It goes without question that Apple Inc. is a highly successful brand of global renown. Apple is synonymous with its technologically innovative products and extraordinary software solution services.
Founded by the late Steve Jobs, this company's headquarters was located in the Californian city of Cupertino back in the 1970s.
By 1976, Apple would launch their first-ever product, a personal computer named 'Apple 1 computer'. Personal computers were unheard-of at the time, and Apple was able to completely create a new niche market that had never existed before. They started a revolution in computer manufacturing and have never looked back since then.
Today, Apple does not only design both the software and hardware of their personal computers, but they have also diversified into the provision of other products and services.
One product that has taken the world by storm is the Apple iPhone. In 2021, the sales revenue raked from this mobile device was over USD$190 billion. This amount made up more than 52% of the total revenue earned by Apple Inc. in 2021, which was over USD$360 billion.
This SWOT Analysis of Apple highlights those strengths that have made the brand so successful. The report here also reveals those opportunities open to Apple while indicating their weaknesses and the threats that may hinder the progress of their business.
What makes Apple so successful? Here are some key strengths worth mentioning;
- A highly valued global brand: Apple is an internationally renowned company and one of the most recognizable brands in the world. They specialize in the manufacture of technologically advanced personal computers and smart mobile devices, such as the iPad and iPhone. Over time, Apple has garnered a large customer base made up of loyal consumers worldwide.
- Technological superiority: Apple is ahead of the curve for innovative technologies. This is one of the reasons why they are so successful today. Apple has been a pioneering force for many innovations trending today. The launch of the iPad transformed the way people listened to music. Their iPhone and iPad technology have changed the way individuals communicate with each other. The iPhone and iPad have also changed the way people entertain themselves, work and transact business.
- Tip-top R&D: In line with their pioneering role in the personal computer and smart technologies market, Apple operates a very dynamic R&D division. They employ a highly intelligent and skilled workforce dedicated to developing groundbreaking, customer-centric products. It is also estimated that Apple invests around 6% of their total revenue into research and development. This has given them a competitive edge in an otherwise highly competitive industry.
- Introduction of 'Liam': Liam is Apple's own robot for recycling their iPhone devices. This AI-driven robot strips iPhone devices to the last screw. Old iPhones are recycled for use in producing new products, which minimizes the cost of production and wastage.
- A preferred brand: Apple products are high performing and greatly preferred by individual users and corporate executives, and professionals. For example, graphic designers and animators prefer using iMacs or Mac Pro. They use these Apple products for creative digital or audio-visual projects, including animation, visual design and even video production.
- Expansion of service portfolio: Apple has always taken pride in its services. They also diligently expand their service offerings to meet the needs of their existing customer base and emerging new markets. It is estimated that around 19% of the overall sales revenue of Apple is derived from its service offering. This makes Apple services second only to the iPhone in terms of their contribution to the company's sales revenue. Apple currently offers many services, including; online TV and film streaming, payment, iCloud, digital content stores, and AppleCare services.
- High ranking by reputable organizations: Interbrand ranks Apple Inc. as the most valuable brand globally. They have been ranked #1 by this renowned organization for the ninth time running. Apple has ranked ahead of other brands such as Amazon and Microsoft, which are ranked at #2 and #3, respectively. Apple's brand valuation is currently more than USD$405 billion.
Some of the identified weaknesses in the Apple SWOT are as follows;
- Expensive products: Apple offers high-priced products that are considered by many people as luxury items. Low-income earning people would rather buy alternative products like Android mobile devices rather than iPhones which are meant for the middle to the upper class.
- Compatibility issues: Apple products are not compatible with much other software outside those approved or authorized by Apple. This has led many people to buy Android OS mobile devices, which offer more compatibility with many technologies and software.
- Allegations of unfair business activities: Apple Inc. is believed to have received substantial payment in exchange for having Google search engine as the default search engine for their Safari web browser.
- Expansion into unfamiliar territory: Apple may be making inroads into unfamiliar territory with their expansion into the provision of services, such as; game streaming, streaming of audio-visual content, and credit card payment services. Apple faces strong competition from established brands in these markets. For example, they face competition from the likes of PayPal, Citi, and Chase for their credit card payment service. Also, Disney and Netflix are likely to give them a run for their money in the provision of audio-visual content streaming services.
- Accusations of tracking customers: It is widely believed that Apple tracks its users with default apps on their iPhones. They are under investigation for illegally tracking the location of their customers. However, the most recent versions of the iPhone give users the option to either decline or accept the tracking app. The problem here is that, like the allegations of unfair business activities, Apple risks breaking the trust it has built with millions of users worldwide.
- Inadequate parental control option: There is a suggestion by parents that the parental control tool of Apple is inadequate. Children are known to easily bypass the present parental control software used by Apple iPhone products.
Despite the weaknesses highlighted above, there are many opportunities open to Apple. A few of these opportunities include;
- The availability of a highly talented and skilled workforce of professionals: The Apple brand is one that many talented software engineers would be readily open to associating with either a contractual or full-time staff. This helps Apple to continually generate innovative products that give them a competitive edge in the industry.
- Increased growth potential with a larger distribution network: Apple can improve its growth rate by expanding its present global distribution network.
- Increased sales revenue through marketing and promotional activities: There is always the opportunity for Apple to increase its sales revenue through marketing efforts. They are currently not engaging in any active marketing campaign, potentially gaining them new customers.
- Venturing into new emerging markets: According to many reputable sources, including Forbes, the smart wearable technology market is likely to be worth an estimated USD$27 billion by 2022, with a global sales volume of 233 million units.
- Expansion into emerging markets: The music streaming solutions services are likely to be a very big thing in emerging markets in developing economies in the Middle East and Africa. Apple can strategically position itself in this market for the future.
Below are some threats to Apple as a brand and business as seen in this Apple SWOT analysis.
- The threat of counterfeits: Due to the expensive nature of Apple products, they are one of the most counterfeited products around. Duds flood the market and have created another niche with a young population buying fake iPhone products at comparatively low prices. Counterfeited products don't last as long as Apple products and tend to give Apple a bad name as many users don't know the difference.
- The threat of increased competition: Apple's market share is constantly challenged by rival firms like Dell, Google, Samsung, Lenovo, HTC, etc.
- Reduction in market share: The global smartphone market is dominated by Android OS smartphones. At this moment, Android OS smartphones command over 72% of the market share, while Apple iOS smartphones hold over 24% of the international market. It is expected that Apple's market share will further drop in the foreseeable future as technologically advanced Android products with more compatibility with other software are now available at better prices compared to Apple smartphones.
- The threat of lawsuits and product liability claims: Product defects have led to class-action lawsuits against Apple in the past. These product liability claims can adversely affect both the reputation and margins of the company.
The Apple SWOT analysis in this post lets you into the strengths, weaknesses, opportunities and threats of Apple Inc. Apple is ranked by Interbrand as the most valuable brand, with a valuation of over USD$405 billion, ahead of companies like Amazon and Microsoft. But Apple faces the threat of rival companies using the more compatible Android OS. Also, Apple's expensive products have limited its expansion into emerging new markets in many countries around the world. Expansion into the Middle East and Africa is viewed by many observers as the next big thing, especially because of the presence of an active young population in these regions.
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Apple SWOT 2022 | SWOT Analysis of Apple
Apple SWOT Analysis
by Madhav, January 1, 2022