Group 8, Section A

SM Assignment: Apple Inc.

Anand, Himanshu, Nabajyoti, Nandini, Neeraj

Abhishek S, Achint,

1) Identify the elements of Apple' strategy and evolution (from Sculley to Jobs) in it.
Apples Strategy and its Evolution
Apple and John Sculley
o Sculley, with a successful stint at Pepsi, assigned the task to compete against the bigger players
like IBM which provided PCs at very competitive prices
o Goal: to make Apple a leader in desktop publishing and education
o Apple was much more vertically and horizontally integrated than any other competitor
o Apple products increasingly seen as BMW of the computer industry due to high prices when IBM
was offering similar PCs at much cheaper rates
o Strategy changed from premium-price differentiation to cost-leadership to regain market
share with focus on the retail PC market
o Apple now to become a low cost producer of products with mass market appeal
o To drive down costs, manufacturing shifted to subcontractors, still the profitability could not be
improved
o Apple formed JVs named Taligent & Kaleida with its biggest rival i.e. IBM to create a new OS and
multimedia applications; which ultimately failed costing company more than $500M
Apple and Steve Jobs
o Jobs vision: To change the world through technology
o Jobs mission: To being an easy-to-use computers to market
o Apple II a step in direction of realizing the dream of computing revolution
o Competitive advantage existed: Apple offered a cutting edge, tightly integrated user experience;
thus Consumers WTP high as Apple provided a superior quality & complete desktop solution with
ease of use features; this is how Apple differentiated itself from other players
o Apple pioneered first usable personal computing device but IBM brought PCs into the
mainstream
o IBMs entry into PC space changed Apples competitive positioning fundamentally as it offered a
open system at relatively cheaper prices against Apples closed ecosystem at premium
price; Macintosh launched to take on IBM more aggressively
o After Jobs return to Apple in 1997, following strategic decisions were taken over a period of 10
years:
Ending the Mac licensing program as Mac clones had cannibalized 20% of Apples sales
since 1st such agreement; moreover it was a step towards keeping the Mac a closed
system unit so that no one could copy it
Consolidated Apples product portfolio by reducing product lines from 15 to 3; done with
an intent of reducing the clutter and to channelize resources and energy into few but
highly competitive products; launching the new iMac to turn around Apples fortunes
Continuation with the subcontracting for manufacturing; revamping the distribution
system by ending relations with smaller outlets and forging new ones with national
chains; a new website launched to make direct sales to customers
Focus on Quality products: Apple's reputation for quality aided entry into new market
segments such as iPod, iPhone etc.
Jobs relentless pursuit of innovation enabling culture helped in successful development of
whole new product lines such as iPod, iPad, iPhone and iTunes which changed the rules of
the game forever. iPods Halo effect on the sales of Mac business testimony of Apples
belief in its competitive strategy of closed ecosystem
Entering into strategic partnerships with major players from other industries such as NBC,
AT&T etc. to thrive the business from iPod, iTunes
2) What factors provided Apple competitive advantage in computer business?
Apples greatest competitive advantage is its ecosystem: Apple's key advantage over its
competitors lies in its unique control over both hardware and software in the Apple ecosystem. The easy
to use devices and software Apple makes are designed to work well with each other and sync easily. All
this gives a splendid user experience which is the reason why Apple has been able to maintain
consistent profitability in an industry where almost everyone else is unprofitable.
To enable a closed ecosystem, Apple follows a vertical integration strategy. Vertical integration has
given Apple a competitive advantage, as it owns chip manufacturers, controls manufacturing, follows
extremely strict software standards, and operates in a nearly closed ecosystem of proprietary retail

Group 8, Section A
SM Assignment: Apple Inc.
Abhishek S, Achint,
Anand, Himanshu, Nabajyoti, Nandini, Neeraj
stores. With these advantages, the company has more control of its value chain and, more
importantly, its component costs. Its retail strategy is a big enabler to achieve efficiency in supply chain.
Differentiation Strategy: Attractive design, ease of use, security, interoperability with other machines
are some of the major qualities that differentiate Apple products from those of its competitors