Apple Computers Inc History

The transition from Apple Computers Inc to Apple Inc is significant. It is an exceptional example of what can happen to a company that fails to have a comparative advantage or even meet industry standards within their market.

Apple Computers was originally established to fulfill market demand for personal computers. Figure 1a demonstrates how the increase in demand created a shortage in the market for personal computers. Suppliers were initially slow to respond to the increase in market demand. Some felt that the increased demand was temporary and did not choose to pursue the market opportunity. However, a number of companies chose to enter into the market to fulfill the need. Figure1b demonstrates how the increased demand being met by increased supply initially led to increased prices. However, the influx of additional suppliers drove the figure 1b supply curve to the right causing a return to the initial market equilibrium price. In the computer market however, and additional impetus occurred driving the supply curve even further to the right. Not only did additional suppliers enter the market, technology advances increased the output that each supplier could produce using their inputs. This led to an substantial increase in the supply of personal computers as well as a drop in overall market prices. As we can see in figure 1c the market was ultimately provided with a substantially higher quantity of personal computers as demanded by the market by the lower price. Consumer demand is always an inverse relationship between price and quantity, as typically consumers would prefer more normal goods as the price decreases.

However, it is important to realize that the playing field was not equal for Apple Computers Inc. Their initial branding created by unique and technologically advanced offerings was quickly eroded as time passed and other manufacturers gained a comparative advantage by offering products they had more compatible economic compliments (such as Microsoft, printers, and other peripherals) as offered by the increasing number of software and peripheral suppliers. Failing to have the compliments offered by other computer suppliers would lead to significant reduction in quantity demanded of their products, as consumers chose personal computers substitutes offered by other manufacturers that were more compatible with the ever-increasing offering of complimentary add-ons and software.