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DATE OF SUBMISSION :- 24TH JANUARY.2015

Case - Apple Inc Strategic Management

Analyze the Personal computer industry. Why did Apple struggle historically in PC? Analysis of Personal Computer Industry Initial Growth and Factors of Growth: IBM was the company which is credited with bringing the personal computers industry to mainstream in early 1980's. However, there are a large number of personal computers manufacturers. Few major personal computers manufacturers are Hewitt-Packard, Dell,IBM,Lenovo and Acer. Till 2011, just four top personal computers vendors had dominated the market with 53.6% of market share.The industry boomed throughout early 2000. The major factors for the rapid expansion of the personal computers market are high usage propelled by internet and growing consumers in emerging markets like China. Major Customers of Personal Computer Industry:- The major category of buyers of personal computers are home users, small and medium scale businesses,corporates, education and government. Home consumers form the major chunk and they value design and mobility along with being price conscious. There has been a drop in computer prices throughout all variants of computing devices and this reduction in price came with rapid improvement in features like better processing speed, reduced weight, higher memory and more applications.This shows that the computer industry is very dynamic and there is always a fierce competition for computing device manufacturers to come up with the latest technology. Dynamic and fast paced industry:-As the technology industry is very dynamic and technologies get outdated very frequently, constant innovation is a major feature of the industry. There is scope of innovation and constant research and development in all part of a personal computers. Major Components :-The microprocessors industry is heavily dominated by Intel which accounts for 80% of the CPU's manufactured.If microprocessors are the brain of the computer, then operating systems are the interface between the user and his computer. There are multiple operating systems used in personal computers. The most popular is Windows and more than 90% of personal computers run on some version of Windows. Other popular operating systems are Mac and Linux.While Windows and Mac are licensed products, Linux is an open source operating system. Mobility is the way to go :- Lately portable devices have become very popular. The main reasons for this are improved internet connectivity and consumer's need for portable devices.Portable devices like laptops,notebooks and other hand held devices like tablets and i-Pads have shown immense increase in the share of personal computers. These devices are the next phase of personal computers. Reason for Apple’s struggle historically in PC Stiff Competition from IBM:- Apple quickly became industry leader and was successful in launching the first IPO in December 1980. But its competitive position changed in 1981 when IBM entered PC market. IBM PC used Microsoft DOS OS and Intel Microprocessor, this system was open and could be easily cloned by other producers.

Apple instead practised horizontal and vertical integration in which it used its own proprietary designs and did not give licence to other manufacturers. This lead to IBM gaining more market share and setting up new industry standards. Macintosh in 1984 was introduced in reply to it but due to incompatibility issues it had limited sales. Expensive Products:- Apple products are very steeply priced as compared to other personal computers. This also restricts its market share. As computers become obsolete very quickly, customers are not always comfortable spending huge amount on a personal computer when cheaper alternatives with excellent features are available in the market. The cost structure of Apple is very due to huge investment in RND. Popularity of Windows over Mac:- Windows is the most popular operating system, with over 90% of all computing device run on some version of windows. Apple products run on Mac and are less popular as most computer users are comfortable with Windows. Lack of joint ventures and few compatible applications:- As there market share of Apple personal computers is very low compared to Windows there are fewer compatible and dedicated software applications for Mac.Two joint ventures started by Apple and IBM in the presence of Scully with an idea to create new PC OS and multimedia applications failed. Licensed Mac clones cannibalized Apple's Share:- Scully was replaced by Spindler, who halted the idea aof joint venture and announced to licence few companies to make Mac clones. 99% of the existing Mac users bought clones cannibalizing Apple’s profit.The consumers did not prefer to choose Mac over Intel based PC further adding to the loss of Apple. This resulted in break of the joint venture and Job’s became interim CEO in September 1997. What advice would you offer the new CEO Tim Cook? Though Apple was seen as a highly profitable company during job’s tenure, there were a couple of products such as Mac mini and Apple TV that created unrest among the consumers. This is to mean that success also comes with slight essence of failure. Few advice which we will give to new CEO Tim Cook are as follows:Continue with its innovation and high R&D spending:- The first and foremost advice for any technological company to be in the business is to sustain itself by continuously innovating. “Running a business is like rowing a boat upstream. Once you stop rowing, you start to slip backwards.”When the company is growing, as in the case of apple, the CEO has to be rowing furiously to sign the next contract, to step towards the next key deal. Launch internet sevices in alliance with other service providers:- Providing internet services has now become indispensable and and Apple has found itself in the position of a laggard. Though Google was a never a leader in the internet services, it rolled out well in this segment. Apple lacks the appropriate talent. An ideal advice would be to form an alliance with Yahoo that has Flickr, mail that are ideal properties of the yahoo that would be position IOS really well. Apple has to work to retain internal talent:-History suggest that Apple has never been successful in retaining the internal talent. Quattro Wireless deal was a failure and its founders are no longer with Apple and the dream of having a successful iAD remains a dream till date.

Apple has been working lately with twitter, but the biggest hurdle is the culture difference between these firms. Acquisition of twitter can boost apple in social segments but that has to be done without swallowing twitter uniqueness. An example for this would Facebookwhatsapp acquisition. Develop Cloud fiercely:-Apple on 2011 launched iCloud to move into Cloud Space.In spite of its success in the initial years there are problems which apple is facing due to lack of cloud talent inside the firm. This was evident when apple tried to buy Dropbox, a cross platform cloud storage solution that was already offering HTC and Samsung customers much more storage for free than Apple could provide. Apple relies on Amazon web services and Microsoft to achieve iCloud functionality. Google and Facebook have their own services and has in- house talent to scale it up but Apple does not seem to have one. An ideal advice would be build an in-house talent and start venturing as cloud computing is considered to be the next big thing. Develop long term strategy and become more open to its ecosystem:-The most important of all is retail domain.Apple needs to think about now as it starts to gear up its strategy for next 10-15 years. Apple did a mistake of developing a home grown retail skill, which is equivalent to going against the wave. Apart from these, Apple needs to slowly get rid of its closed ecosystem and try to be a little open so that external contribution can help them in injecting some technical advancement their pool.