In January 2007, three decades after its incorporation, Apple Computer Inc. shed the second word in its name and became Apple Inc. With this move, the company signaled a fundamental shift away from its historic status as a vendor of the Macintosh personal computer (PC) line. Mac sales remained vital to Apple’s future, but they now accounted for less than half of its total revenue. Apple was no longer just a computer company. Its move into digital music, with the iPod and with iTunes, and into the next generation mobile devices, with the iPhone, had given the company a chance to transcend the constraints of the PC business.
The Evolving PC Industry
From its earliest days in the mid-1970s, the industry has experienced explosive growth. Although Apple pioneered the first usable personal computing devices based on its proprietary design, IBM was the company that brought PCs into the mainstream due to the relatively “open” system and the thenprevailing IBM-compatible standard. IBM’s dominance of the PC industry started to erode in the late 1980s, as buyers increasingly viewed PCs as commodities. By the early 1990s, “Wintel” (Windows operating systems combined with an Intel processor) had replaced “IBM-compatible” as the industry standard. Throughout the 1990s, thousands of manufacturers – ranging from Compaq to Dell to noname clone makers – built PCs around building blocks from Microsoft and Intel.
By 2008, PCs were far easier to use than they had been two decades earlier. They had also begun to enter the price range of consumer electronics (CE) products. As a result, the “digital convergence” of PC and CE products had become a significant factor in the PC marketplace. Various alternative devices – ranging from handheld PDAs to smartphones, from TV set-top boxes to game consoles – had begun to supplement or even to replace PCs. Advanced game devices like Sony PlayStation 3, for example, allowed consumers to not only run...