1. Apple did better in its iPod business than it did in its PC business. Explain why. Justify your answer through the application of industry analysis and other strategy concepts discussed in this course.
In the early years, Apple focused on manufacturing low cost computers, working together with IBM, cooperating with Novell and Intel to create a new operating system that run on Intel platform. However, these projects had not achieved success until Steve Jobs became the CEO and refocused the original strategy for Apple. Jobs was able to create a competitive advantage for the company through restructuring and innovating software, hardware, marketing, digital asset management, retail strategy, and product differentiation. With these advantages, Apple was saved from bankruptcy and has gained a positive reputation, more customers, and large profit margin.
The struggle of Apple incorporate in the PC industry was mostly due to the company’s inability to utilize Porter’s Five Forces. Porter’s Five Forces analysis is a powerful tool for understanding a company competitive position in the industry. The first three CEOs of Apple (Scully, Spindler, and Amelio) failed to address these forces and led the company to the edge of bankruptcy, which largely contribute to the reason why Apple’s PC industry suffer more than its iPod business.
Intensity of Competition
The present of several large PC manufacturers such as IBM, Dell, Hp, Acer, etc. substantially increases the intensity of competition. Additionally, when the Windows operating system combined with an Intel processor, it created a new standard known as “Wintel” which dominated the PC industry. This trend turned every personal computer into a commodity, and the competition turned into a battle of lower prices, which greatly severe the profit of all companies.
Power of Buyer
There are five categories of buyers, include