Apple Differentiation Strategy

Written by ellis davidson | 13/05/2017

Apple corporate strategy for computers and portable electronics has been consistent since the introduction of the Macintosh in 1984: integrated hardware and software from a single supplier; attention to design details; and a pricing point that allows them to command a highly profitable market segment. This strategy is now applied to their desktops, laptops, music players and cell phones.

Hardware and Software Integration

Macintosh computers differ from competing Windows systems in that a single company is responsible for both the operating system and the hardware on which it runs. Windows computers are made by dozens of different manufacturers, and Microsoft cannot control either the minimum baseline of the hardware, or the variety of components which may be included in a computer intended for Windows use. Apple, on the other hand, has complete control over the variety and range of Macintosh hardware, which minimises end-user technical support issues and guarantees that every Macintosh owner will have a common hardware platform creating their user experience.

Apple briefly experimented with allowing third-party companies to sell Macintosh clones, and the Macintosh market began to look similar to Windows: while Macintosh OS users briefly had access to a wider variety of hardware, Macintosh clone makers largely competed by selling cheaper and less well-designed computers. Apple pulled the plug on Macintosh clone licensing to prevent the poorer-quality user experience from being permanently associated with the Macintosh brand.

Design Quality

Apple has had a very strong public association with high quality design for most of its history. Its first home computers, the Apple ][ (pronounced "Apple 2") series in the 1970s and 1980s, do not appear elegant from a modern perspective, but they were breakthrough at the time for their ease of use and setup, at a time when competing computers had to be literally built by hand from a kit of parts.

Apple computers and electronics are frequently designed to be ahead of the curve of contemporaneous public opinion. The iMac line of computers was the first home computer to omit a floppy drive; this was considered by most observers to be mandatory, but they were proven wrong by the success of the model. Even failed Apple products show innovative design planning, such as the Macintosh Cube, a physically small desktop computer which paved the way to the more successful Mac mini-line.

Targeting High Profit Margins

The impact of this design philosophy is that Macintosh computers consistently have a higher profit margin for Apple than most competing brands return to their manufacturers. Apple simply does not compete in the lower end of the market, where commodity hardware competition shaves profit margins razor thin. Apple's cheapest computers and electronics are consistently in the midrange, but include sufficient hardware and software features to ensure a high quality user experience. Apple hardware is designed to provide a lot of a value for the money, which keeps profits high, but to never be cheap in either cost or appearance.

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