1 The volatility and evolution of computer industry
Starting from 1976, Apple computer created the personal computer (PC). After IBM transformed the PC from proprietary systems into open structure, PC has been dominated by Wintel (Windows + Intel) structure. Apple insists in adopting proprietary and niche market strategies made them keep losing market share till less than 3% in 2001. However, its strategy with ignoring the market trends makes it lose the market after years.
1.1 Industrial changes: Apple lost PC market because of ignoring industrial changes
The PC industry has evolved in the past decades. There are 3 phases. Let’s take a look at these phases and Apple’s position ...view middle of the document...
Each area had many providers competing with each other. But CPU, OS and some special application areas had few providers. PC producers became the hub of the hardware business. They had to buy all the components and assemble into a whole piece. Consumers are not only cared about hardware performance, but they also cared about the software applications. IBM style machine with Intel CPU and Windows OS became the mainstream. During this period, Apple kept losing its market share. It is because of 4 reasons. (a) Apple insisted in selling their products as a high price proprietary system. Its hardware and software were different and not compatible with IBM machine. (b) As more people using IBM machine, software developers turned to create software that can be run on IBM machine. (c) Apple adopted Motorola CPU. However, Intel’s developing ability is better than Motorola after late 80’s. As Intel kept leading the market, Apple’s CPU ability could not pass IBM’s. (d) Apple focused on education and printing industries. Compared to the total industrial growth, these 2 markets may only take small portions. The total PC market growth came from increasing businesses customers, they use IBM style machine. It makes Apple’s market share relatively decreasing.
1997- : Internet PC.
After internet booming, the PC industry has changed. PCs connect together. Before that, most PCs are work independently, especially in the household market. But it has changed. Internet connects every computer around the world. Network has become a necessary part in PC industry.
Apple already lost their PC market. It tried to develop new iMac to win the market back. However, Apple kept using the same strategy with fancy styles and user- friendly interface. They still don’t focus on Powerful CPU and compatible software. As most PC users in the market are makes IBM keeps dominating this shrinking market. Apple’s niche strategy success with unique selling points in “ease of use”, “industrial design”, “tech elegance”, and “powerful application in graphic processing”. However, Apple kept losing market share because they focused in relatively low growth industries with many substitute competitors. People can buy an IBM style PC with similar functions and cheaper price from Compaq, HP, Dell, and many other providers. Apple focused on the wrong market with many substitute competitors. Its unique selling points are not hard to copy. Its loosing market is destined.
2 Identification of the strategic issue at the level of the firm
As a computer producer company, there are several strategic issues are faced by Apple. They are:
How Apple survives in competition.
How Apple responds to the dynamic of technology innovation.
How Apple responds to the continuous changing market needs.
2.1 Issues 1: How Apple survives in competition
The structure of computer industry can be considered as monopolistic competition. This structure is characterized by a lot of competitors,...