Apple’s competitive advantages: (1) Apple Inc. produces both hardware and software; (2) Apple's retail strategy. Apple Inc. has its own retail stores; (3) Apple products are easy to use; (4) Apple's design is elegant; (5) Not only does Apple produce PCs but also non-PC products: MP3 players, smartphones, and multimedia computer tablets; (6) built brand awareness, brand loyalty.
Personal computer industry: (1) Even though there has been constant volume growth within this industry since the 1980's, average selling prices tend to decline annually (p.4). That makes PC manufacturers lose profit margin (average profit margin fell below 5%. p. 4). (2) PC manufacturers are cutting spending on research and development due to the standardization of components (p.4). (3) New sub-products like netbooks and tablets emerged recently taking part of the PC market. All these tendencies within the industry wouldn't hurt Apple's sales much because Apple is positioning itself like a seller of both ...view middle of the document...
Industry leaders are keeping leading positions by acquiring smaller competitors (p. 5). Apple is working on delivering value to customers through new technologies, extra features, and design improvements. Apple spent 3% of its net sales on R&D in 2009 (Exhibit 1a), even more than industry leaders HP and Dell did 2 ( Exhibit 7). Not only does this contribution help Apple to keep up with all recent trends but also enables it come up with new technologies annually. To sum up, Apple's competitive position is solid. Apple is increasing market share slowly every year but it won't become an industry leader because it's not cutting prices. PC users can be satisfied using any standardized PC which is half as expensive 3. In PC sales Apple relies on selling luxury products to users who are willing to pay for image. MP3 players: Strong competitive position. Apple is a market leader with 70% of MP3 market in the United States (p.7). Apple's iPod gained this share due to its "sleek design, simple interface, and large storage" (p. 7) and iTunes availability. However, recently it lost some sales 4. This could be due to 1 or all these reasons: (1) market's saturation; (2) cannibalization by iPhones and iPads; (3) economic conditions. Smartphones: Apple has a strong competitive position offering a wide range of applications, elegant design, and access to iTunes / App Store. However, the market is very competitive. RIM is very popular in a business community; Nokia => getting over European market. Knowing that iPhone is 30% of Apple’s net sales (p.10) and the number of units sold annually is increasing (Exhibit 1c), Apple should push sales by singing contracts with other networks (even in the USA).
Prospects for iPad: A small, portable device with big storage capacity, the iPad has everything needed for market success. It’s not that expensive (from $499 to $829, p.12), light, and able to provide internet access (WiFi or/and AT&T 3 G service). However, this market is highly competitive (Kindle, Amazon.com, p.12) and PC industry leaders are going to launch their Wintel-based tablets in 2010 (HP, Dell, p.13). To maintain its margins, Apple Inc. should go on with innovations and quality improvements as well as continue to build customer loyalty.