Strategies in Action: Comparison between Apple Computers and Dell Computers2007IntroductionApple Computers was an early innovator in the market and really brought the concept of personal computers to the masses as early as the 1980s although the commoditization of the product threw it out of the competition in the 1990s. By this time, the standardization of the product, thanks to the advent of the Windows-based systems, computer manufacturing became a cost game rather than one of innovation. Dell Computers rode the bandwagon of cost competitiveness through an elaborate mechanism of direct marketing and outsourced production during this period.
However, of late, Dell’s competitive advantage has been dented by the saturation of its cost competitiveness and lack of innovation. At the same time, Apple is beginning to turn around with the next round of innovative products and diversification (as is evident from its success in the ipod and its change of name to Apple Inc. ). In this paper, I would argue that innovation is a more useful approach for long-term sustainable growth than cost competitiveness although the latter strategy may result in fast growth over the short or medium term. The early 1980sSteve Jobs and Steve Waxniak built Apple Computers from scratch, with Waxniak assembling a computer at Job’s parents’ garage (wikipedia).
The Apple I computer that was sold in 1977 was not a complete computer but simply a motherboard with CPU, RAM and textual video chips. The Apple II computer, introduced the same year, was one of the three personal computers launched that year but became more successful than the others. From the beginning, Apple PCs were user-friendly, had open architecture, color graphics and floppy disk drives that were then available only for mainframe and minicomputers and not for PCs.
By 1981, the market for PCs had grown, thanks to Apple’s innovative products and hard-edged marketing campaigns. Apple III was launched in 1983 (an earlier version was launched in 1980 but that failed because of design deficiencies) (brittanica). The original mission of Apple Computers was to offer sleek computers aimed at the home user segment. The launch of the graphical user interface technology did just that. It changed the entire way that the personal computer would be looked at (wikipedia).
International Business Machines (IBM) took advantage of the mature demand and launched the IBM PC in 1981 but followed a different business strategy than Apple’s, its main competitor then. Unlike Apple, IBM did not use proprietary technology in either hardware or software. On the other hand, it assembled parts including the Intel microprocessor and Microsoft’s DOS (disk operating system) platform. Since the operating system was open ended and other hardware and software developers could also use Intel chips and DOS systems respectively, many software developers began to innovate IBM-compatible applications.
As a result, not only did IBM hardware give stiff competition to Apple’s Mac, programs like Lotus 1-2-3 spreadsheet soon overtook the popularity of Visicalc, so long considered as the killer application in the corporate world. Michael Dell founded Dell Computers in 1984. Dell created its production capabilities in the early-1980s by supplying PC parts and components to IBM when the latter began outsourcing to cut costs (Dedrick & Kraemer, 1998). Thereafter, Dell expanded its network by also supplying to HP and DEC and newer computer manufacturers like Compaq, Gateway and Acer.
The company set up its first production center in Austin, Texas in 1985.