The creation of an i-World

The creation of an I-world
-----Economic analysis of strategies by Apple, Inc.

The Apple Company, renamed Apple Inc. in January 9, 2007 was founded in 1976 by Steve Jobs and Steve Wozniak. Its main activities lie in the IT field with notable products like Apple I and II, Macintosh, Powerbook, iPod, iTV, iPhoto and newly released iPhone in the domain of PC, digital video/audio player, household entertainment appliance and now telecom. However, behind annual sales of $19.3 billion in 2006, Apple has experienced a hard time in the late of 20th century until the return of Steve Jobs who revitalized the company by a series of strategic measures.

Apple’s instructive idea to survive in the ferociously competitive IT world is to have its products differentiated, and one of the methods to achieve this aim is advertisement.

It could be easily observed that 1998, the year of iMac’s release is a watershed for the PC world, at least the appearance of PC was thus changed in a revolutionary way. Beforetime, the PC manufacturers were almost all stuck in a drastic competition that led to a lower and lower margin, and the case is even worse for Apple’s product. In 1996 and 1997, Macintosh was squeezed out from the top three PC marks and cast a debt of $708 millions to the Apple Company. With the retaking of Apple by Jobs, iMac was developed to save the company out of trouble. From the very beginning, iMac’s birth has directly abandoned traditional competition of technique performances that are classically adopted and exerted to the extreme by IBM, Dell and HP etc. Knowing that little effort is worthy in that area, iMac chose a determined way of horizontal differentiation by giving a lively design and vivid color for the PC. What’s beneath the appearance is a spirit of vigor and personalization. The success of this redirection is apparently proved both from the great popularization of Mac and from the data that 2 million PCs were sold within 12 months following.

What really amazed the world happened in 2001 when Apple announced the birth of iPod. This move took a double differentiation: a real differentiation in the techniques and an imaginary differentiation in the outer design and thus in notion.

MP3 players were not the Apple’s invention, but instead of going on with flash memory, Apple started to pick up (even though not literally the exact first) hard disk as memory device equipped with an easy and user-friendly interface and operating system. The sharp rise of volume and smart click-wheel provided by iPod change totally the user habit of MP3 world and moreover, iTune on-line store that supports as music resource, creates a new business mode which differs greatly from the traditional giants of MP3 player in East Asia who care more about the containers than the containing.

Besides, the advertisement campaign of white iPod contrasted by black background silhouette sweeps the milky color breeze all around the world from 2001 till now. People get to accept this lovely white box. In fact, what Apple did has exceeded a simple advertisement for a product. It was indeed constructing its Apple culture in a market-leading and consumption oriented country and then blew it world wide. American popular culture falls in two extremes, either as complicated as to be abstract, or as simple as to be cute. The series products of iPod thereby wear the style of the latter to attract those in search of being distinguished.

What is the result? People walking in the street today in the modern metropolitans with two white strings connecting ears and pocket demonstrate the success of the imaginary differentiation of Apple apart from other MP3 player marks. Saying the differentiation is imaginary is because even the most loyal fans of Apple fail to tell what is the difference in terms of music quality and technique advantage of machine between Apple and others.

No doubt, the fruitful accomplishment owes a “thank you” to the advertisement that is efficiency and effectiveness in pushing forward the product differentiation. Actually, this action follows Apple’s consecutive advertising policy that should be traced back to its origin in the 70s and 80s of last century when its advertising slogan was exactly “Think differently”. The investment on advertising, even though a lot less compared to P&G or GM, was as well prominent among IT enterprises. As proof, in the fiscal year of 2005 Apple has spent $287 million on advertising. Recently, Apple’s advertisement has just been awarded best advertisement of 2006 by the Wall Street Journal.

Obviously in this case, Steve Jobs pulled twice the Apple Company by practicing successfully product differentiation strategy and boosting through perfectly contrived advertisement. The former as goal and the latter as tool, Apple Inc. survived and stands again in the leading edge of IT world.