Apple Inc. A 30 year business strategy
A response to Harvard Business School Case Study 9-708-480 Apple Inc., 2008
Apple’s fundamental business model has not changed since it first began business in the late 1980’s. While being a leader in innovation, Apple has consistently produced proprietary hardware and software, eventually leading to a loss of market share in any particular market they have ventured into. Even though it has learned from some mistakes, Apple’s actions in the past few years have not shown a change from the core reasons for its failures and unless new actions are taken its current market lead will eventually dwindle.
This analysis will look at the various stages of the Life Cycle of Apple, what type of business strategy was employed during that stage and the results of those strategies. We will look at Apples strategy vs. the PC side of the market and how those differences have affected Apple. Finally, the various pieces of the Apple world will be viewed to see if and what Apple has learned over its lifetime.
Apple Computer’s Business Strategy
Since its inception, innovation has been at the forefront of Apple’s ability to compete in the world market. Steve Jobs and Steve Wozniak sparked the PC revolution, turning the world of computers on its head. The Apple II (offered initially in 1978) drove the PC industry to $1 Billion in annual sales in less than three years. (Carlton, pg 10).
Even though initially viewed as a toy by many businesses, the Apple quickly showed itself as a viable substitute to the traditional mainframe. In the years that followed Apple continued to prove its ingenuity; being the first to introduce a computer with color, a Graphical User Interface, sound, a mouse, laptops, and many other firsts.
These inventions came to define Apple and its business strategies. Based on its fully bundled package of hardware and software Apple became synonymous with usability. A staple of Apple computers became based on the idea that ‘it just works”.
Along the same lines, product detail has also been a key differentiator for the company. Apple makes a true effort, and generally succeeds, at making a product which thinks of the little things which truly make it a better product. (Hinge placement on laptops, cord management, etc).
Throughout its history, ingenuity has been at the core of Apple Computer’s business strategy. They have consistently outspent competitors in R&D (as a total percentage of sales). This has very often made the company a driver of the PC market; this does not automatically translate into being a market leader however. Innovation and quality comes with a price, and Apple also consistently produced a computer priced significantly above that of its competitors.
Apple’s various leaders have recognized that their advantages in ease of use, quality, and innovation would keep them selling their product only to a loyal base. This led to Apple’s greatest strategic advantage: Marketing. Apple made a point of marketing their computers as more than just machines, but as an elegant fashion accessory to an extent. Having a Mac set you apart and made you different. Thus the infamous 1984 commercial in which Apple compared PC use to George Orwell’s book “1984”.
As Rob Enderle points out “The Company simply seems to understand what will get people excited about its products, and then it executes on that vision. You don't see the company mainly talking about features or technology, but about how the computer will make your life better.”
IBM and the PC Industry’s Business Strategy
While the Apple computer became known for its innovations, the IBM compatible PC began to be viewed as a commodity as early as the late 1980s (Yoffie, pg 6). IBM recognized this early on; but when it made an attempt to be more like Apple and make a proprietary PC, it lost more than half its market share.
To a certain extent IBM was the creator of its own demise in the PC...
References: Carlton, Jim. 1997. Apple: The Inside Story of Intrigue, Egomania, and Business Blunders (New York: Times Business/Random House, 1997)
Enderle, Rob. March 1984. Apple’s Competitive Advantage. TechNewsWorld. http://www.technewsworld.com/story/33061.html?wlc=1235590233
Yoffie, David B. and Slind, Michael. September 2008. Apple Inc., 2008. Harvard Business School Publishing.
Krazit, Tom. January 2008. iPhone unlocking explodes despite Apple 's countermeasures, cnet News. http://news.cnet.com/8301-13579_3-9860766-37.html.
Krazit, Tom. June 2008. Apple unveils iPhone 2, both the phone and the business, cnet News. http://news.cnet.com/apple-unveils-iphone-2/
Houghton, William. February 2008. Apple iPhone 's "Core" Strategy Problem, The Brooding Savage http://www.broodingsavage.com/business-analysis/apple-iphones-core-strategy-problem.html.
Porter, Michael. January 2008. The Five Competitive Forces that shape Strategy, Harvard Business Review.
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