Apple computers,

1999

Group No. 09Archita (191) | Gagandeep (200) | Prachi (214) | Richard (221) | Teresa (236)

History of Apple

History of Apple

Competitive Advantage
Capability

Rare

Valuable

Costly to imitate

Exploited by the
organization

Competitive Consequence

Ecosystem

Yes

Yes

Yes

No

Sustainable Competitive
Advantage

Hardware +
Software offering

Yes

Yes

Yes

Yes

Sustainable Competitive
Advantage

Innovation &
Differentiation

Yes

Yes

No

Yes

Sustainable Competitive
Advantage

Marketing

No

Yes

No

No

Competitive Parity

Apples sustainable advantages have been in their approach to this industry.

The Operating System and the Ecosystem that they created makes using a computer as easy as plug and play.
For a B2C offering, this stands out and along-with their advantage in having the hardware and software all under
the same roof they can vertically integrate better than the competition
The innovative approach to products, offering pleasing aesthetics and a focus on Graphical User Interface (GUI)
made their products instantly recognizable. This allowed them to command a premium

The Evolving PC Industry

PC industry
over the
1990s

PC Manufacturing

Buyers and Distribution

PC
PC buyers:
buyers: business,
business, government,
government, education
education and
and home
home
In
In 1980s,
1980s, most
most PC
PC buyers
buyers were
were first
first time
time customers
customers and
and were
were therefore
therefore intimidated
intimidated by
by the
the technology
technology
and
servicePreferred
to
buy
from
established
brands
through
full
service
computer
dealers
and service- Preferred to buy from established brands through full service computer dealers
In
In early
early 1990s,
1990s, consumers
consumers had
had become
become more
more knowledgeable
knowledgeable about
about PCs
PCs and
and various
various channels
channels emerged
emerged

Direct
procurement
from
manufacturers
by corporates

Superstores
such as
Walmart
catered to
consumers
and SMEs

Mail order
outlets offered
high discounts

Value-added
resellers
fulfilled
business
demand for
networked PCs

However
However in
in late
late 1990s,with
1990s,with advent
advent of
of Internet,
Internet, PCs
PCs were
were marketed
marketed to
to customers
customers on
on the
the World
World Wide
Wide Web
Web

PC Manufacturers

COMPAQ

Due to increasing competition in

1990s from younger aggressive
rivals, moved to a hybrid
approach direct sales and buildto-order

IBM

Cheaper and superior products

from competitors in early 1990s
forced it to respond with the
industrys first channel assembly
program in 1996
Matched rivals on price and
products

DELL

Distinctive business model with

direct sales and build-to-order
manufacturing

Suppliers and Complements

Intel faced increasing competition in 1990s from others such as AMD, IBM, National Semiconductor
etc.

Microproces Maintained leadership by cutting prices and new products although AMD took away a good share
with even further price undercutting
sors

Windows 3.0 and 3.1 released in early 1990s challenged Apple

Operating Microsoft overtook Apple in the OS market till the end of 1990s with Windows 98
systems

Application
software

Through the 1990s, the number of applications for PC exploded

Alternative Technologies

Convergence between computer technologies and consumer

electronics took place during the 1990s

New devices

PDAs
Smart phones
Game consoles
TV Set top boxes

Changing Dynamics of the Industry

The four main types of PC buyer have remained the same since the early 1990s : Business, Home, Government and
Education
The distribution channels have changed, Business buyers now buy direct from vendors or distributors as
opposed to full-service dealers
The 1990s saw Moores Law holding true and the end of the technological boom has left behind a saturated PC
industry with decreasing profit margins

Highly standardized products, low margins and oversupply characterize todays market

Suppliers of PCs are struggling to find meaningful differentiation with their competitors

Intense competition has lead to consolidation between players on certain aspects like R&D of a product

Apples Strategy since 1990

Strategy

Pre- Jobs

Overall Cost Leadership

Sculley aimed to move apple

into mainstream through a
low cost strategy
Cheaper products launched to
gain mass appeal
Spindler attempted driving
down cost through reduction
in headcount and reduced R &
D spending

Post Jobs

Jobs did not seek to become

the overall cost leader
He sought to reduce costs in
target segments

Evaluation of the strategy :

Achieving an overall cost leadership requires a relatively higher market share that Apple
did not have in the Pre-Jobs era . Apple kept losing its market share as many
manufacturers produced cheaper computers . Thus the low cost strategies during this
period did not work

Apples Strategy since 1990

Strategy

Pre- Jobs

Differentiation

Sculley and Spindler

developed a new OS to
outperform Intel
Amelio reintroduced Apples
premium price
differentiation strategy

Post Jobs

Jobs sought to differentiate

through products with a
platform that facilitated
seamless integration of
digital devices

Evaluation of the strategy :

The new OS project was shelved by 2005. Amelios premium price differentiation could
not be said to work as Apples uniqueness was not valued enough by customers and he
was not able to restore profitability. Jobs seamless integration seemed to work in the
industry as was re-enforced by Apples retail avenues .Apple till date is rewarded for its
uniqueness with a premium price

Apples Strategy since 1990

Strategy

Pre- Jobs

Differentiation focus

Sculley and others targeted

the core markets of
education and publishing

Post Jobs

Evaluation of the strategy :

Though this strategy was successful , compared to industry growth these two
areas remained small by comparison

Strategy
Cost focus

Pre- Jobs

Post Jobs
Targeted the lower end of
the market with iMac

Evaluation of the strategy :

This strategy of reducing cost in target segments boosted Apples sales and
at the same time during this period Jobs did not let go of the middle and
upper end of the market. Thus this strategy can be said to be successful

Recommendations

THANK YOU