MGT 440, December 2009
Apple Inc. (Apple) has managed to create substantial value in the highly competitivepersonal computer industry, by innovating and forging a path considerably different from thoseof the largest competitors in the industry, successfully differentiating its products from those of the competition by choosing to focus on quality, design elegance, and superior customerservice, while outsourcing actual manufacturing to trusted original equipment manufacturers.Yet, despite the advantages Apple has created for itself, the stiff competition within theindustry and other external factors present formidable challenges to the firm.The personal computer/notebook market is becoming increasingly commoditized,leading to intense rivalry among competitors within the industry, driving prices down andcreating potentially destructive price wars. Utilizing key resources and capabilities includingindustry-leading design teams, talented software and hardware engineers, backed by a sizeableresearch and development budget, which is responsible for a portfolio of thousands of patents,and under the strategically brilliant stewardship of CEO Steve Jobs, Apple has successfullyinnovated its way to a comfortable market position commanding premium prices.Unfortunately, Apple cannot rest on its laurels. The position is not permanent and Apple mustcontinually find new ways to maintain profits and create value for customers and shareholders.The maturing personal computer market is becoming saturated, leaving fewer new buyers andmore replacement buyers. To continue to grow, Apple must also look to new and expandingmarkets as sources of revenue.
After considering Apple’s
strategic war chest;
core competencies, keyresources, and capabilities and given its current situation within the industry and thecompounding factors in the form of trends from the general environment, it is clear Applestands to create considerable value through
continued related diversification. The firm’s history
of category-defining products like the iPod and iPhone provide sufficient evidence that it iswell-equipped to continue its path of innovation, by creating a digital lifestyle convergence
device that bridges users’ on
-the-go digital lives and their at-home digitals lives. The proposeddevice will be powerful and feature packed, while leveraging the Apple system of seamlessintegration to create a compelling user experience, presented in an elegant package
showcasing the firm’
s industry-leading industrial design capabilities, to create the next must-have consumer electronics product.