Here’s another installment of the strategy series: Dell and Apple.
Disclaimer: This analysis is based solely on the strategy discussion in Jack Welch’s Winning.
Two companies that are pioneers in selling computers and other electronic items in the world have completely opposite strategies. Dell, with its online store and customization engine, makes buying a computer all about how much memory, hard disk and USB slots you need on your computer. Apple on the other hand sells you much more than a computer or personal music system iPod. It sells an experience primarily through those wonderfully designed Apple stores. Unlike Dell, Apple provides customer with more pre-customized boxed options as compared to customizing that box (Apple computers are customizable as well at Apple.com).
If we look at Dell’s model of selling computers, what Dell is doing is selling an assembled box of all the different parts that makes a computer. Customize-ability of the computer plays a big role and design takes a back seat. The distinguishing factor is pretty much the price and support. Dell’s strategy, in simple words, is to commoditize the computers. Make buying computers as simple as buying any other home or office supplies. The strategy works great with corporate customers who care more about price and support.
Apple does not sell computers, it sells an experience, a membership to an exclusive cult and an entry to the Apple product ecosystem. Design plays the central role in all Apple products. Apple’s strategy, opposite to Dell, can be stated in simple words as de-commoditization of all the products it sells. As in any typical case of de-commoditization, price takes a back seat and customers get attracted to the product itself. Apple’s strategy is crisp and clear, and Apple implements it with perfection in any industry it enters, be it the computer industry, music industry or mobile phone industry.
These are two companies selling the same things with completely different strategies and execution plans. The debate will go on for ever on which company has a better strategy, but the success of Dell and Apple asserts the point that there’s no one strategy that is good or bad for your company. Your success depends on how crisp the strategy is and how well you are implementing it.