Business -- Apple Computers Historically, What Was Case Study

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Business -- Apple Computers

Historically, what was Apple's competitive advantage in the computer business?

Apple's competitive advantage began almost immediately after the company's launch in 1976. Within months, the first 200 units produced by Jobs and Wozniak enabled them to secure venture capital to grow the firm into the leading producer of computers in a market that quickly grew to $1 billion in annual sales, of which Apple's Apple II product accounted for 100,000 units sold. Apple subsequently overcame the initial setback of the challenge from IBM's Windows-based products by opening new markets after 1985, in connection with which its expansion into desktop publishing and education and peripherals allowed Apple to recapture more than half the entire computer market and accumulate $1 billion in cash reserves and recognition as the world's leader in computer manufacturing.

The company's competitive advantage was further invigorated by the release of the iMac in 1998 that supported Windows-based peripherals for the first time. In one year, that product was responsible for turning around a $1 billion annual loss into a $309 million profit. Thereafter, Apple maintained its competitive advantage by regularly rolling out highly innovative products that demonstrated the ability to intrigue customers and spark something of a technological revolution in the ways that computer products could be used, beginning in 2001 with the release of the iPod, followed by the iPhone in 2007, and the iPad in 2010.

2. How have changes in the structure of the PC industry since 1990 impacted Apple?

By 1990, Apple had established a brand loyalty with its customers that exceeded that enjoyed by IBM and other Windows-based pcs.

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That loyalty allowed Apple to charge a premium of $10,000 for its top-of-the-line Macs until the drop in IBM-compatible products dropped substantially, making Macs seem expensive by comparison. As a result, the company transitioned to developing a line of products expressly designed for the entry-level market, such as its $999 Mac Classic that was intended to compete head-to-head with the IBM-clones whose manufacturing costs and retail prices had dropped precipitously by 1990.

3. What business strategies has Apple followed in its Mac business since 1990? What is your evaluation of them?

Apple emphasized two major approaches to its business strategies since 1990: targeting a broader section of the retail market (such as by developing its cheaper lines intended for the entry-level, student, and non-professional home user in the early 90s); and by developing the "digital hub" approach to the industry in the later 90's and into the 21st century. With respect to the first strategic shift, by the early 1990's consumer trends sparked a significant change in distribution considerations. Sophisticated consumers reduced their reliance on full-service outlets in favor of direct….....

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