Apple Case Essay

502 Words3 Pages
Case: Apple Computer, 2006 1) Analyze the structure of the personal computer industry over the last 15 years. How have the dynamics of the PC industry changed? In the early 1990’s the structure of the PC industry changed drastically after several decades of relative stability and dominance of IBM, whose role and integrated standards began to erode in the late 1980s. Even though the industry structure was highly concentrated, technical progress and innovation opened many viable opportunities for other firms. As a result, the much more aggressive behavior of entrants has led to a more competitive market structure. Competitive rivalry. The 1990s was a period of staled technological boom. The top manufacturers engage in fierce competition to produce the most efficient PC at the cheapest price. There is little differentiation between most products. It is costly to leave the industry because of high exit barriers, so manufacturers fight to remain in the industry. Some consolidate to stay in e.g. HP-Compaq, Lenova-IBM. Competitive advantage begins to be developed through innovation. Supplier Power. Throughout the 1990s and beyond, many manufacturers built PCs around hardware and software components generally supplied by Microsoft and Intel. Most firms outsourced the production of components manufacturing to contractors carrying out simple manufacturing operations. Eventually, these contractors took on more complex tasks, such as design and testing. By 2000, large-contract manufacturers began to build entire PC's for brand-name companies, designing and assembling basic computers in Asia and shipping them to geographic hubs for production. Certain suppliers with high market power do have strong position and may dictate terms. Particularly so if there is high switching cost for manufacturers. Manufacturers hold a power over hardware suppliers.

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