Description: When Microsoft stock was at a record high in 1999, and its market capitalization was nearly $620 billion, the notion that Apple Computer would ever be bigger — let alone twice as big — was laughable.
Date: Jan 29, 2015
Mr. Gates “couldn’t imagine a situation in which Apple would ever be bigger and more profitable than Microsoft.”
“He knows he can’t win,” Mr. Gates said then of the Apple co-founder Steve Jobs.
But less than two decades later, Apple has won. How this happened contains some important lessons — including for Apple itself, if it wants to avoid Microsoft’s fate. Apple, after all, is now as dependent on the success of one product line — the iPhone accounted for 69 percent of its revenue — as Microsoft once was with Windows. The most successful companies need a vision, and both Apple and Microsoft have one. But Apple’s was more radical and, as it turns out, more farsighted. Microsoft foresaw a computer on every person’s desk, a radical idea when IBM mainframes took up entire rooms. But Apple went a big step further: Its vision was a computer in every pocket. That computer also just happened to be a phone, the most ubiquitous consumer device in the world. Apple ended up disrupting two huge markets. Read the rest of the Story
Questions for discussion:
1. How did Apple overtake Microsoft in becoming more valuable?
2. How would you describe Apples strategy using one of Porter’s generic competitive strategies?