

the

major

application

areas

such

as

home

finance,

utility

controls,

or

entertainment.

The

overall

expenditure

required

to

support

this

program

is

$500K

during

calendar

1978.

Distribution

During

1977,

Apple

was

successful

in

establishing

180

authorized

dealers

across

the

United

States.

Of

these,

approximately

half

are

a

chain

of

highly

success-

ful

consumer

electronics

retailers

-

TEAM

ELECTRONICS.

TEAM

is

a

subsidiary

of

Dayton

Hudson

Corporation,

a

large

retailing

organization.

This

is

Apples'

first

step

(in

distribution)

toward

the

eventual

true

home

market.

Careful

consideration

was

given

to

several

alternative

channels

such

as

Sears,

Wards,

etc.

with

the

conclusion

being

that

Apple

could

not

possibly

support

a

program

of

that

magnitude,

nor

can

any

of

our

competitors.

It

is

our

strategy

to

"build"

our

way

into

the

market

by

laying

a

sound

foundation

each

step

of

the

way.

TEAM

was

a

logical

first

step

since

they

operate

only

about

100

stores,

are

more

competent

at

selling

a

complex

product

than

the

average

sales

person

at

a

major

department

store,

and

were

willing

to

commit

to

a

formal,

two

day

training

program

prior

to

any

location

physically

handling

the

product.

We

have

already

held

the

first

of

3

training

meetings

with

the

owners,

managers

and

sales

personnel

from

24

stores

in

attendance.

During

1978

we

will

continue

to

distribute

through

our

existing

channels.

Depending

on

the

relative

success

of

the

TEAM

outlets,

we

will

decide

whether

or

not

to

sell

Apple

lIB

through

the

larger

department

store

chains.

-20-

Our

main

strategy

in

distribution

is

to

insure

that

each

customer

establishes

a

positive

on-going

relationship

with

the

local

Apple

dealer.

This

would

be

impossible

to

do

through

mail

order

houses,

direct

mail,

or

through

existing

department

store

organizations.

Another

reason

for

this

choice

has

to

do

with

service.

One

of

our

competitors

claims

that

his

product

will

be

serviceable

by

any

local

TV

repairman.

Based

on

the

average

competence

level

of

today's

TV

repairman,

it

is

Apples'

opinion

that

this

technique

simply

will

not

succeed!

Our

approach

is

to

service

Apple

products

at

local

dealer

locations.

Since

the

dealer

wants

to

sell

future

peripherals,

he

has

a

stake

in

seeing

that

his

customer

remains

satisfied.

Apple

is

in

the

process

of

setting

up

a

Warranty

Service

Center

Authorization

and

Training

Program,

which

will

result

in

many

existing

dealers

also

becoming

authorized

warranty

service

stations.

The

program

will

be

fully

operational

by

February

'78.

Competition

The

current

competitors

may

be

grouped

into

three

categories:

1.

Hobby

Manufacturers

2.

Small

Business

Manufacturers

3.

Personal

Computer

Manufacturers

The

first

group

is

characterized

by

products

which

were

designed

to

be

sold

as

kits.

Examples

of

this

type

are

Southwest

Technical

Products,

Inc.,

Processor

Technology,

Inc.,

and

Cromemco

Inc.

Companies

like

these

have

dominated

the

hobby

market

until

recently

when

several

assembled

products

were

announced

by

manufacturers

such

as

Apple.

Because

of

the

"penney

pinching"

nature

of

the

average

computer

hobbyist,

and

the

product

and

business

management

strategies

of

the

companies

participating

in

the

market,

no

one

company

has

gained

a

dominant

market

share.

It

is

highly

likely

that

Apple

will.

Since

this

becomes

a

small

fraction

of

the

overall

market

by

1982,

no

major

effort

will

be

expended

by

Apple

to

satisfy

the

on-going

needs

of

the

kit

building

hobbyist.

Because

of

the

applications

development

ability

of

the

software

oriented

hobbyist,

Apple

will

continue

to

service

his

needs.

-21-

The

small

business

manufacturers

are

lead

by

MITS,

Inc.,

now

a

division

of

Pertec,

and

IMS,

producer

of

the

IMSAI

8080

system.

Both

of

these

companies

have

set

their

courses

strongly

in

the

direction

of

small

business,

and

away

from

the

consumer.

Average

prices

for

installed

systems

of

this

type

range

from

$10,000

to

$20,000

dollars.

We

do

not

expect

to

compete

with

them

directly.

The

last

category

is

characterized

by

manufacturers

such

as

Commodore

Business

Machines

and

Tandy

Corporation.

These

two

machines

will

be

our

major

competition

during

1978.

Apple

expects

at

least

three

additional

and

probably

stronger

competitors

by

the

end

of

1978.

The

most

likely

are

Atari,

Texas

Instruments,

and

RCA.

Tandy

-

TRS

80

The

system

configuration

is

divided

into

fbur

separate

elements;

a

CRT

monitor

(poor

quality

black

and

white),

a

power

supply,

a

recorder,

and

a

keyboard

with

cabinet

which

also

houses

the

main

computer

board.

The

unit

includes

a

4K

byte

BASIC

in

ROM

which

is

entirely

unsuitable

in

todays

market.

The

keyboard

has

no

n-key

rollover

making

rapid

typing

impossible.

There

are

no

provisions

for

direct

connection

of

analog

devices

such

as

game

paddles

or

resistive

sensors,

and

the

system

lacks

a

speaker

for

audio

effects.

Tandy

claims

that

a

floppy

and

printer

will

be

available

in

the

future

but

makes

no

commitment

as

to

when.

Advantages

of

the

system

are:

1.

Up

to

16K

bytes

of

memory

may

be

installed

directly.

2.

Some

"canned"

software

has

already

been

developed

for

it.

Overall,

it

is

a

very

poor

second

after

the

PET.

Apple

IrA

will

definitely

outsell

the

TRS

80

"hands

down"

regardless

of

the

large

number

of

potential

retail

locations

in

the

Radio

Shack

chain.

Corrrnodore-

PET

The

PET

computer

is

similar

to

the

TRS80

in

that

it

has

a

black

and

white

display

only, has

no

speaker

or

provision

for

analog

inputs,

and

sells

for

the

same

$600.00

price.

-22-

The

important

differences

are:

1.

PET

has

a

calculator

style

keyboard-

completely

unacceptable

for

data

entry

or

major

programming

efforts.

2.

The

PET

BASIC

is

much

more

powerful

than

the

Tandy

machine

and

resides

in

12K

bytes

of

ROM.

3.

The

CRT

and

cassette

are

built

in.

4.

PET

is

limited

to

8K

bytes

of

RAM

internally.

Note:

The

PET

uses

4K

static

RAMs

from

MOS

technology.

The

retail

price

for

4K

bytes

is

$200.00

over

twice

the

Apple

price

for

4K

bytes

of

dynamic

RAM.

5.

PET

has

an

IEEE

interface

port.

6.

PET

has

64

graphics

characters

for

use

in

graphic

displays.

Both

systems

are

severely

limited

in

expandability

when

compared

with

Apple

II

or

Apple

IIA.

Commodores

current

tost

pro-jeet-;-onYor-PET-through

the

end

of

the

year

is

$360.00.

Commodore

has

publicly

stated

that

their

software

will

be

developed

mostly

by

users,

not

by

Commodore.

The

current

strategy

for

distribution

of

the

PET

machine

is

to

sell

through

the

major

department

store

chains.

Apple

expects

that

this

effort

will

be

plagued

by

both

service

and

support

problems.

Neither

the

department

stores

nor

Commodore

has

an

organization

capable

of

answering

the

questions

that

will

be

generated

by

the

sale

of

several

thousand

machines.

Apple's

strategy

in

this

regard

is

to

"let

Corrmodore hang

themselves"

during

the

fi~st

half

of

1978,

while

we

build

an

organization

competent

to

train

department

store

personnel

(through

experience

with

TEAM)

and

to

train

competent

service

personnel

(through

the

dealer

warranty

training

program).

At

the

same

time

the

Apple

Software

Bank

will

grow

to

nearly

700

canned

programs.

In

June

of

'78

we

will

be

ready

to

properly

support

a

major

department

store

type

of

distribution

channel,

will

be

announcing

Apple

lIB,

and

will

already

have

the

broadest

product

line

with

18

peripherals

and

2

main

frames.

This

combination

of

events

should

put

us

in

a

position

to

become

a

"favored"

supplier

to

the

Sears',

Wards'

and

Penney's

type

of

stores

in

time

for

Christmas

of

'78.

-23-

Surely

both

Tandy

and

Commodore

will

revise

and

update

their

products

by

June

'78,

but

it

is

expected

that

Apple

lIB

will

be

as

far

ahead

of

PET

II

and

TRS

8011

as

our

current

product

is

ahead

of

PET

and

TRS

80.

Apple

expects

more

formidable

competition

from

Texas

Instruments

and

Atari.

It

is

likely

that

each

will

obtain

at

least

a

20%

market

share

within

18

months

of

their

entry

into

the

market.

It

is

impossible

at

this

time

to

obtain

reliable

information

on

either

product

or

strategy

from

either

company.

An

estimate

of

market

shares

vs

time

is

given

in

Table

VII.

1978

1980

1982

APPLE

18%

35%

35%

ATARI

0%

15%

25%

1.!.

0%

15%

25%

COMMODORE

10%

10%

TANDY

5%

5%

ALL

OTHERS

67%

20%

15%

TABLE

VII

Market

Share-Estimate

-24-

OPERATING

PLAN

STAFF

A.C.

Markkula,

Chairman

of

the

Board

and

V.P.

Marketing

MSEE,

BSEE

University

of

Southern

California

MTS

-

Hughes

Aircraft

Co.

-

4

Yrs.

Marketing

Mgr.

-

Fairchild

Semiconductor

-

4

Yrs.

Marketing

Mgr.

-

Intel

Corporation

-

4

Yrs.

M.M.

Scott,

President

BSPH,

California

Institute

of

Technology

Engineer,

Beckman

Inst.

-

2

Yrs.

Marketing

Mgr.

-

Fairchild

Semiconductor

-

4

Yrs.

Marketing

Mgr.

-

National

Semciondcutor

-

2

Yrs.

Director

Hybrid

Operations

-

National

Semi.

-

4

Yrs.

S.P.

Jobs,

V.P.

Operations

Attended

Stanford

and

Reed

College

Engineer

-

Atari

-

2

Yrs

S.G.

Wozniak,

V.P.

Engineering

Attended

University

of

Colorado

and

University

of

California

at

Berkl~y

Engr.

Tennant

-

Yr.

Engr.

Electroglass

-

Yr.

Engr.

-

Hewlett-Packard

-

3

Yrs.

F.R.

Holt,

Chief

Engineer

BSc.

Ohio

State

University

Engineering

1\lgr,R&D

Hickock

Elect.

-

9

Yrs.

Assistant

Chief

Engineer,

MB/Gilmore

-

2

Yrs.

Dr.

W.B.

Sander,

Staff

Scientist

BSEE,

MSEE

and

PhDEE,

Iowa

State

University

Design

Engineer

-

ITT

Gilgilian

2

Yrs.

Senior

Engineer

-

Tasker

Industries

-

6

Yrs.

Department

Manager,

Fairchield

R&D

-

13

Yrs.

Gene

Carter,

Director

of

Dealer

Marketing

AAS

Milwaukee

School

of

Engineering

Sandia

Corporation

(AEC)

6

Yrs

Fairchild

Semiconductor

-

MOS

Marketing

Mgr.

and

Linear

Marketing

Mgr.

-

3

Yrs.

National

Semiconductor

-

MOS

Marketing

Mgr.

-

1

Yr.

IC

Marketing

Manager,

4

Yrs.,

Director

of

Marketing

1

Yr.,

Director

of

Microprocessor

Mkt.

2

1/2

Yrs.

-30-

Gross

Sales

Returns

1l.11owances

~et

Sales

Std

COS

Jther

COS

fotal

COS

APPLE

COMPUTER

INC.

INCOME

STATEMENT

1977

Adjusted

Year

to

Tota 1

Sept.

Aug.

July

June

May

Apr.

Mar.

Feb.

Jan.

Tota

1

Date

Adjustments

756391

756391141677

)per

Profit

:st

Taxes

68540

19568

-17664

108395

41450

74653

67124

10919-30935-21031-31811

-6613

37322

18238

19084

4639

let

Profi

t

48882

22191

71073

23212

55569

67124

10919-30935-21031-31811

-6613

4639

APPENDIX

A

APPENDIX

B

APPLE

SOFTWARE

BANK

&

POLICY

ROUGH

DRAFT

Redington

10-5-77

Apple

Computer

Inc.,

referred

to

in

this

paper

as

APPLE,

has

de-

veloped

a

way

of

increasing

the

availability

of

APPLE

software

and

in

extending

the

usefulness

of

the

Apple

II

computer

system.

APPLE

would

like

to

introduce

it

to

all

present

and

potential

Apple

users.

It

is

called

the

APPLE

Software

Bank.

This

paper

describes

the

APPLE

Soft-

ware

Bank,

the

APPLE

Software

Policy,

the

two

bank

sections:

User

supported

software

and

APPLE

supported

software,

the

Software

Bank

Contributor's

Guide,

and

what

this

bank

will

do

for

the

user.

APPLE

SOFTWARE

BANK

The

APPLE

Software

Bank

is

a

repository

for

all

APPLE

programs,

procedures,

and

related

documentation.

The

enormous

amount

of

mail

that

has

been

received

from

Apple

users

has

been

the

inspiration.for

estab-

lishing

this

software

bank.

This

mail

has

consisted

of

numerous

soft-

ware

and

product

suggestions

and

many

exciting,

clever

and

useful

pro-

grams.

Apple

Computer

Inc.

has

created

this

software

bank

with

the

user

in

mind.

APPLE

Software

Policy

The

foundation

of

this

bank

is

the

APPLE

Software

Policy.

Policy

as

used

here

means

a

method

of

action

to

guide

and

determine

present

and

future

decisions

concerning

APPLE

software.

As

a

process

the

APPLE

Software

Policy

has

several

steps.

They

are:

1.

Apple

Computer

Inc.

encourages

interested

users

to

develop

software

for

the

Apple

computer.

2.

APPLE

encourages

its

users

to

submit

their

developed

software:

APPLE

will

then

carefully

survey

its

potential

utility

with

the

Apple

computer

system

and

then

make

it

available

to

all

Apple

users.

3.

Apple

Computer

Inc.

encourages

its

users

who

contribute

software

by

awarding

them

with

an

ROUGH

DRAFT

II.

APPLE

Program

Cassette

-

a

recorded

program

on

a

high

quality

low

noise

APPLE

tape

cassette.

Some

of

these

steps

may

be

omitted

or

expanded

depending

upon

the

nature

of

the

software

involved.

Contributor's

Guide

Apple

Computer

Inc.

is

developing

the

APPLE

Software

Bank

Con-

tributor's

Guide.

This

manual

will

explain

the

process,

step

by

step,

in

submitting

a

program

to

the

software

bank.

More

information

on

the

Contributor's

Guide

will

be

available

after

October

24th,

1977.

Any

questions,

suggestions

and

programs

may

be

mailed

to:

APPLE

SOFTWARE

BANK

Apple

Computer

Inc.

20863

Stevens

Creek

Blvd.,

B3-C

Cupertino,

California

95014

(408)-

996-1010

The

APPLE

Software

Bank

will

afford

Apple

users

more

effective

utilization

of

their

Apple

Systems.

The

chances

are

that

someone,

an

Apple

user

or

Apple

Computer

Inc.,

has

already

written

software

for

a

particular

application

to

satisfy

a

need

that

is

similar

if

not

identical

to

another

users

need;

this

software,

if

existing

will

be

available

through

the

software

bank.

The

bank

will

save

time.

As

a

result

of

the

APPLE

Software

Bank,

the

user

will

have

easy

ac-

cess

to

a

large

number

of

programs

and

applications

information.

The

user

will

be

able

to

contribute

almost

any

kind

of

software.

The

APPLE

Software

Bank

has

been

created

to

increase

the

usefulness

and

enjoyment

of

the

Apple

II

system

and

is

available

to

all

Apple

users.

ROUGH

DRAFT

APPLE

SUPPORTED

SOFTWARE

Apple

supported

software

is

the

second

bank

section.

It

will

primarily

contain

all

software

written

and

supported

by

Apple

Computer

Inc.

And.

it

will

contain

contributions

con-

sidered

to

be

outstanding

by

APPLE's

Software

Development

Lab

.personnel.

All

software

available

through

this

section

will

be

fully

documented

and

supported

by

Apple

Computer

Inc.

Programs

in

this

section

will

contain:

I.

A

PROGRAM

BOOKLET

A.

PROGRAM

DESCRIPTION

-

a

mini-essay

on

what

the

program

is

intended

to

do.

B.

PROGRAM

INSTRUCTIONS

-

how

to

load

and

use

the

program

on

the

Apple

II

System.

C.

PROGRAM

LISTING

-

a

hardcopy

listing

of

the

program

that

is

annotated

with

appropriate

comments

explaining

program

concepts.

D.

PROGRAM

FLOWCHART

-

an

APPLE

flowchart

diagram

showing

schmatically

the

flow

of

the

program.

E.

PROGRAM

MODIFICATION

-

a

list

of

sug-

gestions

for

changing

certain

variables

and/or

parts

of

the

program

to

meet

specific

user

needs.

F.

GLOSSARY

-

a

list

of

words

and

their

definitions

that

are

used

in

the

program.

ROUGH

DRAFT

APPLE

Product

Gift

Certificate

in

appreciation

of

their

contribution.

The

value

of

the

certif-

icate

will

vary

depending

on

the

value

of

the

contribution

and

or

an

honorarium

for

an

outstand-

ing

programming

contribution

This

policy

provides

a

means

for

easy

contribution,

access,

and

dis-

tribution

of

software

to

all

Apple

users

through

two

bank

sections.

USER

SUPPORTED

SOFTWARE

The

first

bank

section

is

User

Supported

Software.

Software;

pro-

grams,

tapes,

and

listings,

available

through

this

section

will

be

sup-

ported

and

maintained

by

their

contributors.

APPLE

will

periodically

publish

a

User

Software

Listing

for

all

user

contributed

software.

Each

software

listing

will

contain:

I.

Contributor's

Software

List

-

a

listing

of

the

name

and

mailing

address

of

each

contributor

along

with

a

listing

of

all

of

the

software

they

have

authored

and

submitted.

II.

User

Contributed

Programs

A.

PROGRAM

NAME-

the

name

given

to

the

programs

by

their

contributors

and

a

reference

number

desig-

nated

by

APPLE.

B.

PROGRAM

ABSTRACT-

a

brief

description

of

the

soft-

ware.

It

will

answer

the

questions:

i)

what

the

software

is

intended

for.

ii)

what

are

its

limitations,

if

any.

iii)

what

are

its

system

requirements

(program

language,

minimum

memory

size,

etc.,).

C.

ACQUISITION

OF

SOFTWARE-

describes;

i)

how

an

interested

user

can

obtain

a

list

of

a

particular

program.

ii)

how,

for

how

much,

where,

and

by

whom

to

obtain

a

specific

program

listed

in

the

user

supported

software

bank.

PROGIWI

STAlUS

PJU:L1HIIWlT

PRODUCTIlllI

VERSllllI

EHTERTAIICI1EHT

SOfT\IAJU: Nlt18ER

TAPE

DOC

TAPE

DOC

Breakout

IZT-llOlE-I04-TB

Yes

11-1-71

Surtrek

IZT -llOZE- 116-

Yes

11-1-71

IlorllYtM

1ZT-l103E-104-TB

Tes

11-1-71

Clless

IZT-llOSE-XI6-TB

110

Pong

&

Handba

IZT-oofiE-104-T8

Yes

3-1-78·

3-1-78

Etch

&

Sketch

8ZT-l107E-104-TB

Yes

11-1-78

Coloreaur

Il2T-l)08[-I04-

Yes

2-1-78

Z~1-7;

M!ste!"'!!!1nd

8ZT-<l10E-1C4-Ta

'fei

1-1-78

1-'-78

fortune

Teller

IZT-ollE-I04-TB

3-'-7.8

3-'-78

Space

War

1ZT-oIZE-116-TB

9-Z6-71

11-1-71

T"""rs

HanoI

lZT-ol3E-I04-T

3-1-78

(heck_k

1ZT-llOlf-116-T

Yes

11-1-17

11-1-71

tkJele

n.nee

aZT-OOZf-HI6-T

1-1-78

Loan

AmortIzatIon

1ZT-l103f-HI6-T

lZ-1-71

12-1-71

LEARNING

&

EOUCATllllI

Hangonan

8ZT-001L-104-TB

Yes

11-1-71

Color

IIoth

aZT-llOZL-I04-TB

Yes

11-1-71

Leamlng

IIoth

aZT-003L-104

1-1-78

1-'-78

Progr

•••

BASIC

82T-004L-104

Color

0etn0/8reakout

8ZT-001K-104-TB

Yes

Startrek/HI-Res

82T-l102K-104-TB

Yes

Color

Graph

Deoo

aZT-003K-I04-TB

Yes

110

Ren_r/Append

8ZT-004K-104-TB

Yes

11-1-71

HI-Res

aZT-OOSK-116-

Yes

Z-1-78

2-1-78

Huslc

8ZT-oofiK-104-TA

'-1-78

1-1-78

Bouncer

82T-007K-104-T8

Yes

2-1-78

Applesoft

BASIC

82T-0081I-

116-

9-30-71

lZ-l-71

12-1-71

!!!!ill!

KItchen

82T-001U~104-TA

1-1-78

WORK

&

8USINESS

IIolllng

l1st

12T-llOII/-

12-'-17

lZ-1-71

Calendar

IZT-OOll/-

1-1-78

Telephone

dIrectory

aZT-0031/-

1-1-78

HI-Res

Text

GraphIcs

82T-0041/-

1-1-78

IlEY

YES

Iftelns

avaIlable

IM.ns

not

a ••

llable

- ~.ns

in

development

XX-XX-XXROans

estl~ted

date

•••

n.bllity

APPENDIX

C

(EURAPPLE

ORGANIZATION)

Apple

Computer,

Europe

(Eurapple)

represents

a

large

potential

market

but

it

has

requirements

of

its

own.

First,

the

television

system

in

Europe

is

two-display,

625

lines

instead

of

the

525

lines

of

the

U.S.

Second,

the

main

power

is

220V,

50Hz

instead

of

110V,

60Hz.

Third,

the

connecting

hardware-

plugs,

jacks,

coax

connectors-between

electronic

systems

is

dimensioned

differently

than

in

the

U.S.

Fourth,

the

variety

of

languages,

at

least

two,

French

and

German

dictates

to

trans-

late

technical

information,

manuals

and

literature.

The

computer

language

itself,

BAS!C,can

remain

in

English

since

it

is

treated

as

mnemonics.

And

last,

the

ways

and

means

of

doing

business

locally,

the

export-import

procedures,

the

selection,

appointment

and

support

of

local

distributors

require

a

group

of

people

who

have

had

experience

in

marketing

technical

products

in

Europe

or

more

generally

abroad.

For

all

these

reasons,

Apple

had

originally

decided

to

delay

the

European

market

a

year

or

two,

and

concentrate

its

engineering,

marketing

and

cash

flow

resources

to

the

domestic

market.

In

April,

1977,

Apple

was

approached

by

Andre

Sousan,

who

had

recently

resigned

from

the

position

of

corporate

V.P.

of

engineering

and

board

member

of

Commodore

Electronics

Ltd.,

the

operating

subsidiary

of

Commodore

International.

Andre

Sousan

had

disagreements

with

Commodore

on

product

and

management

philosophy.

He

was

familiar

with

Apple,

in

1976

when

Apple

was

operating

in

a

garage

he

tried

to

interest

Commodore

in

the

new

approach

Apple

had

in

the

personal

computer

market.

Mr.

Sousan

offered

Apple

the

opportunity

to

set

up

the

European

operations,

finance

personally

the

required

engineering

changes

that

would

need

to

be

made,

the

implementation

of

a

European

operations

group,

and

later

merge

these

operations

with

Apple

Computer

when

both

companies

would

be

at

a

productive

level.

This

was

accomplished

when

Mr.

Sousan

set

up

Eurapple

as

a

distributor

for

Apple

to

all

European

Countries

and

more

generally

for

all

countries

that

have

a

television

system

similar

to

the

European

version.

Eurapple

purchases

from

Apple,

maintains

its

own

engineering

and

manufacturing

for

the

add-on

converters

between

Apple

II

and

the

European

TV

receivers,

its

own

product

inventory

and

its

own

sales

and

marketing

group.

Mr.

Sousan

holds

a

doctorate

in

physics

from

the

University

of

Paris,

a

master

in

Electronics

from

the

Superior

School

of

Radio-electronics

in

Paris.

He

was

in

Europe

five

years

for

Texas

Instruments

as

marketing

manager

and

assistant

to

the

European

V.P.,

then

was

scientific

director

for

Thomson-CSF

engineering

operations,

with

Europe

and

US

technical

responsibility.

He

then

moved

to

Vice

President,

European

operations

for

Varadyne

before

jOining

Commodore

in

1971.

At

Commodore,

he

traveled

extensively

to

Europe

and

to

the

Far

East,

both

for

product

marketing

and

manufacturing

engineering

purposes.

Eurapple

has

appointed

a

resident

European

director,

Jacques

Boivin

who

was

with

Thomson

CSF

as

an

electronic

engineer

and

then

was

with

European

subsidiary

of

Wang,

with

European

marketing

responsiblity.

Jacques

is

located

in

Paris

but

travels

constantly

throughout

Europe.

The

first

step

of

Eurapple

has

been

to

implement

a

distributor

network

in

Europe

and

at

the

same

time

promote

the

Apple

II.

Apple

II

is

currently

demonstrated

in

all

major

electronics

shows

this

fall/winter

season;

the

Sicob

in

Paris,

Systems

77

in

Munich,

EuroMicro

in

Amsterdam,

data

fair

in

London,

and

the

US

department

of

Commerce

sponsored

computer

show

in

London

in

January.

At

this

show,

Mr.

Sousan

will

make

the

final

selection

between

4

companies

who

have

confirmed

a

strong

interest

in

distributing

Apple

II

respectively

in

England

and

4

others

in

Germany

(which

needs

3

distributors,

North,

Central

and

South).

Eurapple

will

have

a

hospitality

suite

in

London

at

the

same

time

as

the

show

to

more

efficiently

cbnductits

business.

Eurapple

has

already

sold,

since

it

began

shipping

in

September,

approximately

20

systems

in

Eurpoe

and

has

approximately

50

systems

backlogged

as

of

this

date.

Eurapple

has

appointed

2

distributors

in

France,

one

in

the

Benelux,

one

in

Spain,

one

for

all

Arab

countries,

one

in

Australia,

one

in

Singapore

and

one

in

India.

All

these

distributors

have

extensive

capabilities

in

marketing

computer

equipment,

including

programmers

and

service

technicians.

As

an

example,

the

Arab

countries

distributor

is

the

Atari

licensee

for

video

games

and

has

paid

for

the

re-design

of

Apple

II

through

Eurapple

to

make

Apple

II

display

its

characters

in

the

Arabic

language.

The

head

of

this

company

in

Egypt

is

a

computer

sciences

major

from

Stanford

University.

ORGANIZATIONAL

CHART

FOR

EURAPPLE

-l

I.--

rapple

ermany

A.

SOUSAN

CALIFORNIA

Dist.

Sales

Arab

Count.

Eng.

Admini~tr.

European

Singapore

TBA·Mar

n8

Director

Mgr.

India

Mfg.

J.

Boivin

Australia

(Subcontract)

Paris

South

Amer~ca

-1-

Administ.

Software

Sr.

Eurapple

Eurapple

Assist.

Engineer

U.K.

France

T.B.A.

Mar

'78

T.B.A.

Mar

'78

France

England

Germany

Benelux

Spain

Greece

(2

Dist.)

(1

Dist.)

(3

Dist.)

(1

Dist.)

(l

Dist.)

(1

Dist.)

Scandinavi

a

Switz.

Austria

Italy

(1

Dist.)

(1

Dist.)

(1

Dist.)

(1

Dist.)

JUDGED

BACKLOG

OCT

NOV

DEC

Order

Prob

Order

Prob

Order

Prob

Dealers

67

82

74

99

68

109

-----

T~ch·

Allied

40

20

40

20

40

20

Team

36

36

24

40

24

50

Eurapple

10

10

20

20

30

30

Computerland

59

50

90

60

90

80

Computer

Sotre

10

10

12

25

12

30

Direct

5

10

15

Subtotal

262

253

310

314

304

374

Additional

Orders

resulting

from:

F.P.

Basic

and

25

35

50

Peripheral

Availability

Total

278

349

424

7/27/77

ALS/st

APPLE

PRODUCT

DEVELOPMENT

PROGRAM

1.

Competition

based

development

1.1

Does

competition

have

features

that

would

make

our

product

sell

better?

(e.g.

floating

point

basic.

floppy.

etc.)

Identify

those

features.

Do

we

have

the

resources

to

add

them,

in

house

or

subcontract?

Schedule.

1.2

Does

competition

sell

a

comparable

product

to

ours

at

a

lower

price?

Identify.

1.3

If

competition

product

is

identified

as

comparable

to

Apple

II,

does

compe-

tition

deliver?

If

yes.

how

and

when

do

we

plan

to

meet

the

price?

1.4

If

competition

product

is

identified

as

generally

comparable

to

Apple

II

but

less

performance

or

features,

does

this

justify

price

difference?

List

all

differences

(e.g.

color.

expandability,

etc.)

Go

over

differences

one

by

one.

Can

a

dealer

be

sold

on

price

difference

because

of

them?

Can

user

be

sold?

Ask

marketing.

Define

market

portion

that

will

belong

to

competition

because

of

features/price

difference

combination.

Evaluate

lost

sales

accordingly.

Is

it

worth

it?

If

not.

how

and

when

to

remedy?

1.5

If

we

agree

to

lower

price

models

to

meet

competition,

how

to

restructure

our

expenses

to

assign

engineering

budget?

Do

we

do

all

of

engineering

in

house

or

part

on

subcontract?

Do

we

attempt

private

label

with

customer

development

or

any

other

possible

source

of

additional

funds?

2.

Innovation

based

development.

2.1

Do

we

have

unique

ideas

that

will

make

our

product

a

favored

buy

with

regard

to

competition?

Can

we

patent

those

ideas?

How

and

when

do

we

implement

them?

2.2

Do

we

have

better

ideas

that

will

save

cost

on

our

product?

(independently

of

the

normal

engineering/purchasing

cost

reduction

program)

How

and

when

do

we

implement

them?

2.3

Do

we

keep

a

close

look

to

technological

developments

(new

micro

architectures.

new

memories.

etc.)

and

evaluate

how

and

when

they

may

impact

our

product?

3.

Market

based

development

3.1

Do

we

have

the

right

product

configurations

for

the

existing

markets?

(Software

-

peripherals

-

packaging,

etc.)

Do

we

have

to

modify

anything?

3.2

Do

we

anticipate

market

evaluations

that

will

call

for

new

configurations?

Do

we

prepare

for

them

and

when?

Gross

Sales

Returns

&

Allowances

Net

Sales

APPLE

COMPUTER

INC.

INCOME

STATEMENT

1977

Adjusted

Year

to

Total

Sept.

Aug.

July

June

May

Apr.

Mar.

Feb.

Jan.

Total

Date

Adjustments

756391

756391

1416'77

Std

COS

Other

COS

Total

COS

Oper

Profit

Est

Taxes

68540

19568

-17664

108395

41450

-

74653

67114

10919~30935~21031-31811

-6613

37322

18238

19084

4639

Net

Profit

48882

22191

71073

23212

55569

67124

10919-30935-21031-31811

-6613

4639

Standard

Costs

Apple

II

Mother

PCB

RAM

(Bytes)

Power

Supply

Case

Assy.

Ship

Kit

Total

Mat'l

+1%

Burden

Labor

+OH

Total

Mfg.

Cost

$137.09

21. 20

51.15

102.32

11.00

$332.76

3.23

34.11

$360.10

16K

$137.09

(includes

sub

assy)

144.00

($18

ea.

for

16K)

51.15

(includes

sub

assy)

102.32

11.00

$445.56

4.46

34.11

($5.95/hr.@

270%)

$484.13

Apple

II

A

Average

Std.

Cost

@

15/85

mix

$465.53

Same

as

Apple

II

except

1.

Floating

point

basic

in

ROM

2.

6

vs.

4

color

HiRes

and

HiRes

ROM

3.

Color

killer

in

Text

Mode

4.

New

Case

Mat'l

but

same

style

5.

New

low

cost

keyboard

4K

16K

PCB

RAM

Add'l

ROM

Power

Supply

Case

Assy

Ship

Kit

$100.00

18.00

9.00

37.75

57.00

3.00

$100.00

100.00

9.00

37.75

57.00

3.00

(includes

sub.

assy)

($12.50

ea

16K)

FP

+

HeRes

(includes

sub.

assy)

Total

Mfg.Cost

$224.75

+

1%

Burden

2.25

Labor

+OH

22.41

Total

Mfg.Cost

$249.41

306.75

3.07

22.41

($6.20/hr

@

220%)

$332.23

__~~~!~~eStd.

Cost

@

15/85

mix

=

$318.81

Apple

II

B

Standard

Cost

Estimates

Cartridge

Add-in's

FCC

Approved

UL

Approved

Keyboard

8K

RAM

Case

CPU

10K

ROM

Custom

IC

(40

pin)

Connectors

&

Sockets

PCB

Power

Supply

Paddles

TTL

Demo

Cartridge

Ship

Kit

Total

Mat'l

+1%

Burden

Sub

Assy

Labor

+OH

Total

Mfg.

Cost

$13.00

28.00

15.00

5.00

15.00

7.00

5.00

5.00

15.00

4.00

5.00

5.00

3.00

$125.00

10.00

4.95

$141.30

(CPU

Scanned)

Injection

65K

+

16K

Wall

Xformer

8

IC's

(sub

contractor)

($4.25/hr.

@

220%

Apple

Plug-in

Peripherial

Cards

Est.

Average

Mat'l

Lab

+OH

Total

Mfg.

Cost

Apple

II

BMini

Floppy.

Est.

Average

Mat'l

Labor

+OH

Total

$26.26

7.70

($7.00/hr

@220%)

$33.96

$101.00

(sub

assy)

15.40

($7.00/hr.

@220)

$116.40

FINANCIAL

PLAN

APPLE

COMPUTER

BALANCE

SHEET

September

Pro

Forma

Assets

Current

Assets

Cash

Accounts

Receivable

Accounts

Receivable

Inventories

Deposits

Total

Current

Assets

Fixed

Assets

Equipment

Depr.

Net

Fixed

Assets

Other

Assets

Total

Assets

Liabilities

Accounts

Payable

Customer

Deposit

B

of

A

Loan

Accrued

Wages

&

Exp.

Sales

Tax

Payable

Total

Liability

20916

170877

other

Equity

&

Retained

Earnings

Equity

R/E

Total

Equity

5630

48882

54512

Total

Liabilities

and

Equity

-34-

411380

APPLE

COMPUTER

INC.

INCOME

STATEMENT

6899'

10295

6899

10295

Jan.

1977

Feb.

1977

Mar.

1977

May

Apr.

1977

1977

June

1977

July

1977

Aug.

1977

Sept.

1977

Year

to

Total

Date

1977

Adjustments

Adjusted

Total

1977

756391

Gross

Sales

--Returns

Allowances

Net

Sales

Std

COS

Other

COS

Tota 1

COS

.641840

Oper

Profit

68540

108395

41450

.

74653

67124

10919~30935~21031-31811

-6613

4639

Est

Taxes

19568

-17664

37322

18238

19084

Net

Profit

48882

22191

71073

23212

55569

67124

10919-30935-21031-31811

-6613

4639

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Apple Business Plan

Prompt to Clone This Apple Business Plan

Apply this example's core structure, strategic pacing, and structural hierarchy directly to your own topic.

What are you generating today?

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