Economics of Competitive Strategy Professor R. Preston McAfee

Apple Computer Inc.: Digital Connectivity in the Age of the Maturing PC

8 April 2002

Group : Alp Buyukuygur Yuma Maris Amit Bhardwaj

Brief Background
Apple Computer is a major developer, manufacturer, and marketer of personal computers and peripheral products for sale primarily to the business, creative, education, government, and consumer markets. Apple also sells operating systems, utilities, languages, developer tools, and database software. California-based Apple Computer aims its colorful iMac (desktop) and iBook (laptop) computers at the consumer and education markets. It targets high-end consumers and professionals involved in design and publishing with its more powerful G4 portable and desktop computers. Apple also makes publishing and multimedia software, and offers Internet services such as Web page hosting. The company's FileMaker subsidiary makes database software. Once the world's top PC maker, Apple Computer has been relegated to niche status in a market dominated by "Wintel" machines (computers using Microsoft Windows software and Intel processors). Macintosh computers (Macs) forgo the Intel Pentium for processors made by IBM and Motorola. Apple has offered unique designs such as the colorful iMac that distinguish its computers from their competitors. Looking to attract customers into "the era of the Digital Lifestyle," Apple has conducted a marketing campaign that casts Macs as the centerpiece for a host of digital devices such as cameras, video recorders, and music players. Apple has traditionally maintained popularity in classrooms, Web design shops, and graphic arts studios. Although more than a quarter of its sales are to schools, Apple has felt increasing pressure in that market, particularly from Dell. In an effort to boost its appeal among consumers, the company has