This report will provide a critical insight into today’s personal computing market as well as looking into the strategies of Apple and Dell to analyse how they have become two of the leading players in the technology industry. The main body of the report will include Apple’s entry into the retail market and how they managed market innovation theory to their advantage.
2.1 Personal computing market
The personal computing market is ever expanding and is expected to continue its rise following 2012 and beyond (Mintel, 2012). The laptop market is set to return to growth in 2012, however, tablet sales are expected to outgrow combined laptop and desktop sales in 2012 (Mintel, 2012). Since the introduction of the iPad by Apple in 2010, the tablet market has shown rapid growth and is expected to grow again in 2012 by around 40% (Yang, 2012). This rise in tablet computing has contributed to the ever decreasing desktop market, which is again expected to take a hit come the end of 2012, and is expected to drop below the 1million market volume mark by 2017 (Mintelb, 2012). Some experts such as Goldsborough (2012) argue that tablets or comparative price laptops will never have the same productivity as a desktop as they aren’t simply as powerful. Big name brands within the computing industry such as HP are starting to lose their way however, as their market shares decline due to their inability to innovate and stay ahead of the pack (Brandler and Burke, 2012). Microsoft have detected this and are currently launching ‘Windows 8’, which some experts are predicting could claw back market share lost to Apple (Cross, Ralph and Albro, 2012). Research has also suggested that, because the operating system can run across all platforms, it will spark a huge rise in hybrid devices e.g. laptops that can turn into tablets etc. that could see them begin to dominate the technology market once more (Mintelc, 2012). Apple will no doubt however, have something in the making due to their relentless innovation strategy that should see them retain their leading market share across all platforms.
2.2 Assessment of the strategies of Apple and Dell
Dell has been a one of the big market leaders over the past few decades and in 2011 had the third leading market share in the computing industry (Gartner, 2012). From the start, Dell had always been a company that would try to cut costs where possible, particularly with their ‘build-to-order’ and ‘just-in-time’ mass customisation strategies (Dissanayake, 2012). This helped Dell to drive their price down in order to sell to a mass market of customers. Dell’s strategy was to focus on direct sales via the internet and over the phone to help cut out the middle man which cut down costing. This customer-led focus enabled Dell to place emphasis on the customer’s needs to generate higher margins (Doyle and Stern, 2006). This strategy was praised by many and has become an industry hallmark of excellence (Kumar and Craig, 2007; Teece, 2010). Nevertheless, Benner (2011) argues that the strategy has become out-dated and much more needs to done in terms of research and development in order for the company to stay within the top 5 market leaders; threats of new entrants that are innovating in a fast growing market, could see Dell lose their position due to their lack of innovation. Furthermore, in recent years, Dell’s computers have been perceived as a ‘value’ product and, as customers rely on price/quality relationship because of the uncertainty surrounding the product due to the lifecycle of computers (lifecycle is approx. 3-4 years so customers don’t have as much knowledge about new products when looking to purchase), therefore a higher price means higher quality (Herbst, Leary and McColskey-Leary, 2012). Dell however realise the importance of relationship marketing (Schmid and Vogl, 2003) and emphasise best practice when trying to get close to customers (Dell, 1999) as well as using the...