The Apple Company is a pioneer in the creation of personal computers. In the 1980s, personal computers (PCs) were brought to the market by IBM and sales increased while prices were being maintained at minimum with growth in market capabilities. The sale of PCs manufactured by Apple oversaw a booming season from the 1980s to the early 2000s due to increase in internet technology and growing demand from the market in China. Apple started to experience decline in PCs sales from 2005 (Yoffie " Baldiwn, 2015). By 2012 sales has reduced by 4%, in 2013 sales had dropped by 10% and in 2014, 2.1% sales reduction (Yoffie " Baldwin, 2015). Because of reduced sales, revenue growth in Apple began to slow down which led to decrease in volume of shipment. From 2006 to 2014, Apple experienced slight improvement in its PCs sales and annual sales rate went up by 2%. However by 2014, Apple’s profit margin for the sale of its main PC machine was slightly below 3%. This caused manufactures of PCs to reduce their expenditure for PC components by 1% to 3% of Apple’s revenue (Yoffie " Baldwin, 2015). As a result Asian companies particularly the ones from China and Taiwan took over the manufacture of PCs and came up with creative and innovative designs. The main segment that was greatly demanded in the PC industry was laptops. In accordance with Yoffie and Baldwin (2015), in 2014 laptops occupied 56% of PCs sales. Increase in demand for laptops was as a result of low prices.
Distribution of buyers
The main buyers of PCs were home consumers, small and medium-sized enterprises, corporate businesses, learning institutes and the government. Home consumers comprised the largest market, making up to nearly half of global PC sales. Apart from favorable prices, buyers looked for other qualities when purchasing PCs. Home consumers valued portability, design and internet connectivity. Business enterprises sought for excellent service support while educational consumers sought for dependable software. Apple experienced a negative shift in consumer demand in the early 1990s when consumers became aware that full-service marketers sold more established computer brands to executives of business enterprises. Moreover, larger businesses bought computers directly from manufacturing industries and home consumers moved their purchases to electronic retail companies such as Best Bay, superstores such as Costco and Walmart and Web-based stores. The ‘White-box’ channel that was created by local entrepreneurs to market generic electronic machines became a great threat to Apple. In 2012, half of the PCs that were sold to China came from ‘white-box’.
Supply chain
Suppliers PC components were categorized into two groups. There were those that supplied products with a variety sources such as disk drives, keyboards and memory chips and those who supplied products with few sources such as operating systems and microprocessors. The products with many sources were readily available at more competitive prices than those with few sources. The products with few sources had two main suppliers namely Microsoft and Intel.
Alternative Technologies
From the early 2000s, other electronics such as Play stations and cellphones began encroaching into the market impacting on the sale of PCs. An alternative to Windows and MacPCs was Chromebooks introduced by Google in 2011. Chromebooks were cost-effective, ultraportable laptops that were used for browsing, emailing, and performing activities online or on cloud. Tablets and smartphones also caused a huge blow to the sale of PCs.
In 2001, Apple launched the ‘digital hub’ program to integrate the Macintosh with digital devises that were popular in the market. Apple therefore created several creative and innovative computer products for example the ultra-thin Mac Air which made significant improvements to the sale of PCs. By 2014, Apple was the third-highest in PC sales in the U.S.A. and had a 13% unit share in the global market (Yoffie " Baldwin, 2015). Apple’s global market share rose gradually since the year 2004 and by 2014, it was 6.4% therefore placing Apple in fifth place globally among PC manufacturing companies.
Yoffie and Baldwin (2015) argue that Apple expanded its market by opening more retail stores in various countries around the world. These retail divisions thus accounted for 12% of Apple’s total income. This marketing strategy proved a huge success because consumers became more aware of Apple’s media products such as the iPod that was introduced in 2001, the iPhone introduced in 2007 and the iPad introduced in 2010. The iPod however had more market potential, boosting Apple’s sales rates by a great margin.
My opinion is Apple Company has the potential for tremendous revenue growth sparked by iPad and iPhone sales. Between 2011 and 2014, Apple revenue increased by 70% due to the sale of iPods and iPads. In the early months of 2015, Apple was recognized as the most profitable organization globally, having market capitalization of more than $ 700 billion (Yoffie " Baldwin, 2015). However, I think that Apple should increase its efforts in coming up with more innovative software and technological designs so that it is not wholly dependent on profits gained from the sale of iPhones and iPads. Tim Cook, the current CEO of Apple launched the Apple Watch, Apple Pay and Apple TV targeting corporate customers. These commodities are projected to be great successes like the iPhones and iTunes but the results are yet to be seen.
Supply-Demand Curve for the Sale of Personal Computers between 2000 and 2014
Change in Equilibrium Price to Change in Demand for Personal Computers between 2000 and 2014
Reference
Yoffie, D. B., " Baldwin, E. (2015). Apple Inc. in 2015. Harvard Business School Publishing.
