Apple Computer has had both successes and failures throughout its 30-year history. The growth and development of the company have been heavily influenced by its leader, Steven Jobs. Despite highly successful product launches, Apple has also faced significant setbacks. During Jobs’ absence from the organization, Apple went through a challenging period that raised doubts about its survival. In fact, in 1997, Michael S. Dell, the CEO of Dell Inc., even suggested shutting down the company.
However, instead of being a pioneering force, Apple has thrived by refining existing products. They have made portable music players and notebook computers more stylish and functional. Furthermore, Apple’s current focus is on dominating the home computer market with their aim to create a digital lifestyle centered around the home as a multimedia hub.
Apple focuses on various segments, including home users, small and medium-sized businesses, the education sector, the younger generation, and creative individuals referred to as “Mac users.” Apple retail stores allow consumers to interact with visually appealing products and software. Their product line comprises Macintosh, iPod series, iPhone series, iPad, and iMac. Nonetheless, it is noteworthy that two of their products – Mac Mini and Apple TV – fell short of expectations. BACKGROUND
Apple is a publicly owned company located in Cupertino, California. It mainly concentrates on the Mac portable personal computer line within the United States as part of its Americas division. With a significant presence in the broader technology sector, particularly the personal computer industry, Apple designs, produces, and sells personal computers, mobile phones, portable digital media devices, software, and associated peripherals and accessories. The company globally distributes its products through various direct sales channels like online and retail stores alongside wholesalers and resellers. Apple’s strategic focus revolves around achieving extensive differentiation.
Apple stands out by providing outstanding quality, superb design, and personalized support. Their strategy is comprehensive, catering to a wide range of customers including novices and advanced users with unique needs. To achieve cost savings through economies of scale, Apple delegates main manufacturing responsibilities to third-party original equipment manufacturers (OEMs). However, they maintain control over design elements to effectively attract and retain customers. The company excels in industrial design and user interface, prioritizing these areas to deliver a product that seamlessly combines elegant aesthetics with ergonomic usability.
Apple’s distinct value proposition, supported by prices that are higher than average, derives from their easy-to-use devices and personalized customer service.
Mission Statement: Apple’s goal is to provide the best personal computing experience by offering innovative hardware, software, and Internet services to students, educators, creative professionals, and consumers worldwide.
Environment: In a market characterized by intense competition, Apple encounters rivalry primarily from Microsoft and Linux in the realm of operating systems.
Apple is being challenged by several computer hardware manufacturers, such as Sony, Asus, Dell, HP, and Toshiba. These competitors offer cheaper hardware options that can impact Apple’s sales negatively.
Regarding the iPod, Apple also faces competition from other MP3 player brands like Sony and Creative. Furthermore, Apple has rivals who offer similar products across different devices and vendors. For example, YouTube competes with Apple’s streaming video service iTunes. In terms of suppliers, Intel supplies processors and computer memory to Apple while Microsoft provides Office for Mac.
The Apple Store on iTunes relies on suppliers from the entertainment industry, including EMI, Warner, Disney, Fox, Pixar, and others. The behavior of consumers can affect Apple’s sales as they share music without paying through peer-to-peer networks and use custom firmware to get free apps. Furthermore, retailers may ask for better terms or lower prices. In the past ten years, the consumer technology sector has seen significant growth with PDAs evolving into advanced ‘smart phones’ that act as suitable replacements for PCs.
The rise of new technologies has caused a decline in PC sales, but it is unlikely that smartphones like the iPhone or Blackberry will greatly affect the importance of PCs in the near future. This shift in consumer preferences for digital devices allows PC manufacturers to expand their product offerings, a path many are already taking. Through conducting a SWOT analysis (strengths, weaknesses, opportunities, and threats), Apple’s success as a company becomes clear; its profits for Q2 2005 reached $320 million primarily due to increased sales of the iPod music player.
The sales of Macintosh computers have been boosted by their positive brand image, leading to the opening up of new market segments for other Apple products like the iPod. The strong sales of Apple’s notebooks significantly contribute to the company’s overall income. As a globally recognized and respected IT brand, Apple has a loyal customer base that strongly supports the brand. This dedicated customer base not only attracts new customers but also ensures returning customers who purchase additional Apple products and services, including the iPod.
Reports indicate that certain models of Apple iPod Nano have defective screens, which the company acknowledges and is replacing. Earlier versions of iPods had battery problems, for which free battery cases were provided by the company.
The music industry is pressuring Apple to increase the price of its music downloads.
With an 82% share, Apple dominates the US downloadable music market. Through iTunes, they have sold millions of iPods and hundreds of millions of songs. This success has caused concern among music producers, but Apple remains determined to maintain its position. In 2005, they made a significant change by switching from IBM to Intel as their chip supplier, which raised consumer questions.
Now, Apple has the opportunity to expand its iTunes technology into mobile phones through the Rokr phone developed by Motorola. The Rokr phone features a color screen, stereo speakers, and a camera system. It also allows access to Apple’s iTunes store for managing music downloads and even pauses the music when receiving calls. With emerging technologies and strategic partnerships forming, Apple envisions further growth.
Podcasts are radio shows that can be downloaded from the Internet and played back on iPods and other MP3 devices. They can be conveniently subscribed to for free, but revenue could potentially come from paid subscriptions or other download sales. The intense competition in the technology market poses a significant challenge to IT companies like Apple. To maintain its competitive position, Apple focuses on extensive research, development, and marketing efforts.
The popularity of iPod and Apple Mac is contingent on demand, meaning it will be impacted if economies falter and demand decreases for their products. Moreover, in the rapidly evolving IT consumables market, there is a significant effect of substituting products. While iPod and MP3 are dominant today, just yesterday it was CD, DAT, and Vinyl that held sway. Tomorrow’s technology may be entirely different, with wireless technologies potentially rendering physical music players unnecessary. In 2005, Apple successfully sued Bloggers, compelling them to disclose their sources of information that revealed details about upcoming Apple products.
Apple’s own employees were suspected of leaking confidential information about their new product, Asteroid. The three individuals who were prosecuted were all owners of Apple tribute sites and avid fans of the company’s products. The blogs containing the leaked information had been published on their sites, and they were compelled to disclose their source. The ruling prioritized commercial confidentiality over individuals’ right to free speech. Apple is at risk of leaks that could potentially impact their profits. Furthermore, in the commodity PC market, there is a continuous downward pressure on prices, which diminishes firm profitability.
Developing a unique brand image can help distinguish the firm from competitors and minimize the impact of fierce competition, thereby ensuring higher profit margins. Apple should prioritize building strong connections with suppliers due to the limited availability of essential components in the PC manufacturing industry. Cultivating close relationships with suppliers is crucial. Instead of solely focusing on finding the cheapest supplier, fostering a collaborative and exclusive business partnership will enable Apple to mitigate the suppliers’ influence and secure favorable prices for components.
Despite the PC market becoming more crowded with competitors and customer saturation, other areas of consumer electronics are continuing to grow. Developing complementary products in other categories allows for access to a wider customer base in markets with less intense competition, resulting in broader sources of revenue. According to Technology News, Apple’s competitive advantage is believed to stem from its exceptional marketing techniques. Rob Enderle (2004) stated that the company has a profound understanding of what excites people about its products and successfully executes on that vision.
Apple, unlike other PC brands like Dell or HP, doesn’t emphasize the size of the internal memory or the picture quality. Instead, Apple focuses on catering to the lifestyles of its consumers. Their advertising approach aims to make consumers believe that their lives will improve with the purchase of Apple products. Unlike Dell or HP, which have a more practical target market, Apple embodies the motto of “work hard, play harder.” Additionally, the sleek and elegant look of Apple computers adds to their appeal.
The visual appeal of Apple products sets them apart from most PCs in the market, which works in their favor. To continue growing and succeeding, Apple needs to focus on several key aspects. These include maintaining a stable commitment to licensing, seeking economies of scope between media and computers, and becoming a learning organization.
Although Apple has already made a commitment to licensing, they should consider exploring other forms of strategic alliances. One possibility is an equity strategic alliance that could provide Apple with additional competencies. A joint venture would be an effective way for a company like Apple to achieve this.
While pushing their new line of media-centric products, Apple should also ensure they do not lose sight of their computers. Steve Jobs plays a crucial role for both competitive advantage and risk at Apple. He is closely associated with the success of the company and holds significant equity interests in both Apple and Disney. If he were to step down from his leadership position, it would create uncertainty among both the market and consumers.
Despite the absence of Steve Jobs, Apple must adjust and expand to ensure its survival. Given their current decision-making and actions, we anticipate a bright future for the company. By promptly addressing any challenges they encounter, Apple can seize this opportunity to outshine their competitors and achieve success.
REFERENCES
These html tags and their contents contain links that were accessed in September 2011:
– http://investor.apple.com/faq.cfm?FaqSetID=6
– http://marketingteacher.com/swot/apple-swot.html
– http://www.businessweek.com/magazine/content/06_06/b3970001.htm
– http://www.marketingminds.com.au/branding/apple_branding_strategy.html
– http://www.scribd.com/doc/24134877/Strategic-Analysis-of-Apple-Inc-Brian-Masi
– http://www.technewsworld.com/story/33061.html
