Apple Computers Inc., an American-based multinational company, specializes in consumer electronics goods and computer software. The company’s well-known hardware products include the Macintosh Computer, iPod, and iPhone. Their software products include the Mac operating system, iTunes, and more.
– iTunes Music Store is an excellent source of revenue, especially with the iPod and accessibility on the Windows platform.
– Apple Computers is skilled in developing their own software and hardware.
– Apple’s niche audience gives them an advantage over direct price competition.
– The company has given a face-lift to their desktop and notebook lines.
– Web technology can be utilized to improve product awareness and sales.
– Low debt makes Apple more maneuverable.
– Apple Computers has established good brand loyalty.
– They have a partnership with Intel Computers since 2006.
– The Research & Development department is strong.
– Weak relationship with Intel and Microsoft.
– Limited presence in the business arena.
– Apple products have short product life cycles, making revenue reliant on new product launches and services.
– Limited presence in markets other than education and publishing.
– Slow turnaround on high demand products.
– Apple’s market share is far behind major competitor Microsoft.
– In the past, the relationship between Steve Jobs and employees was not good, resulting in a loss of reputation.Opportunities: Apple has the potential to develop an antivirus solution for PCs to address the increasing worms and viruses. The company can also capitalize on the large population of Generation X and Y individuals who prioritize individualism and brand names. Additionally, Apple can strengthen its ties with other companies to pursue joint ventures. The market for downloadable music and MP3 players is highly profitable, and online sales of computers are growing rapidly. Apple should focus on developing new laptop models to meet customer demands.
Threats: Some companies do not view Apple as compatible with their software. Apple faces strong competition from Dell, HP, Sony, and Toshiba in the laptop segment. The prevalence of downloading free music from other online sources without payment could impact iTunes sales. Compared to competitors like Dell, Apple’s software, cell phones, and hardware are expensive. The long-lasting recession poses a threat due to higher product and service prices. Microsoft’s launches of Microsoft Vista and Windows 7 are gaining market share. Rapid technological advancements also contribute to potential threats.
Overall, Apple’s closed ecosystem provides total control over the user experience from research and development to retail sale.Competitors in the market must compete for shelf-space and rely on Microsoft OS and Intel reference designs. This often results in numerous low-quality laptops, priced at $499, filled with unnecessary software, found on the shelves of OfficeDepot. The primary customer assistance at this store involves checking if there are any laptops in stock, still sealed in their original packaging.
Apple has the capability to define specifications and deliver them directly to customers through their controlled retail experience, such as the Apple Store and Apple Online Store. This allows them to communicate the value of their products and charge a higher price for that value. Their elevated research and development costs compared to Dell contribute to this. Additionally, their channel costs are slightly higher for the same reason.
However, Apple is not influenced by niche markets with no future potential, despite efforts from vocal minority groups attempting to bring them into these areas. Apple will never compete in the low-quality market, which restricts their sales volume.
Nevertheless, products like the iPhone, bootcamp, and virtualization can be avenues for re-entering the corporate sales market if Apple positions itself as a premium brand rather than chasing after the cheaper beige box market. The iPhone already enjoys significant success and can achieve even greater success by targeting corporate customers and offering products at various price points.
In terms of set-top boxes, TiVo currently holds dominance in the market; however, Apple TV 3.0 or 4.0 could capitalize on TiVo’s weaknesses.
Consumer purchases heavily determine Apple’s success but are more likely to decline during economic downturns compared to business purchases.
Content providers in the record, television, and movie industries have a significant influence on Apple’s earnings, acting as primary suppliers. Despite the slim possibility of open source operating systems penetrating traditional markets, it is important to protect against this potential threat. Microsoft currently holds a dominant position in PC operating systems, but they could prevent further market share loss by improving their existing XP platform instead of pushing for Vista. It is possible that special interests could persuade Apple to allow OS X to be used on hardware that is not produced by Apple.
During the OS 7/8 era, there was almost a disaster which was prevented by revoking licenses and acquiring the licensees. If Apple repeats the same mistake, it will be unable to recover from the damage. However, there are certain strengths that can predict return customers, such as strong brand loyalty. It is more cost-effective to retain existing customers than to attract new ones. Additionally, the simple and easy-to-use design, along with a concise product range, attracts customers, especially considering the Paradox of Too Much Choice. On the other hand, Apple has a limited product range, but its products are profitable. Even during the best times, only one or two Windows OEMs manage to earn a profit.
It is observed that Microsoft is now being forced to layoff workers in order to maintain profitability, similar to Dell which has also experienced significant losses. The discussion surrounding HP-Compaq is no longer relevant. Although low-end computers are more affordable for customers, they do not result in significantly lower costs for the manufacturer, leading to financial losses. Dell used its low-end products as a means of attracting customers and then upselling them a profitable computer. In contrast, Apple does not rely on such tactics and satisfies its customers. There is no known source for the idea that Apple disregards OS X.
The fact is that OS X is highly regarded by those familiar with it, as evidenced by Michael Dell’s request for a license and the existence of numerous websites dedicated to porting it to commodity PCs. The only disadvantage of OS X is the requirement to purchase Apple hardware. OPPORTUNITIES: The negative perception of Windows Vista allows Apple to promote OSX as an appealing alternative for users. Additionally, the success of the Apple iPhone can attract new users who may not have previously owned an Apple computer. THREATS: The global economic situation may decrease demand for higher-priced consumer items. Since Apple does not offer lower-end alternatives, consumers may switch to other manufacturers due to declining incomes. Windows 7 appears poised to address many of Vista’s flaws and provide a fresh start for public perception, potentially discrediting one of Apple’s major selling points. Strengths: a strong and reliable ecosystem, ease of use and intuitiveness, small product footprints which save office space, attractive designs, and seamless product integrations.
Weaknesses – The high cost of Mac computers allows for the possibility of building a computer with better specifications for a lower price. Additionally, there is limited application support, so most users still require Windows applications. Mac computers also have negligible gaming capabilities due to their parts and are generally not upgradeable. This means that users are essentially stuck with what they buy, except for the Mac Pro which has some limitations. Moreover, the closed off ecosystem of Mac restricts user customization, while providing protection against viruses.
Opportunities – There is potential for Mac to collaborate with more developers in order to expand application support without the need for Windows. Mac can also improve the specs of their systems to match those of PC counterparts. The notion that users are paying only for the OS is becoming outdated, especially considering that a Core i7 PC can outperform any Mac at the same price. Furthermore, including a full-sized keyboard with a number pad on their 17″ notebooks is worth considering.
What the hell is going on with all that wasted space? – Improving warranty support. Apple’s warranty purchase plan is pretty terrible, with only 90 days of standard service compared to everyone else’s one year. – Removing HDCP from the newly released iTunes HD Movie Store so they can compete with Netflix and provide a valuable service beyond just iPod or iPhone users. Threats – The economic crisis has already caused Apple’s market share to drop rapidly as people don’t want to spend extra money for a Mac when they can get a PC with better specifications for less. Windows 7 is shaping up nicely and, combined with the lower cost of a PC, may challenge Apple’s market share further, especially for budget shoppers. Windows 7 might also convince PC users considering switching to Mac to stay with PC. Strengths: • Recognizable brand. • Good reputation. • Integration of iPod and iPhone. Use the iPod brand as a foundation to expand the iPhone market (Customers purchase an iPhone and also receive an iPod in the same device) • Strong business strategy: Apple is using the App Store in iTunes as a tool to drive the iPhone market.
Apple has made the App Store more appealing by reducing app prices by 30%. Almost half of the apps in the store are free to download. Currently, there are 65,000 available apps with over 1.5 billion downloads annually. Apple’s iPhone was the first device to introduce the OS software platform successfully. The company encourages developers worldwide to create software for this platform and participate in the App Store business through iTunes, supported by effective marketing ads. Apple heavily invests in Research and Development, continuously releasing new technologies and features each year to surpass competitors.
The iPhone also includes iTunes application where customers can download music and ringtones. The company holds significant power as it exclusively controls the design, software, and development of iPhones without AT&T involvement. However, a weakness is that subsidizing iPhones comes at a high cost since customers may not buy them otherwise.
The reasons why the iPhone is too expensive and does not have a strong presence in the international market are as follows: Apple provides an unlock SIM option for the iPhone, allowing customers to switch to another carrier. However, there are limited distribution and service channels for the iPhone, with only Apple Store and Apple retail stores able to distribute and repair or replace the device. If a country does not have an Apple Store, shipping costs will be required. Additionally, there is a lack of strong alliances, as the AT&T contract will end in 2010 and Google has become a new competitor with its Android operating system. Under the AT&T contract, Apple’s ability to sell iPhones is limited.
On the other hand, there are several opportunities for the iPhone: People tend to change their phones frequently due to social trend. Loyal customers who have already purchased Apple products such as Mac and iPod may be impressed by the iPhone. The smartphone market has experienced high growth rates in recent years, indicating increasing consumer purchasing power.
- The potential for hacking the operating system, installing unauthorized applications, and unlocking iPhones without permission, accessing all available information on the Internet. This makes it easy for people to modify and unlock their devices.
- There are government taxes imposed on importing products, which can affect the distribution of Apple products in overseas markets.
- The fluctuation of foreign exchange rates can impact the cost of importing and exporting Apple products.
- Competition from other phone brands such as Nokia and Blackberry pose a threat as substitute products in the market.
- The oversaturation of rivals in the smartphone market leads to intense competition.