MBA299: Strategy

1
MBA299 Strategy

• Apple
• Take-aways
• April 27, 2006

2
The Rise and Fall (and Rise?)

• From Business Week, 1996, The Fall of American
  Icon
• The year was 1984. Apple Computer Inc. was the
  Magic Kingdom. It was the hip, young heart of
  Silicon Valleythe place where America was
  showing the world how the combination of
  technology and entrepreneurship could make a
  revolution. Apple created the legend of two kids
  in a garage inventing a computerand then
  building a New Age company where the old
  corporate rules were scrappedToday, that
  Applethe very icon of a post-industrial,
  high-tech Americais barely recognizable in the
  troubled 11 billion company that bears its name.
  Years of overlooked opportunities, flip-flop
  strategies, and a mind-boggling disregard for
  market realities have caught up with Apple.

Three years later
Business Week names Steve Jobs one of the 25 Top
Executives of the Year
3
Apples Ride
4
The IBM PC Industry A Recap

• Buyers
• Rivalry
• Barriers to Entry
• Substitutes
• Suppliers
• Complementors

The Bottom Line This is a terrible business!
5
Some Lessons

• Product advantage does not competitive
  advantage
• Product advantages are often hard to maintain
• To build competitive advantage, have to think
  about the entire value system (complements, cost
  drivers, etc.)
• Have to scan widely to understand economics of an
  industry
• Apples biggest mistake? Too insular?
• In this sense lack of imitation capacity led to
  distraction from true threat of PC substitute

6
Some Lessons

• Multiple standards can coexist only when there is
  a substantial gap between them and customer
  segments
• Apple/Microsoft could coexist when Mac v DOS
  (highly differentiated), but not when Mac v
  Windows
• 2 standards is inefficient and will tend to
  disappear (against MS monopoly?)
• Windows of opportunity and timing can be the key
  to strategy
• Closed system (no clones) till Spindlerbut then
  too late?
• Big advantage in peripherals/printing but did
  not focus on value potential, HP ends up
  dominating
• iPod and windows of opportunity may have some
  features of early Apple opportunities, but will
  competitors prevent tipping in this case?

7
Apples Ride (Riches to Rags to Riches to Rags to
Riches to?)