Apple Case Study

PC Industry Case Study

Believe it or not on April 1st, 2008 the personal computer will be 32 years old. Apple introduced the first PC, the Apple 1 on April Fools day in 1976. A few years later, in 1981, IBM introduced its personal computer. This technology could be used as a productivity device for employees in large organizations as well as for personal productivity improvements. The IBM introduction was largely responsible for spawning an industry now in the hundreds of billions worldwide. Today companies like Dell, Hewlett Packard, Intel, and Microsoft dominate this industry. In the early days of the PC, communications occurred through modems running at 2,400 bits per second or less. The speed was a tiny fraction of today's modern cable or DSL lines that run at around 5,000,000 bits per second (over 2000 times faster). There were no handheld computers and mobile phones were bricks with very limited coverage, primarily used in automobiles. The early PC were difficult to use and often required their users to be "do-it-yourself" hobbyists. There was no PC-based e-mail. There was however text type e-mail running on mainframe computer systems.

A pivotal breakthrough was the introduction of the Microsoft Windows operating system which replaced the techie-oriented Disk Operating System or DOS. Windows provided an easier to use, graphical oriented operating system with a Mouse pointing device. This system looked very similar to Apple's earlier operating system that ran on a far superior Macintosh computer (which had some networking and multi-media already built in).

The IBM PC was different from Apple's in that its two primary components, the Operating System and the Central Processing Unit were sourced from third parties and not designed or manufactured "in-house." Specifications for the technology were open and made available. This helped keep costs down and spawned the emergence of hundreds of companies that could build IBM PC clones or products to connect into the PC. Apple, on the other hand, kept its specifications proprietary and kept a tighter control on outside providers. There was no such thing as an Apple Macintosh clone, these system had to be sourced from Apple.

The "IBM-Compatible" PC dominated this industry from the late 1980's to today with over a 95% share of the PC market. The reasons for this market domination stem from the openness of the design, flexibility, and price considerations.