I believe Apple has performed very well in the industry. Being involved in the high
technology industry there is a constant need for companies to strive towards innovation.
These companies are forced to either innovate, or become stale and eventually fail. This is
apparent throughout the whole article. The company was formed in a garage in 1976
through building circuit boards. Eventually the company was named Apple Computer, and
in 1978 began selling the Apple II computer. According to Yoffie (2012) “Apple quickly
became the industry leader, selling more than 100,000 Apple IIs by the end of 1980. In
December 1980, Apple launched a successful IPO” (p. 2). In 1981 IBM entered the market
which had a negative impact on Apple’s performance. Apple was not prepared for this
since IBM was teamed up with Intel, so they could appeal to consumers by offering a
faster computer that had the ability to be cloned (open system). Apple on the other hand
did not have an open system. They preferred to design everything themselves, and refused
to allow third parties to use their hardware.
It is apparent now that a lot of people prefer to customize electronic products. It was the
same case in the late 1990’s. The ability of an open system offered by IBM allowed
computer enthusiast to buy every part of a computer and build their own system. Plus all
the IBM compatible parts on the market due to third parties, allowed customers to build
computers for business, media, and gaming. Through Apple focusing on their exclusivity
they have achieved power and control. However, at the same time they have created an
opportunity for a parallel market. The failure of allowing third parties to use hardware and
software, the design, and processor speed eventually led to a 62% decrease in net income
from 1981 through 1984. At the same time IBM was able to flourish and gain market share
becoming the standard of the industry. Shortly after Jobs was replaced, Sculley began to
focus on desktop publishing and education. The software, peripherals, hardware, and
IMB-compatibles enabled Apple to become successful again by gaining back market share
they had lost. They also developed a loyal customer base, according to Yoffie (2012) “The
majority of IBM and compatible users ‘put up’ with their machines, but Apple’s customers
‘love’ their Macs” (p. 2). This was not to last, Apple was able to charge high premium
prices for their products, but as the prices for IBM-compatibles steadily fell so did their
market share. Sculley tried to regain market share by teaming up with Intel, and IBM.
However, Sculley would soon be replaced by Spindler and Amelio after Apple’s gross
margin fell 14 points lower than the 10 year average. Spindler focused on cutting staff,
killing the Intel partnership, allowing only a handful of clone companies, and
concentrating on a new operating system. After the venture with IBM ended and Apple
experienced almost a $70 million first quarter loss; Sculley was replaced by Amelio.
Amelio spent roughly 1 year as Apple’s CEO with Job’s coming back as an advisor.
Though he turned the company back towards a premium-price differentiation strategy,
sales continued to fall rapidly and many believed bankruptcy was inevitable.
Late 1977, Jobs came back to Apple and began reshaping the company. Jobs stopped
licensing Macintosh due to the cannibalizing of profits, and reorganized the product lines
into four categories. Apple received $150 million from Microsoft, a commitment to
develop compatible software such as Microsoft Office, Cook created a more efficient
supply chain, and the company created a website to sell directly to the public. On top of
these changes, Jobs turned his attention towards reshaping the company’s culture for
confidentiality, motivation, and innovation which contributed to saving the company from
bankruptcy. Due to the loyal customer base Apple achieved, and their ability to
adapt/change strategies; they have been able to turn a profit and prevent bankruptcy.
According to Yoffie (2012) “Jobs was especially fanatic about industrial design, simplicity,
and product elegance” (p. 4). Since the development of the iMac in 1998, Apple has been
enjoying profits. The iMac illustrates Apple’s ability to charge a premium price compared
to others in the industry:
The company’s loyal customer base followed by their ability to provide elegant design,
new operating system, compatible windows based plug and play peripherals,
streamlined/efficient supply chain, retail store, and the ability to promote itself; Mac was
able to differentiate itself from others, draw more market share, and enjoy continuous
success.
It is easy to see that Apple has learned from the mistakes that they made in the beginning.
The “i” products have been an enormous part of Apple’s success. The company has
constantly pushed itself to remain ahead of their competitors, innovative, elegant,
compatible (open), and simple; which helps their products appeal to just about everyone.
The development of iTunes to tie the “i” products together with the computer has not only
increased sales, it has improved the ease of use by allowing functionality and interface as
well. iTunes allows customers to purchase apps, organize, and customize their “i”
products. It is important to note that Apple is still able to charge their premium price for
all of their “i” products. The iPod was the first device released and it defined what the
MP3 standard should be. According to Yoffie (2012) “Over the next several years, Apple
delivered one new innovative design after another. In 2012, Apple continued to hold more
