Industry Análisis: Apple Computer
Analyzing the computer industry from 1995 to 2005 seemed to be like analyzing a game of chest between the major competitors. The development is noticeable and the shaping of different corporate strategies could be sensed easily thanks to the different approaches toward the movement of the industry that the companies had; some of them shaped it, some followed it and some helped it grow. In order for us to analyze the computer industry during the up said time period, we will consider porter's five forces analysis, though static, it helps improve one's understanding of the setting and the conditions of such. Porte's five forces constituted the analysis of the new entrants to the industry as the barriers that can occur and the rivalry that represents it, the supplier's and buyer's power and the threats from substitute products. With this in mind, in order to determine if the industry is attractive or not we need to understand the pulling of these forces and therefore the profit potential of such industry. Since we are mainly concerned with Apple computers, we will alternate also with the position of the company and its defense against these forces giving a setting for recognizing the company's corporate strategy.
By 1995 the computer industry was a relatively new industry with a history of around 20 years only, a considerable time for a technology based industry, but still not a mature industry. On the other hand, by 2002 the industry was all ready a "$220 billion global industry" showing how "from its earliest days in the mid 1970's, the industry had experienced explosive growth" and presenting the industry as a very attractive industry with capability of even more growth. Even with this growing strength, there was a great presence of economies of scale, if a new company were to enter this industry it would have to face the cost disadvantage of not coming in with a large scale, since competing against IBM and Microsoft, and even Apple in a large scale would be suicide. Following, the industry was characterized also for been very capital intensive, for developing new products and new technologies required and investment on R&D of around $500 to $700 million, representing in Apple's case some what of a 4% to 6% of revenue investment fluctuating through out the years. On the other hand, by 2005 this capital intensive industry changed as manufacturers and more competitors a raised, IBM lower it's R&D investments to around 1% to 2% of revenue and other competitors dedicated to assembling and manufacturing computers like Compaq, Dell and HP had no investment in R&D but, in contrast with Apple, were highly dependent on Intel Microprocessors and Microsoft operating systems.
Like such, we can characterize the industry's rivals into two categories: Producers and Developers and Manufacturers. Developers wise, the computer industry by 1995 was dominated by two key players; IBM and Microsoft, even though Apple had introduced the first friendly to use PC Computer, it had very little market share by 1995 and IBM and Microsoft dominated the industry, "with 2001 sales of $86 billion, IBM was the largest computer company in the world" but had failed to maintain the owner ship of the PC platform allowing for Microsoft and Intel to gain control. As far as manufacturers only, the most representative companies, "accounting for 40% of PC shipments in 2001" , were Compaq, Dell and HP (Hewlett-Packard). Dell developed a very competitive internet based direct-sales structure which aloud for mass customization and low inventory costs, Compaq managed to maintain very low and competitive prices for its desktop computers through its build-to-order model and Hewlett-Packard revenue from computer sales constituted only a 20% of the entire firm's revenue, but its printers and electronic instruments for PCs constituted a 43%. As so, the competitions is high and intensive, but given the current conditions as...
References: • Porter E. Michael, How Competitive Forces Shape Strategy, Harvard Business Revier, 1979.
• Yoffie B. David and Yusi Wang, Apple computer 2002, Harvard Business Review, Harvard Business School press, 9-702-469, October 20 2005.
• Ghemawat J. Pankaj and Jan W. Rivkin, Creating Competitive Advantage, Harvard Business Review, Harvard Business School press, 9-798-062, February 25, 2006.
• Yoffie B. David, Apple Computer 2005, Harvard Business Review, Harvard Business School press, 9-705-469, August 4 2005
Please join StudyMode to read the full document