Case Analysis: Apple Inc., 2012
Case Analysis: Apple Inc., 2012
IBM introduced the personal computer into the mainstream in the 1980’s, after Apple pioneered the first usable “personal ” computing devices. By the early 1990’s, lower price and expanding capabilities drove the growth of “Wintel” (the windows OS combined with an Intel processor). The revenue growth continued through the early 2000’s then lowed over the next decades. The personal computer (PC) industry is in high dynamics, with new products emerging and old technology being abandoned quickly. With the requirement of cost cutting and the development of emerging market, contract manufacturing in Taiwan and China became popular. The dynamics are mainly driven by cost components cutting, software and hardware updates, product designing and consumers’ needs.
The five forces (see Exhibit 1) that have shaped the industry include threat of new entrants, threat of substitutes products, bargain power of suppliers, bargain power of consumers, and competitor rivalry within an industry.
NEW ENTRANTS:
One of the main barriers to entry is the scale economy. The industry requires PC companies to invest extremely large capitals in all aspects to gain the scale economies, including tech economy, managerial economy, financial economy, marketing economy and R&D economy. PC industry also involves lots of patents and rights, protecting innovations and setting up another barrier to entry for the new entrants. Technologies as well as innovation are advancing every year even every month, making the competition in PC industry fiercer. The top five PC vendors control large shares of the global personal computer market. It is really difficult for new competitors to enter the market.
On the other hand, price-sensitive consumers show low customer loyalty, usually have low brand identification and are willing to switch their PC to anther brand or product with limited costs. For example, consumers loved the mini notebooks just because of the low average
IBM introduced the personal computer into the mainstream in the 1980’s, after Apple pioneered the first usable “personal ” computing devices. By the early 1990’s, lower price and expanding capabilities drove the growth of “Wintel” (the windows OS combined with an Intel processor). The revenue growth continued through the early 2000’s then lowed over the next decades. The personal computer (PC) industry is in high dynamics, with new products emerging and old technology being abandoned quickly. With the requirement of cost cutting and the development of emerging market, contract manufacturing in Taiwan and China became popular. The dynamics are mainly driven by cost components cutting, software and hardware updates, product designing and consumers’ needs.
The five forces (see Exhibit 1) that have shaped the industry include threat of new entrants, threat of substitutes products, bargain power of suppliers, bargain power of consumers, and competitor rivalry within an industry.
NEW ENTRANTS:
One of the main barriers to entry is the scale economy. The industry requires PC companies to invest extremely large capitals in all aspects to gain the scale economies, including tech economy, managerial economy, financial economy, marketing economy and R&D economy. PC industry also involves lots of patents and rights, protecting innovations and setting up another barrier to entry for the new entrants. Technologies as well as innovation are advancing every year even every month, making the competition in PC industry fiercer. The top five PC vendors control large shares of the global personal computer market. It is really difficult for new competitors to enter the market.
On the other hand, price-sensitive consumers show low customer loyalty, usually have low brand identification and are willing to switch their PC to anther brand or product with limited costs. For example, consumers loved the mini notebooks just because of the low average