Who does not know about Apple computers? Everyone knows something about it. But in this blog you will learn something more about it. We have covered strengths, weaknesses, opportunities, and threats of this company. You will only find application of SWOT technique in this SWOT Analysis of Apple.
If you are not sure of SWOT meaning, learn in this free course on external analysis from us. Before we go ahead with the SWOT Analysis, we have introduced Apple computers below. Click here to skip to the first section if you are interested in Apple’s SWOT only.
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About Apple Inc.
Apple Inc., previously known as Apple Computer Company, is a multinational company that deals in technological products. It is headquartered in Cupertino, California. The company was founded in April, 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne.
At the time of the writing, CEO of the company is Tim Cook, and the company is chaired by Arthur D. Levinson. In 2018, the company generated revenue of around US$265 billion, and it has more than 130,000 employees.
The company also has several subsidiaries. They are Anobit, Apple Energy LLC, Apple Sales International, Apple Services, Apple Worldwide Video, Beats Electronics, Beddit, Braeburn Capital, and FileMaker Inc. Apple has few flagship products – iPhone smartphone and iPad tablet – along with a list of various other products.
Apple Inc. saw unprecedented rise recently but not all was good all the time. In the 1990s, the company’s personal computers were not doing well, and it continuously lost market share. The major competitor that kept on snatching away its market share was low priced Microsoft Windows. This led to the hiring of Gil Amelio as the CEO who made several restructuring, reshaping, and product improvements.
More importantly, he brought Steve Jobs back into the company. From there on, things started to turn profitable for the company and we can see where it has reached now. Look at the graph below and you will get the idea:
The company’s revenue saw a dramatic rise after it released iMac, iPod and then iPhone, and since then it has not looked back. Now let us dig deeper into the SWOT Analysis of Apple Inc. in the following sections.
Strengths of Apple Computers
Apple computer is a strong company. There are several good things about the company. Strength is the first component of SWOT Analysis. Given below are five strengths of Apple.
Company has a strong brand among its consumers. The company is liked by many. Its brand is protected and defended by its fans. Its reputation is beyond any geographical boundaries. People from all over the world admire this brand.
Apple always innovate. It always tries to come up with something new every time it launches its product. It keeps adding new features to its phones, and laptops. Innovation has put the company where it is today. Many company came and lost the market, but Apple kept on surviving, only because of this. It follows strong innovative processes within the organization.
Customers of Apple are too loyal to it. They rarely move away to other brands. A strong fan base of the company ensures that more positive word of mouth occurs all the time. Apple has not only given a quality product to its customers, it has also helped its customer raise their social status. People associate high social status with the Apple products.
Profit margin can be seen from three angles. They are gross margin, operating margin, and net margin. The profit margin of Apple Inc. by June 30, 2019 was 21.5%. If you view the past 15 years of profit margins, it shows an overall rise. Check out the graph below:
Apple is the best at advertising its products, and it was quite evident since the days of Apple CEO Steve Jobs. Its product launches in the form of Apple events are observed worldwide. Company has produced several heartwarming TV commercials that touched million soul. Now you can see that many companies are following its lead in the way product launches take place.
Weaknesses of Apple Computers
But as we said in the beginning with an example of Apple in 1990s, not all goes well for Apple all the time. At present, it is also struggling on some dynamics. In the second component of SWOT Analysis of Apple, we will see some of its weaknesses.
Apple keeps its distribution channel exclusive. Not every distributor can get access to sell Apple products. The company allows only selected authorized sellers to sell the product. This limits its reach to the customers.
▸High end market dependence
Target customers of the company are majorly those who have bigger budget. This limits the products’ access to the mass market, thus negatively impacting the revenue generation. You can see that Apple not only maintains exclusivity in the distribution, it also keeps the customer segment exclusive.
▸Higher product prices
All apple products are sold at higher price points. Therefore, customers who can afford a Samsung with almost same features at half the price cannot purchase an Apple product.
Unlike other companies, it has fewer key products in the market. This puts the company in a dangerous situation as if a slip in demand of one or two product may jeopardize its future.
▸Third party incompatible products
Company’s devices have their own closed ecosystem, whether it is Apple iPhone, iMac, or iPod. If you purchase Apple, then you cannot expect external devices or software to work with it. This reduces flexibility of the product.
Opportunities for Apple Computers
However, company is still thriving, and there is a long way to go. Ups and downs in the internal and external environment takes place all the time, and it brings several opportunities as well. Three opportunities for Apple Inc., under third component of SWOT Analysis, is given below.
▸Higher sales with rising demand
The company can focus on raising the demand of its product by making changes in its product pricing and promotions. It can make effort to further reach to the geographies that are still inaccessible, and reduce the product price to an affordable level to that market.
▸Expanding distribution network
Brand image of the company can get it wide access to distribution. It can extend its reach to the remotest of the geographies to make it product easily accessible to the customers. Now riding on the wave of technology, the company can reach out to its customers through online eCommerce channels as well.
▸New product line development
New products can be launched in the market to strengthen its presence. Sale of product cannot be doubted due to the brand image and loyal fan base, provided that the company gives out a useful product to the market.
Threats for Apple Computers
Amid all these opportunities in the market that you read in the previous section, there are some threats as well. In the fourth and final component of SWOT Analysis, we will see five threats that may hamper company’s growth.
▸Growth of Android
Android is riding the smartphone wave and in all smartphone brands, except Apple, you will find some version of Android operating system running in it. And the way market is moving up, it seems Apple has to do something about it else it may end up losing its customers to Android. Look at the huge rise of Android OS in the past ten years in the graph below. Growth of iOS is nearly stagnant showing same pattern throughout.
New technologies come out on the block every few months, and keeping up with the changes has become a quite tedious process. Every revolutionizing technology brings with it a challenge for existing companies. So either Apple has to keep coping with it or perish!
In the past few years, particularly since iPhone, Apple has not come up with any revolutionizing and paradigm shifting technology. Smartphone products in the market now have more or less similar technologies and features. It seems Apple is surviving only because of its image and fan base.
Competition has grown rapidly in the past five years. Around the world Chinese technology companies are doing far better than Apple or even Samsung. Take a look at the graph below. It was the scenario of Chinese smartphone market in 2017 and 2018. Apple and Samsung were on the last line.
▸Rise in labor costs
The labor costs are rising in countries that used to be low cost like China. Apple has its manufacturing unit in China, and the increased labor cost is likely to affect the product cost. And this increased product cost will eventually burden the customers or it will reduce profitability of the company.
Overall, SWOT Analysis of Apple shows that the future scenario of Apple Computers does not look bright. It needs to come up with some right decisions, and few innovative products to keep up with the market. The role of management will be crucial in stirring this big ship towards its vision and mission. We hope you liked our SWOT analysis.