The Buying Decisions of ‘Consumers’ on the Use of Microsoft or Apple Products” Essay Example

The Buying Decisions of ‘Consumers’ on the Use of Microsoft or Apple Products† Essay â€Å"The Buying Decisions of ‘Consumers’ On the Use of Microsoft or Apple Products† Submitted By: SANUSI SANI BUHARI Student No: 200922R7018 The Dissertation has been submitted to the Skyline University College In partial Fulfillment of the Degree: Bachelor of Business Administration (International Business) December-2012 Acknowledgement The writing of this dissertation has been one of the most significant academic challenges I have ever had to face. Without the support, patience and guidance of the following people, this study would not have been completed. It is to them that I owe my deepest gratitude. * Dr. Rashad Mohammed Al Saed, who undertook to act as my supervisor despite his many other academic and professional commitments. His wisdom, knowledge and commitment to the highest standards inspired and motivated me. * My friends and whoever directly or indirectly helped me to during the course of the dissertation. * The authors of the various books and web sites as well as the facilities and university library that helped me gain various information for this dissertation. Abstract This research paper describes the buying decisions of ‘consumers’, as to whether they prefer Microsoft or Apple products. People have different choice according to needs. Business organizations and telecommunication sectors judge product on usability. Data analysis suggests many important elements impact the buying decision of an individual or any specific company. Data analysis also suggests Microsoft and Apple continue to push the envelope when it comes to developing software and hardware. The main objective of this research is- which product do people prefer? We will write a custom essay sample on The Buying Decisions of ‘Consumers’ on the Use of Microsoft or Apple Products† specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on The Buying Decisions of ‘Consumers’ on the Use of Microsoft or Apple Products† specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on The Buying Decisions of ‘Consumers’ on the Use of Microsoft or Apple Products† specifically for you FOR ONLY $16.38 $13.9/page Hire Writer To find answers to the research questions of this research, data analysis and descriptive study has been used, because it involves observing and describing the behavior of a subject without influencing it in any way. This method is used to obtain a general overview of the subject, and answers who, what, and why of the study. The two giants pride themselves for producing cutting edge consumer and business products, and are leading the developments in software and hardware. But what about their websites how do they both compare, and more important, which one is better and more usable? This study will help reader to find all this answer. Chapter No. | Particulars| Pg No. | 1| Introduction * Aims of Independent Study * Objectives| 6-7| 2| Literature Review| 8-29| 3| Research Methodology| 30-32| | * Research Design| 31| | * Research Approach| 31| | * Research Instrument| 32| | * Sampling Design| 32| 4| Data Analysis| 33-37| 5| Conclusion| 38-40| | Bibliography | 41-42| | Appendixes | 43-46| Aims of the Study Technology has slowly started to rule our lives. No matter where we are, we have access to some sort of technological appliance such as cell phones, computers or televisions. Anything one could think of that might, in even the slightest way, make our lives easier is now available. So many different types of devices have been conceived and developed that is has become a complicated and confusing decision when trying to choose the right product. Computers and other forms of technology impact our lives daily. We encounter computers in stores, restaurants, and other retail establishments. We use computers and the Internet regularly to obtain information, experience online entertainment, buy product and services as well as communicating with others. Most of us carry a computer or a mobile phone with us at all times so we can remain in touch with others on a continual basis and can access internet information by the touch of a button. Businesses use computers to keep track of bank transactions, inventories, sales, credit card purchases and also provide business executives up to date information to make important decisions. Government’s use computers to support our nation’s defense system, for space exploration, for storing and organizing vital information of citizens, and other important tasks. Computers are used everywhere, and is a vital tool in one’s life. When you turn to your computer, it’s nice to think you’re in control. There’s the trusty computer mouse, which you can move anywhere on the screen, summoning up your music library or the internet browser by one click. Although it’s easy to feel like the director in front of your own desktop or laptop, there’s a lot going on inside, and the real man behind all these operations is the ‘Operating System’. The purpose of an operating system is to organize and control hardware and software so that the device it lives in behaves in a flexible but predictable way. Most desktop or laptop PCs come pre-loaded with Microsoft Windows. Macintosh computers come pre-loaded with Mac OS X. The operating system (OS) is the first thing loaded onto the computer. Without the operating system, a computer is useless. When it comes to computer technology, the two biggest giants are ‘Microsoft’ and ‘Apple’. Microsoft and Apple are by and large the biggest producers in cutting edge consumer and business products. Between the two companies, they continue to push the envelope when it comes to developing software and hardware. Question is, which do people prefer? Prior to this, I’ve decided to base my study on ‘ The buying decisions of consumers’, as to whether they prefer Microsoft or Apple products ’ Research Objectives Research Objectives ascertains specific points that may aid in gathering information related to the main objective. The purpose of this research will be: * To know the factors that affect the buying decisions of customers * To determine the products and services provided to customers Literature Review As stated by (Allan 2001), Microsoft Corporation is an American public multinational corporation headquartered in Redmond, Washington, USA that develops, manufactures, licenses, and supports a wide range of products and services predominantly related to computing through its various product divisions. While jointly developing a new Operating System (OS), working alongside IBM, Microsoft released Microsoft Windows. On February 26th 1986, moved its headquarters to Redmond, and decided to make the company go public. Microsoft worked closely with Apple during the development of Apples Macintosh computer, which was introduced in 1984. Revolutionary in its design, the Mac featured a graphical user interface based on icons rather than the typed commands used by the IBM PC, making its programs simple to use and easy to learn, even by computer novices. ( Iceboat, Daniel, and Susan L. Knepper 1991 p. 304) Apple INC was established on April 1, 1976 in Cupertino, California, and incorporated January 3, 1977; the company was previously named Apple Computer, Inc. for its first 30 years, but removed the word Computer on January 9, 2007, to reflect the companys ongoing expansion into the consumer electronics market in addition to its traditional focus on personal computers. (Price 1987) On August 15, 1998, Apple introduced a new all-in-one computer important of the Macintosh 128K: the iMac. The iMac design team was led by Jonathan Ive, who would later design the iPod and the iPhone. The iMac featured modern technology and a unique design. It sold close to 800,000 units in its first five months. Through this period, Apple purchased several companies to create a portfolio of professional and consumer-oriented digital production software. On May 19, 2001, Apple opened the first official Apple Retail Stores in Virginia and California. Later on July 9 they bought Spruce Technologies, a DVD authoring company. The same year, Apple introduced the iPod portable digital audio player. The product was phenomenally successful  Ã¢â‚¬â€ over 100 million units were sold within six years. In 2003, Apples iTunes Store was introduced, offering online music downloads for $0. 99 a song and combination with the iPod. The service quickly became the market leader in online music services, with over 5 billion downloads by June 19, 2008. It can understandably be said that when it comes to computer technology, the two biggest names are ‘Microsoft’ and ‘Apple’. (Suhail 2009) It success has become so immense that a customer’s choice can either be one of the two. Other competitors are too far off, but what do these two giants give in return to society? To most people, Microsoft represents computing. Those with a dynamic interest in technology usually believe that Microsoft Windows is the computer. This kind of brand association you won’t see in other companies, which makes it a very powerful source in the world of technology. Apple computers have grown very popular in the last few years, and its simplicity and user-friendly attributes is what keeps customers captivated. Historically, Microsoft began the personal computer revolution with their Windows Operating System, which offered people a different platform for their computer needs. Apple also introduced, with their own line of Macintosh computers and devices, though it did have it ups and downs. Microsoft followed a general policy by marketing their computers with non-expensive hardware and software parts which allowed every house to have a PC (personal computer). People can afford their computers with no restrictions on the type of hardware. Apple had a different mind frame whereby they went for exclusivity and decided to sell their products at a much higher price than Microsoft PC’s. Its elite hardware and software is what makes it more expensive. (Admin 2010) Although where Apple has the upper hand over Microsoft is related to security. Apple Mac computers are generally more secure because of its OSX operating system. Suhail 2009) It has more protection built in against malware and viruses. Customers want to feel comfortable and safe, knowing that the product they are purchasing is protected against threat at all times. Windows (operating system of Microsoft) is more prone to malware and viruses, and requires expensive protection software to make the PC more secure . Another advantage of Apple computers is they are more efficient when it comes to graphics acceleration and games. Microsoft has problems with that. If one would buy a Microsoft based PC, they would need to spend an additional amount to handle graphics of that scale. On the other hand, Microsoft is committed in making its products and services easier for everyone to use. The Windows operating system has many in-built accessibility features that are useful for individuals who have difficulty in typing, using the mouse, seeing or hearing difficulties. Microsoft also produces other computer hardware’s such as Xbox, Zune, Xbox 360 and MSN TV. (MSJ 1986) Apple also offers a wide variety of products such as the iPhone, iPod, Apple TV and the newly introduced iPad. Factors affecting buying decision Homepage The homepage is one of the most important pages of the whole site because it’s the first, and in many cases the only chance you get to impress the visitor enough to keep them browsing. You’ve got a few seconds to convince them that the site has enough value for them to keep using it, because if it doesn’t, the visitors will leave. Apple’s approach to the homepage has been consistent throughout all the years that the site has been running. They use this page as a kind of advertising board that always shows a big ad of their latest product, followed by 3 other ads to another 3 products or news that is important at the moment. If you’re not interested in any of the 4 suggested items, you can use the large navigation bar at the top, which is split into their core businesses: Mac, iPod and iPhone, followed by a couple of other important links, such as the online store and support pages. The navigation bar also incorporates a search field. (Dmitry Fadeyev) One other thing to note is the lack of content. You’re not distracted by sidebars, notices or extra navigation items — there are only a few items on the page, focusing your attention and making the decision of where to go next easier. Microsoft has a different approach to their homepage. Firstly, they feature a similar style of ad at the top, designed to be attention grabbing. These are large images, but only one out of 3 ads is shown at a time — you have to hover over the other two to expand them. This focuses attention, but may potentially weaken the effectiveness of the two hidden ads since the visitor has to work to see them right at the top of the page is the navigation, together with search. Flow All of the content of Microsoft is extremely monotonous, especially the â€Å"Learn More† box with a list of 8 links. The dry presentation gives the user less incentive to click around. Some Microsoft sites use better layout to direct the flow of attention, but they generally all suffer from the same illness: too much content. When you present the user with too many choices, you make them work — they have to think about what they want and they have to process more information. By reducing choice, Apple directs the users through a more carefully designed funnel, which generally delivers a better experience. (Dmitry Fadeyev) Navigation Apple’s website has a large navigation bar at the top, which remains there consistently whichever section of the site you go to. The options available show the main sections split by its lines of business as well as a couple of essentials, such as support and the store. The bar also integrates search and branding as the home button displays the Apple logo instead of a label. Any extra sub-navigation is located on individual site pages and is placed within the context of that page, whether on a sidebar, or as a horizontal bar at the top. Microsoft has a similar navigation bar on the homepage, but that navigation bar is not consistent across the site. Actually, all of the sub-pages tend to use their own navigation bar, in style and in content. The homepage navigation thus acts as a site map to the rest of the Microsoft website sections. In a lot of the navigation bars, including the one on the homepage, Microsoft uses drop-down menus — unlike Apple. They don’t just use drop-down menus — they use huge drop-down menus. In some cases, the menu even has a scrollbar (in Firefox): Is this good or bad? In a recent Alertbox entry, Jakob Nielsen, a well known usability guru, has written that mega drop-down menus can work. They work because they present a lot of choices in groups, so they allow for easier scanning as you can jump to the group that you want and scan the items inside them. You have to get certain things right though, like the order of the groups and only mentioning each element once, for them to work well. In this case, it makes sense for Microsoft to go the route of the drop-down menus, but feel that they may have gone a little too far. For example, some options point to the same thing, like the ‘Office’ drop down and ‘Office’ option in the ‘All Products’ drop down. The drop-down also blocks the content below, so if you accidentally moused over the menu, you have to mouse off from it again to get to the content below — all the while being careful not to hover over other items. There are also a lot of options under each group — sometimes showing about 13 items, which makes processing the options much more difficult. Also, the inconsistency of navigation across the different sections makes it much harder to jump from one area of the site to another, e. g from the Office site to the Xbox site. (Dmitry Fadeyev) Readability Because most of the content on the sites is text, it’s vital to ensure that everything is readable and legible. Here are the main things to consider when working on readability of your site’s content: * Make the text large enough so that it’s easy to see and read. Ensure that there is enough contrast between the text and background. * Provide enough white space around the text to keep other content and graphics from distracting the reader. * Provide plenty of headings or highlighted/bold text to allow users to quickly scan the content for key information. * Add images and icons to make it easier to focus on indivi dual sections of the text, i. e. product or feature descriptions. * Keep the text short and to the point. Apple does a great job of keeping everything easy to read. The text is generally small, but never too small so as to be a problem. Headings are set in heavier type and stand out, allowing you to quickly get the gist of each section. Apple also makes heavy use of white space to separate everything apart and adds images to make each text blurb more interesting. It follows the general usability guidelines by breaking things down into small bite size pieces of text that are easy to digest. It looks a lot busier than the Apple site because there is more content on one page and there are many different treatments for headings and highlighted words. Dmitry Fadeyev) Too much variety causes visual chaos on the page, with each different colored or bold item competing for your attention. In this case, the page really needs to be simplified to make it easier for the viewer to process. Search Apple’s search is integrated into the navigation bar. When you type something in the search box you actually get live search results with AJAX, by way of a l ittle box which pops up, showing you the results as you type. It’s very well done — there is no lag when typing, the results are grouped in categories and are fetched very quickly, usually before you finish typing your full query. If you want to see more results you can just hit Enter when you’ve finished typing and you’ll be taken to the standard search results page. It’s very clean and organized by categories. You can drill the results further down by category, selectable from the menu on the right. It’s functional and clean, and works well when you’re trying to find any products that they sell. Aesthetics Apple’s website aesthetics closely mirrors that of its product line. The navigation bar looks like it’s crafted out of aluminium and features gentle gradients and indented text. There are also plenty of reflections and minimalist design elements. Apple has always worked on unifying the look and feel of its interface across its entire product line, from the hardware to software, and their website is no exception. Do aesthetics have anything to do with usability? Actually, they do. Research shows that people perceive better looking interfaces as more usable. The site follows a faint Windows theme with the light blue clouds, but there is little else to say that this is a page for Internet Explorer or Windows. The look and feel is very generic and doesn’t do enough to differentiate itself or build a coherent brand. The designs are overall pretty good, but pretty good just isn’t enough. There are plenty of inconsistencies and a lack of polish, which puts Apple ahead in this area. Consistency Consistency is important because it allows you to develop usage patterns. This basically means that if your site has a consistent interface throughout, your visitors will quickly learn how it works and will be able to use this knowledge in any of the new pages that they visit, since they’ll all be using the same, or very similar, interface. Apple does a great job of keeping the interface consistent. All of the product pages feature very similar aesthetics and are structured in the same way. The whole site looks and feels the same throughout and the global navigation bar at the top is always there, on every page. This means that the entire experience is very unified and coherent — you know you’re on the same website wherever you go. Could you tell that this is a Microsoft page if you took away their logo? Custom graphics, styles and colour palettes across all the Microsoft sections help little to maintain a coherent brand image on the web. Microsoft really struggles here. There are many different sections across Microsoft. com and they all feature their own look and feel, including their own navigation. So once you go to a section on their site, be it the Microsoft store, the Office site, or the Security pages, they will all look and feel like separate websites. What’s worse, the global navigation bar is also gone, meaning that you have to go back to the homepage, or the site map, to see an overview of all of their sites. It’s really an ecosystem of websites hosted under the same domain and therefore it doesn’t get the benefit of consistency that Apple has. The brand image is also terribly fragmented making it impossible to define what a Microsoft site looks like. (Dmitry Fadeyev) Marketing Nobody will argue that Apple is the kind of viral marketing. You might find some PC ads/commercials on local magazines and newspapers, but you will not find great Mac vs PC / Get a Mac / Buy a Mac / Hello, I am a Mac, and I am a PC commercials like Apple produces. Security When it comes to Mac vs. PC security concerns, many experts think that Windows has caught up with Apple. Before Microsoft Windows 7, we have all heard that Windows operating system is a targeted platform for malicious attacks. Of course it is true, but the question is. Does the operating system has the right tools to defend itself? With Mac computers, you wont need to worry about viruses as you do in Windows operating system. The real problem is not only about viruses, but about security breaches that allow hackers to penetrate into your computer, and steal your valuable art works, photographs and important (and sometimes secret) media assets. It was proven that both Windows 7 and Mac OS X Snow Leopard have their own glitches. DailyTech. com posted an article, saying that one prominent Mac hacker has pointed out that Mac OS X Snow Leopard is less secured than Microsoft Windows 7 OS. Well, if a Celeb hacker says so, we should probably take it pretty seriously. So it seems, at least when making a business decision, that you shouldnt pick a Macintosh over a PC, just because people are telling you that Macintosh doesnt have viruses, or they are more secure. Apple OS X Snow Leopard is based on the UNIX core. That fact alone doesnt make it more secure than Windows 7 as you can see. We just couldnt ignore the fact that viruses are real pain in the axe. As a power PC user, with all those pop-out windows saying You have been infected with a Virus † I would probably be very happy knowing that I can work quietly, without worrying about viruses and all that crux horrors that the Internet brings with it. You just cant blame Windows operating system for being more popular. Financial Analysis Its important to step back and examine just how close each of these companies really are in terms of revenue and earnings. Analysts polled by Thomson Reuters expect Apple to report approximately $2. 85 billion in net income ($3. 07 in EPS) on about $14. 62 billion in revenue when it releases its results. Yet, its well known that Apple regularly beats consensus estimates by quite a large margin and that actual results will come in well above the consensus. Just last quarter, Apple not only beat revenue estimates by over $1 billion, but it annihilated EPS estimates by reporting $0. 88 above the $2. 45 consensus – a 36% beat. In fact, Apple has regularly beaten consensus estimates by well over 35% each quarter over the past year. (Andy M. Zaky) Financial Alchemists Turley Muller, who is currently the most accurate analyst on Apple, offers a more realistic view of the company. Muller believes that Apple will report about $3. 1 billion in net income on ($3. 35 in EPS) on $15. 15 billion in revenue. And while I think Muller has left some room for upside surprise, its clearly best to use his numbers rather than the consensus as a measure of comparison. Microsoft, on the other hand, is expected to earn $4. billion in net income ($0. 46 in EPS) on $15. 26 billion in revenue when it releases its results – just a hair above Mullers revenue estimates for Apple. And while Microsoft regularly reports upside surprises itself, the gap between consensus estimates and Microsofts actual results is nowhere near as wide as it is with Apples results. Thus, if Apple reports at the higher end of Mullers estimates, and if Microsoft reports closer to the consensus, its quite possible that Apple might have a shot to beat Microsoft in revenue for the first time in its history this quarter. The chart (Appendix 2(A) details a quarterly revenue comparison of Apple and Microsoft over the past few years. As one can see from the chart, Apple is within striking distance of surpassing Microsofts quarterly revenue. Since Microsoft and Apple are on a different fiscal year, the chart realigns their results based on the calendar year. (Andy M. Zaky) So the big story in tech earnings is whether history will be made in the decades-long battle between Apple and Microsoft, or whether Microsoft will postpone the inevitable and maintain its dominance over Apple for at least one more quarter. Even if Apple doesnt beat Microsoft in sales this quarter, it will almost certainly do so next quarter and by quite a large margin. For the September quarter, analysts expect Apple to generate approximately $16. 81 billion in revenue compared to a projected $15. 16 billion in revenue for Microsoft. So even conservative estimates, which have yet to be adjusted to account for iPad sales, already put Apple ahead of Microsoft by nearly $1. 2 billion next quarter. My estimates put Apple ahead by $3. 2 billion as I expect Apple to record nearly $18. 9 billion in revenue. Whats even more surprising is that Apple will likely far surpass Microsoft in revenue for the entire 2012 fiscal year (Appendix 2(B). Im looking for Apple to record $81. 6 billion in revenue, well above the $70 billion Im expecting out of Microsoft for the year. You can view my track record on Apple at Philip Elmer-DeWitts column Apple 2. 0. Even the analyst consensus puts Apple well ahead of Microsoft next year, with revenue estimates of $72. 6 billion (AAPL) versus $67 billion (MSFT). The chart below compares Apple and Microsofts annual fiscal revenue for the past several years. While quarterly data must be compared on the calendar year to show a side by side comparison over a particular 3-month period, yearly data can be analyzed on the fiscal year. And, what about other metrics? Net income growth, total net income, total net cash, cash flow, book value, total assets and the economic sensitivity of each companys primary operations are just a few of the other key factors to consider when comparing the two companies. While Apple will surpass Microsoft in revenue in the near future, that doesnt necessarily mean that Apple automatically deserves a larger market capitalization. But it does appear that Apple will not only record more revenue than Microsoft, it will also eventually (within the next few years) earn more in net income, generate a larger amount of cash, and outpace Microsoft in terms of growth in net income and revenue. The earnings beat wont come easy for Apple. Due to Microsofts extraordinarily high operating margin, the only way Apple will beat Microsoft in earnings is by simply outpacing it in sales. Since Microsoft pushes more of its revenue to the bottom line, Apple will have to significantly outpace Microsoft in revenue to win on the net income front. The chart below compares Apple and Microsofts net income for the last several fiscal years (Appendix 2(C). Though these two companies no longer really operate in the same space as they once did with Apple turning its focus on the consumer and Microsoft on enterprise spending, both companies are dominating their respective industries. Update 7/20: As expected, Apple has once again crushed the consensus estimates on the top line, beating analyst revenue expectations by over well $1 billion when it reported $15. 7 billion in revenue Tuesday afternoon. In fact, Apple even surpassed my lofty expectations of $15. billion by $100 million in sales. Unless Microsoft far surpasses analyst expectations of $15. 24 billion in revenue, it appears that Apple has already won the race. Microsoft primarily makes its profits from business to business, which mainly consists of selling licenses to its operating system to computer manufacturers and office suites for enterprises. That’s not to say t hat they don’t sell to consumers — they do, and they have consumer only product lines as well, such as the Xbox gaming console, and of course home users also buy Windows and Office. This means that their business targets pretty much everyone, from home computer owners to developers and enterprises; which in turn stretches the purpose of their website to try and serve everyone. On the other hand, Apple is primarily a consumer company, and makes most of its profit selling hardware, like its iPod music players and Mac computers. This makes the target of Apple’s site much clearer — marketing, selling and providing support for its products to consumers. They don’t have to worry about selling licenses to manufacturers because they’re the only manufacturer, so the key purpose of the website would be to advertise and promote their multiple product lines, as well as selling them through their online store. (Andy M. Zaky) Cost Analysis Other factor that affects buying decision is cost. People have been arguing online about how much more expensive Macs are than PCs or not for more than a decade (and in print for years before that). These discussions usually involve some hard facts but also some persistent myths. As a longtime Windows guy who has recently migrated to the Mac, I think Im in a retty good position to try and sort out reality from fiction. Lets take a look at what you can really get for your money these days. Hardware For those of you who are left, what I have found in my research is that neither side has a lock on good value. If you start with Apples relatively short list of SKUs (three or four model variation s for each of its lines, such as MacBook Pro, MacBook, and iMac) and then look for comparable Windows machines, youll find that Apple bests the competition in some ways and not in others, but the pricing, overall, is surprisingly on par. Only a few years ago, it seemed like a no-brainer that Windows hardware was much cheaper. But if youre talking name-brand hardware, thats just no longer the case. On the other hand, if you search the Windows side first, youll quickly discover machines that in features and price fit in between the Mac SKUs. And in those niches, they represent very good values. So theres one answer to the question of whether Macs or Windows represent a better value: If one of those in between PCs suits your needs best, youd be paying an unnecessary premium to get a Mac instead. Lets look at some hard numbers. I started my research with top-of-the-line notebooks I spent an hour on Dells site trying to find the cheapest notebook that offered everything Apples $2,799 MacBook Pro 17 provides. That