Apple 2004 Annual Report Download - page 16

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other high-speed peripherals. FireWire is currently included on all Macintosh systems and is a data transfer technology utilized by iPod.
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.
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 compatible for both Macintosh and Windows-based computers;
Wireless Mobile Labs that allows teachers and students to share iBook computers, a printer, and a wireless network/Internet connection stored
on a cart for mobility between classrooms; and three special Digital Media Studio solutions designed for education, including one that is
integrated into a mobile cart. Additionally, the Company offers one-to-one (1:1) learning solutions, which are a complete solution typically
consisting of an iBook portable system for every student and teacher along with a wireless network connected to a central server.
The Company's PowerSchool ® software product is a web-based student information system 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 via the Internet. PowerSchool offers the option of remote hosting with an application service
provider model.
Markets and Distribution
The Company's customers are primarily in the education, creative, consumer, and business markets. Apple 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, and ability of Macintosh computers to network
and communicate with other computer systems and environments. Apple personal computers were first introduced to education customers in the
late 1970s. Over 16% of the Company's net sales in 2004 were through its U.S. education channel, including sales to elementary and secondary
schools, higher education institutions and individual customers.
The Company distributes its products through wholesalers, resellers, national and regional retailers and cataloguers. No individual customer
accounted for more than 10% of net sales in 2004, 2003 or 2002. 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 businesses through its retail stores in the U.S. and
internationally, or through one of its online stores around the world. Total direct and indirect sales transacted through the Company's online
stores totaled approximately $3.9 billion, $2.9 billion, and $2.4 billion for fiscal years 2004, 2003 and 2002, respectively.
Competition
The Company is confronted by aggressive competition in all areas of its business. The market for the design, manufacture, and sale of personal
computers and related software and peripheral products is highly competitive. This market continues to be characterized by rapid technological
advances in both hardware and software development, which have substantially increased the capabilities and applications of these products, and
have resulted in the frequent introduction of new products and significant price,
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