Apple is arguably one of the most “hip” companies in the technology world. Its popularity largely comes from competitive advantages that separate Apple from the rest of the PC pack. Its success started with computer hardware, and continues today by building Apple’s ecosystem which supports it highly profitable and “cool” hardware.
Apple’s historic competitive advantages:
Develop new products – easy to use products, such as Mac, OS, and iProducts
Enhance new products – update existing products & create ecosystem to support them
Lock in buyers – loyal users make it fashionable to own Apple brand products
Raise barriers against imitation – control their proprietary (soft)hardware
Establish alliances – Wintel made Apple faster, leaner, and allowed access to larger networks
Apple & PC industry (2010):
With Dell, Acer, Lenovo, and HP controlling about 55% of the industry, rivalry was intense. As the majority of PC’s were merely Wintel machines with slightly varying features, barriers to entry were low; consequently, companies competed on cost. Suppliers like Microsoft and Intel were powerful, but suppliers outside of them were not. Buyers were demanding, as the enterprise market demanded quality offerings at a bargain price. Home consumers valued design, mobility and wireless capabilities; these preferences fit right into Job’s strategy of using PC substitutes to make the Mac the center of a “digital hub.” This is how Apple differentiated itself from other PC manufacturers industry wide.
Sustainability of Apple’s competitive PC position (2010):
Apple’s competitive strategy in 2010 was sustainable since they bundled proprietary (soft) hardware, made easy to use products, and used sleek designs and promotions for company products. This allowed the company to tailor their products for a great end user experience and become a differentiated product, unlike competitors which mainly competed on cost; this also contributed to Apple’s popularity and profit margins by satisfying user’s needs and wants in return for the high price tag for Apple products. In turn, this increased network effects, e.g., Apple symbolized