pple Inc. 2010 Apple’s Competitive Advantages Apple was the first company that launched computers for personal use but by 2010 the company viewed itself as mobile device company. The competitive advantages for Apple throughout history have been ease of use, industrial design and technical elegance. Apple designed its products from scratch using chips, disk drives and monitors. For instance the iMac that came out in august 1998 was available to buy with colorful translucent cases with an eggshell design.
The iMac also supported “plug-and-play” peripherals that were designed for windows based computers. Apple differentiated itself from other computer brands by having the “think different” ads and a unique design on both hardware and software that no other PC brands had. Also later on they started making energy efficient notebooks made from recyclable materials. In 2001 Jobs believed that the Macintosh had an advantage over its competitors for consumers who started to live a more digital lifestyle, using digital cameras, portable music, etc.
Because Apple offered all these devices and to sync them together Apple made a digital hub strategy. Because the consumers could sync all the files to the other Apple devices they had it made it easier to use than other PC brands. Personal Computer Industry Apple’s Competitive Position in PCS In the 80’s and 90’s Apple was best known for their personal computer, the Macintosh. Customer loyalty made it possible for Apple to sell their Macs at $10,000 with a gross profit around 50% in the 90’s.
By the early 2000’s Dell overtook the market lead and contract manufacturing in Taiwan and China became more popular and took over areas such as design and testing. According to the data, Apple has shown that they have had a very steady market share from year 2000-2009, with a market ratio ranging from 3-5%. This means that Apple has a very sustainable market share. Over the years the PC industry has experienced many developments in the form of technology advancements and consumer behavior. Due to these changes many of Apples competitors have left and entered the market.
In 2000 Compaq had a market ratio of 13%. Two years later this was gained by Hewlett-Packard. While PC vendors like Acer, Lenovo quickly entered the market growing quickly in 2004, Compaq and Packard Bell had been forced out of the industry because of the rivalry. As competitors where coming and going Apple kept holding on strong. Since 2006 Apple’s market share has been growing but the PC market has stayed the same. While many of the new PC vendors started to concentrate on home users, Apple continued to focus on the education market.
Apple’s innovative products made them unlike their competitors. The introduction of the sleek, stylish and powerful Mac Air proved there innovative presence. In 2005 Apple changed its CPU processor from PowerPC processors to Intel processors. This transition made it possible for the Mac to run a Windows OS along with Windows application. Before this transition many consumers had felt that there was a disadvantage to choosing Mac because of the lack of Macintosh software. The idea Steve Jobs introduced with the Macintosh as a so called “digital hub” became a sustainable strategy for Apple.
The idea was to create an advantage for the consumers who were starting to get used to having a digital lifestyle using digital cameras, mobile phones and portable music players. The Macintosh became a “hub” where you could control, integrate and add value to all of the devices. Thanks to this strategy they have managed to attain a sustainable position in the PC industry. While Apple has introduced devices such as the iPod, iPad and the iPhone to the market the Mac PC has still been able to stay relatively strong due to its position as the digital hub they introduced it as.
The digital hub concept has however slowly been fading or transitioning to the Smartphone, and the PC is now linked more to the heavy task loads. Apple’s Competitive Position in MP3 Players When the case was written Apple didn’t have much to worry about. MP3 players were still popular because smart devices were still not as popular as they are today. Apple had a large competitive advantage over the other MP3 makers because of their brand name and image. Apple is known for their popular and stylish designs and they always have a variety to choose from.
The IPod was also popular because of their accessory ecosystem they created. Apple gave the customers a variety of accessories to choose from; they ranged from fashionable cases to docking stations. ITunes was also a way that Apple attracted customers. ITunes had two features including the free desktop software and the ITunes music store. ITunes has many competitors both free and paid music services and most of them are cheaper than ITunes which chargers a minimum of $. 99 per song. ITunes even being more expensive than the competition helped grow the IPod sales.
Before ITunes was created the IPod sold about 133,000 per quarter but after ITunes it sold approximately 733,000 per quarter. ITunes now has a high switching cost because if you switch to a cheaper music store it most likely won’t be compatible if you are using an IPod and to change to a different MP3 player it would cost more than just paying slightly more for each song. Apple’s MP3 players do have threats to worry about now. With the smart device industry increasing they all come with their own MP3 player.
If you buy the IPhone you won’t need to buy an IPod because it plays all your music on your phone. Apple’s main threat is cannibalization. With the addition of the IPhones it is no longer necessary to have an MP3 player. The only advantage the IPhone has on Apple’s MP3 business is that it comes with the ITunes store preloaded so they don’t have to worry about the competitor’s music store. When the customer has something easily available they are more likely to spend more for the convenience factor. When the case was written Apple’s competitive position was as high as it could be.
With the addition of smart devices their position has become almost equal to their competition but they still have a high competitive position in the MP3 music store. Apple’s Competitive Position in Smartphones In distribution, Apple faced powerful cellular carriers such as NTT DoCoMo and Vodafone, which controlled the networks and often the phones used on those networks. In the U. S. , the top two carriers were Verizon Wireless and AT&T. A handset manufacturer was usually dependent on the operator to provide a subsidy.
Subsidies lowered the consumer’s purchase price of a popular new handset by as much as $150 or more. Nokia, Motorola, and Samsung dominated the industry, with roughly 60% market share. Products were characterized by short product life cycles and sophisticated technology. At the time, a mobile phone’s foremost purpose was to make calls. In the mid-1990’s, the industry’s preference shifted towards phones that offered more attractive hardware designs and user- friendly interfaces. Then smartphones rose to prominence in the next decade. These high-end phones rought multiple functions together in the palm of one’s hand, serving as a mobile phone, Internet browser, PDA device (such as managing schedules and address book), and media player. The iPhone’s entire system ran on a specially adapted version of Apple’s OS X platform. The first model was priced at $499 for a 8GB model. At that time, handsets that cost more than $300 accounted for only 5% of worldwide mobile phone sales. AT&T, the exclusive U. S. operator for the iPhone, did not provide a subsidy. AT&T agreed to an unprecedented revenue sharing agreement, which gave Apple control over distribution, pricing, and branding.
Apple revamped the pricing model under a new agreement with AT&T. The carrier provided a subsidy on the phone. The second iPhone model was released in 2008. This version ran on a faster 3G network. With the 3G models, iPhone revenues exploded to $13 billion by the end of the 2009 fiscal year. A third version, the iPhone 3GS, went on sale in June 2009. With its release, the subsidized price of the 8GB iPhone dropped down to $99. Analysts estimated that Apple generated an ASP of $562 from its iPhones, while competitors’ ASP on similar handsets ranged between $300 and $400.
Within two years, the iPhone went from zero to 30% of Apple’s total revenue. In terms of global smartphones sales, the iPhone was the biggest growth story, capturing more than 14% of the market. A key factor behind the iPhone sensation was the extension of the iPhone’s ecosystem with the launch of the Apple App Store in 2008. The popularity of the App Store was stunning. In about 18 months, iPhone and iPod touch users worldwide downloaded four billion applications. Mobile apps had turned into a nice side business for Apple.
Around $4 billion was spent on mobile phone applications in 2009, the bulk of which was spent on iPhone apps. In conclusion Apple changed the game with an innovative new touchscreen smartphone. Apple made profits by pricing the smartphone under $100 making it accessible to any consumer to break into the smartphone market. Apple created the App Store for consumers so that in order to fully utilize your phone you needed to download apps. Apple covered all of their bases with the iPhone and today still seems to stay ahead of the curve in the smartphone market. Prospects of the IPad