First competitive advantage of Apple is high margin. In Exhibit 5 you can compare the percentage of gross margins and R&D/Sales of three major PC manufacturers. The percentage of gross margin of apple is the highest among the three from 2006 while there is no big difference in R&D/Sales. This implies that the manufacturing process of Apple is more efficient than those of other companies and that consumers are willing to pay a little more to buy Apples products which means they are loyal enough.
Second advantage is that the product category of Apple is simpler than other companies. When you look at Exhibit 1b, you can see in what product line Apple is making profit. From March 2011 to March 2012 Apple’s net sales are generated only from Macintosh(desktops and portables), iPad, iPod, iPhone, other music products, peripherals and software. And more than 85% of its total net sales came from Macintosh, iPad and iPhone. This simple product line will be easy for the company to control over the market change. For example in the case of phone, there are five iPhones launched (3gs, 4, 4s, 5, 5s) in Apple but Samsung has numerous kinds of cellphones. It will be very hard to take care of many kinds of product lines.
Third advantage is integration. Apple has a well-made integrated system which can be utilized among the Apple’s products. For example, all the pictures, music, apps can be shared among the Apple devices through the iCloud and iTunes. So customers can get much synergy effect by buying Apple’s products rather than others. This system directly leads people to buy Apple’s product once they bought any product of