TECHNOLOGICAL ENVIRONMENT – APPLE LOST PC MARKET BECAUSE OF IGNORING INDUSTRIAL CHANGES- The pc industry has evolved in the past decades. There are 3 phases. Before 1981- PROPRIETARY SYSTEMS. Every pc producer had to develop self-own hardware and software. It was proprietary. Most buyers were technical people. There were two main streams in the market: apple style machine and IBM style machine. During this period, apple was the leader. Its strong developing ability made it become a family commodity.
However it didn’t use patents etc to protect its products so many other computer companies re-engineered apple products and made cheaper similar products to compete in the market. For example, Acer copied apple and developed little professor series. 1981- 1997: OPEN STRUCTURE. During this period, hardware can be separated into CPU, mother board, power, disk drive and peripheral businesses. Softwares could also be separated, and so each area had many providers competing with each other. But CPU, OS and some other areas had few providers.
Pc producers became the hub of the hardware performance. They had to buy all the components and assemble into a whole piece. At this time, IBM style machine with Intel CPU and windows OS became mainstream. During this period apple kept losing its market share. It was because of 4 reasons. 1. Apple insisted in selling their products as a high price proprietary system. 2. As more people started using IBM machine, software developers turned to create softwares that could run on IBM machines. 3.
Apple adopted Motorola CPU. As Intel kept leading the market, Apple’s CPU utility couldn’t pass IBM’S. 4. Apple focused on education and printing industries which only took small portions of the total industrial growth. It made apple’s market share decrease rapidly. 1997: INTERNET PC After internet booming, the PC industry has changed. Earlier PC’s used to work independently, here they can connect. Internet connects every computer around the world. Network has become a necessary part in PC industry.
Apple had already lost their PC market. It tried to develop new iMac using the same strategy of fancy styles and user friendly interfaces. They still didn’t focus on CPU and software. So, apple kept losing market share because they focused in relatively low growth industries with many substitute competitors. People could buy an IBM style pc with similar functions and cheaper price from Compaq, HP, Dell and many other providers. Its unique selling points aren’t hard to copy.
How Apple responds to the dynamics of innovation Apple and all computer producer firms depend on components and software from suppliers. Among them, without neglecting the importance of other components, processor is the core component of computer because the general performance of computer is usually associated with processor speed. The rapid innovation of processor, approximately every quarter by Intel Company, put no choice for computer producers including Apple except to adopt the new technology.
The ignorance of adopting such new processor will create competitive disadvantage for Apple. Besides, computer also requires core software which is called operating system to provide environment for applications. Microsoft is the main operating system competitor of Apple. It dominates operating system market share with more than 80% PCs using Microsoft Windows. Furthermore, it is really a hard for Apple MacOS to get back market share because it creates high and expensive switching cost from Windows to MacOS.
This situation is hardened since Microsoft releases new version of operating system approximately every two years. To keep in pace, Apple has also to respond by innovating at least the same frequency with Microsoft’s Windows. The pressure coming from processor innovation and rapid release of competitor operating system represents the dynamics of innovation. While responding fast to those dynamics will result in a short product life cycle, failing responds to these dynamics will create competitive disadvantage for Apple.