Apple 2001 Annual Report Download - page 6

Third-Party Software Products
Thousands of third-party software titles and solutions are available for the Macintosh platform. The Company sells a variety of these third-
party software products directly to end users through both its retail and online stores. Additional information regarding the Company's
relationship with and dependence upon third-party software developers, including Microsoft Corporation, may be found in Part II, Item 7 of
this Form 10-K under the heading "Factors That May Affect Future Results and Financial Condition," which information is hereby
incorporated by reference.
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Product Support and Services
AppleCare®
offers a range of support options for Apple customers. These options include assistance that is built into software products, printed
and electronic product manuals, online support including comprehensive product information as well as technical assistance, and the
AppleCare Protection Plan. The AppleCare Protection Plan is a fee-based service that typically includes three years of phone support and
hardware repairs, dedicated web-based support resources, and user diagnostic tools.
Apple Training offers comprehensive system administration and development training on Apple technologies, together with certification
programs that test customer's skills and verify their technical proficiency. Apple Professional Services offers a range of custom, personalized
technical services, including Internet consulting and setup, installation and integration services. The Company also offers specialized loan
programs including loans for consumers, students, and educators. Apple also provides leasing solutions for its education institution customers
and its business and design customers. The Company uses several third-party lenders to originate and carry these loans and leases.
Specialized Education Products and Services
The Company offers a variety of unique services and products to its education customers, including a separate online store for education
customers offering special education price lists and promotions; special financing programs for K-12 and higher education students, faculty,
and staff; a special edition of its productivity software suite, AppleWorks, that is cross platform for both Macintosh and Windows computers;
the iBook Wireless Mobile Lab that allows teachers and students to share iBook computers, a printer, and a wireless network/Internet
connection that are stored on a mobile cart that can be moved between classrooms; and three special Digital Media Studio solutions designed
for education, including one that is integrated into a mobile cart. Additionally, Apple Professional Services offers a range of technical services
to education customers.
In March of 2001, Apple acquired PowerSchool Inc., a privately held provider of web-based student information systems for K-12 schools and
school districts. PowerSchool ® software products give school administrators and teachers the ability to easily and cost-effectively manage
student records and give parents real-time access to track their children's performance. PowerSchool offers the option of being hosted remotely
with an application service provider model.
Markets and Distribution
The Company's customers are primarily in the education, creative, consumer, and business markets. Certain customers are attracted to
Macintosh computers for a variety of reasons, including the reduced amount of training resulting from the Macintosh computer's intuitive ease
of use, advanced graphics capabilities, industrial design features of the Company's hardware products, ability of Macintosh computers to
network and communicate with other computer systems and environments, and availability of application software. Apple personal computers
were first introduced to education customers in the late 1970s. Sales in the United States to both elementary and secondary schools, as well as
for college and university customers, remains a core market for Apple, accounting for over 26% of net sales in 2001.
The Company distributes its products through wholesalers, resellers, national and regional retailers and cataloguers. During 2000 a single
distributor, Ingram Micro Inc., accounted for approximately 11.5% of net sales. No other customer accounted for more than 10% of net sales
during 2000, and no individual customer accounted for more than 10% of net sales in 2001 or 1999. The Company also sells many of its
products and resells certain third-party products in most of its major markets directly to consumers, education customers, and certain resellers
either directly, through its retail stores in the United States, or through one of its online stores around the world. During 2001, net sales
attributable to the Company's online stores totaled approximately $2 billion.
Since May of 2001, the Company opened 27 retail stores in the United States. The Company anticipates opening additional stores in calendar
2002. The Company has located its retail stores in high traffic
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locations in shopping malls and urban shopping districts. In addition to its own hardware and software products, the Company's retail stores
carry a variety of third-party hardware and software in inventory and provide certain hardware support services.
Competition
The Company is confronted by aggressive competition in all areas of its business. The market for the design, manufacture, and sale of personal