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 1970 s. 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 price of not only a new operating system, but also a new PC and new peripheral devices.
It also includes the effort of learning to use the new system, the cost of acquiring a new set of compatible applications, and the work of replacing files and documents that were associated with the old applications. For example, users of Intel- compatible PC operating systems would not switch in large numbers to the Mac OS in response to even a substantial, sustained increase in the price of an Intel-compatible PC operating system because of the substantial costs. In addition, continuing declines in market share in certain geographic regions and sectors of the economy are attributable to its marketing approach. Apple computers are geared towards magazines, newspapers, and graphic designers. With a mature industry and relative inexpensive PCs, Apple's market share remains in the low single digits, owing in part, to the perceptions that Macs are more expensive than PCs, that Macs are proprietary and that, significantly, the chips inside Macs are slower than the Intel chips powering Windows-based PCs. With i Mac being the least expensive compared to Power Mac Apples most expensive computer.
Current Problems Currently, Apple has entered the entertainment industry offering numerous products the: i Pod, i Tunes, and i DVD. While, the impact of the company's new products i Tunes and i DVD remains unclear. Apple has enjoyed much success with the i Pod. The problem that Apple faces today is that it must surpass the i Pod. Build on its strengths and expand the product as far as it can go, but go well beyond it. Once the i Pod peaks in success, it will become a significant burden to overcome.
In order to survive the i Pod craze, Apple needs to do more than expand it needs to surprise. And it needs to do this more than ever before. From a market perspective, all Apple needs now is another successful consumer product. Apple not only needs to find one more consumer success but also a product that tie to its overall strategic mission and goals.