Apple Computing

SWOT Analysis of Apple Inc 2019

SWOT Analysis of Apple Inc. 2019

Apple SWOT 2019

Apple was based by Steve Jobs and Steve Wozniack in 1976. The corporate was included in 1977. It is a leading private computing and smartphone brand with a worldwide presence and market main place. The corporate is legendary worldwide for several things together with its leading edge know-how, superior quality and premium merchandise, advertising in addition to monetary power. It’s one of the primary rivals of Microsoft. For Apple, 2018 was an yr of robust financial performance. Because the firm revolutionized private computing by introducing Macintosh in 1984, it has continued to stay on the vanguard of technological transformation globally. The corporate’s market cap touched 1 trillion dollars last yr.

Whereas the success of Apple as a know-how brand is attributed to the visionary leadership of Steve Jobs, its products have continued to outshine rival merchandise and brands even after his departure. Beneath Tim Prepare dinner, Apple’s performance is a few areas has improved quite a bit. Its providers revenue grew the very best in its historical past in 2018. Even when the efficiency of the brand in the first two quarters of 2019 has not been as nice as last yr, the reasons might be attributed to the commerce wars and some other modifications in the PC market. In any other case, Apple remains just as targeted on technological innovation and is working on growing its providers portfolio.

Apple’s giant product portfolio consists of Mac OS, iOS, notebooks, desktops, Mac Mini, iPad, IPhone and a number of other extra services. The corporate is one of the main manufacturers on the earth of private computers and rivalled by manufacturers like Dell, HP and Lenovo. The premium products of Apple has a big base of loyal clients throughout the globe.

Study extra concerning the private computing brand, its strengths, weaknesses, in addition to its monetary performance and essential focus areas in this SWOT evaluation.

STRENGTHS: –

Brand image and equity :-

One of the leading strengths of Apple is its robust model picture. The excessive degree of model fairness or customer belief that it enjoys could be attributed to its exemplary customer focus. Apple had gained rather a lot of reputation during its early days and its give attention to research and innovation proper because the days of Steve Jobs has been excessive. Its focus upon product high quality and innovation, established the model as a pacesetter in computing know-how right throughout its early days. While Apple nonetheless continues to rule, its continued focus upon consumer expertise has helped it strengthen its model fairness. iPhone and Macbook Pro as well as Macbook Air are among the hottest products of the model. Consumer experience as well as advertising are some areas which have bolstered its picture among know-how users. Model picture issues greater than ever within the twenty first century and on this area, Apple and its merchandise including Macbook or iPhone are thought-about second to none. Excessive brand equity has also translated into superior financial performance for the know-how  brand.

Product Portfolio :-

Apple’s product portfolio has continued to develop greater with time and has expanded from core hardware and software products to incorporate a number of new providers. Apple, now has a large portfolio of services. They  embrace iPhone, iPad, Mac, Apple Watch, AirPods, Apple TV, HomePod, a portfolio of shopper and professional software program purposes, iOS, macOS, watchOS and tvOS working techniques, iCloud, Apple Pay and a wide range of other equipment, providers and help choices. Apple additionally sells and delivers digital content material and purposes by way of the iTunes Store, App Retailer, Mac App Retailer, TV App Store, E-book Retailer and Apple Music (collectively “Digital Content and Services”). Apple products are bought globally via its retail shops, online stores and direct gross sales pressure, as well as via third-party mobile network carriers, wholesalers, retailers and resellers. The Company sells a restricted range of third-party Apple-compatible merchandise, together with software software program and numerous accessories, by way of its retail and on-line shops (Apple Annual Report, 2018). iPhone is its leading sources of income. Different major sources of revenue for the model are Macbook and iPad. Nevertheless, providers also type a big half of its portfolio as the corporate’s income from providers grew past $37 billion in 2018.

International presence :-

Apple is actually a world brand and its reputation is excessive not just in the domestic markets but in addition overseas. The reason is its consistent focus upon innovation and consumer expertise. Americas are the main supply of income for Apple. Nevertheless Higher China additionally accounts for a big half of its earnings. In 2018, Larger China accounted for around 19% of the entire revenue of the model. Apple has very properly managed its worldwide presence via bodily and on-line stores. Aside from that, the corporate makes use of third celebration retailers, resellers and wholesalers also for selling its products in numerous corners of the world.

Research and Improvement :-

Innovation is one of the primary sources of Apple’s competitive advantage.  The corporate is considered one of probably the most revolutionary brands on the earth right since its early days. Nevertheless, with time its focus upon consumer experience in addition to analysis and innovation has solely grown. As an element of its analysis and improvement program, it focuses on growing its range of services as well as improving the prevailing ones. It also makes vital investment of financial and other assets in research and improvement yearly. Degree of financial funding in research and improvement at Apple has grown sharply over the past three years. In 2016, the R&D bills of Apple stood at $10 Billion and grew to $11.6 billion in 2017. In 2018, its R&D expenditure grew previous $14 billion to succeed in $14.24 billion. On this method, it’s also one of the main R&D spenders in the whole business.

Profit margins : –

Apple has one other necessary supply of aggressive benefit. It makes solely premium products. From Macbooks to iPhones, iPads and different products from the home of Apple, all of them carry a premium price ticket. The reason being their wonderful quality and nice consumer experience. This is additionally why Apple enjoys large buyer loyalty and there is a main difference in the high quality of its merchandise and people by rivals. Apple clients don’t thoughts paying additional for its premium range of products. Nevertheless, there’s a further profit of quality for Apple. It enjoys large revenue margins on virtually all products. Revenue margins on most merchandise and notably, the iPhone which is Apple’s leading revenue generator is sort of high. No rival brand enjoys such high revenue margins. It is extensively quoted that Apple enjoys 200% revenue margin on its iPhone XS Max.

Advertising : –

Steve Jobs had helped Apple earn a special place for itself on the earth of know-how. Nevertheless, aside from product quality, there are different things also which have helped Apple earn a singular and safe place for itself in the hearts of its clients. Steve himself was an awesome marketer who very nicely knew the way to set the merchandise Apple created aside from the competition. It’s why Apple merchandise are usually not simply loaded with know-how however just as engaging as progressive. Simultaneously, the model also focuses on advertising for product promotions and customer engagement. On this area, the brand utilizes a large selection of advertising channels and mainly digital advertising channels for promotions. The corporate makes use of paid channels as well as e-commerce platforms for the promotion of its services. Apple’s  emblem makes it an simply recognisable model. Whereas the competition is fierce and may grow fiercer with time, Apple’s management position is bolstered by its focus upon advertising. The brand additionally invests a big sum annually in promoting. Its advertising prices are included in its promoting, common and administrative bills which reached $16.7 billion in 2018 (Annual report, 2018). The corporate has also raised its focus upon company social duty within the current years. Tim Prepare dinner has tried to change the picture of Apple from a fiercely aggressive tech model to a aggressive however passionate firm.

Giant and constant buyer base: –

Apple enjoys a really giant and constant customer base unfold throughout the globe. Its reputation in most corners of the world could be very high and clients from around the globe love its know-how merchandise. Higher China is one of the main markets of Apple aside from America. Nevertheless, Apple’s give attention to consumer expertise has helped it earn the shoppers’ trust and the brand does every thing to retain the trust it has earned. United States is the most important marketplace for Apple products followed by China. Product high quality, consumer experience, innovation, advertising and buyer engagement are the primary reasons that the corporate has been capable of win a big and constant customer base from everywhere in the world.

Supply chain administration : –

Apple’s main power is the standard of its merchandise. Nevertheless, to retain the quality degree and keep its high quality standards, it sources from greatest element suppliers situated all over the world. It ensures that only the suppliers who supply the highest quality raw materials are an element of its supply chain. Majority of Apple’s supply chain in addition to manufacturing and meeting activities are situated outdoors america. A large part of the company’s supply chain and manufacturing actions are situated in Asia.

Almost all of Apple’s hardware merchandise are manufactured by outsourcing companions situated primarily in Asia, with some Mac computer systems manufactured in the U.S. and Ireland. A big part of this manufacturing is at present carried out by a small quantity of outsourcing companions, typically in single places. Some of these outsourcing companions are single-sourced suppliers of elements and producers for a number of Apple products. While on the one hand, Apple has set rules and laws for its suppliers in several areas including product high quality and labor, on the opposite it has additionally made obtainable assets which can make their activity easier and working with the corporate profitable.

Weaknesses :-

Fluctuating gross sales of Iphone :-

While Apple has a robust position in the computing and smartphone business, the know-how business is undergoing quick modifications. It’s pitted towards a number of main gamers. 2018 was a fantastic yr for the brand financially. Nevertheless, in 2019, the sales of Apple products have fallen. No matter, be the rationale behind the autumn, it isn’t a very good sign. Microsoft which is a number one rival has continued to realize quicker leaving  a niche of round 100 billion out there caps of the two brands. Gross sales of Iphone lowered in 2019 first and second quarters, compared to the same interval final yr. iPhone gross sales fell from $61 billion within the first quarter of 2018 to around $52 billion in 2019 Q1. There was again a serious difference within the internet gross sales of iPhones through the second quarters. In the second quarter of 2019, the web sales of iPhone got here right down to round $31 billion compared to $37.6 billion throughout the same interval final yr. Internet sales of iPhone in the first half of 2019 equalled $83 billion compared to $98.66 billion in the first half of 2018. This can be a main distinction. Mac gross sales however have remained comparatively secure. Nevertheless, iPhone is the leading supply of income for the model and decline in iPhone gross sales has a serious impression on the web revenue of Apple.

Premium prices :-

Apple has been capable of sustain its premium pricing technique despite the growing depth of competitors within the smartphone and private computing business. Nevertheless, its premium pricing technique can also be a cause behind the fluctuation in gross sales. Otherwise, the model would have a larger customer base. Nevertheless, while the premium prices of Apple merchandise do not solely constitute a weak spot, Apple gross sales might have been larger with lower costs. The problem is that Apple risks dilution if it tries to lower them. So, premium prices still constitute a sort of hindrance.

Failure to grab a number of necessary opportunities :-

Apple has all the time targeted mainly on its core merchandise. While the business has changed swiftly and its rivals embraced the opportunities together with cloud know-how, Apple has been comparatively slower in this regard. Its revenue from providers has grown. Nevertheless, Microsoft and Amazon are reaping larger benefits by getting into the cloud business. Apple still has not been capable of move very quick from its core merchandise like iPhone, Mac and Ipad. Different leading gamers including Microsoft and Amazon have continued to see their revenue from cloud providers growing. To make its place and aggressive benefit stronger and to take pleasure in extra secure gross sales yearly, the company ought to seize the alternatives created by rising applied sciences.

Alternatives :-

Growing providers portfolio : –

The know-how business has advanced quicker in the current years. Apple can very properly benefit from rising its providers portfolio. Apple’s earnings from providers are already growing quick. If the company focuses on providers, it might see its revenue growing quicker. While iPhone is its main supply of revenue, decrease gross sales of iPhone in 2019 versus earlier yr have alarmed the administration. Its providers embrace every thing from app retailer to the licensing offers. Furthermore, providers are a very profitable space and by rising its income from providers, the company would be capable of scale back its dependence on different sources.

AI and IoT : –

Emerging technological areas is usually a worthwhile deal for Apple. From 5G to AI and IoT, all these emerging areas in know-how have introduced a large number of opportunities for the know-how manufacturers. Rumours abound relating to Apple working on autonomous driving know-how and of the discharge of an iCar in near future. One can’t say anything with certainty proper now. Nevertheless, in case, Apple enters any of these areas on a bigger scale then it might prove extremely profitable for the model.

Threats :-

Ever Intensifying competition :-

Competition within the know-how business including personal computing, cloud know-how and smartphone business has stored rising. While the rise of cellular computing has led to progress within the quantity of alternatives for smartphone brands, it has also affected the PC businesses. Moreover, Apple is rivalled by brands like HP, Dell and Lenovo that are equally aggressive in phrases of innovation and product high quality. The demand for reasonably priced computing merchandise has grown as a large quantity of individuals are joining info know-how jobs. Competition and the battle for market share is among the many leading threats confronted by Apple.

Trade wars :-

The commerce wars between China and United States have stored intensifying leading to greater strain on both American and Chinese know-how companies. It isn’t just the Chinese language companies like Huawei which are on the receiving end. Other know-how giants together with Apple have additionally found their operational prices growing because of the progress in tariffs. Tim Prepare dinner attributed the decline in revenue and sales in the course of the first quarter of 2019 to the commerce struggle and rising tariffs which led to lower sales in China. Curenty, China is the second largest market for Apple products, accounting for near 20% of the model’s revenue.

Economic fluctuations :-

Foreign money fluctuations and economic modifications also affect the enterprise of international know-how manufacturers like Apple.  These elements are related directly to the revenue of a model like Apple. If financial activity in any of its main markets declines, it results in decrease demand and lower gross sales. This affects income negatively and the income as properly. Last fiscal yr, key economies including Asian economies remained comparatively secure which boosted Apple’s income. Nevertheless, a stronger greenback continues to be having a unfavourable affect on its income.

Regulatory pressures :-

Regulation of the know-how business has grown stiffer through the current years. Aside from privacy and knowledge security, there are several more considerations that have led to larger authorities scrutiny of tech companies. Governments around the globe have grown strict of their management and regulation of the tech companies including Apple, Google, Amazon and Microsoft. Greater regulation has also led to larger compliance costs and progress in the quantity of limitations. For some companies market enlargement is being notably troublesome on this state of affairs.

Conclusion:

Apple is one of the large 4 players in the know-how business. The company enjoyed impressive gross sales in 2018. Nevertheless, its financial performance in 2019 (Q1 and Q2) has dwindled as a result of US China trade wars and some more elements. Nevertheless, there’s additionally some good news. Its providers revenue is rising steadily and within the next few years if revenue from providers accelerates, Apple might once more be number one. Nevertheless, it remained stuck with its core merchandise for along time. Meanwhile Amazon and Microsoft entered the cloud business and have seen their revenue and income develop quicker. The market surroundings can also be far more difficult now than some years ago.

Apple’s core power is its give attention to innovation and product quality which have helped it keep its string position. Aside from fluctuations in income, general the model maintains its formidable presence in the tech business. Nevertheless, to scale back its dependence on personal computing and cellular computing products, it might want to diversify into new areas. The PC market stabilized a bit in 2018 but once more appears to be in decline mode. All these elements have led to progress in number of challenges before the model whereas its rival Microsoft has steadily managed its market cap above 1 trillion for previous few months. The challenges earlier than Apple is huge and until it focuses upon expanding its sources of income and attracting new consumer segments, the hole between it and Microsoft may develop greater.

  • Extra Sources:
  • Apple Annual Report 2018.