Apple’s Increasing Problems and Core Strategic Issue(S) Leading to the Crises Around the Mid 1990s
IBCON – Global Strategic Management
Case: Apple Inc. 2010 – One pager case questions October 2011
Question: Please explain and generalize Apple’s increasing problems and core strategic issue(s) leading to the crises around the mid 1990s?
By overtaking Exxon Mobil Corp., Apple Inc. became the world’s most valuable company on 9th August 2011 with a market valuation of $337.2 billion1. However, Apple has not always been that successful throughout the company’s history. During the mid 1990s Apple was struggling to stay afloat and almost went bankrupt by 1996. Loss of market share Founded in 1976, Apple grew rapidly with high profits and became market leader of the PC industry by the end of 1980. As IBM entered the market in 1981, the competition between Apple with its Macintosh Operation System (OS) and Microsoft with its “open” DOS (later Windows) OS has begun (see case p. 2). At least one factor which led into Apple’s crises was that both competitors followed different market entry strategies. On the one hand, Apple kept its Macintosh OS proprietary and was not willing to license the software and technology in order to enable other manufacturers producing Macintosh clones. Michael Spindler was the first CEO which turned Apples strategy into this direction – obviously too late2. On the other hand, Microsoft not only started setting up an ecosystem with a lot of PC manufacturers (e.g. IBM) very early, but also a close cooperation with Intel as a producer for microprocessors. This partner network enabled IBM and other PC producing companies to attack the market with very low prices. As a result, the Microsoft-Intel cooperation (called “Wintel”) became a de facto standard in the Personal Computer industry by the early 1990s, which is reflected in a market share of more than 90%. In comparison to that, Apple’s market share decreased from 16% in the early 1980s to 10% in the early 1990s, further down to finally 4% in the late 1990s (see Exhibit 3). We can observe a
Case: Apple Inc. 2010 – One pager case questions October 2011
Question: Please explain and generalize Apple’s increasing problems and core strategic issue(s) leading to the crises around the mid 1990s?
By overtaking Exxon Mobil Corp., Apple Inc. became the world’s most valuable company on 9th August 2011 with a market valuation of $337.2 billion1. However, Apple has not always been that successful throughout the company’s history. During the mid 1990s Apple was struggling to stay afloat and almost went bankrupt by 1996. Loss of market share Founded in 1976, Apple grew rapidly with high profits and became market leader of the PC industry by the end of 1980. As IBM entered the market in 1981, the competition between Apple with its Macintosh Operation System (OS) and Microsoft with its “open” DOS (later Windows) OS has begun (see case p. 2). At least one factor which led into Apple’s crises was that both competitors followed different market entry strategies. On the one hand, Apple kept its Macintosh OS proprietary and was not willing to license the software and technology in order to enable other manufacturers producing Macintosh clones. Michael Spindler was the first CEO which turned Apples strategy into this direction – obviously too late2. On the other hand, Microsoft not only started setting up an ecosystem with a lot of PC manufacturers (e.g. IBM) very early, but also a close cooperation with Intel as a producer for microprocessors. This partner network enabled IBM and other PC producing companies to attack the market with very low prices. As a result, the Microsoft-Intel cooperation (called “Wintel”) became a de facto standard in the Personal Computer industry by the early 1990s, which is reflected in a market share of more than 90%. In comparison to that, Apple’s market share decreased from 16% in the early 1980s to 10% in the early 1990s, further down to finally 4% in the late 1990s (see Exhibit 3). We can observe a