Apple Inc, in 2012
Whether “Apple Computer” or “Apple Inc”, the company’s competitive advantage has historically always been innovation mixed with secrecy. Their superiority arises from being the first and furtive. They broke new ground with the first usable “personal computing devices”. They created a Mac OS and refused to license it out. They changed the way we listen to music, the iPod, and what we want our cell phone to do, iPhone. Job’s theory was to tell people what they want and this idea made Apple a leader in innovation.
Conversely, other companies, be it PCs or mobile device producers, are more reactionary and simply give the people what they want. Unfortunately for them, companies lose the lead and are sometimes years late to the game. With all their success today, it’s hard to imagine a time when Apple products didn’t dominate the market, however in the early 1990s, the company struggle in the PC industry. Initially, Apple struggled to keep net income high because the 1984 Macintosh had a slow processor speed and lacked compatible software.
Once the Mac’s software became more compatible, they were fighting a pricing war. Competitors’ prices slashed, while Apple was sitting on a 50% profit margin, which while envious, did not make for great quantity sales. Furthermore, before the Job’s turnaround in 1997, Apple was lacking the new wave of operating systems which incorporated Intel chips. In 1995, more than half said they would rather purchased an Intel-based PC than the Mac. However, this struggle with the PCs came to an end when Jobs retook the company and delivered a new OS and a new chip architecture.
Steve Jobs turned a company on the brink of bankruptcy into a billion dollar brand however the sustainability of Apple’s current position in the market with respect to PCs, MP3s, and smartphones is questionable. The company cannibalized itself (on purpose) with iPod sales decreases each quarter and the iPhone is facing increased competition from comparable brands, such as the Android. With competitors companies now being able to replicate the intellectual property – at least to some extent – of Apple, while still offering cheaper prices, Apple’s domination could take a hit.
Rather, Apple needs to look into continuing to make innovative grounds in the market, once again reinventing what people want. Perhaps, Jobs last new idea about how the television is viewed would be a great place to put resources. In 2010, Apple defined a new device category with the launch of the iPad. Within 2 years, 55 million iPads had been sold. However, competition quickly caught on and companies started producing similar products – such as the Kindle Fire and Android based tablets – to keep up with Apple’s latest creation. In the short term, iPad sales will continue to grow as the tablet has become a fad.
Various industries, from the medical profession to public schools, are investing in iPad purchases for daily use. However, in the long term, the iPad won’t continue to sell at such increasing rates unless they differentiate themselves from the competition. Companies like Microsoft, who recently launched the Surface, offer comparable tablets for a significantly lower price. Rather than simply coming out with a new version of the iPad, Cook may want to look into revamped the iPad by offering something more than just a “mini” version.
While Tim Cook finds it necessary to differentiate himself from Apple’s-God, Jobs, it would be wise of him not to complete do away with the mentality that brought the company such great success. For instance, in an industry where intellectual property is king, it would suit Cook to “battle” and not “settle” disputes. Jobs himself iterated the importance of protection and “if protection of intellectual property begins to disappear, creative companies will disappear or never get started. ” Computers, technology, and the industry as a whole survives on IP and secrecy.
If that got out, the company could essentially be done for because what more would you have to offer than the person next to you, especially if those same competitors with comparable products are offering significant cheaper rates. Perhaps litigation fees are high. Perhaps court case are time consuming. But Apple lives of the fact that they have products that can do what no one else’s does first. Cook needs to recognize that working together with competitors or worse, possible licensing out, didn’t work in the early 1990s and it’s only going to the hurt them today.