Mac shipments have grown to 5.5 million while the entire PC industry has remained stagnant. Counter to industry trends, Apple’s Mac has grown by 20% compared to the same quarter last year, according to IDC’s latest PC report. This comes in the face of the PC industry‘s quarterly decline of 1.7%.
Apple’s fanatical insistence on creating its own hardware to run its software paid off. It should give credit to Sony, Intel, and Unix for the Mac’s performance.
In 1991, Andrew Rapport declared Microsoft the winner in the PC contest because Microsoft and Intel had harnessed the Asian supply chain and dramatically undercut the cost of the eccentric Steve Jobs’s Apple Mac. Microsoft benefited from the network effect of the thousands of manufacturers that built parts and systems compatible with Windows that also saved the company billions in working capital that it would have otherwise had to invest to produce a Microsoft-branded PC. After publishing his findings in Computerless Computer Company in the Harvard Business Review, current venture capitalist Rappaport won the 1991 McKinsey award for the best HBR article. This was a long time ago, yes, but it illustrates how Apple changed its game plan over the last 30 years to compete with the PC.
When Apple’s first notebook, the Macintosh 100, wasn’t embraced by consumers because it was two big, too heavy, and too expensive, Apple partnered with Sony, then the consumer electronics leader with the know-how to build a small and attractive portable. At about the same time Rapport published his report, Apple debuted the redesigned, Sony-manufactured Powerbook 100. Until Sony extricated itself from the lackluster, low-margin PCs, Sony and Apple notebooks had similar designs. Apple absorbed Sony’s supply chain expertise.
In 2006, Apple shifted to Intel Pentium processors from the Power PC. This gave Apple the same supply chain effect that Microsoft enjoyed. Almost all the components in a Mac are the same for PCs, letting Apple drop its prices to align more closely with top-end PCs and notebooks.
Parts of the Mac’s operating system, such as the kernel, were built on FreeBSD Unix. In 2007, the Mac became single-user Unix-certified. Although most Mac users don’t know that OS X has a command line, developers prefer to work with Unix and its variant Linux because making the OS better for other programmers is a core value within the Unix culture. This brought the Unix network effect to the Mac, empowering Apple and independent develops to build a better end-user experience.
In 2007, Sony’s supply chain lessons, the network effect from the shift to Intel architecture, and a better OS X for developers combined to renew the Mac’s growth. The network effects of the Microsoft Wintel ecosystem that Rappaport explained 20 years ago are no longer a big advantage. By turning itself into a premium PC company with a proprietary OS, Apple has taken the best of PC ecosystem, but avoided taking on the disadvantages.