case study

Competitive Advantages

Current Competition -Very Intense

Threat of new

Entrants

Bargaining Power of

Customers

Threat of Substitute Products

Bargaining Power of Suppliers High

Low

Low

Very High

Current Rivalry:

• Very intense and fierce• Very low switching costs• Competitors Dell, IBM, HP, etc.

Threat of New Entrants:

• New entrants reluctant due to huge investments

Bargaining Power of suppliers:

• Two types : microprocessors and Operating system

Bargaining Power of Buyers

• Switching cost is low• Countered by companies having strong product differentiation

Threat of Substitute Products:

• Higher price needs justification for increase• Apple can charge higher price to creative designer community but not to common consumer

PC Industry

Intense competition

Technology going paradigm shifts

Coping with these changes make life difficult

Strengths

Brand awarenessProduct DifferentiationComplete package of hardware and software

Weakness

Heavy investment in ResearchNot a lean operations ManagementNot completely independent

Apple’s Difficulty Frequent changes in the strategiesClose system of the apple MacNiche market operatorPremium segment hence costly

Apple’s Difficulty in PC Industry

Apple’s Mac BusinessAgreement with Microsoft to invest $150 million in Apple

Launched the I-Mac, plug n play with multiple colors

Outsourcing and restructuring, while expanding to national chains

Direct selling through website

Paired down Inventory and heavy spending on R&D

Notebook products launched

Technology and Innovation

Integrated with the Intel Platform

Mac users able to operate both windows and Mac based applications

Leopard OS launched

Web browser Safari

MS-Office suit for MAC

Distribution and Sales

Threats & Competitors

Threats/Competitors

I-Phone: Initial Strategy

Rationale to launch I-phone: To integrate the i-pod with a mobile phone service and to reinvent the phone as a multifunction communication device

• 8 GB and 16 GB• AT&T Plan $59.99• No third party distribution• Edge Network 2-2.5 G• Battery life affected by 3 G• 19.5 market share during 1st Quarter•

Version 1 :

Version 2

• 8 GB and 16 GB• AT&T plan $ 69.99• Best buy retail channel• 3G Bandwidth• Google, YouTube partnership• I-tunes integration• Launched in 22 markets

Reasons for change in strategy

Availability of 3G

bandwidth and battery

life up gradation

Revenue sharing model

was not generating revenue

Price band was on the higher side,

and the early

adopters were not

interested

Retail chains were a better option

Design improvements

To make I-phone

successful and

international brand product

Strategies for IndiaCost premium attached to Apple products could

become a hindrance

Cost leadership strategy needed

Maintain product differentiation

Supply chain initiative

Demographic factors could play a major role to succeed in

India