Apple Computers Inc – A SWOT Analysis
Apple’s June 2005 quarters results witnessed a profit of $320 million due to its iPod music player sales. Being one of the earliest computer suppliers, Apple has its own market share in Macintosh computers. IPod sales induce the consumers to buy into the other products of Apple brand. The lion’s share of its sales is dominated by the sale of its notebooks. Due to its strategic quality products and advertising in the past decades, Apple has its own market share.
Not only new customers are being attracted by the variety of the product being offered by the Apple but it also retains its existing customers as they look for new products and services from Apple. Apples iPod sales have touched new heights thus about 28million iPod digital music players have been sold since their introduction in 2001 and it has offered more than 600 million songs through its iTunes music stores. This has accounted about 80% of all legally music downloads in the US.
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There is a tremendous pressure from the music producers to increase its retail price on the music download file as these producers enjoy lion’s share of income from iTunes than the sales of original CD sales. But the Apple is determined not to increase its retail price as it may distress its music sales in the long run. Apple’s net profit for the quarter to 24 September 2005 rose to $ 430 million from $ 106 million a year ago. Revenue increased to $ 3. 88 billion during this period. Apple also sold 1. 4 million desktop and note book computers in the quarter, up 48% from the last year or triples the PC market rate. As one another major business strategy, Apple has switched to Intel for its chip requirements disbanding its long standing chip supplier IBM. Though some look this as a commercial weakness but it has brought number of advantages for maintaining its trade reputation. The recently introduced Apple “Mac mini “ is the lowest priced personal computers and is also smallest and tiny with just two inches high and also it’s price is very cheap costing about ?
Thought it has many feathers to add to its cap but it is being criticized that it is being offered with out a key board, mouse and monitor. But this is one of the sales strategy to attract the consumers there by offering at a very cheap price and the other necessities like key board, monitor are available at extra cost. Likewise iPod shuffle comes with cheap flash memory and either 120 or 240 songs can be stored in it. Apple is also offering wireless mobile lab which is loaded with iBook laptops, which is the favorite of many schools in US and other parts of the globe.
One another attractive product from Apple is the Quick Time. QuickTime movie files can be accessed through power point using a hyperlink. However the Quick Time player must be installed on the computer in which movie will be displayed. But one of the disadvantages is that QuickTime movies are not as PowerPoint friendly on the windows operating system as they are on the Macintosh platform. In the music industry ,songs were sold for 99 cents over iTunes have limited profit margin and are regarded to be almost a loss-leader –used by Apple computer to generate sales for the iPod players . ( Cuneo et al).
One another value added product from Apple is the Podcasts which are downloadable radio shows that can be accessed from the internet and then enjoyed back on iPod and other MP3 devices at the convenience of the music lovers. This is a free service and finally revenue could be generated from paid subscription services or through income created from sales of other downloads. Likewise, Apple III had lot of tribulations when it was introduced and several hundred computers had to be withdrawn from the market and replaced with an enhanced Apple III. This has shattered the customer’s confidence on the Apple brand computers.
KEY SUCCESS FACTORS: Apple had lot of first to its credit like marketing economical RISC chips and early positioning for archetype shift in programming towards OOP. The foreseeable shift towards OOP starts to change the nature of software development and Apple is poised to take an early lead and the ensuing Copeland OS will make momentous of OOP protocols and itself tender enhanced RISC performance that will advance the gap between PowerPC chips and Pentium Processors. Further its strategic business associations with Microsoft, Sony, AT&T, Siemens and Motorola has opened up new vistas.
The entry of Apple in the server market apart from mainframe and workstation will definitely help to cut cost so as to maintain profit margin and to stand in the market competently. WEAKNESS: Apple’s popular iPod Nano is having a faulty screen. Apple has accepted this and commented that a batch of its production has problem with its screens which tend to break under impact. As such, Apple is now replacing all the defective supplies. Earlier, there were complaints as regards to faulty batteries and this had been rectified by replacing the same with new ones.
One can see about 250 complaints in ConsumerAffairs. com database against iPod and the most popular complaints are the failure of the battery to hold a charge and the screen turning to be blank. 6 Customer support is lacking as it was evidenced in the case of product default that existed in iPod Nano and supplies with faulty batteries. The failure of the product ‘Newton ‘ which aimed to capture the market for Personal Digital Assistant ( PDA’s) exposed the weakness on the part of Apple’s management for techno-gadgets and leadership is short of in the area of critical review of product introduction .
During last decade, there were several reorganizations in the Apple and change in the top leadership like John sculley, Steve Jobs etc and this has made an impression that Apple lacked the apt corporate structure that would have averted its top leaderships from taking the company beneath exceptionally perilous path. Failure of the top management to take sharp decisions made corporate buyers to feel that Apple’s future was very gloomy and had created a notion that Macintosh computers didn’t have a bright future but in the reality the users felt more comfortable with Macs.
Consumers felt that Macintosh may create future problem due to its technical isolation. To obviate this, Apple has built in Ethernet communication and full network compatibility with Novell networks in alliance with Houdini and Soft Windows. Thus Apple suffers from vision-fatigue and it has become necessary to take off the company on a pragmatic approach of arrogance reduction and cost cutting measures. As regards to the licensing of Macintosh OS, this has always been under criticism and some feel that it is too late and the Apple should have never resorted to this.
It was commented that Apple might have licensed its Mac OS so as to finance the launching of Power PC. NEW BUSINESS OPPORTUNITIES: Apple is contemplating to offer the music through mobile phone . For this new venture, it has tied up with the Motorola and a new mobile device namely The Rokr mobile phone was developed by Motorola. Supporting services for this new venture through its music stores is being offered and music downloads to the mobile handsets are viable through USB.
Apple is expected to introduce new video playing version. Apple should offer more realistic services as that of Timex watch which allows loading data’s into the watch face from regular computer screen. Apple should aim to deliver its product on time and enhance its corporate image among the consumers. Apple Inc in its efforts to introduce novelties has announced that it has released an iPod capable of playing videos, evolving portable music player of choice into a multimedia platform for everything from TV shows to music videos.
Further Apple has introduced 17 and 20 inch iMac two newer, slim models of the all-in-one iMac desktop computer with a built-in web cam. The iMacs allow users to browse and access their music , video films and photos from one corner of the room , as far as 30 feet away and it also carries new feature namely “ Photo Booth “ which permits consumers to take quick snapshots and forward them to others via e-mail’. THREATS: Cut throat competition is the biggest threat to the Apple.
Once if you become market leader then competition envelops to futile to your further efforts for the growth. Apple is continuously engaged in the improvement of research and development programs and marketing programs. Competition from IBM and Microsoft has compelled the Apple to enhance and introduce new products. The investment in non voting shares of Apple Computers Inc in about $ 125 million by the Microsoft postulates a strategy to swallow another potential competitor. Some other view that it helped the Apple to come out of the financial problems it was facing.
Apple has to face the worst challenge from the Microsoft as it has already released windows 2 003, windows explorer 7 and likely to release windows vistas. Apple as a measure of defense should engage in the advertisement war illuminating that those who buys Pentium not only opting for out-dated CISC technology but in an outdated operating systems which looks more like a Macintosh and not an operating system that fetches Pentium performance up to the mark of RISC. Apple is relying more on the IBM and Motorola as its business partners as the IBM is the main supplier of RISC chips.
If the trust is broken by the business partners, Apple may have to suffer financially and technically. Early in 2005, Apple declared that its honey moon with the IBM as chip supplier was no more and it has remarried the Intel to source its chips. In 2005, some suspected Apple own employees had disclosed confidential information about their new asteroid product. In a legal battle against these bloggers, Apple was able to prosecute three individuals and successful to name the sources of information that pre-empted the launch of the new Apple product.
As result of these, Apple is susceptible to leaks that could reduce their profits. Some critics comment that since major part of the Apple manufacturing facilities are located in the earth quake prone areas of California. If there is an outbreak of an earthquake with severe magnitude, it could cause devastating blow to its design and marketing facilities. As the IT industry is fast changing due to innovations and technology improvement , Apple may face the grunt of it and has to gear up to the situation else it could loose the race .
Today, iPod and MP3 rule the market and if one can recall the role played by CD, vinyl and DAT during past and has become outdated today. Apple has to remember that tomorrow’s technology may of a complete sea change. Microsoft Inc is going to unleash its rival player probably during fag end of 2006. The devise will have special add on features like WiFi wireless capabilities which iPod doesn’t have. The new devise of Microsoft may help the consumer to upload and download the files instantly and in public places like airports.