Apple is one of the legendary companies that deserve serious consideration in order to understand the nature of its leadership. Apple became famous not only for its innovative ideas but also for flexibility in the competition. The company survived a crisis that put at risk the financial sustainability and overall development. Moreover, it eventually managed to win the market of personal computers (PC) and the market of smartphones. Competition does not have any serious effect on Apple's performance as long as customers have already developed loyalty and trust towards the company. Annually, millions of Apple's users impatiently wait for the launch of the new iPhone, which means that the company manages to exceed the customer's expectations. Today, Apple obtains its winning positions due to the contributions of Steve Jobs and Tim Cook who led the company in appropriate direction without fear to fail. The history of the company shows that Steve Jobs adopted a systematic approach aimed at supporting the company's competitiveness and leadership regardless of the impact coming from aggressive competitors. As a result, Apple became a highly innovative and creative company that had its reflection in the historical competitive advantages, challenges faced in the computer industry, determination of the competitive position in the market of smartphones, and development of the Apple Watch strategy.
Historical Competitive Advantages
From the beginning of Apple's performance, Steve Jobs succeeded in nourishing the company's performance with unique competitive advantages, which helped Apple to make a technological breakthrough at the end of the twentieth century. For example, the company's well-known technology entrepreneur took several steps towards creating easy-to-use computers by introducing Apple I and Apple II (Yoffie & Baldwin, 2015). Owing to the attraction of the venture capital, Apple continued the development of personal computers to be the primary leader in the field. In fact, its products started a revolution in the industry of personal computers, which meant that the company became the igniter of the technological growth and development. Due to the revolutionary performance of Apple, the PC industry reached the point of $1 billion in annual sales, which was a legendary breakthrough. The outlining competitive advantage of the 1980s, which helped the company to support its competitiveness, was the denial of the company to have its software licensed by the third parties (Yoffie & Baldwin, 2015). It made Apple unique with its own practice of horizontal and vertical integration. Regardless of the idea that IBM computers became the main competitors of Apple, the company gained even more motivation and encouragement from the pushing rivalry with the new PC manufacturers. As a result, Apple introduced Macintosh in 1984, which became another significant achievement in design, applicability, and technical elegance (Yoffie & Baldwin, 2015). The design has always been an outlining feature of the company's performance, which attracted attention of consumers willing to make their home modern and technologically developed. In addition, starting from 1985, the Mac conquered new markets including desktop publishing and education (Yoffie & Baldwin, 2015). Superior software and peripherals made Apple unique and provided the brand with another competitive advantage. Consequently, Apple managed to become the most profitable company by 1990 (Yoffie & Baldwin, 2015). Idiosyncratic chips, disk drivers, monitors, and a complete desktop solution helped Apple to remain competitive. However, as soon as IBM and Microsoft started to put more pressure on Apple, Steve Jobs came on the stage to save the company's competitiveness.
In the 1990s, Apple had four product lines including desktop and Macintoshes for consumers and professional users. Research and design became the primary Jobs' focus as it became a guarantee of the new era in the company's performance. In fact, Jobs brought a new organizational culture, which led to the absolute secrecy and "closed door policy." Even newly hired employees could not access many projects and could work on simple tasks in order to prove that the company could trust them. The culture of confidentiality became the competitive advantage of Apple, which did not provide competitors with any details of the coming products. As a result, the company brought iMac under Steve Jobs' management in 1998, which became another breakthrough in the industry. This time Apple impressed customers with eggshell design, colorful translucent cases, and multifunctional PC. Along with outstanding technological characteristics, Apple used recyclable materials and energy efficient components, which labeled the company as an environmentally friendly PC manufacturer.
Regardless of intense competition in the PC industry, the main goal of Apple was to make iMac unique and innovative. Another support of the company's competitiveness came from the slogans used in advertisements. "Think Different," "It just works," and "The ultimate all-in-one design" made it possible for Apple to attract customers' attention and encourage them to take the advantage of using iMac (Yoffie & Baldwin, 2015). Due to Apple's desire to build relations with consumers based on trust, advertisements became a guarantee of the company's continuous growth and development. The company successfully promoted itself as an alternative to other computer brands, which meant the beginning of a rivalry war. Nevertheless, Apple's profits proved that the company was ready to parry any threatening attack coming from the competitors.
Challenges in Personal Computer Industry
Regardless of success in PC industry, which Apple obtained by means of effective advertising and technological development, it has always been difficult for Apple to be a primary leader. First, IBM became the main competitor that offered computers at lower prices. Second, Apple could hardly accommodate to the reduced prices because of the quality and price of the resources used in the manufacturing process. Third, the company faced significant difficulties in shaping a pricing strategy, which could help to compete with other companies. In fact, IBM and Microsoft offered computers with more functions and better characteristics at lower prices. It happened for the reason that competitors used a small percentage of revenue for the research and design procedures, while Apple strived to move faster in the technological evolution than other companies.
Another challenge was to meet the needs of the PC users, which formulated several target groups including home, small and medium-sized business, corporate education, and government (Yoffie & Baldwin, 2015). As long as home consumers represented approximately 50% of the market segment, it was necessary to accommodate prices according to the consumer's financial capabilities. Design, mobility, and wireless connectivity became the main criteria along with the prices, which formulated the focus of the customers when selecting home computers. Therefore, laptops became the best solution for the consumers willing to pay less for the computers that were transportable and easy to use. Apple struggled to meet all criteria, but it was obvious that the company did not feel any confidence in the development of its products in the segment of PC industry. Hence, it started shifting to phone industry in order to have another product line in case PC would not bring any significant profit.
In general, Apple continued to face tough competition not only from IBM and Microsoft but also from newly established companies including Dell, Lenovo, and Hewlett-Packard. Industry leadership started to switch from one manufacturer to another, since the customer's needs, tastes, and financial capabilities had a changeable nature. As a result, Apple had to show outstanding accommodation skills in meeting the consumer's needs. In addition, the development of the Chinese PC market pushed Apple to the limit of its capabilities. The customers began to focus on the Internet-based computers, which allowed using the global network faster and easier. Furthermore, many companies managed to outsource the production to Asia, which contributed to the reduction of costs and prices at the same time. Apple had no other choice rather than adhering to the business environment and work on the reduction of prices.
Nevertheless, Apple started its competition struggle in early 2001, when Jobs decided to work on the "digital hub." The idea of making home PC a device combining the performance of other devices including music players, digital cameras, digital camcorders, and mobile phones. Consequently, iMac became the "hub" helping to control the performance of other devices (Yoffie & Baldwin, 2015). It also added value to other gadgets, which meant that iMac was necessary not only for computer functions but also for the integration of other devices in a single system. Apple's ability to control hardware and software became a unique feature, which still made the consumers interested in purchasing the company's products. Apple's creative approach towards marketing campaigns and innovative computer products helped it to win the vast share of the market due to the introduction of Mac-Air that altered the customers' imagination about home PC. In this way, Apple became the third largest PC manufacturer in the U.S. in 2014. Eventually, Apple's strategic vision helped to focus on the development of unique applications, which could provide consumers with additional benefits. The company finally opted for the right strategy centered on the software, as it kept balancing between technological development and software support of the PC computers, which could meet the rising demands of consumers.
Competitive Position in the Market of Smartphones
A brilliant achievement of Apple in the field of smartphones helped it to sell around 6 million iPhones in five quarters after the release of the first iPhone. The generated revenue was spent on the research and design of new iPhones that the company was introducing every 12-15 months. Every new product was better than the previous one. It is a primary example of outstanding sustainability, which Apple gained due to the unexpected breakthrough in the market of smartphones. Apart from this, the company's sustainability was proved by the statistics, which showed that Apple obtained 63% of the market revenue in 2014.
Apple realized that it had to add new products and make its performance remarkable in terms of the technological revolution, which was gaining a new momentum. As a result, the presentation of the new product attracted attention not only of thousands of consumers but also of mass media. Apple announced the introduction of three products combined in a single product, which became the main invention of the year according to many publications. The company successfully introduced iPhone to the world, and this event started the boom among the customers willing to become the lucky ones using the world's best smartphones. At the beginning of Apple's attempts to produce smartphones, it was risky and unreliable to launch a new product. The industry of smartphones had already had Samsung, Nokia, and Motorola, which had around 60% of the market share. Moreover, Apple did not have enough experience in radio technology, which meant that it would be hard to compete with the leaders of the industry.
Apple managed to create a smartphone, which amazed not only consumers but also leading companies of the mobile phone's industry. iPhone did not have a physical keyboard; it had a touch screen for managing the phone's features instead. In addition, Apple did not use any of the existing platforms, which added it another competitive advantage. The company decided to make the first smartphone on the OS X platform called iOS. Moreover, Apple made an agreement with AT&T operator, which allowed both companies to share the revenue. As a consequence, Apple was capable of regulating the distribution and pricing of iPhone. AT&T, an exclusive U.S. operator, helped Apple to obtain another competitive position and became the only operator for iPhones (Yoffie & Baldwin, 2015). All these factors played a major role in shaping stable background for further development of Apple in the industry of smartphones. The fourth iPhone amazed consumers with voice-activated technology called Siri. It helped users to plan the schedule, make appointments, dictate texts, ask questions, and send e-mails with the help of voice commands. This feature was fresh and unique and continued to impress competitors with the new challenges they had to face. The fifth iPhone, in its turn, had a significantly bigger screen, which also became a breakthrough. The Apple's competitors, however, prepared new devices with 5-inch screens, which made Apple re-think the design of an iPhone. As a result, Apple introduced iPhone 6 and iPhone 6 plus in September 2014. These phones became the most profitable products in the history of Apple. It is obvious that the company manages to keep a sustainable competitive position in the industry of smartphones, regardless of its primary focus on the production of personal computers.
Thus, an outlining competitive advantage of Apple lies in the App Store, a depository of applications designed for iPhones. The users obtained a key to the applications, which the majority of Android phones did not support. It is a significant competitive step, which motivates users to take the advantage of purchasing the brand. Apple continuously works on the development of software, which can give consumers various benefits that other users cannot have. In this way, unique technological features and opportunities help Apple to remain a primary leader in the market of smartphones. It would be impossible to make Apple compatible in the market without continuous investments in the development and improvement of iPhones.
Apple Watch Strategy
As long as Apple needed to impress the consumers after Steve Jobs passed away, Tim Cook introduced Apple Watch. It became the first attempt of the company to enter the market of wearable technologies. In essence, the new leader created a product that continued to combine all features generated by Steve Jobs and added new comfort to the usage of iPhone. Apple Watch became a new product saving time of Apple's users by helping them to access applications, music player, e-mails, and maps without taking iPhones in their hands. It became a distinctive feature of the new device, which enabled many people to save much time in a rush during the day. In fact, the product became a necessary feature for people involved in business willing to navigate through the city quickly without the need to stop. Apple Watch also includes fitness tracking features, which help to support a healthy lifestyle trend among the consumers. Although Tim Cook chose an appropriate field of further development of Apple, he failed to choose an appropriate strategy to manufacture the product. The main problem of Apple Watch is competition, which was already been started in 2014 during the launch of the new device. Pebble, Samsung, LG, and Google are the key players of the field (Yoffie & Baldwin, 2015). Apple did not introduce anything innovative that would deserve a leading position in the market. Apple created a device, which worked only with iPhones, while other companies created watches also compatible with branded products. In addition, the price of Apple Watch was high enough to make consumers think twice before purchasing a device.
The main problem of the strategy of Apple Watch distribution lies in the positioning of the device and its compatibility with other devices. While any user of smartphones can afford purchasing smartphones of a different company, it is impossible to buy Apple Watch without having iPhone. On the one hand, it is an initiative that supports customer's loyalty and should increase company's sales with the help of the attractive device as a bonus feature of iPhone. On the other hand, high prices on Apple's products do not encourage middle-class consumers to purchase iPhone and Apple Watch at the same time. A typical middle-class consumer will consider Apple Watch useless as long as it does not have any new features and functions. It is not a problem for the majority of the consumers to take the phone out of the pocket and navigate through applications or map. Thus, the new Apple product did not become a primary item in the consumers' wish list as long as it did not present any functional innovation. What is more, the smartphones users that belonged to the competitors did not get any motivation to purchase Apple's products, since they already had the same technological opportunities offered by a competing company. The positioning of Apple Watch is weak and requires revision in order to encourage consumers to use it with iPhone and refuse using products of competitors.
One of the major points in the revision of the strategy should become an innovational perspective of Apple Watch. First, Apple should consider making Apple Watch compatible with other devices, even though it is a difficult task from the point of view of platform interaction. However, Apple is a leader in innovation, and there should be a niche in making the interplay between different platforms, especially because this will have a positive effect on the profits generated by the company from the sales of Apple Watch. Second, the customers will be motivated to purchase iPhone and other products as long as they have already experienced the benefits of Apple's products. Apple Watch should become an attraction for customers who prefer the competitors' products. Otherwise, there will be no use in purchasing Apple Watch even for the owners of iPhone. Finally, to be successful in the market, the company should also change the functionality of Apple Watch. For example, Apple can continue the trend of healthy lifestyle and extend the device's functionality by adding primary health supporting applications. These applications should help users to detect any deviations from perfect health conditions and indicate recent changes in organism. For instance, the watch can measure temperature, pressure, heart rate, or other body parameters. In general, Apple Watch still requires Tim Cook's revision and re-design in order to make it more competitive. Alternatively, the company will waste significant financial investments, which would not find enough return on investment.
The evaluation of Apple's performance showed that the company had to encounter many difficulties and rivalry wars in order to achieve success. Steve Jobs will remain one of the main contributors to the development of the company. An organizational culture supporting full confidentiality and secrecy helped him to secure innovative ideas and protect the company's intellectual property. As a result, Apple successfully won the loyalty of customers owing to the unique design and high quality of every new product. Apple succeeded in reaching the balance in managing its performance in the market of personal computers and smartphones. Steve Jobs had enough courage to enter the market of smartphones without enough experience in radio technology. Regardless of the risky chance to win the market with tough competition between Motorola, Nokia, and Samsung, Apple brought a new revolutionary movement to the world of smartphones. Every iPhone was a better version of the company's innovational product, which became a breakthrough in the development of smartphones. As long as iPhone became a reliable source of income, Tim Cook took his turn to bring Apple to the new heights of success by introducing Apple Watch. On the one hand, the product was brand-new for Apple and probably unexpected for the customers. On the other hand, the device was not new for the broad specter of consumers. It did not introduce any innovative features that could impress them. Basically, Apple Watch requires revision and repositioning of its marketing strategy in order to provide Apple with another reliable source of revenue. Otherwise, the company will waste its investments in the device, which does not have any difference from the products of competitors.