Historically, Apple's competitive advantages included their innovative spirit shown through products like the Apple 2 computer. They also had total control over their vertically integrated software and hardware. However, Apple struggled in the PC market due to IBM allowing PC cloning, higher Macintosh prices compared to cheaper IBM clones, and the rise of Windows-based PCs from many manufacturers. For the Apple Watch, Tim Cook has taken the right strategic approach in entering the emerging wearable market similarly to Jobs' "Digital Hub" strategy. However, the watch's limitations like only working with newer iPhones and short battery life could be improved.

1. Cory Kemp
Marketing Strategy
April 19, 2016
Case Study: Apple Inc.
Q1. What historically have been Apple’s competitive advantages?
There have been many competitive advantages that have allowed Apple to be a consistent leader
in the PC market. One competitive advantage has been their innovative spirit. This was shown
with the initial release of the Apple 2. Steve Job’s mission of Apple was to bring an easy-to-use
computer to the market, and this is what he accomplished with the release of the Apple 2. The
Apple 2 was a revolutionary product that changed the PC world forever. The Apple 2 was
launched in 1978 and it lead the PC industry to $1 billion in annual sales in less than three years.
Another competitive advantage for Apple is that they have total control over all of the software,
hardware, and operations related to Apple products. The apple software is horizontally and
vertically integrated, meaning it relies on its own designs and does not license software to third
parties. Apple released the Mac in 1984, which featured an interface that was easy-to-use, a great
industrial design, and technical proficiency. The superior software allowed Apple to enter the
Mac into new markets, desktop publishing and education. In education, Apple grabbed almost
half of the market and by 1990, Apple had $1 billion in cash and was the most profitable PC
Company in the world. Furthermore, Apple hired Tim Cook to streamline the Apple supply
chain, and also Apple launched a website to set up direct sales. This has allowed Apple to be
successful by creating a comprehensive, unified culture with all aspects of the company. Their
most important competitive advantage was Steve Jobs. Being the co-founder, Steve Jobs had the

2. long-term vision of Apple and worked every day to live out the vision. Steve Jobs was forced out
of 1985, but returned as the interim CEO in 1997 when the company was near bankruptcy. Jobs
refocused Apple to only having 4 product categories, rather than 15 it had previously. Through
Steve Job’s leadership, Apple created the iMac in 1998, which allowed Apple’s sales to outpace
the industry average for the first time in many years. Steve Jobs made strategic decisions to make
Apple products the most competitive by bringing a new culture to Apple, and positively
changing the image and brand of Apple.
Q2. Analyze the personal computer industry. Why did Apple struggle historically in PCs?
It is true that Apple was the company who pioneered the personal computing devices, but IBM
was the company the mainstream PC’s. This was the biggest competitor to the early success of
Apple. The IBM PC operated on an “open” system that allowed producers to clone it. Another
reason why Apple struggled with PCs was the price. Macintosh did have a loyal customer base
which allowed them to sell it at a premium price. IBM- compatible prices started to drop, and the
high Macintosh’s looked unfeasible and too expensive. Another reason for the struggle of Apple
PCs was the rise of “Wintel”. “Wintel” was the combination of Windows OS and Intel
Processor, and it dominated the industry. Thousands of manufacturers built PCs around building
blocks from Microsoft and Intel. Nearly 90 % of all PCs in the world were ran on some version
of Microsoft’s operating system by the end of 2014. This made it difficult for Apple to
differentiate the Macintosh in the PC industry due to the intense competition coming from other
PC manufacturers. The three top PC manufacturers were Lenovo, Hewlett-Packard, and Dell,
which accounted for 51% combined.
Q3. Evaluate Apple’s strategy for the Apple Watch. Has Tim Cook taken the right approach?
Would you suggest any course corrections?

3. During the three years after the death of Steve Job, Apple seen excellent revenue growth, by
iPhone and iPad sales. Tim Cook, the current Apple CEO wanted to focus on the innovativeness
that Apple was started with. This was something that Apple attempted with the Apple Watch. In
September 2014, Tim Cook announced the launch of the Apple Watch. From the frame of the
case, I think this was the right approach as, the wearable technology market is an emerging one. I
think Tim Cook is keeping the focus on the core products and using the Apple Watch as a new
way to drive profits. This is similar to Steve Job’s “Digital Hub” strategy. I think for the first
generation, the Apple Watch has many great features that are appealing to consumers, such as
the fitness tracker and the ability to receive notifications from the iPhone straight to the wrist. I
think there are some negatives to the Apple as well. The Apple Watch had to be charged each
day and it only worked with newer iPhones. The watch was also expensive as well: prices start at
$349 for the basic model and ranged as high as $17,000 for the 18-karat gold model. Also, there
are many competitors that have already released their own versions of smartwatches, making the
market rather crowded. I think one correction would be to make the watch compatible for all
generations of iPhone. This will broaden the scope of customers that would be willing to buy the
watch.