Apple SWOT Analysis

Apple is a consumer electronics company which operates in hundreds of countries around the world. The company was founded by Steve Jobs and Steve Wozniak in 1976 where they produced a computer in a garage. The company has grown greatly since then but only gained worldwide popularity after the release of the iPhone. The share price of the company has been fairly stagnant up until that point, until it rose to make the company the most valuable company by market valuation.

Strengths

Innovation is the key to the company’s success. It has created unique products which have been ahead of the curve such as the iPhone which brought touchscreen technology to the mainstream. Other touchscreen phones were available at the time, but the products did not look appealing and did not have a good operating system. Other products like the iPad were created by Apple which also brought the market forward, in terms of design and in competition. This corporate culture towards research and development into new product ideas and thinking outside the box has created great goodwill within the company.

New way to access your phone and potentially pay for things.

One of things that Apple has been able to do with the successes of their product ranges is to collect a lot of money in cash. The company has over $100bn in liquid cash available on the balance sheet. The money has been criticised by its corporate investors for not investing it in companies or to return the money via dividends. Apple has started to take this information on board only after the death of Steve Jobs and has purchased companies, issued dividends and underwent share buy backs. This had inflated the share price more and also allowed Apple to use acquired companies technologies in their product range such as the Touch ID on the latest iPhone 5S.

Branding and brand loyalty is one of the best things that the company has going for it. Existing customers have been able to switch from on product to another product very easily due to the operating system. This has created a type of loyalty with consumers which is an excellent for Apple to keep and grow over time while it’s competition, particularly Android based smartphones, have found it hard to take some of this market back. The brand and the logo itself of the company is known globally by most people in the world and would be able to name at least one product made by Apple.

Weaknesses

The way in which the company prices it’s products can be seen as exploitative. The costs of manufacturing for the products are several hundred dollars less than the recommended retail price. This is the method in which the company has amassed its large cash reserve. The fact that the company has also been criticised for having questionable work practices in its manufacturing factories in China is also a problem which needs to be constantly monitored. These problems combined make it harder for the company to truly have a positive influence on the social aspects of the business.

How much premium per phone is too much?

The yearly product offerings of the iPad, iPhone and some MacBook products is a cause for concern for consumers and Apple also. When new products are expected to be released, Apple experiences a major decline in sales for that particular product which is expected. In most instances, consumers will be polarised in their opinions of new releases. Some customers can justify making a yearly purchase of a gadget which is useable just to get faster processors, while other consumers may not agree and find a product better for them elsewhere. Recently, the iPhone segment of the company has innovated in some aspects such as speed but lacks features which is found on various other mobile products made by competitors. Features such as near field communication (NFC) and better resolution cameras have been present in products other than Apple smartphones. Apple need to ensure that they can innovate enough on a yearly basis to justify a new contract renewal or upgrade from older handsets.

Opportunities

One of the main things Apple has been criticised about with the iPhone 5C is that the price point is too high. The greatest opportunity for Apple as a worldwide company to do is to create a lower priced budget smartphone to cater for the biggest developing markets in the world, China and India. Analysts expected Apple to price the iPhone 5C as a budget phone for the developing market, but was priced too high for that to be real. Under the new leadership of Tim Cook, Apple can create a budget smartphone for the developing markets to create brand loyalty from a younger age or to follow the wishes of Steve Jobs which is to be a premium priced consumer electronics company.

Growth is clear in the emerging markets. Why not cater to them?

There are various things the company can look into when choosing its future options. Reinventing existing products is the most common way in which all companies retain and possibly generate streams of revenue. Apple purchasing PrimeSense, which co-created the Kinect sensor for the Xbox 360, can yield future benefits. The way in which Apple could use this acquisition is to use the sensing technology in products like the rumoured Apple Television set or the Apple TV set top box. This would make the products have a unique selling point separate to conventional television sets or set top boxes.

Threats

Threats are usually considered to focus on the external factors, in the case of Apple, it’s the competition. The largest smartphone manufacturer Samsung is making it harder and harder for Apple to keep its customers. This is mainly done by the different features samsung offer on their smartphones. Even Nokia can boast the fact that they are creating smartphones for the developing market with their Asha range of phones which are available out of contract for a cheap price relative to the cheapest Apple product. Sony can use their imaging division to create smartphones with great cameras to entice photographer enthusiasts that want something compact which still produce compact camera quality images.

New features from old players.

The rapid movement in technology is a threat to Apple as well as a strength. If the industry moves faster than the company, Apple will lag behind. This is not the case but there can be potential for a rapid change in the way which products are used and interacted with in the long term. This would need to be considered when looking at the disposable incomes of its target market and how that will change as the global economy improves.

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