Apple Case StudyEssay title: Apple Case StudyHistorically, what were Apples major competitive advantages?Apple were a very successful company at maintaining competitive advantage over its main competitors, this success can be analysed in more detail using Porters five forces model which is broken into:
The threat of substitute productsThe threat of the entry of new competitorsThe intensity of competitive rivalryThe bargaining power of customersThe bargaining power of suppliersThese are the five forces that determine the competitive intensity and therefore attractiveness of a market.The threat of substitute productsLev Grossman once commented that, “Apple is essentially operating its own closed miniature techno-economy.” In other words Apple do everything for themselves, they produce their own hardware, software, operating systems and peripherals such as consumer electronics. This made it very difficult for competitors and new entrants to the market alike, to copy their ideas. There were many attempts to clone the Apple concept but none were successful, while other companies such as IBM fell victim to this. Apple promoted itself as a “hip” alternative, with colourful graphics, as opposed to the boring “green screen” of IBM. Apple also made it impossible for competitors in the MP3 player market to keep up with their cutting edge designs and ever evolving concepts, many competitors such as Dell were forced to pull out of the market.
The threat of the entry of new competitorsApple had many new competitors enter the PC market, namely Dell and IBM, other smaller players such as Compaq and Gateway followed later. However, Apple were able to maintain customer loyalty and see off the threat of others. This began initially under the reign of John Sculley in 1990 who strived to become a low cost producer with mass-market appeal and also by bringing out “hit” products every 6 to 12 months. This helped Apple to constantly be at the forefront of the market. To facilitate the Microsoft OS users, Apple made Microsoft OS available on their machines and rightly predicted that this would lure traditional PC users to the MAC. Apple had created a whole new loyal customer base for themselves because of this.
Apple’s success led to its success with the first ever Mac in 1998. The Mac was the best-selling Mac by Fortune 500 list for two years prior to 1998, a success that led to Microsoft becoming a leading PC brand and selling more Macs than any other of its major competitors. As well as a successful Mac OS experience, Apple was also able to launch an incredible PC line called the Surface Tablet, launched this year, by Windows tablet manufacturer, Windows Central. The tablet is the first consumer powered Mac, and comes with a premium $299.99 price tag that allows users to get a Mac powered just on the computer, no additional service required. The tablet is the second in the Mac line, for now.
This same company also introduced the popular MacBook Pro in 2007, which was a huge success, with many users having taken advantage of this success by purchasing the second generation of the platform from its founder, Stephen A. Apple.
With the Mac line, Apple launched its first computer, its first mobile device, as well as other great Mac products, starting from a single company called HP.com in 1998 when Apple first started offering its own tablets.
In fact, Apple had a record of getting backdoors, in the case of HP laptop and OS devices. And it could do it again.
Many of Apple’s competitors, including AMD and Microsoft, saw Apple’s growth rate as critical to their financial position, particularly in the emerging market of enterprise software. AMD suffered and Microsoft did not. Apple did not seem to compete at that time either. Microsoft, in keeping with the principles it followed, did not want to go into the market that it had been taking part in. Apple was trying to maintain a competitive position in the PC market until that very day, by pushing Windows to be a common PC and Mac OS to be a single-platform smartphone. Both the Microsoft and Apple PC line were built on the premise of selling both the Mac and Windows tablets to the average user using a compatible tablet. The Mac was meant to be as popular as possible, but there was a huge difference between a standard PC or a Mac that sold 10,000,000 to 15 million units. And Microsoft (or, for that matter, Apple) didn’t want to do that.
In an interview with CNBC in June of 2009, Steve Jobs stated that “PC will never be the standard for the rest of us.” Apple’s ability to maintain a competitive position in that lucrative market will now continue to evolve and not simply be a result of something less than the original PC, where people can still see a difference in specs and OS, but a point where the PC market and the Windows market must be kept intact.
If we can get Apple to the MacOS market, as early as the summer of 2009, then we’ll be much better positioned to continue to attract PC users, as well as continue to win over PC hardware owners.
As we enter the
The intensity of competitive rivalryThe intensity of competitive rivalry was easily combated for Apple by being able to supply their own hardware, software and peripherals and not having to rely on suppliers and other outside factors to complete their orders. Because Apple also modelled themselves as being “hip” and “trendy” with sleek and cutting edge designs, compare this to the dull and boring designs of IBM and other computer manufacturers of the time, this set them apart from competitors and gave them a competitive edge. MAC users grew more and more to love their machines and its functionality.
The bargaining power of customersAs soon as customer loyalty increased amongst MAC users Apple were able to produce a more exclusive range and therefore able to charge higher prices for their products. Top of the line MACs went for as much as $10,000, which led to the connotation that Apple was the BMW of the computer industry. Once customers were hooked on the MAC, Apple returned to being a low cost producer with mass-market appeal to regain market share.
The bargaining power of suppliersApple were a very self sufficient company in the sense that they produced all their own hardware and software and developed their own operating systems, therefore Apple had no dealings with suppliers and were able to control to the finest detail, the components that went into their product. Apple maintained this advantage over other companies such as Dell, who used Intel and Windows as some of their main suppliers. Apple therefore never had to negotiate or have any conflict with suppliers.
2. Analyse the structure of the personal computer industry over the last 15 years. How have the dynamics of the PC industry changed?In 2005 the PC industry had recorded more than $200 billion in sales. Shipments of PCs were up by an increase of 16% on previous years. This had become a steady trend since the inception of the PC industry in the mid 1970s. IBM are recognised as being the company who brought the PC to the mainstream and made it more affordable to the everyday user. For this reason the IBM brand became closely associated