2. Apple over the years ( 1976 -201x)
In its 36 years of existence Apple has evolved from being an assembler of Micro Computers to a digital
convergence giant and the most cash-rich company on earth with over $100 billion cash reserves. Apple 2
currently operates in several industry spaces
- Computers, Portables and Peripherals , Music /Media and Mobile
For Internal Use Only
3. 5 Forces Model - Pre-2002
Threat of New Entrants
3
• Entry into PC clone market is easy
• Local Consumer base varies
For Internal Use Only
Bargaining power of
Suppliers
• Very few vendors Rivalry/Existing Bargaining power of
would agree for Competitors Consumers
software for Apple 1. Major threat from large • Apple products
products (including established were expensive
Microsoft) manufacturers (IBM, but customers
• Only 2 large DELL, HP, Compaq) still bought them.
vendors for critical
component - CPU
(Intel, Motorola)
Threat of Substitutes
• IBM PC Clones
• Differentiators reduced as Technology
Innovations are copied / replicated.
4. 5 Forces Model - Post 2002
4
Forces /Industry PC Music Mobile Phone
New Entrants HIGH HIGH HIGH
For Internal Use Only
• Hardware – HIGH • Short Product Lifecycle
• Music – HIGH • High Investment Cost
• Initial Contract with Carrier
required
Buyer Power HIGH HIGH HIGH
• Switch cost is very low • Choice based on Device Look &
Feel and Performance
Supplier LOW MODERATE HIGH
• Many suppliers available • Carriers
• Component Manufacturers
Substitutes HIGH HIGH HIGH
Laptops, Smart Phones, • Local Regional Based Devices
Tablets , Phablets
Rivalry HIGH HIGH HIGH
Existing competitors • Competition from Android Phones
• Competition from China Clones
5. Activity System Map – Pre 2002
5
For Internal Use Only
Brand Value / Innovative
Marketing Edge Offerings
Superior
Simplistic
Direct
Retail Designs Hire Right
People
Leadership
Outsourced
in Sectors
Production
Extensive Pioneering
Research & Market Entry
Development
Proprietary OS /
Software
6. Activity System Map – Post 2002
iTunes 6
Exclusive
Apple
Stores
For Internal Use Only
Brand Value / Innovative
Marketing Edge Offerings
Direct
Retail Hire Right
People
Superior
Simplistic
Designs
APPS
stores
Extensive
Research & Outsourced
Development Production
Pioneering
Market Entry
Proprietary OS /
Software
7. What worked / What Didn’t
Year Product What Worked What Didn't Work
7
Innovation - 1st Personal Computer
1976 Apple - I Price
For Internal Use Only
Innovation - Color Graphics, Open
1977 Apple II Architecture, Floppy
Product Design Flaws
1980 Apple - III Negative Publicity
High Price - $10,000
1983 Lisa Innovation - GUI Limited Softwares
Collaboration with Suppliers for PageMaker Slow Performance, Lack of MAC compatible
1984 Macintosh software, Innovation - Laser Printer software
Better Horizontal & Vertical Integration Change in Business Strategy diluted the
(Hardware as well as Software), Duopoly differentiators (from Differentiation to Cost
1985 - 1990 Approach Leadership ), Federation of Corporate Alliances.
Change in Consumer Brand Loyalty.
International Expansion backfired.
1994 - 1996 PowerMac Improved Processors with Price Correction Cost Cutting measures (Employee Reduction)
Premium Pricing Strategy and Quality Issues.
1997 Failure of Handheld Devices
Move to Strong Differentiation Strategy.
2002 Onwards Regular Product Upgrades / Launches.
