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Apple Michael Dell in 1984. He started by selling

Apple was created by two
college dropouts in that mid-nineteen seventies. Steve Wozniak and Steve Jobs
wanted to “change the world through technology”.  By 1980 Apple was recognized as an industry
leader. Apple’s competitive advantage started to change in the early eighties
once IBM entered the market. Although Apple was an industry leader, they were
losing market share. The differences in IBM and Apple were that Apple was
considered a closed system in which their technology could not be duplicated.
IBM, on the other hand, was considered an open system. This open system gave
was to imitators or clones as they were called. These clones were able to copy
IBM’s system and sell their products at a competitive price but these clone
companies could not compete with IBM’s brand name reputation. At the time there
were only three industry leaders: IBM, Compaq, and Apple.

            Apple made a breakthrough with their user-friendly and
functional personal computers with their Macintosh computer. More software
applications were being created that added to the popularity of personal
computers. Although IBM was a major supplier of industrial computers to
businesses, Apple was had a bigger market margin in education and personal use
computers. Early on, Apple believed in creating all the things that went into
building their computers. Companies were not finding different channels to sell
their products. One of these firms was Dell Computers. It was started by
Michael Dell in 1984. He started by selling clones of IBM PC/XT at half IBM’s
price. Their strategy was by selling his PC products through direct mail. Dell
offered some incentives to their customers including money back guarantees and
on-site service. Dell was offering these services at a lower price than local
dealers. Soon after other companies started offering the same services as Dell
but at a lower price and at a lower expense for the firm.

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            There were some changes in manufacturing during this time
as well. Firms were finding that it was cheaper to buy components from
independent vendors and build the product. It was costly to design and
manufacture a component. Firms also looked at the location of manufacturing.
They found that it was cheaper to find manufacturing outside of the United

            Apple did not believe in out sourcing or using another
manufacturer for parts that were to be installed in their products. Because of
this their research and development spending was approximately eight to ten
percent. Its leadership saw this as unsustainable because it was unrealistic
due to their change in culture and objectives they imposed on themselves. They
started collaborating with their competitors to build a better product and to
be more open. This fostered a culture of creativity and innovation. They also
wanted to be sure to satisfy their independent software vendors. They started
joint ventures in collaboration with IBM. These joint ventures were Taligent
and Kaleida. Taligent was utilized to develop their new operating system.
Kaleida was used to produce multimedia technologies. Apple also joined with
Japanese firms looking for major innovations to create technology that would
merge all aspects of telecommunication. Apple wanted to move from being a
commodity and become a firm that provided value added products.

            They created notebooks and handheld palm devices. They
lowered their research and development expenditures because they entered in to
these joint ventures with other companies. In doing so they had to lay off over
one thousand workers because they were no longer pursuing projects that they
felt would not be profitable. At the time IBM computers ran on MS/DOS and Apple
ran on Motorola chips. These two operating systems were not compatible with
each other. It was not cost effective for a personal computer user to buy IBM
then switch to Apple. The two systems were not compatible and the user would
have to learn how the new system worked to operate it. Switching from one
system to another was not cost effective for the end user. They also started to
compete with other computer companies because they started offering bundles for
their systems that included software and peripherals. Peripherals included
printers, keyboard, mouse, etc. Their bundle prices were much cheaper than
buyer each item individually.



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