Apple vs. Dell an Analysis of Two Leading Information Technology Providers

Topics: Apple Inc., Personal computer, Dell Pages: 8 (2760 words) Published: August 5, 2013
Executive Summary

This paper provides the historical background and financial data of two of the leading information technology (IT) corporations in the United States. Going beyond their humble beginnings to the present, an analysis is made of their current financial performance. This serves to compare and contrast the differing business strategies of the two financial juggernauts. The two companies are direct competitors in the IT market place. Developing cutting edge software that is futuristic and enticing is what Apple does best. Apple has the ability to offer a diverse product line that caters to a wide variety of consumers, especially tech savvy earlier adapters. Dell’s marketing approach is to create a product line that is affordable and easily used by the general computing public. Audit reports, ratios, cash flows and income statements are analyzed to gain a clearer picture of which marketing strategy is proving to be the more successful.

Corporate Histories and Strategies:

In 1976, high school friends Steven Jobs and Stephen Wozniak shared a common love and interest in electronics. In their early stages, Apple I & II were designed as a hobby. Apple I was actually created in Steven’s bedroom. “They would showcase the computers at the Homebrew Computer Club (of which they were members) as a demonstration (Apple Museum, 2011)”. The highlights were the video screens, and the fact that it used few chips to operate (during this time keyboards and video screens were not well established). The blue prints/schematics were passed around freely for all to see. Stephen would go to the homes of friends and help them build their own. Their computer displays would take place at club meetings, showcasing new features and additions.

Dell, Inc. began in 1984, when then freshman pre-med student Michael Dell used $1000 dollars to fund PC’s Limited. Working in an off-campus dorm room at the University of Texas in Austin, Michael Dell had a goal to produce IBM compatible computers from stock components to suit individual customer needs. Michael Dell bought parts from wholesalers, than sold the finished computers by mail order at very low prices.

One similarity both Apple and Dell shared was their early and rapid success. Dell had plans to make computers that could be customized with specialized components to build a computer system to accommodate individual requirements and give the customer exactly what they wanted. By ordering the components wholesale and selling directly to the consumer, Dell eliminated the need for retailers to serve as middle-men (which cut into his profits). Initially, Apple would build the computers at night in their garage. Their plan was to sell the circuit boards to members of their club. Before they had the opportunity to do this, Apple received a $50,000 order from a local vendor. This drastically changed their plans. The initial financing was used to build one hundred computers that cost a little over a hundred dollars per system to build. The plan was to purchase the parts needed on a 30 day credit term. Surprisingly enough, with no established credit, or collateral, Steve persuaded the vendor to do just that. With parts secured, they began to test the computers in the garage. There was a ten day turn-around to produce a new computer. Throughout the process, they received positive feedback and much needed exposure; the product emerged to become one of the most innovative creations of all times.

Dell computers (IBM clones) were built from stock parts as they were ordered. In 1985, the founder dropped out of school, got a family loan for $300,000 dollars and began to focus all his effort on the new company. Later the same year the company introduced its first non IBM clone computer, the Turbo PC. The computer utilized an Intel 8088 processor that ran at an impressive (at the time) speed of 8MHz. It...

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