Apple Inc., 2010 - How Sustainable Is Apple's Competitive Position in Pcs?

How sustainable is Apple's competitive position in PCs?

Current rivalry in PC industry is very high. Major four competitors (HP, Dell, Acer and Lenovo took 55% of market in 2009 (Exhibit 6). There are considerable investments to be made for setting up for new entrants who are reluctant to enter market. This makes threat of new entrants low. Even 30% of the market owned by white-box PC's; existing companies have created strong branding awareness. There are two main types of suppliers. First type consists of microprocessors and operating system companies, which has very few resources like Intel and Microsoft. In other type of suppliers are memory chip, keyboard, disk drives, etc. producers that has an strong competition against a low supplier power position. Suppliers adjust pricing and quality to make their products attractive. Bargaining power of customers is high. With five different types of customers has a strong buyer power because of low switching costs. Strong product differentiation (such as valued design, mobility, wireless connectivity for individuals; price, service and support for companies and software availability for educational or governmental users) increases the switching costs. Threat of substitute products is low. More differentiation in the products creates less switch option to a substitute. If prices are high, the companies should provide justification.

Apple has strengths on brand awareness and product differentiation with its "Think Different" motto. Providing complete package of hardware and software has aesthetics by design, plug & play and unusual shapes for computer chasis are other strength points of Apple. High investment in research and not to be completely independent (rely on microprocessor producers) are Apple's weaknesses.

Apple's Mac Business based on integration with Intel platform. Mac users able to operate both windows and Mac based applications. Leopard OS, Safari, MS Office for Mac are launced. Retail stores opened, collaboration with best buy is signed. Owing to all these measures, Apple had a robust trend in total Macintosh unit sales from 2004 to 2009. (Exhibit 1c). But to continue this trend Apple will need to look outward. Since the US market is not growing at a great pace, Apple will have a look at the emerging markets such as China and Middle East. As Apple is operating in a Fast-cycle market in which the firms capabilities that contribute to competitive advantage aren't shielded from imitation and where imitation is often rapid and inexpensive, its strategic decisions need to be undertaken quickly and in an effective manner.

How sustainable is Apple's