Apple Computer, Inc. - short company overview
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Denny Lau Case 12 Apple Computer, Inc. October 10, 2004 The Beginning Since the mid 1970s, Apple Computer, Inc. had been a major player in the personal computer (PCs) market. Aside from manufacturing and designing its line of computers, Apple's product mix also includes software and hardware peripherals. Its most successful accomplishment includes the Macintosh line of desktop and notebook computers, the Mac operating system, and the iPod portable music player. Michael Porter's Five Forces Model examines the dynamics between competitors, suppliers, and buyers within an industry. Specifically, it focuses on five forces that impact the industry - rivalry, threat of substitutions, buyer power, supplier power, and barriers to entry. In order to better understand the theories behind these five forces, we will apply them to analyze Apple Computer, Inc. Rivalry To describe the rivalry between competitors in the PC industry as intense is an understatement. Whether it is the structure of the competition or degree of differentiation, Apple must carefully evaluate each aspect.
Nevertheless, Microsoft Windows, the operating system that is in direct competition with Macintosh's Mac OS, was IBM compatible and can be used on any PC system. As the number of PC users and manufacturers continue to grow, Apple's presence in the personal computer market had gradually diminished. In addition, as functionalities and performance between PC and Apple continue to converge since the days of OS/2, consumers are finding PCs to be perfect substitution to Macintosh. Third party programmers had also shifted their focus toward windows programming, leaving Mac users with fewer choices in selecting software applications. Buyer Power Buyer has necessary power to impact producing industry. When buyer power is stronger than the supplier power, it creates a phenomenon where there are many suppliers and few buyers. This lets the buyer to have a strong influence of setting the market price. When the education market chose Apple for their computer needs back in the 80s and early 90s, the buyer power was concentrated with a significant market share in that sector.
Besides the software platform standard, Apple was having difficulties distinguishing its own operating system with Microsoft. This resulted in weak financial performance in the next several years for Apple, until 1997 when Steve Job took over as CEO of the company. Future of Apple Computer For years industry experts have been using Michael Porters five forces to examine various aspects of their industries. Apple has indeed been successful in differentiating its line of product with IBM compatible machines. The introduction of iMac is a very good example. Consider the popularity of this line from Apple in its inception. At this time, all PCs that are sold in the market have similar physical appearance - grey tower, grey monitor, and grey keyboard. They were neither attractive in design nor user friendly. Part of the reason why iMac drew such a wide range of audience was its aesthetic appearance and user friendly design. Of course the introduction of Mac OS X was also another factor that had attributed to iMac's success.
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