Apple Inc History and Industry

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We can glean Insight into the history and composition of the PC Industry from itseponymous title. In the late 1970s, as Wozniak and Jobs were starting Apple computer, personalcomputers were an emerging product.The following chart (Reimer) gives an overall view of themajor market players since the mid-1970s.

By 1983, the market share of the Apple II fell to 8% while the PC had 26%.Marketshare of Macintosh peaked at slightly more than 10% in the early 1990s and has since tapered tobetween 2-3%.The IBM PC and its clones became the standard due to the success of the opennature of the PC.This allows product developers to offer vastly more products for the platform. Some argue that not licensing the Mac OS was a mistake.Bill Gates and Microsoft wereencouraging Apple to license their OS in the early 1980s, because they were developing softwarefor Apple and had much riding on the success of the company. When Apple did not license,Microsoft began developing their operating system, Windows. (Linzmayer, 169-75, 245-9)

The Online Music Industry
While Apple clearly dominates the online music industry, the battle for domination is notover.Although digital music sales are growing rapidly, the Recording Industry Association ofAmerica (RIAA) states that digital sales account for only 4% of all music sales. (Borland)Analysts at Forrester (Bartiromo) and Gartner (Bruno) validate this.Apple’s sales are between66% and 75% of downloads and 80% of music players. (Bruno)Apple is part to a suit allegingmonopolistic practices concerning their market share dominance of players and downloads.(Grundner) The other players in the download market are (the revised) Napster, Yahoo Music,Rhapsody, and illegitimate file-sharing services.Portable music players competing with the iPodinclude those made by Creative, Samsung, iRiver, and Sony.A major point of contentionbetween these services and player manufacturers is the control of a variety of incompatibleDigital Rights Management (DRM) schemes.

The Future of Apple
Personal Computers – A Shift in Strategy
Apple has historically taken a far different path than the traditional Windows and Intelcombination.Microsoft provides the Windows operating system to separate downstreamhardware producers such as Dell.Apple vertically integrated both the operating system softwareand hardware completely under Apple.A consumer running Microsoft Windows can choosefrom a myriad of systems based on the Intel processor, while a consumer running Apple’s OS Xmust purchase Apple hardware. pple is adjusting this strategy by migrating their microprocessors from IBM andMotorola PowerPC to Intel.Analysts believe that the Intel-based Macintosh may be able to runMicrosoft Windows applications by the end of 2006. (Burrows) In addition to switching processors, Apple positioned their computers as an immediateoption for the traditional Microsoft Windows user.With Apple Boot Camp, users may now useMac OS X or Windows on an Apple computer. (Sutherland By allowing users to run Windows on an Intel Mac, Apple reduced the switching costs fortraditional PC users.Apple may steal away customers that are willing to pay a premium for asystem that runs both Windows and Mac OS X.

Apple continues to retain a strategic option to license its technology to clone makers suchas Dell.Past attempts at licensing Apple technology (to IBM, Gateway, and others) failed onaccord of Apple’s rigid demands.Many technology leaders (such as a 1985 letter by Bill Gatesto Apple CEO John Sculley) criticized Apple for keeping a closed architecture.Apple cofounderSteve Wozniak criticizes this strategy, “We had the most beautiful operating system, but to get ityou had to buy our hardware at twice the price.That was a mistake.” (Linzmayer, 245-57) Whether Apple would be willing to pursue this reversal of vertical integration is unclear.Although such a move would cannibalize a portion of Apple’s own hardware sales, it would alsoprovide royalty-based revenue...
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