Business Analysis Part 1: Apple Swot Analysis

SWOT Analysis: Apple, Inc.

MGT-521

August 27, 2012

SWOT Analysis: Apple, Inc.

Company Overview

High school friends and college dropouts, Steve Jobs and Steven Wozniak both ended up working in electronic in Silicon Valley. In 1976, Steven Wozniak designed the first Apple computer. Apple was the first personal computer to include color graphics. By 1980, Apple employed several thousand employees and was beginning to see their product internationally. In the years that followed Apple experience growing pains with failed projects and management struggles. Competitors such as IBM and Microsoft began to give Apple stiff competition and loss of market share in the late 80's. Apple continued to release new and innovative products, but was struggling in the mid 90's to keep up with demand, and then the release of Microsoft Windows 95 struck another blow. In 1998, Apple debuted the first of its now popular "I" devices with the iMac. Since then we have seen products that have revolutionized our world in computing and electronics with the iPod, the iPhone, and the iPad. (Apple-History, 2012) In October 2011, Steve Jobs, founder and innovator, died due to health problems.

Strengths

Apple is a strong brand name and is internationally recognized for their innovation and quality products. Apple has a strong customer based and strong customer loyalty. "Apple also has the strongest brand loyalty out there, matched by none. Once you join the Apple family, you stay there forever" (Turcan, 2012). "Apple has a presence across main digital media devices of computing and mobile communications" ("Apple Inc. SWOT Analysis," 2012). Apple's use of vertical integration allows the users of their products to share information and applications across multiple devices. Apple's strict control over their operating systems helps to keep it stable and less vulnerable than other operating systems. The combination of vertical integration of devices and the ability of the customer to experience uniformity in the interfaces of all of the devices from one generation to the next also helps Apple to maintain a strong market share. The Apple Store allows potential customers to experiment with and experience the products before committing to purchase. Apple's Itunes accounts for more than 70% of all digital music Sales (Agnello, 2012). "Apple's strong product line up has been responsible for the company's industry leading growth rates" ("Apple Inc. SWOT Analysis," 2012). Apple is a leading design innovator that tends to stay ahead of trends because they invest a great deal into research and development. Recent developments in applications such as iWorks now make Apple products increasingly compatible with Microsoft documents. Apple also recently won a lawsuit with Samsung over patent infringements which could hurt their Samsung product sales as well as other competitors (Martin, 2012).

Weaknesses

"Currently the company's revenues and growth rates are largely dependent on iPhone and iPad product lines" ("Apple Inc. SWOT Analysis," 2012). Dependency on just a couple of product lines is a huge business risk, especially in fast paced technology driven industry. In their second quarter, the iPhone and iPad accounted for 75% of Apple's total revenues, and the iPhone and related products and services accounted for 77% of those revenues (Apple Inc, 2012). Apple depended a great deal on the vision and leadership of Steve Jobs until his death. Apple products tend to be more expensive than the competition which may push price sensitive customers toward their competition's lower priced models ("Apple Inc. SWOT Analysis," 2012). The iPhone only competes in the Smartphone market, while competitors have products at all levels in the mobile phone market.

Opportunities

"According to the most recent industry estimates, China is to surpass the US as the largest market in the world for smartphone sales. China, India and other similar emerging markets have smartphone penetration of about 20-30% which when compared to 60% in developed countries like the US, indicates the potential for smartphone manufacturers. ("Apple Inc. SWOT Analysis," 2012). "As a percentage of global sales [for smartphones], those in emerging market countries have quadrupled in the last five years for Apple, from 7% to 28%. When Apple reports its earnings on July 24, revenue from China is expected to be on a course to more than double this year to $20 billion. As impressive as this is, it is only the beginning for Apple" (Yates, 2012).

"Apple has long hoped to create a more complete television device as a way to create a foothold in the living room, after enjoying huge success with its mobile devices such as the iPad and iPhone" (Laughlin, 2012). Currently Apple TV only streams HD Video to televisions from your iTunes account, but Apple hopes to partner with cable service providers like it has with mobile phones to deliver live content through the device (Lawler, 2012).

Digital music sales and application sales through iTunes and the App Store will continue to be a growth opportunity for Apple. Downloads of applications are surpassing music in the digital media arena (Dediu, 2012). With downloads increasing year over year, this is a great opportunity for Apple to capitalize on.

"Apple's products complement and complete each other. Buy an iPod, and you can download music via iTunes. For the average user, most Mac programs are produced by Apple. This sort of control over the entire user process, from hardware to software, strengthens customer loyalty. Apple users generally don't have to stray to find products and solutions they want" (Compare Business Products, 2009). "All of Apple's products have the same basic architecture. Because of this consistency, customers who already own Apple products have a good idea of what they'll be getting before they make a purchase. They know that it will be easy to adapt to new hardware, and this makes them more open to making a repeat purchase" (Compare