Apple Computers in the Brink of PC Industry

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Apple Computers in the Brink of PC Industry
On April Fool’s Day, 1976, Steve Wozniak and Steve Jobs released the Apple I computer and started the Apple Computers. It was then followed by more than 350 products that surprised the IT community, enlivened the PC Industry and promised a whole new world for computer technology.

The competitive environment in the PC industry started as low-competition in the 1970s. From the mid-1960s onward, IBM dominated the business mainframe segment. IBM was the most successful firm in the 1960s because it combined technical and marketing capabilities (Bresnahan and Greenstein). In 1972, the invention of microchip sprang the revolution of computer technology; it fueled a siege of innovations that galvanized the overall U.S. electronics industry into a force with revenues. The United States dominated the computer industry up to the 1980s, with 80 percent of the industry’s revenues worldwide. Most of these revenues were produced by less than ten companies, with IBM as the leader (Gilder “Computer Industry “).

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Competition-avoidance was apparent during the microcomputer segment in the late 1970s and early 1980s. Competition was avoided because microcomputers (using 8 bit micro-computing) were far smaller and cheaper compared to mainframe computers suiting for small decentralized tasks and games. People could program and assemble their computers. During this period, Apple and CP/M machines dominated as microcomputer platforms eclipsed the mainframe world. .

The 16-bit era of the 1980s dislocated the dominant 8-bit platforms. Many new platforms were proposed, but once again two platforms dominated, the “IBM-PC” and the Apple Macintosh who showed admirable persistence, surviving well over a decade, through a stunning amount of technical progress. Competition was becoming prevalent as the PC became more complicated. The development of GUI for home computers was pioneered by Apple Lisa but was quickly overshadowed by more affordable Apple Macintosh. Apple Macintosh prototypes were given to Bill Gates that led to the development of Microsoft Windows for IBM PCs in 1985 using many of the elements of the Macintosh OS. With this, a long legal battle began between Apple Computer and Microsoft with a court settlement stating that Microsoft would be allowed unlimited use of the Macintosh GUI. IBM PC became the “industry standard architecture” but backward compatibility led to Window’s succession as it quickly became the Wintel (Windows/Intel) standard at the beginning of 1990s.

The Macintosh was indeed a de facto in computing not just simply because of its GUI. Because of its introduction of desktop publishing and computer animation through Apple’s partnership with Adobe Systems, it became a brand for Apple’s success. Because of this, the Macintosh became the genuine platform for industries such as cinema (Paramount Pictures in their release of Star Trek IV: The Voyage Home), music, publishing and the arts. Apple Macintosh was becoming the future of Apple Computers.

In the early 1990s, the PC industry experienced a competitive crash. Development of new software programs (such as the desktop publishing programs) in the late 1980s led to the creation of some ten thousand new publishing companies. Small computers transform the electronics of broadcasting. Although Apple faced its fiercest technological rivals in the late 1980s (Amiga and Atari ST platforms), by the 1990s, computers based on the IBM PC had become more popular with comparable GUI from Windows 3.0; and they were out-competing Apple. Competition during this time was profuse and over the following years, the Wintel partnership would become the de-facto standard.

Apple Macintosh versus ‘Wintel’ Standard

The debate on which is better operating system had intensified the competition between the two between Apple Macintosh and Windows PC. There are two basic reasons why the ‘Wintel’ standard managed to dominate the PC industry despite the fact that many consider Apple’s products to be superior:

(i)                                         Network externalities;

(ii)                                       Compatibilities;

(iii)                                     Standardization.

Network externalities were first recognized in the telecommunications network, where clearly the appeal of the network to a consumer increases with the number of subscribers on it. A good network component is more valuable when more complementary components are available because compatible computers form a “virtual network.” (Economides “Competition and Vertical Integration in the Computing Industry”)

Benefits of complementarity can be realized through standardization and interoperability among components. Wintel structure, where many brands of computers conform to the same technical standards and can share the same operating system, is a good example. Users can take advantage of a variety of applications that are compatible with that operating system (Economides “Competition and Vertical Integration in the Computing Industry”).

Alternatively, with vertical integration, Macintosh computers also offer such benefits of complementarity, however, limited. This is due to the fact that all the hardware and software components are to be made by the same company. This means that there will be fewer compatible products and lesser complementarities.

From our point of view, compatibility and standardization are desirable since we can benefit from the externality of our equipment, compatibility with more similar products, more private benefits. This is the reason why the ‘Wintel’ standard managed to dominate the PC industry.

The Future of Apple Computers

Success was meant for Apple in the past but because of the competition, it is always struggling to put its name to the top of the PC industry. Putting a deeper look on Apple, we might wonder what more can it produce? Does it really have future in the PC industry now that the Wintel standard dominates? Can it win the competition? Furthermore, what are its actions to threats on their products? Are they able to expand into other consumer electronics items?

For some reasons, Apple Computers, Inc. differentiates itself from the rest in the PC industry by “thinking different”. Apple has cultivated a customer base that is unusually devoted to the company and its brand. Included in the company’s developed, sold and supported products are a series of personal computers, portable media players, computer software, and computer hardware accessories. Among the company’s most famous products are the Macintosh line of personal computers, the MAC OS X operating system, the iPod portable music player, and the iTunes store. Up to this date, Apple continues its legacy. Surfing their website, we could see announcements of innovation on their products, applications, investment for new projects, as well as new products that will surely surprise consumers.

As of 2004, 90% of client operating system market is dominated by Windows. This is perhaps caused by the ‘Wintel’ standard that started in the 1990s. However, this does not mean that Apple Macintosh is facing defeat. Many people believe that Apple Macintosh is much better than Windows OS. A very important feature of the Mac OS is that it is virus-free while Windows OS faces the problem with virus seriously. This could reverse the situation since network externalities require safer means. This means that Macintosh computers are actually better than Windows when it comes to networking and possibly, compatibility as well.

Apple does not think of leaving the industry. It is well-placed to expand into other consumer electronic items. As proof to this are the firm’s new products namely, iPod and iTunes. But these products face threat as developments in the industry continue. There is that problem of cheaper MP3 players that do not restrict formats. There is that development of Linux OS that is an open source. Whatever will happen, we are sure that Apple knows how to live and how to change.

In the end, we know that Apple Computer is a leading firm in the PC industry and it continues to be different, to produce more products, to shoulder the PC industry and to change the world of computer technology.



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