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Apple Computer Corporate and Business Strategy
also has positively affected the industry’s success. PC companies must keep up with the pace of technological innovation to remain competitively viable. Systems must be able to comply with new and innovative complementary products and performance must match what component suppliers such as Intel are providing.
With that said, is Apple’s competitive strategy aligned with the industry’s dynamics? I would argue that Apple’s differentiation strategy is uniquely aligned with the changing dynamics of the industry. The following industry characteristics serve as supporting premises to this argument. Firstly, Apple owns the only viable alternative to a “Wintel” machine. All other major computer manufacturers are only slightly differentiated because they are forced to conform to the “Wintel” standards of an Intel chip and Microsoft operating system. They are limited to differentiating themselves based on accessibility, service, and marketing. Differentiation has been realized by the way the industry evolved and Apple is positioned as the only alternative to the PC.
If differentiation results in a highly inferior yet differentiated product, then this strategy is doomed to fail. However, Apple has developed a superior product because it controls a large degree of input components, peripherals, and the operating system. The result is a differentiated product that outperforms PC competitors on speed, design, style, ease of use, and peripheral integration. Additionally, Apple is not subjected to the same degree of supplier power as PCs. It has the advantage of picking and choosing which technological innovations to pursue based on what will perform best on their system whereas PC’s are forced to deal with Windows and the associated software incompatibilities that may arise with new releases.
Long term, PCs are subjected to increased competition from small brands that use alternate, yet inferior components, allowing these manufacturers to offer comparable products at discounted prices. Companies like eMachines and other small brands are undercutting costs by adopting alternative components from lesser well know brands such as AMD versus Intel. You can’t clone an Apple. Therefore Apple is not directly subjected to the same threats as PC manufacturers are.
A major weakness in Apple’s differentiation strategy is in its operating costs. As PC prices fall, Apple must remain somewhat competitive by narrowing the gap in production costs. This provides a continuous challenge for Apple. How high of a premium can Apple justify for their differentiation strategy? In times of economic contraction, large discrepancies between the selling prices of a PC and an Apple can result in a loss of market share for the company.
An additional weakness to Apple’s differentiation strategy is that by adopting its own operating system, the company limits itself to the availability of software. With a significantly dwarfed customer base, software developers are more inclined to save costs by not developing Mac compatible versions.