What, Historically, Have Been Apple’s Competitive Advantages?

1. What, historically, have been Apple’s competitive advantages?

Apple Inc. was founded by Steve Jobs and Steve Wozniak in 1976 with the mission to make products that were cutting edge, designed beautifully, and easy to use. They have been able to keep this competitive advantage not only by relying on its own proprietary designs but by refusing to license their hardware to third parties. They tend to be a leader in new technologies such as the first desktop solution, mp3 player, and touch screen cell phone.

2. Analyze the personal computer industry. Use the tools you learned in your strategy course. Consider the following factors: competition in the PC industry, barriers to entry, power of PC buyers, power of suppliers (Intel & Microsoft), threat of substitutes. Is the competitive environment favorable or problematic for Apple? (In other words, is this a hard industry to compete in?)

The competitive environment was favorable at the inception of Apple. The only barrier at the time was the actual knowledge capable of developing the technology never seen before. They quickly became the industry leader when they came out with Apple II and were able to launch a successful IPO which would allow them to raise needed capital to develop more products. At the time the PC industry gained momentum quickly and Apple was responsible for sparking a “computing revolution” with annual sales reaching $1 billion in less than three years.

Once IBM entered the PC market in the early 80’s the competitive environment changed drastically. Quickly their PC’s became the industry standard and they were able to spread their product by selling the rights to the system so other producers could easily replicate the product. At this point it was easy for producers to enter the market as long as they had the capital to purchase the rights to the system. This had a very negative impact on Apple and caused net income to fall 62% in just four years, after being industry leader just years before.

The new structure of the PC Industry lead to what is called “buyer power.” Since there were so many sellers, prices of the PC became more accessible and this eventually lead to a crisis for Apple. Jobs was forced out and the company began to go in a new direction. By the 90’s Apple was on the rise and was able to catch a part of the market untouched by the other PC competitors. They began to develop new products like laser printers and also grabbed more than half of the education market. Over time things began to change for the other PC Manufactures and the number of manufactures decreased to a point where about four or five PC vendors existed instead of thousands. This allowed the vendors to sell their products to customers through superstores instead of dealers.