Apple History

Symptoms

Since its inception, Apple has had major changes at the top of the organization. In, as little as, ten years four CEO's were giving the position and then dismissed because of inabilities to bring the company to profitability and an increase in market share. Apple had no clear business strategy, no statement of direction that could be used as a plan for deciding for which businesses the company should be in and which not. Executives and managers created their own strategies, with each strategy going into different directions. Other symptoms include the computer industry in general. Personal computers have become a commodity and the industry itself has reached a level of maturity. Major players in the computer industry have to constantly remain innovative and invest heavily in research and development to sustain a competitive advantage.

In the beginning, of the computer era when personal computers were in development Apple became the industry leader during the mid 1970s. In 1981, IBM produced its first personal computer. During, the time IBM developed and launched its first PC IBM approached Bill Gates to provide an operating system for the company's product. By giving Microsoft total rights to license the operating system put both IBM and Apple at a disadvantage while establishing Microsoft as the dominant leader in the software industry. Apple also faces aggressive competition in the hardware sector. The inability to react to competitors aggressive strategies such as: Dell direct marketing approach, Gateway focusing on customer satisfaction and brand loyalty, and the merger of HP/Compaq with its focus of innovation has cost Apple to lose over half of the company's market share.

Problems

Within the software market Microsoft dominates. Many PCs that are purchased by consumers come equipped with Windows operating systems. The problem that Apple faces is that Apple offers an operating system, the Mac OS, that is only compatible to Apple computers and not PCs. The result is the only market share that Apple can obtain is through software sales through the sale of Apple computers. Microsoft's application barrier prevents Apple and other software companies from drawing a significant number of customers away from the monopoly. Even, if Microsoft decides to price its products substantially above competitive levels for a significant period of time it will still surpass its competition.

There are three main factors that indicate the reasons why Microsoft is so successful. First, Microsoft's share of the market for Intel-compatible PC operating systems is extremely large and stable. Second, Microsoft's dominant market share is protected by a high barrier to entry. Third, and largely as a result of that barrier, Microsoft's customers lack a commercially viable alternative to Windows. Consumers who already have a version of Windows with which they are content and who are not shopping for a new PC system are somewhat reluctant to incur the cost of switching to another operating system.

Since only Intel-compatible PC operating systems will work with Intel-compatible PCs, a consumer cannot opt for a non-Intel-compatible PC operating system without obtaining a non-Intel-compatible PC. Thus, for consumers who already own an Intel-compatible PC system, the cost of switching to a non-Intel compatible PC operating system includes the