The personal computer industry has been growing in demand ever since the dominance of Microsoft PC’s and Windows Operating Systems. Macintosh, Apple’s PC, in the 1980s was very successful in penetrating the market. Although the threat of new entrants in the PC industry was low due to various barriers of entry, Apple had to face intense competitive pressure from Microsoft’s PC, which had a dominant grasp over the market. Consequently, the threat of substitute PC’s from Apple’s perspective was substantial due to Microsoft’s user friendly design of there PC.
With Microsoft having a strong hold over market share, the bargaining power of both the suppliers and customers was fairly low. Customers did not have a lot of choices in terms of substitute products and the suppliers had to agree with terms offered by large players such as Microsoft and Apple. Lastly, there was not much rivalry in terms of numbers; however, being a technological industry, it was harder for companies to create sustainable competitive advantages due to constant technological innovation. Therefore, the PC industry as a whole had intense rivalry amongst the big players.
Competitive Advantages, Resources and Capabilities
Apple’s traditional competitive advantages included differentiating their products on the basis of quality by making their products user-friendly. Apple used their competitive advantage to create new demand while simultaneously using economies of scale to lower product cost. Apple’s employed a Blue ocean strategy to create these