Apple’s proﬁtable but risky strategy
When Apple’s Chief Executive – Steven Jobs – launched the Apple iPod in 2001, he made a signiﬁcant shift in the company’s strategy from the relatively safe market of innovative, premium-priced computers into the highly competitive market of consumer electronics. This case explores this proﬁtable but risky strategy. Early beginnings
To understand any company’s strategy, it is helpful to begin by looking back at its roots. Founded in 1976, Apple built its early reputation on innovative personal computers that were particularly easy for customers to use and as a result were priced higher than those of competitors. The inspiration for this strategy came from a visit by the founders of the company – Steven Jobs and Steven Wozniack o the Palo Alto research laboratories of the Xerox company in 1979. They observed that Xerox had developed an early version of a com-puter interface screen with the drop-down menus that are widely used today on all personal computers. Most computers in the late 1970s still used complicated technical interfaces for even simple tasks like typing – still called ‘word-processing’ at the time. Jobs and Wozniack took the concept back to Apple and developed their own computer – the Apple Macintosh (Mac) –that used this consumer-friendly interface. The Macintosh was launched in 1984. However, Apple did not sell or share the software to rival companies. Over the next few years, this non-co-operation strategy turned out to be a major weakness for Apple. In 2001, Apple moved from selling specialist niche computers used in design and desktop publishing into mainstream consumer electronics. This shop façade in Fukuoka, western Japan illustrates the depth of the new competition taken on by this major strategic decision on the part of Apple. Apple’s specialist computers dominate the desktop publishing market segment – here in a design studio in Italy.
Battle with Microsoft
Although the Mac had some initial...
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