DATE OF SUBMISSION :- 24TH JANUARY.

2015

Case - Apple Inc

Analyze the Personal computer industry. Why did Apple struggle historically in PC?
Analysis of Personal Computer Industry
Initial Growth and Factors of Growth: IBM was the company which is credited with
bringing the personal computers industry to mainstream in early 1980's. However, there are a
large number of personal computers manufacturers. Few major personal computers
manufacturers are Hewitt-Packard, Dell,IBM,Lenovo and Acer. Till 2011, just four top
personal computers vendors had dominated the market with 53.6% of market share.The
industry boomed throughout early 2000. The major factors for the rapid expansion of the
personal computers market are high usage propelled by internet and growing consumers in
emerging markets like China.
Major Customers of Personal Computer Industry:- The major category of buyers of
personal computers are home users, small and medium scale businesses,corporates, education
and government. Home consumers form the major chunk and they value design and mobility
along with being price conscious. There has been a drop in computer prices throughout all
variants of computing devices and this reduction in price came with rapid improvement in
features like better processing speed, reduced weight, higher memory and more
applications.This shows that the computer industry is very dynamic and there is always a
fierce competition for computing device manufacturers to come up with the latest technology.
Dynamic and fast paced industry:-As the technology industry is very dynamic and
technologies get outdated very frequently, constant innovation is a major feature of the
industry. There is scope of innovation and constant research and development in all part of a
personal computers.
Major Components :-The microprocessors industry is heavily dominated by Intel which
accounts for 80% of the CPU's manufactured.If microprocessors are the brain of the
computer, then operating systems are the interface between the user and his computer. There
are multiple operating systems used in personal computers. The most popular is Windows
and more than 90% of personal computers run on some version of Windows. Other popular
operating systems are Mac and Linux.While Windows and Mac are licensed products, Linux
is an open source operating system.
Mobility is the way to go :- Lately portable devices have become very popular. The main
reasons for this are improved internet connectivity and consumer's need for portable
devices.Portable devices like laptops,notebooks and other hand held devices like tablets and
i-Pads have shown immense increase in the share of personal computers. These devices are
the next phase of personal computers.
Reason for Apples struggle historically in PC
Stiff Competition from IBM:- Apple quickly became industry leader and was successful in
launching the first IPO in December 1980. But its competitive position changed in 1981
when IBM entered PC market. IBM PC used Microsoft DOS OS and Intel Microprocessor,
this system was open and could be easily cloned by other producers.

Apple instead practised horizontal and vertical integration in which it used its own
proprietary designs and did not give licence to other manufacturers. This lead to IBM gaining
more market share and setting up new industry standards. Macintosh in 1984 was introduced
in reply to it but due to incompatibility issues it had limited sales.
Expensive Products:- Apple products are very steeply priced as compared to other personal
computers. This also restricts its market share. As computers become obsolete very quickly,
customers are not always comfortable spending huge amount on a personal computer when
cheaper alternatives with excellent features are available in the market. The cost structure of
Apple is very due to huge investment in RND.
Popularity of Windows over Mac:- Windows is the most popular operating system, with
over 90% of all computing device run on some version of windows. Apple products run on
Mac and are less popular as most computer users are comfortable with Windows.
Lack of joint ventures and few compatible applications:- As there market share of Apple
personal computers is very low compared to Windows there are fewer compatible and
dedicated software applications for Mac.Two joint ventures started by Apple and IBM in the
presence of Scully with an idea to create new PC OS and multimedia applications failed.
Licensed Mac clones cannibalized Apple's Share:- Scully was replaced by Spindler, who
halted the idea aof joint venture and announced to licence few companies to make Mac
clones. 99% of the existing Mac users bought clones cannibalizing Apples profit.The
consumers did not prefer to choose Mac over Intel based PC further adding to the loss of
Apple. This resulted in break of the joint venture and Jobs became interim CEO in
September 1997.
What advice would you offer the new CEO Tim Cook?
Though Apple was seen as a highly profitable company during jobs tenure, there were a
couple of products such as Mac mini and Apple TV that created unrest among the consumers.
This is to mean that success also comes with slight essence of failure.
Few advice which we will give to new CEO Tim Cook are as follows:Continue with its innovation and high R&D spending:- The first and foremost advice for
any technological company to be in the business is to sustain itself by continuously
innovating. Running a business is like rowing a boat upstream. Once you stop rowing, you
start to slip backwards.When the company is growing, as in the case of apple, the CEO has
to be rowing furiously to sign the next contract, to step towards the next key deal.
Launch internet sevices in alliance with other service providers:- Providing internet
services has now become indispensable and and Apple has found itself in the position of a
laggard. Though Google was a never a leader in the internet services, it rolled out well in this
segment. Apple lacks the appropriate talent. An ideal advice would be to form an alliance
with Yahoo that has Flickr, mail that are ideal properties of the yahoo that would be position
IOS really well.
Apple has to work to retain internal talent:-History suggest that Apple has never been
successful in retaining the internal talent. Quattro Wireless deal was a failure and its founders
are no longer with Apple and the dream of having a successful iAD remains a dream till date.

Apple has been working lately with twitter, but the biggest hurdle is the culture difference
between these firms. Acquisition of twitter can boost apple in social segments but that has to
be done without swallowing twitter uniqueness. An example for this would Facebookwhatsapp acquisition.
Develop Cloud fiercely:-Apple on 2011 launched iCloud to move into Cloud Space.In spite
of its success in the initial years there are problems which apple is facing due to lack of cloud
talent inside the firm. This was evident when apple tried to buy Dropbox, a cross platform
cloud storage solution that was already offering HTC and Samsung customers much more
storage for free than Apple could provide. Apple relies on Amazon web services and
Microsoft to achieve iCloud functionality. Google and Facebook have their own services and
has in- house talent to scale it up but Apple does not seem to have one. An ideal advice would
be build an in-house talent and start venturing as cloud computing is considered to be the next
big thing.
Develop long term strategy and become more open to its ecosystem:-The most important of
all is retail domain.Apple needs to think about now as it starts to gear up its strategy for next
10-15 years. Apple did a mistake of developing a home grown retail skill, which is equivalent
to going against the wave. Apart from these, Apple needs to slowly get rid of its closed
ecosystem and try to be a little open so that external contribution can help them in injecting
some technical advancement their pool.