Apple: Company strategy

2 Company strategy

Apple relies on the unique integration of hardware and software, both developed inhouse,
to deliver the best possible consumer experience. Their devices sports a
unique design and some of them are recognized as icons of contemporary industrial
design. The target is extremely broad and the company has reputation of delivering
exactly what they promised, without fuss.
The product range is narrow and typically Apple chose to bet on few,
groundbreaking, hit products rather than on incremental steps. This strategy has the
advantage of creating a strong differentiation among other computer makers and
generates a lot of buzz around the company’s products, that leads to real brand
substance.

The product roll out process has more in common with the fashion industry, than
with other IT company; new products are unveiled two times every year, during
keynotes held in February and September; the keynotes are more similar to a show,
or to a catwalk, rather than a press conference, since they’re hosted by Steve Jobs
himself in a spectacular frame within the San Francisco’s auditorium.
Historically, Apple had little if none interest in market share; they preferred to sell
high quality product with a pretty good margin to a small group of extremely loyal
customers, rather than exploiting the mass-market with compressed margins.
However the scenario is changing. The pressure on prices is growing as competitors
are closing the gap and the computer hardware is increasingly becoming a
commodity, and thus hard to differentiate; moreover the expenditures for developing
new software products increases dramatically as long as programs becomes more
sophisticated. MacOS X has cost about $1 billion do develop in 2001 and Windows
Vista, released in 2007, required almost $3 billion. To amortize these large
investments over a small user base (Apple sold 9,715 millions of Mac computer,
compared with 140 millions of Windows Vista licenses sold by Microsoft) could
require to charge a premium too large even for Apple’s ultra-loyal customer base.
In order to overcome this limit Apple moved in two directions: tried to expand its PC
market share, with products that could appeal to Windows users and entered the
consumer electronic mass market, thus becoming more an horizontal hardware and
software provider. The two strategy are self supporting: while its customers will be
glad to expand the capabilities of their Mac with portable mp3 players or cell phones,
the company will also be able to exploit the “Halo Effect” generate by iPods and
iPhones.

The achievements of this ambitious results, as we’ll see in this paper, relies heavily
on proper distribution management.