Personal computer (PC) as we know it today has undergone several transitions and phases in its life time. In this process, several companies have entered, conquered, lost and left the industry, while several others adapted to the changing rules of the industry and continue till date to function in the PC market. Apple is one such company. In fact, Apple was the pioneering company which introduced the concept of Personal Computer to the consumers in the first place in the year 1978. The success of this product, called as Apple II was so immense that Apple sold 100,000 Apple IIs in just a span of two years (Yoffie & Rosano, 2012, 1-2).
However, in the year 1981, when IBM entered the market of PCs, the dominant position of Apple was highly challenged. The main reason was that the Operating System (OS) DOS by Microsoft which was used by IBM was much more open and even the microprocessors (by Intel) used were faster compared to those by Apple. Secondly, several other manufacturers were able to clone the Microsoft's operating system, thereby providing more options for the consumers to buy. This was where Apple faced its first setback -- relying more on complete integration -- horizontal and vertical -- Apple stuck to developing its own designs and software, while refusing license to other interested parties. Lacking in a faster OS, its sales suffered immensely, even as its premium pricing policy further demeaned its customers.
It is not to say, however, that Apple did not respond to the easy-to-use OS. In 1984, Apple launched Macintosh, which had a new improved OS which was more user-friendly. Nevertheless, the problem with the slow microprocessor still prevailed and hence, Apple saw a decline of its profits by 62% in merely three years time. This was when in a coup, Steve Jobs was ousted from the board membership, while John Scully was given the helm of Apple Computers. The first five years of the Scully regime were good as Apple innovated into bringing "plug and play" options for the PC users. However, with the IBM-compatibles launching Windows 3, this gap was minimised. Nevertheless, Apple continued its reign over the PC market. It was when the price of PCs by IBM reduced drastically, that the offering by Apple seemed hugely overpriced in comparison. Scully tried to fill in this gap as well by launching Mac Classic priced $999, while also collaborating with IBM into developing new OS. Nevertheless, both these steps failed immensely as more focussed and lower budgeted options in PCs were available for the PC users. The problem arose more so because of the open system of the Microsoft's OS platform where integration was easier to reach with other products and offerings. Further, Apple's failure to launch a better, upgraded OS led to a fall in its world-wide market share to a mere 3% in 1997.
It was only after Steve Jobs resumed his position in Apple in 1997 that consolidation of Apple's offerings was reached and focus began on developing better software and products for the consumers. It was realised that as much as Apple's R&D (Research & Development) was to be blamed, the marketing processes of Apple's too were responsible for its bleak performance. There was no option of direct sales, either through website or through Apple retail showrooms. Steve Jobs, on his return, identified these key areas and worked on the same, only to earn back all the losses made in the year 1997, while making a whopping profit of $309 million in 1998. It was truly a story of struggle and conquer for Apple in the PC industry.
Yoffie, D.B. & Rossano, P. (2012). Apple Inc. In 2012 (Unpublished doctoral dissertation). Harvard Business School, Boston.