The PC industry was born in the mid-1970s and since then has expanded rapidly. Since its beginnings, the PC market has witnessed several booms. An essential feature of this industry was innovation and new product development. Hardware components were changing fast, and technology was improving rapidly. One company had no time to finish the production line of a series of its products when the hardware components were already improved. There was also a boom in the new product releasing where new ideas were materialized quickly into consumer products. This made the competition very fierce and benefited consumers with a wide spectrum of products for selection.
Apple was one of the first companies to enter this market. This was its greatest advantage and disadvantage at the same time. Since it was a newly formed market, Apple had to go through various market ups and downs and conform, or not, with its trends. After we analyze the market trends historically and if they were favorable or not, we can assess then the competitive advantages of disadvantages of the company.
Apple insisted much on market penetration in the first decade of its existence. It was when the PC market, from a ‘confined to a certain circle’ industry, became open to the consumer public. Apple was one of the first to introduce personal computers to the market for consumer use. Up until the time this technology was used mainly by governments for military purposes. The average consumer had no opportunity to utilize this technology for his or her everyday life needs. But even though Apple pioneered this revolution of making the PC personal, it was IBM who really gained more profit from this. In the 1980s, its market share was almost 70%, a predominant market share. But gradually, people began to see the personal computer as a commodity, and so IBM began gradually to lose market share. Even so, the combination of Microsoft Windows with microchip producer Intel accounted for the large majority of personal computer production. Thus, Apple was not able to gain that much. It had a unique platform and hardware composition, but this unique made it difficult for it to expand largely its market share based only on one product, namely Macintosh personal computers.
Trying to penetrate this market with the current product it offered became really difficult for Apple. The fact that their platforms were running on operating system software different from those of the other chipsets made it difficult to increase the market share. In fact, Apple never got over the 10% of the total market share with its personal computer product. But still, Apple managed to establish a positive, reputable brand name on the market. Reliability was one of the basic features which consumers recognized as a feature of the Apple personal computers. This was the basis of the coming success for Apple. This positive brand recognition made it possible for Apple not to lose its market share, which continued to remain constant, with little fluctuations, as long as it kept going with only one product. Especially designers and high-performance graphic users turned to be very satisfied with Apple Macintosh personal computers. In fact, the unique platform on which the Macintosh was built. In a certain sense, if we use Porter’s analysis terms, there was little threat of substitute products. But that was true for those specific categories of graphic designers, high-end graphic users, and any other related group.
These dynamics of the market were both favorable and unfavorable to Apple. The favorability for Apple was that it established a brand name that consumers perceived positively in terms of quality. In a market tending to unify in the hardware and software utilities used to build the PCs, Apple managed to be ‘different’ in a positive way.
That was a favorable condition on which it built the successes we are going to speak below. But, in other aspects, these market conditions were unfavorable to Apple because all the other companies’ products were valid substitute products for personal computing usage. Thus, the threat of substitute products for Apple’s Macintosh personal computers was high. That is a significant unfavorable condition that prevents you from expanding your market share. The road that Apple took was being ‘different’ in the market by offering a different recognizable product and thus created groups of satisfied consumers which gradually turned into loyal consumers. This loyalty in consuming brought Apple a stable market share on which it could rely. It absorbed the buyer power of these categories of people like those mentioned above.