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In 2003, Apple soared even higher when it opened the online store iTunes. Apple didn’t stop there. In 2007, the company revolutionized the smartphone
market with the introduction of the iPhone. Just three years later, Apple created the tablet computer industry by introducing the iPad, thus beginning to
reshape the publishing and media industries. Further, for each of its iPod, iPhone, and iPad lines of businesses, Apple followed up with incremental product
innovations extending each product category. By combining tremendous brainpower, intellectual property, and iconic brand value, Apple has enjoyed
dramatic increases in revenues.
A Good Strategy
Why was Apple so successful? Why did Microsoft’s once superior market valuation evaporate? Why did Apple’s competitors such as Sony, Dell, Hewlett-
Packard (HP), Nokia, and BlackBerry struggle or go out of business? The short answer is: Apple had a good strategy. But this begs the question: What is a
good strategy?
A good strategy is more than a mere goal or a company slogan. A good strategy defines the competitive challenges facing an organization through a
critical and honest assessment of the status quo. A good strategy also provides an overarching approach (policy) on how to deal with the competitive
challenges identified. Last, a good strategy requires effective implementation through a coherent set of actions. A good strategy , therefore, consists of
three elements:
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1. A diagnosis of the competitive challenge.
2. A guiding policy to address the competitive challenge.
3. A set of coherent actions to implement the firm’s guiding policy.

THE COMPETITIVE CHALLENGE. First, consider the diagnosis of the competitive challenge. Above, we briefly trace Apple’s renewal from the year 2001,
when it hit upon the product and business-model innovations of the iPod/iTunes combination. Prior to that, Apple was merely a niche player in the desktop-
computing industry and struggling financially. Steve Jobs turned the sinking company around by focusing on only two computer models (one laptop and
one desktop) in each of two market segments (the professional market and the consumer market) as opposed to dozens of non-differentiated products
within each segment. This streamlining of its product lineup enhanced Apple’s strategic focus. Even so, the outlook for Apple was grim. Jobs believed that
Apple, with less than 5 percent market share, could not win in the personal computer industry where desktops and laptops had become commoditized
gray boxes. In that world, Microsoft, Intel, and Dell were the star performers. Jobs needed to create the “next big thing.”
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A GUIDING POLICY. Second, let’s consider the guiding policy. Apple shifted its competitive focus away from personal computers to mobile devices. In