Back in 1980 when IBM introduced the first Personal Computer or PC to enter homes, small businesses and schools, the modern PC era dramatically dawned. It was the first time that IBM contracted the production of its components to outside companies: Microsoft was offered to write the operating system and Intel was offered to produce the processor chip("IBM history"). As the result of this contract, since other PC makers wanted to produce IBM-compatible machines, Microsoft’s operating system called MS-DOS became standard on PC market, which enabled Microsoft to become the biggest software company in the world later on. After Microsoft seized the solid dominant position in the field of operating system, it began producing compatible application software. Microsoft primarily used three key strategies that are worth mentioning here. Firstly, it acquired some good software invented by other companies, such as VisualBasic and PowerPoint, to sell under Microsoft brands. Secondly, it bundled some software, such as spreadsheets and word processing, to sell as suite software. Finally, it sold many products for less expensive price than those of rival firms, using its financial and monopolistic power ("Lecture for beginners of Microsoft").

Before 1960’s to 70’s, IBM already had dominated the world computer market, having expanded its operations to Europe, South America, Asia and Australia. Having had superior technologies due to its strong R&D and marketing technique, IBM built a market share near 80% in the 1960’s and 70’s ("International Business Machines Corporation"). One of the crucial strategies was to produce computers that can be upgraded rather than purchase a new system each time for consumers. In 1964, IBM introduced the System/360 as the first upgradable computers in the world, which allowed consumers to use interchangeable software and peripheral devices. Also besides computers, IBM developed floppy disk in 1971, which became the standard for storing personal computer data, banking machine in 1973, which was an early form of today’s ATM and the first laser printer for computers in1975. All these innovative inventions accelerated IBM’s control of the market. Another significant strategy was its marketing that instead of offering hardware, services and software exclusively in packages, IBM offered each component individually to customers ("IBM history").

The decisive difference between Microsoft and Apple in terms of their nature of businesses is that the former only produces software but the latter produces not only software but also hardware. Therefore, Apple had to develop both software and hardware, while Microsoft could concentrate on developing only software. Taking this difference into account, both firms resulted in completely opposite strategies. Basically, Apple stubbornly protected its proprietary hardware and software and refused to license MAC clones. In more detail, Apple only licensed firms that write the program according to Apple’s guidelines. This strategy stifled the firms and programmers who wanted to write programs for the MAC (Montgomery 42). Consequently, this strategy brought MAC computers to be priced out of the range of many consumers, although using superior technology like graphical user interface. On the other hand, IBM PC clone market, where Microsoft provides the operating system, dominated the market due to significantly lower prices as a result of harsh competition among PC makers. Currently, Apple’s market share is 4.6% and Microsoft’s share is 86.0% in operating system market (Lazich 401).

Primarily, the new strategy can be seen in aggressive investment in software and server firms by recent acquisitions. In 1996, IBM bought spreadsheet software pioneer Lotus, which has more than nine million users in the world, for approximately $3.2 billion. In 1997, IBM purchased the majority stake in NetObjects, a leading provider of website development tools for designers and intranet developers, to expand its web presence. With the amazing growth of the Internet technologies, IBM’s strategy has shifted gradually from computer hard and soft maker to integrate IT provider. As the importance of the Internet becomes greater through e-commerce, combined with the desire to concentrate on core businesses for firms, IBM has become to provide customers with sophisticated and best fitted IT solution due to the acquisition strategy and high technologies it can offer. IBM is currently not only the biggest computer maker but also the most versatile IT service provider (IBM Annual Report).