Apple Inc. (Apple) has managed to create substantial value in the highly competitive personal computer industry, by innovating and forging a path considerably different from those of the largest competitors in the industry, successfully differentiating its products from those of the competition by choosing to focus on quality, design elegance, and superior customer service, while outsourcing actual manufacturing to trusted original equipment manufacturers.
Yet, despite the advantages Apple has created for itself, the stiff competition within the industry and other external factors present formidable challenges to the firm. The personal computer/notebook market is becoming increasingly commoditized, leading to intense rivalry among competitors within the industry, driving prices down and creating potentially destructive price wars.
Utilizing key resources and capabilities including industry-leading design teams, talented software and hardware engineers, backed by a sizeable research and development budget, which is responsible for a portfolio of thousands of patents, and under the strategically brilliant stewardship of CEO Steve Jobs, Apple has successfully innovated its way to a comfortable market position commanding premium prices. Unfortunately, Apple cannot rest on its laurels. The position is not permanent and Apple must continually find new ways to maintain profits and create value for customers and shareholders.
The maturing personal computer market is becoming saturated, leaving fewer new buyers and more replacement buyers. To continue to grow, Apple must also look to new and expanding markets as sources of revenue. After considering Apple’s strategic war chest; the firm’s core competencies, key resources, and capabilities and given its current situation within the industry and the compounding factors in the form of trends from the general environment, it is clear Apple stands to create considerable value through continued related diversification.
The firm’s history of category-defining products like the iPod and iPhone provide sufficient evidence that it is well-equipped to continue its path of innovation, by creating a digital lifestyle convergence device that bridges users’ on -the-go digital lives and their at-home digitals lives. The proposed device will be powerful and feature packed, while leveraging the Apple system of seamless integration to create a compelling user experience, presented in an elegant package showcasing the firm’ s industry-leading industrial design capabilities, to create the next must-have consumer electronics product.