Apple's market position and operating system competition

Apple Computer

Overview and Historical Perspective

Apple Computer was founded in April 1976 by college drop outs Steve Wozniak and Steve Jobs. The Macintosh computer finally moved Apple into the business office, and by 1988, over one million Macintosh's had been sold. Now, Apple designs, develops, produces markets and services microprocessor-based personal computers, related software and peripheral products, including laser printers, scanners, compact disk read-only memory drives and other related products; and manufactures communications products that connect Apple systems to local area networks, connect the Macintosh to other computers and integrate the Macintosh into various computing environments. One of Apple's most successful new products is considered by many to be the current "ultimate" smart phone -- the iPhone, capturing over 40 million sales in 2010 alone, and almost 20 million in Q1 2011 alone. Combined with the I-Pod, Apple remains a global icon and technological force (Garside & Arthur 2011). In fact, with Apple guru Steve Jobs' passing, Apple and Jobs now receive almost "superstar" mythology (Schaefer 2012).

Central Issues

Apple's central issues are dual: capturing more market share (volume to reduce costs) and remaining profitable. The growth of the iPod, iPhone, and iTunes market has been a huge success story for Apple, and promises to help gain both market share and competitive edge. However, Apple faces legal issues on its outsourcing policies, charges of collusion and price fixing in its iTunes niche, and some media issues on the iPhone 4 regarding reception (Case Study, C-154). Too, Apple has limited editions because of their proprietary operating system with a corporate attitude of "one size fits all" and "ours is the best, just use it." From a legal perspective, this arrogance often translates into a media-inspired view of strong arming, when in fact compared to other players in the industry (Microsoft, for instance), Apple has a very light touch.

Alternatives and Solutions

Clearly, Apple is a successful, multidimensional and global corporation. Sales have more than doubled between 2005 and 2009 domestically and more than tripled internationally. The company has adequate income to fund R&D, but could reduce cost of sales considerably and funnel those funds into future projects and/or advertising. Solutions for their issues may be broken down into four general areas: Reduction of COG through outsourcing, Improving Market Share by boosting iPhone line, and Soft Push Advertising Campaign to Improve Global Image, and Improving Strategic Partnerships:

Reduction of COG - When Jobs was still at the helm, Apple said that American workers were no longer "flexible" enough to assemble their products at a cost-effective rate. Switching to a Chinese manufacturing base could save millions; instead of spending money on new domestic factories, use lower wages, government (Chinese) incentives and tax breaks to build iPhone, iPad and other Apple products at 1/3 the cost of domestic production, even after shipping is included.

Improving Market Share -- the Macintosh platform continues to grow internationally, and the way to grow Apple brand demand is through the iPhone. Focusing on the ability to have a phone, pad, and computer device that are all interconnected and can handle any conceivable business situation is paramount. Further, updating the iPhone and continually pushing the envelope with new editions keeps the market price elastic, competitive, and ensures continued sales and new customers. Rumors abound about Apple introducing a new, compatible HD Television platform, which would certainly increase visibility and market share.

Advertising -- Apple has traditional focused on innovation and design as their primary advertising message. However, they must improve their image as a globally responsible and sustainable corporation that thinks globally, not just locally. They need to push their proprietary system as something special that deserves protection, and come out looking like the hero rather than the villain. Finally, Apple needs to push towards its strengths.

Strategic Partnerships - Finally, Apple needs to push towards its strengths. Apple is not, nor has never wanted to become, a manufacturing company. Instead, Apple is an innovator of electronic devices, and they wish to retain that expertise. Partnering with other organizations that are more focused on manufacturing allows Apple to retain its core knowledge, its proprietary technology.

Implementation Plan

Portion of Plan

2010

2011

2012

2013

Decreasing COG

Meet with Chinese officials; work to establish core factory groups that are market sensitive.

Implement strategic Out-sourcing plan with iPhone and iPad.

Increase Out-sourcing plan to include iMac.

Retool and build more factories as funds and share grow.

Improving Market Share

New version of iPhone annually.

Update laptop market annually.

Increase compatibility through platform and software enhancements (bi-annually)

Image

Multi-tiered campaign that expands and morphs every 4-6 months:

Part 1 - Focus on sustainability and proprietary OS

Part 2 - Focus on global partnering and eco-friendly products

Part 3 -- Focus on innovation, education and reaching a global mandate for computer and SmartPhone use

Part 4 -- Focus on the future, what is next to come… anticipate and beat competitors.

Partnerships

Seek global partners in strategic markets through educational innovation and Corporate Social Responsibility (e.g. A toned down Mac for school children, etc.).

Focus on partnerships with companies that could include docking stations and/or compatibility products (e.g. The automotive and automotive aftermarket industry).

Partner with large textbook companies to bundle a Mac and a course load for colleges and universities, paid for through financial aid. (e.g. Software packages come preloaded or downloadable on Mac platform for all majors.)

Partner with television manufacturer to bring the Apple experience through television; Partner with HBO or Showtime to deliver content only available on an Apple (e.g. Apple sponsors a new HBO series).

Sources:

Krimly, N. (2012). Mac vs. PC: Myth-Busting for Consumers. Hongkiat.com. Retrieved from: http://www.hongkiat.com/blog/mac-vs.-pc-myth-busting-consumer-guide/

Marino, L. And Gamble, J. (2010). Apple Computer Case Study.

McCracken, H. (2010, February 27). PC vs. Mac: The Straight Scoop. Retrieved from Technologizer: http://technologizer.com/2010/02/27/pc-or-mac/

Schaefer, S. (2012). Steve Jobs, Michael Jordan and Superstar Mythology. Forbes.com. Retrieved from: http://www.forbes.com/sites/steveschaefer/2012/01/13/steve-jobs-michael-jordan-and-superstar-mythology/