Paul Theby
Strategic Management
Section 002
Individual Case study
September 30, 2009
Apple Inc.
What were Apples competitive advantages?
The basis of all of Apple’s competitive advantage stems from differentiation. In the
Beginning they succeeded because they produced the first “relatively simply machine that people could use out of the box.â€(Slind) They were the market leader for the first few years because they were the only company offering such a machine with high tech graphics and ease of use. Once IBM entered the PC market in ’84 Apple’s market share fell drastically due to IBM’s “open†system that was easily cloned by others creating even more ...view middle of the document...
They are so much differentiated that people are reluctant to switch from something that is all around to something that is less known. Apple has also spent time trying to UN-differentiate because they realized this problem, even though it was their life force to be different. There is evidence of this due to the fact that they made a deal with Microsoft to incorporate a Microsoft Office and have it available on MACs, as well as USB drives and interchangeable components with non-Apple PCs.
With iTunes, iPods and iPhones, Apple has used the same approach to differentiation by using the very latest technologies and gaining exclusive rights from suppliers and also distributors such as At&t.
A great deal of Apple’s success comes from its “rule changing†and very creative innovations. An example being iTunes. It became the first website/ programs that let people buy music by the track as well as have copyright protection built in. Also Apple had secured music from the top 4 record labels and thousands of others.
As you can see, Differentiation for Apple comes in the forms of high-tech innovation, new approaches to existing industries and high priced premium products that are not viewed as commodities even though all their competitors are.
How would you assess Apple’s initial strategy for the iPhone? Why did Apple change its strategy so quickly?
Apples initial strategy for the iPhone was a strategy that offered an ultra-premium product at an ultra premium price. They had gone against all the industry norms in distributing the product as well as it’s exclusive , non subsidize service agreement with ATT.
By June ’08 the iPhone sold 6 million of the 10million unit goal they had set for the end of 2008. It still had accounted for less than 1% of the mobile phone market. Over 25% of the 3.7 units sold...
