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Apple Inc.’s (The erstwhile Apple Computer) competitive advantage stems from its strategy to introduce differentiated products in the market. The main drivers for differentiation are innovation, user loyalty and ability to provide products that can interact with each other. (iPhone, IPad, Mac, iPod all interact with each other over icloud or iTunes). The personal computer industry has been constantly evolving since the 1980s. Growth in this segment was driven primarily by lower prices and expanding capabilities. With burgeoning internet demand and emerging markets such as china the industry continued to grow through the early 2000s. This large increase saw the standardization of components and therefore reduced R&D spending in a bid to cut costs. Inspite of these exercises the net profit margin for an average PC manufacturer was about 5%. The buyers of PC fell in to 5 categories- Home, SMB, corporate, education and government. The home consumers who were the biggest segment valued design, mobility and wireless connectivity. There was a shift in the distribution pattern as well as customers moved away from full service dealers to PC super stores. The suppliers for the industry fell into two categories, those that made products with many sources (key boards, memory chips etc.) and those that made products with few sources (OS and microprocessors). Since early 2000’s consumer electronic products ranging from cellphones to TV set top boxes to game consoles had started to encroach the functionality that was once the sole purview of PC. Smartphones began to increasingly function as handheld computers.
Apple’s core competency, innovation, makes current PC market favorable for it. Apple has aligned itself to these changes by switching to a new chip architecture, developing proprietary OS that would function across all its product offerings, develop a proprietary set of

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