This paper provides important information on Apple Inc, a company that manufactures a number of consumer electronic products. The information is relevant for competitor analysis as well as for business intelligence needs. In this study, Apple’s key internal and external factors are analyzed using a SWOT analysis. It is important for competitors to understand these factors which are valuable for the creation of strategies to compete with Apple effectively. This article provides some important recommendations on effective strategies that can be implemented when competing with Apple.
Apple Inc. is involved in the designing, manufacturing and marketing of personal computers, PCs together with their related software, components, networking utilities (including servers), portable mp3 and mp4 players among other accessories. The organization’s product portfolio consists of excellent offerings such as Mac operating systems, iPads, iPods, and iPhones. In addition to Mac OS, other software applications include iLife and iWork. In addition to these Apple develops internet applications such as Safari and QuickTime. Apple’s operations are mainly in the United States with headquarters located in California, Cupertino; nevertheless Apple’s products are sold worldwide. In 2007, the company generated revenues of about $24,006 million; a 24.3% increase from 2006. The increase in revenues was attributed to increased demand for Mac OS and internet downloads of digital products. In the same year (2007), Apple’s operating profit was $4,409 million, a 79.7% from the previous year. Apple’s net profit for 2007 was $3,496 million, up by 75.8% from 2006. The recent (2010) launch of the iPad was revolutionary. In less than three months of its launch the tablet had sold over three million iPads. Thus in the third quarter of 2010, Apple had sold about 3.27 million iPads, and it has been estimated that last quarter’s sales will range from 3.8 million at minimum and about six million units on the upper side. This implies that the company is gaining foot steadily in the digital market hence researching on the company gives insight to potential competitors on what Apple is doing which they are not doing or probably can do better.
SWOT Analysis of Apple
Apple’s strong brand loyalty guarantees return customers. As is the nature in business, it is more costly to attract new customers than it is to keep existing ones. Apple’s positive brand perception has significantly contributed to increased sales of Macintosh computers. The iPod on the other hand guarantees the gives the company entry in other segments of the market that in turn purchase other products. The sales of Apple’s notebooks are also doing well, contributing to its income. The recent Launch of the iPad was revolutionary. The company has sold over 3.27 million iPads, and it is estimated that sales may go as high as 6 million in the last quarter.
Strong and reliable Operating System
The company has managed reliable OS (Mac OS) which has been reputed as virus free. The boost for Mac sales can be attributed to flops in Windows Vista. The company offers what most people really want most of their PCs, reliability combined with the ability to create documents of various types
Easy to use and intuitive gadgets
Consumers want a product that is well designed and easy-to-use. Apple’s products such as iPods have excellent designs with modern technology such as optical pads and digital surround ear phones making them very attractive to customers. The iPad on the other hand runs on Apple’s iPhone OS and has a built in Safari browser. The tablet is very easy to use with touch screen technology that allows for easy and quick opening and closing of applications. The iPad’s sleekness is as a result of streamlining and debugging of iPhone OS and iPod touch technologies. This is one of the e biggest advantages that Apple has over its competitors whose OS are brand new (untested). Hence, they have a high probability of experiencing glitches.
Small product footprints with stylish designs
The company has employed experts who carry out a comprehensive life cycle analysis of a product before developing a product’s packaging that’s is not only small and strong but also light so as to give to customer’s value for their money. This implies that, Apple keenly focuses on product design and innovation with the intention of saving space.
Most (if not all) of Apple’s products connect and/or work with each other. For example one can be listening to an Apple Hifi in their living room while the music streams wirelessly from a Mac Pro located in a study room via Airtunes to an iPod that is connected to the HiFi. All these functions work flawlessly; this is what technology consumers want.
Mac OS lacks gaming capabilities
Mac OS unfortunately supports only up to OpenGL 2.1, this is far too low with regard to the fact that games require DirectX 9, together with 3D graphic accelerator. The main consumers in the digital market are young people (the dotcom generation) who want to have virtually everything on their PCs, from serious academic friendly applications to pure entertainment. Lack of horsepower to run games on Mac OS closes of a potentially lucrative market which gives competitors (Microsoft) a big advantage.
When one buys a Mac PC, they face challenges since these computers are simply non upgradable. Unless one is going for a Mac Pro, which is rather expensive and has its limitations too, such as it only supports 4 graphics cards which are not the best in the market.
Allegations of Apple iPod Nano faulty screen together with iPod’s faulty batteries have to some extent dented the company’s image. Apple defended itself by citing that the screens broke under impact, and they would replace all faulty items. Such problems were experienced earlier when iPods had faulty batteries yet the company was offering free battery cases.
Limited product range
Apple’s products are limited; the company mostly relies on high-end consumers. Manufacturing of Low-end products, which are relatively cheaper for the customer can attract customers to their stores who may end up purchasing a computer that, fetches profits for the company. However, in as much as “the bait-and-switch” strategy may not work for Apple, customers would even be happier if they can purchase all a cheaper iPhone and an expensive Mac book.
Apple can branch out and collaborate with more software developers for more applications support and not rely on Windows. Product diversification should be combined with price reductions while at the same time ensuring that high quality is maintained. It is necessary for Apple Company to pursue this particular opportunity in order to attract more customers most of whom are willing to purchase its products but cannot afford.
Competitor’s negative publicity
The negative public perception of Microsoft’s Windows Vista is a good opportunity for Apple to intensify its campaign for OSX as a better option for consumers.
Upgrading of operating systems
The operating systems market is somehow saturated days, with technologies such as Core i7 (A Core i7 PC outperforms the best iMac) being used by its competitors, Apple will need to take advantage of its innovative power to come up with even superior PCs.
Provision of better warranty support
The company has had poor publicity with its warranty; Apple’s warranty purchase plan is not competitive. The company offers 90 days standard service while other companies like Microsoft offer a 1year warranty. The company can offer better warranty to escort the success of its iPhones and iPads as a possible stepping stone to attract new users.
Acquisition of competitor business
Apple’s cash balance is a noteworthy feature in its financials. The company has more than $23 billion in terms of cash and near cash assets. This cash can be used for future acquisitions without seeking external financing. The company can embark on an acquiring online music companies and mobile advertising companies among other companies that market its products. This can boot its sales revenues.
Increased competition on mobile products
Companies are selling products similar to the iPhone, this include Blackberry, Android and Samsung among others this reducing Apple’s exclusivity. The customer plays a significant role in a competitive environment; his/her bargaining power puts Apple Inc. in a tight spot since customers are very sensitive to price changes.
Economic Volatility can result in the dipping of Apple’s markets incredibly fast since consumers lose their purchasing power making them unable to purchase ‘smart’ products. The recent global economic crisis dipped demand for higher-priced digital items. Because Apple does not offer low-end products, consumers are most likely to opt for cheaper alternatives.
Technology is changing very fast, yesterday it was all about CD players, today everyone is either with an mp3/4 or with an iPod or both, tomorrow is uncertain. Current physical gadgets are likely to be replaced with wireless technologies. The fast change in technology means that Apple should be well endowed with resources to spend on continuous R&D projects.
The improving Competitors technology
Microsoft’s product Windows 7 has moved in to mend the errors of Vista and coupled with the cheaper prices of PCs as a result of competition, Apple’s market share is challenged even further. The timely introduction of Windows 7 has made sure that consumers that were considering Mac OS are retained.
Apple has enjoyed success as a result of an excellent management team under the leadership of Steve Jobs (for more than 12 years) who is also a co-founder. Steven is an obsessive visionary who has mastered every itsy-bitsy of Apple’s products and operations. In as much as Apple is not short of other excellent people but it is hard to imagine another CEO with an obsessive and impulsive personality who can do Jobs’s job. A new CEO coming into apple means an overhaul of the entire leadership’s operating system.
Apple has been very profitable in its business platform has been that, while Apple is making huge amounts of money (see above link), most of its developers are not. Most of the apps currently selling on the Apple iPhone platform are being distributed for free. The original business plan for developers had them selling apps for $9.99 then $4.99 and now $.99. To win against Apple, another platform (say, Google with Android and HTC) would need to create a viable way for developers to actually make money. Then, the source of differentiation (interesting, compelling apps) would be drained away from the Apple platform and the competitive play would deflate pretty quickly. I’m not saying this is easy but developers will of course respond to a better financial model and there is plenty of money to be made in a viable mobile ecosystem. Google has the market power, technology prowess, and relationships within the web world to create it. Unlike Apple’s closed vertically integrated system, Google could establish an amazing open garden. If I were a developer, I would form a consortium of peers, to have a whiteboard session with Google to do just that. 2 years from now, we’ll look back at the iPad announcement with a different lens.
Implementation-explain “HOW” to implement your strategies, do not just tell us what to do, you need to explain the steps needed to accomplish your goals;
However, the cautious approach may very well backfire as well. Coming late to the tablet party–possibly a couple years from now–gives rival chip manufacturers plenty of time to establish a strong stake that may be insurmountable for AMD.
2) Reactive Mechanisms and specific
3) quantitative and
4) qualitative Measures.
If you were trying to take out Apple or beat them in the market, what would you do? Well, there are weaknesses in their position. First, they are now using superlatives. When you really have a revolutionary product, you don’t have to say it’s revolutionary. See Apple’s recent positioning for the iPad: “magical”, “revolutionary” “unbelievable”. 15 words, 4 superlatives.
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