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Apple Computer Corporate and Business Strategy
with the new entrants, such as IBM, who had cost advantages.
The adopted differentiation strategy explains Apple’s future decisions to vertically and horizontally integrate. Software and hardware integration allowed Apple products to be more “versatile,” reliable, and superior in performance. However, superior and integrated products meant higher manufacturing costs. Products were priced at a premium to their PC counterparts. It is no surprise that when the company, in response to higher costs decided to change its strategy by attempting to become a cost leader overnight, failed in this endeavor. The executive team overlooked the firm’s value creating activities and picked a strategy that was inherently incompatible with the company core competencies.
I argue that during this time, management should have realized that the company’s true value was bringing to the market a highly differentiated product based on form, features, design, and quality. Although this has taken some time, I believe Apple has finally arrived at this conclusion and its strategy today incorporates the company’s core competencies and value added benefits.
What is Apple’s mission and strategy today? Rather than focusing on delivering a mass market product, which inevitably translates into a low cost commodity-like product, Apple’s mission is to deliver a highly innovative and superior solution to a customer’s personal computing needs. Is this product designed for everyone? No. Because the mission statement focuses on superiority and innovativeness, it inherently segments the broad market into consumers whose computing needs demand a solution that is powerful, cutting edge, reliable AND who are willing to pay a slight premium for such value added features and functionality.
With such a mission in mind, it logically follows that in order to provide a superior computing solution, Apple’s corporate strategy must not limit itself in terms of scope. A complete computing solution expands industry and market boundaries. We are not just talking about a personal computer anymore. Apple’s corporate strategy is to compete in the markets that encompass all the devices, peripherals, and software to make a computing solution or “experience” complete. This corporate strategy implies vertical integration. As one Microsoft executive so eloquently put “this isn’t the post-PC era; it’s the PC-plus era.”
Apple’s present day competitive strategy is a return to differentiation. Key elements to this strategy are an emphasis on design, service, branding through advertising, and quality. Drivers needed to attain these objectives are through the firm’s unique marketing abilities, engineering skills, creativity, and R&D.
For Apple, differentiation encompasses tangible and intangible dimensions. Tangible differentiation is concerned with the physical characteristics and performance of a product, in this case, a personal computer. Physical characteristics include form, features, performance quality, durability, reliability, and style. Products that are enhancements or complements to the personal computer are also vital in [next page]