Apple is an innovative world that focuses on the design, development, and sale of numerous computer software, electronics, and online services. It is the topmost company in the world with more focus on technology. The SWOT analysis of Apple tells us the way Apple made use of its competitive advantage to turn out to be a leading player in the technology industry.
The SWOT analysis of Apple detects all the main strengths, weakness, opportunities, and threats that helps the company more to scale up. Read out this article, to get an understanding of where Apple stands.
Before we begin in-depth on the SWOT analysis of Apple, let us understand a bit of the background of the company Apple.
Background of Apple
The following provides you a gist of the company:
- The company is known with the name Apple Inc.
- Apple was established during the year 1976 and has its headquarters set up in California, United States.
- Its logo is shown in Image 1.
- The following are the various industries served by the company:
- Computer Hardware – iMac, iMac Pro, MacBook, MacBook Air, MacBook Pro
- Software – iPadOS, iOS, MacOS, tvOS, watchOS, iWork, Safari, iMovie
- Consumer Electronics – iPad, iPhone, Apple TV, AirPods, Apple Watch, HomePod
- Internet Services – Apple Pay, iCloud, App Store, TV App Store, Mac App Store, Book Store, Apple Music
- Apple company has served various locations worldwide. It has served both online and offline stores.
Apple is one of the largest technology company in terms of revenue and a valuable company with regards to brand value and market capitalization worldwide. The company sets proposals, manufactures, and markets the following:
- Personal computer
- Various technology and financial services
Apple has transformed the entire smartphone market and has been one of the great brands in the history of technology.
It started its business by producing and selling computer hardware and software and has faced a noteworthy growth and success by their consumer electronics products like iPad, iPod, and iPhone.
Apple’s main product is the iPhone as all of us are aware of it. iPhone gets executed on Apple’s iOS operating system. This product is quite popular and accounts for about 54.7% of its revenue. Over the years, during 2019, Apple has announced three new versions of iPhone – iPhone 11, iPhone 11 Pro, and iPhone 11 Pro Max. Apart from computer hardware products and consumer electronics, Apple provides many services to its customer that includes the following:
- Digital Content Stores – Apple operates on digital content stores and provides customers to download the following digital content:
- Subscription-Based Services – Apple provides various services on subscription-like Apple Music and TV+.
- AppleCare Services – This service is a free service that delivers extra coverage for the phone like hardware maintenance, theft, and accidental damage.
- Other Services – Apple provides various other services like iCloud, Apple Card, licensing, Apple News+, and Apple Pay.
The services for Apple alone generate about 17.8% of the entire Apple’s revenue and are a growing category for the company. Apple operates in a modest industry and must exhibit its best performance so that it can stay ahead of the competition. Apple competes on the following features:
- Product features
- Quality and reliability
- Design innovation
- Accessories ecosystem
Apple faces severe competitors and requires the company to be at the constant innovation thereby taking benefit of the rising chances.
Few fun facts about Apple:
- The name Apple has come up because the founder of the company Steve jobs likes the fruit.
- Apple has a ‘no smoking’ ban with regards to their computers. It sounds meaningless, but in case you smoke while you use an Apple computer, you get void with the warranty. You would be warned.
- Apple has more employees that a city of good population. Its employee strength is about 90,000 and many others generate income directly or indirectly from the company and ranges from sales affiliates to small shops seen worldwide.
- When the first Apple iPod was set up, an Easter Egg was rooted. To get the Easter Egg, you need to go to the ‘About’ menu and keep pressing the center button for about two seconds.
- The success of Apple is huge and has two times the US treasury amount.
- Apple has created a big impact on the introduction of the iPod.
Let us discuss on the SWOT analysis of Apple.
Strengths in SWOT analysis of Apple
- Huge Range of Products – Apple has a huge variety of products that provides the company to earn more profit. The various product lines of the company include the following:
- Apple Watch
- Apple TV
- Electric Vehicles
- Apple Energy
Having been into the production of varied products and technologies, Apple ensures that it can work with modern technologies to their customers. Out of these products, few products earn the most revenue for the Apple company. When Apple works with varied products, it also ensures that it provides a steady revenue to the company. There might be a case when at a specific period, one product would fail whereas other products would get a high scale. Hence, when Apple is providing more products it also takes care of product failure risk. Having a wide range of products, the company grows to great heights and its products are being acknowledged by the users.
- Employee Selection – Apple has a very strategic way to recruit its employees. To maintain its quality, Apple selects sincere and quality employees to work with the company. The company recruits’ employees who powerfully follows their passion all along. It takes care to recruit people who are positive thinking and who does not say ‘no’. It recruits employees who think out of the box and those who could justify and make impossible actions to possible actions. This would ensure that Apple always maintains quality and produces innovative and stylish products to its customers. By having the right fit of the employees, Apple ensures that it maintains a strong brand image.
- New Product Development – When Apple launches a new product it does not stop. Instead, it starts working to develop new products as soon as one gets over and launched. The development does not get involved in watching the product sales figures. They keep on working on the next and then next once each product is released. This is a major strength to the company as there would not be a gap for new products to launch. The product gets released one by one.
- Good Brand Image – Ever since its formation, Apple has been producing and providing quality products to its clients. One who purchases iPhone uses the product for a longer duration and enjoying its features without any internal issues. When the product offers strong quality, it does develop strong brand recognition. With this, people tend to buy more products from Apple, thereby increasing its brand image.
- A Successful Company – Apple is being a successful company in the history of technology. It is also a valuable technology and service company in the world that is being recognized everywhere. It has set the record earning of its competitors and has many apps in the market and widely used.
- Financial Position – Apple company sees a strong position in finance. Its financial position is so strong that it finances its research and development of its products and services. During the year 2015, it has generated a revenue of about $74.6 billion and a profit of about $18 billion for one quarter. This is estimated to be the greatest income in the history of technology sales. It has indeed retained this earning over the years as well.
- Outstanding Hardware Performance – The internal hardware performance is exceptional. Indeed, customers are satisfied with the durability of Apple’s product hardware.
- Wonderful Designs – The product design is amazing and unique. Each product’s look is wonderful and unique.
- Innovation – Apple has a huge range of innovative products. Ever since this company has been formed, it has been providing innovative products. Its innovation is being noted in current history. During the year 1984, Apple has launched Macintosh for the first time in the history of technology that brought into the world of the graphical interface. This has seen a huge changeover in the technology world.
Weaknesses in the SWOT Analysis of Apple
- More Price – Apple makes use of premium pricing strategy; its products are indeed priced high. Apple’s products are mostly higher than the other company’s products and are generally not affordable for a normal person’s financial condition. The middle-class market is too high in the world and they could not afford to purchase Apple’s product. Apple tends to ignore this market segment to retain its brand image.
- Less Variety of Phone Design – iPhone tends to maintain the same design for its products and there is no huge difference between iPhone 1 and iPhone 7. It is like the first look and does not deviate much from it. The user has a feeling that they are using the same product all the time. Other company’s products have a unique and gorgeous look.
- Restrictions – Apple products are not that flexible as compared to other company products with respect to connecting to other devices from other brands.
- Slight Product Line – One major weakness of Apple is that there is a slight variation to the product lines. For almost a decade, Apple has been releasing iPhone that has the same look and with less updated features. This is a major weakness as customers using one version might hesitate to upgrade to the next version if there is not much difference in the new version.
- Niche Customer Target – When a company target’s niche market, their market segment tends to become smaller. In this case, the market of Apple is not as big as the other computer or smartphone brands. Apple targets only high-class customers and avoids the middle-class customers that form the largest market. This is indeed a big weakness for the brand.
- Less Distribution Network – Apple tends to distribute its product all by itself. The distribution channel for the brand is narrow and they do not depend on the third party for their product sale. Apple hangs on on its stores and websites to sale their product.
- Instable iPhone Sale – Apple has a strong stand in the technology industry, and the technology industry is a dynamic one. It is not a smooth one as compared to many other major players. The year 2018 has seen a good financial position for the Apple brand, whereas it was slightly low during the year 2019. The iPhone sale is so fluctuating that its growth is not predictable. As the iPhone contributes to Apple’s revenue, a dip in the iPhone sale affects the entire revenue of the brand.
- Failure to Take hold of Significant Chance – Apple has mainly been attentive to its main products. When the industry has changed so fast, its competitors have taken over new innovative strategies using the latest technologies like cloud technology. As compared to the other company, Apple has been slow in this area. Apple’s revenue from its services has grown drastically. Apple has not been able to go beyond their main products like Mac, iPhone, and iPad. Whereas, other important players like Amazon and Microsoft have been increasing their revenue from the cloud services. To make the brand’s position stronger, Apple should grab the opportunities of the emergent technologies.
Opportunities in the SWOT Analysis of Apple
- Huge Demand for Laptops, Computers, Mobile Phones – There is a huge demand always in the market for technology devices. Mobile phones and laptops are being used by almost all people of all age groups. Hence, there is an ever-rising demand for such devices, and this provides a huge opportunity for the brand to produce more and more such devices. When more products are produced and sold, Apple’s revenue tends to increase more.
- Increase in Dependency on Technology – In the current era, people depend on technology for all the activities and hence the smartphone is seen as a basic requirement for all. People have become more dependent on various portable devices. As a result, the smartphone demand increases and thereby the sale gets increased.
- Globalization – When there is a huge level of globalization, it provides an opportunity for the brand to have more technology products. As an outcome, people can purchase the product in less time from the company directly. This would increase sales thereby increasing the profit margin.
- Gadgets and Accessories – To increase their product sale, Apple provides various technology accessories and gadgets along with its devices. Having a strong innovative and technology background, Apple has a strong familiarity to introduce new products. If this trend continues, Apple can go in for huge profits.
- Research and Development – Apple sees more innovation in varied products, and it invests a lot in research and development. It has a huge research and development area where people focus on more innovations to release huge products.
- Product Divergence Strategy – Currently Apple’s product is narrow and when the product line becomes broader, it would provide an opportunity to offer better products to the customer. Moreover, Apple should try to focus to develop products of lower prices to target middle-class people and to get over the market in all the countries.
- Increasing Distribution Network – Currently, Apple tends to distribute its product all by itself. The distribution channel for the brand is narrow and they do not depend on the third party for their product sale. Apple hangss on its stores and websites to sale their product. Apple should try to include more distribution channels and create more third-party channels for its product distribution to increase its sales worldwide. When the brand focuses to increase its distribution channel, its profits would automatically increase.
- AI and IoT – One main opportunity for Apple would be to include emerging technologies areas like AI and IoT. These emerging technology areas would bring a lot of opportunities for the brand to succeed in the market. When apple takes over working in these areas of technology it would strive for a highly profitable brand.
- Smart Wearable Technology – The world is soon being dominating by smart wearable technology and making use of these technologies would increase the sale.
- Green Technology – Apple is yet to produce and roll out products using green technology. This opportunity for Apple is yet to hold on to create eco-friendly technology.
Threats in SWOT analysis of Apple
- Potential Table and Smartphone Market – The sale of the smartphone has seen a fall for smartphone demand by 3%. There are multiple reasons for the sale of the smartphone to fall. The main reason is that when a person purchases a smartphone, he or she uses it for a few years. During this period, people don’t find a reason to spend more money to buy new smartphones when the one they have is in a good condition. This would slow down the smartphone sale and is a huge threat to the brand.
- Innovative Competitors – Technology industry is so dynamic that many technology companies innovate new products regularly. There are many emerging companies that produce similar products and sell them at a lower price. Every product that Apple produces has seen a similar product by its competitors. This is indeed a huge threat again as people would prefer to purchase a product with similar features at a lower cost.
- Competitors in the Blue-Chip Companies – The technology industry sees an alarming increase in the Blue-Chip company. This makes the brand face more competition and becomes another threat to the brand. Indeed, China provides a superior quality product at a lower price than Apple products.
- Imitation – This is a huge threat to the brand. When Apple comes out with new products and gets released in the market, a duplicate of the same product is released by another company. At times, technology gets stolen and there are many imitations in the technology market. So, this is a threat that Apple needs to take care of and come out with ways and methods to come over this to maintains its brand image.
- Trade Wars – The increasing trade war between the countries, the United States and China results in huge pressure in technology companies of both the countries. Not only is the Chinese firms face this threat, but also great companies like apple also see an increase in their functional costs due to an increase in various tariffs.
- Economic Variations – Fluctuating currencies and changes in economic in the world affect the technology brands like Apple to a larger extent. This impacts the profit of the brand directly. When the leading markets economic activity drops, it impacts the sales thereby affecting the profit of the brand also.
- Regulatory – Over the years, the technology industry regulation has grown harder. More than data security and privacy, there are many issues that triggered the higher government inquiry of the technology firms. Governments worldwide have taken a strict procedure to control and regulate the technology firms that include Apple, Amazon, Google, and Microsoft. When the regulations are higher, the compliance cost is more. In this case, the expansion would be an issue and is a major threat to Apple.
Apple is a leading technology player and has enjoyed an inspiring sale during the year 2018. The SWOT analysis of Apple has highlighted the key strengths of the brand that arise from its brand value, its quality of products, and its unique features. The major weakness is its less distribution network, its high price, and its market segment.
Apple sees more opportunity for its growth on expansion to the distribution network and entering emerging technology. Its major threats come from its competitors and its price.