Apple, Inc. is one of the world’s most successful corporations. The company has long been known for its high-quality technological goods and superior software services. Steve Jobs founded Apple in Cupertino, California.
Apple Inc.’s performance is tied to its capacity to leverage corporate strengths to overcome weaknesses and challenges and capitalize on opportunities in the industrial environment.
Apple SWOT analysis framework is a strategic management decision-making technique that identifies the firm’s most important issues based on internal and external business conditions.
Apple’s SWOT analysis identifies the company’s strengths, weaknesses, opportunities, and threats (SWOT variables) concerning various markets and industries.
The corporation is involved in computing technology (hardware and software), consumer electronics, cloud computing services, and online digital content distribution services.
This condition needs the development of Apple’s wide range of tactics to ensure its competitiveness and company growth.
Apple released a computer called the Apple 1 in 1976. Apple has expanded its product and service offerings substantially since then. The ‘iPhone’ is one of Apple’s most successful devices today. In 2020, iPhone sales of $137 billion will account for half (50%) of Apple’s total revenue of $274 billion.
|Year founded||April 1, 1976|
|Industries||Consumer electronics, Computer software, and online services.|
|Headquarter||Cupertino, California, United States|
|Market Cap||$2.449 Trillion (Aug 2021)|
|Revenue||US$274.515 billion (2020)|
This Apple Inc. SWOT analysis outlines the strategic elements influencing CEO Tim Cook’s and managers’ decisions in building the business. With operations in numerous markets worldwide, the corporation is confronted with diverse SWOT considerations based on regional circumstances.
Apple SWOT Analysis
The Strengths component of the SWOT framework identifies the strengths that allow Apple to overcome its weaknesses, capitalize on opportunities, and resist threats.
Strengths in company organizations are dependent on organizational conditions and technology capabilities. Here are Apple Inc.’s most prominent strengths in this case.
1. Brand Value
According to Interbrand, the brand value of Apple’s brand has increased to $612 billion for the eighth consecutive year. Apple is undoubtedly the world’s most recognizable brand due to its advanced features and unique design. Several reports estimate it will be the third most valuable brand by 2020.
Customers and clients have always been pleased with Apple’s high-quality products. An iPhone user used the device for a long time without experiencing any internal issues.
A high-quality product has given it significant brand recognition. Forbes ranked Apple first on its most valuable brands, stating that Apple is twice as valuable as Microsoft.
2. Innovative Products
Apple’s work does not end when they release a finished product. Soon after finishing and launching one, they begin developing a new one. They do not waste time tracking the sales of their products. “When we release a product, we plan the next one.
Apple was the first to debut some of the most revolutionary inventions that have altered the course of history (iPhones, iPads). Apple is still determined to create better, more capable technological devices.
Apple has continued to enhance its applications in response to various new digital streaming and payment technologies.
Current applications to be introduced and improved include Apple TV+, iTunes, Apple Card, and Apple Music, demonstrating a tremendous ability to reinvent your product line consistently.
3. Wide Range of Products
Apple offers a wide range of products, allowing them to profit. Mac, iPod, iPhone, iPad, Apple Watch, Apple TV, Software, Electric Vehicles, and Apple Energy are product lines.
Apple assures its clients that it can provide modern technologies by diversifying its portfolio. Some of these products are cash cows. This signifies that these are the most popular products and provide the most revenue.
The diverse portfolio also offers revenue-earning stability. One product may fail for a while, while another may surge in sales. As a result, by offering a diverse range of products, Apple mitigates the chance of product failure.
4. Design & Technology
The best aspect of Apple, and the basis for its fantastic brand equity, is its design and the technology it employs. Apple’s product design has always been sophisticated and elegant.
At the same time, beneath this stunning look is a mechanism designed to provide maximum performance. All of this runs on macOS, which is another software that is well-known for its efficiency.
Apple devotes time and effort to the design of its products. A thorough investigation is launched, followed by more research, to better understand the consumer’s demands and wants.
5. Financing Strength
Apple has solid financials to fund all its investments and research to develop its products and services. Apple announced $74.6 billion in revenue and $18 billion in earnings for the first quarter of 2015.
The income is reported to be the largest ever recorded in history. It possesses a substantial quantity of money in the form of retained earnings.
This retained earnings account will assist them in recovering from any future financial downturns. This can also be a backup for a better research and development department.
6. Expansion in services
Apple has been adding new services to its portfolio for several years. Apple’s services accounted for 19% of its total revenue ($53 billion in FY 20 out of $274 billion), putting them second after the iPhone (which generated 50% of its revenue).
Many of Apple’s services are available online, including downloads, streaming, AppleCare, and similar offerings. Besides offering Apple TV+ (available in November 2019), Apple News+, Apple Card (credit card services), and Apple Arcade (game subscriptions) in 2019, Apple launched numerous other services in 2019.
7. Retail Stores
Apple’s retail locations guarantee a high-quality consumer experience and direct interaction with trained staff. The increase in Apple customers could be attributed to Apple’s excellent consumer service and individualized attention.
Apple has 470 stores in 17 countries, according to its SWOT analysis. The brand also sells through trade partners, online platforms, and other luxury retail locations in addition to these stores.
Apple’s retail stores are thrilling to enter. Apple has also implemented the Apple genius bar within its retail stores to resolve customer issues directly. Apple is, therefore, renowned for its focus on sales and distribution of services.
8. Consumer Focus
Apple consistently designs its products with the user in mind while keeping the future in mind. They are constantly attempting to imagine something that even the consumer has not yet envisioned.
According to Steve Jobs, “if you ask the consumer what he wants, he will want something else by the time you deliver him the same thing.” Apple’s success is due to this mentality.
9. Marketing Strategy
Apple has long been regarded as the maestro of advertising. Before releasing its new goods, Apple builds a lot of buzz about them. Its public relations and marketing are so effective that it develops a word-of-mouth approach to raise brand awareness and improve product demand.
10. Brand Of Choice
It’s no surprise that Apple is a sought-after brand in workplace settings. Apple’s dedicated business page provides high-quality technology solutions for every corporation’s requirements.
Apple devotes time and effort to the design of its products. A thorough investigation is launched, followed by more research, to better understand the consumer’s demands and wants.
A SWOT analysis of Apple will emphasize its weaknesses, inadequacies, and product development and marketing capabilities.
The company’s weaknesses are the characteristics that inhibit growth, considering how the company compares with competing technology companies. Apple has the following notable business flaws:
1. Expensive Products
The high cost of Apple products can make them seem like a luxury. The products are priced to appeal to middle- and upper-class consumers. Low-income people cannot afford Apple products.
Apple’s greatest weakness is its exorbitant prices. A company’s high-priced products pose a vulnerability since buyers can easily find comparable products at a lower price.
These products are priced at a level only accessible to the middle and upper classes. Apple’s premium pricing strategy keeps its products out of reach for the general public, particularly its iPhones.
The prices of the items were always higher than those of other well-known brands, such as Samsung, HTC, etc. There is a large market for middle-class individuals. Apple ignores this market to protect its image.
2. Decline in Market Share
Apple’s market share is likewise dropping, with one of the key causes being their reliance on the iPhone and iPad series. It implies that a drop in the popularity of these goods could affect Apple’s company.
3. Limited Advertising & Promotions
Apple has secured its position even with minimal promotional expenditures by developing devoted customers. Apple’s marketing strategy heavily relies on its famous and flagship retail outlets.
The success of Apple allows it to see no need to spend as much on advertising as companies like P&G, Coca-Cola, and Samsung.
It is not adaptable if you wish to use it with devices manufactured by different manufacturers. You cannot install software from sources other than Apple.
Apple clients become part of its universe as soon as they purchase an Apple product. Apple’s devices cannot be used with other devices because they do not support other software or technologies.
Consumers find it difficult to switch to iOS-based devices because their operating systems aren’t compatible with other devices and the products aren’t user-friendly. Apple customers must purchase Apple accessories and apps to continue using their products.
5. Limited Product Line
Apple Inc’s product portfolio is extremely limited, which was a weakness in the SWOT analysis. The company has been producing the same-looking iPhones with upgraded features for the last ten years.
6. Tracking Allegations
It erodes user confidence to track them. Apps on Apple phones were accused of revealing users’ exact locations through tracking apps.
The most recent version of Apple’s phones allows customers to opt out of tracking, but it is difficult to regain once trust is lost.
7. Fewer choices in phones designs
When it comes to appearance, there isn’t much of a difference between the iPhone 1 and the iPhone 8. It didn’t stray far from its initial appearance.
This gives the impression that you’ve been using the same things for years. Other manufacturers, such as HTC, ASUS, and Samsung, provide distinct and appealing smartphone designs.
8. Meeting Customer Expectations
Apple has been a market leader since the 1980s, and consumer expectations are skyrocketing. Every year, Apple’s fans expect great things from the company, and it isn’t easy to meet these expectations.
A corporation’s market shrinks when it focuses on niche markets. Apple does not hold a large market share compared to other smartphone or computer firms in this scenario. The company targets only upper-class customers, thereby avoiding the considerable middle-class market.
9. Patent Infringements & Unfair Business Practices
Apple has often been accused of infringing on other companies’ patents and lost trials, harming its reputation and financial standing.
Apple is under investigation for unfair commercial practices after accepting money from Google to make its Safari browser use Google’s search engine as the default search engine.
Competitors find it difficult to enter and expand into the search engine business due to the cooperation between the two behemoths.
The incompatibility of Apple products with third-party software and peripherals is one of the most important concerns for the company.
When you buy a gadget from Apple, you enter the Apple universe and must remain loyal to them. This impacts the decision-making process for consumers.
Opportunities For Apple
Apple Inc.’s SWOT analysis identifies the most significant opportunities the company can take advantage of. The digital on-demand content market is an external factor with opportunities based on the industry environment.
Corporate organizations are affected by these elements in terms of their strategic direction. Apple has the following opportunities:
1. Loyal Customers
Apple is witnessing growing demand for its numerous devices due to its large market share and brand recognition. People who use Apple electronics show loyalty to the brand by exhibiting interest in new devices.
Apple has dominated the technology sector for many years. They offer high-quality, cutting-edge technology that provides a breakthrough in the consumer experience.
Their customer retention percentage of 92 percent is outstanding. Apple can always rely on the power of the internet to recruit new customers and build new relationships in the future.
2. Widespread Distribution Network
Apple Inc. may be able to expand its distribution network. Apple’s distribution network is currently quite limited, with little possibility for expansion.
Apple distributes its products on its own the majority of the time. It should establish additional third-party distribution channels to increase sales in foreign countries. They will be able to generate more profit by expanding their distribution network.
Apple can increase revenue and sales by building a large distribution network. Furthermore, rigorous marketing and promotion might benefit the organization.
3. Experienced Professionals
Apple’s product specialists, researchers, and developers are highly qualified individuals with extensive consumer product branding experience. Apple’s team expansion enables them to create new opportunities consistently.
4. Growing Reliance on Technology
People are growing increasingly reliant on technology, particularly cell phones. They had a greater interest in portable electronics. As a result, the demand for smartphones may continue to rise at a rapid pace.
5. Lack of eco-friendly technology
Apple has yet to release items made using green technologies. The company has not yet implemented or engaged in developing environmentally friendly sustainable technology.
6. Accessories and Gadgets
The world will soon be ruled by wearable smart technology. Forbes forecasts that sales of smart wearable technology devices will triple by 2025. It will reach a market size of $27 billion+ with 233 million unit sales.
Apple can expand its product line by offering technical accessories and devices. It has proven experience in launching new products because of its strong innovation history. The company can increase its profits even more if it continues to follow this path.
Apple has the potential to expand beyond the Apple Watch and AirPods into additional wearable categories.
The globalization of the market provides consumers with very easy access to technological products. This allows customers to get their goods directly from reputable companies quickly. It also improves sales, resulting in a higher profit margin.
8. Employ Artificial Intelligence
Apple should use artificial intelligence to boost its profit margins and maintain a strong market position. The company’s AI portfolio was recently expanded.
Apple acquired Regaind, a French business specializing in artificial intelligence, and DeskConnect, a tool that utilizes AI.
Apple acquired the former to integrate intelligent search into its iPhone Photos application, while the latter purchase helps consumers arrange apps and features through a string of commands. The corporation should expand its AI portfolio to gain a firm presence in the future.
9. Develop Self Driving Software
Self-driving cars are steadily becoming more popular. Apple has the expertise it needs to supply self-driving technology rather than fully automated and electric vehicles.
Apple can focus on delivering self-driving software technologies rather than constructing actual cars, as Tesla does.
10. Extend Music Streaming Services
Emerging economies’ rapid economic growth and youthful populations present enormous expansion potential. Apple has already announced plans to expand its music streaming services to 52 African and Middle Eastern growing economies.
Threats For Apple
Apple faces no threats as a firm. However, as products, each of the products faces significant competition. Becoming a global leader is difficult, and you will face competition, especially from other companies.
This component of the SWOT analysis focuses on the risks Apple faces from numerous sources, such as competitors like Samsung. Threats are external factors that limit or impair a technology-focused corporation’s financial performance. Apple Inc. faces the following dangers:
1. Supply Chain Disruption
Several recent events have affected and disturbed the functioning of the organization. Supply chain uncertainty led it to announce flat sales for the second quarter of 2020 and declined to provide annual revenue predictions for FY2020.
2. Technological Changes
Consumer electronics are on the cutting edge of technology almost every day. A significant challenge for the company will be keeping up with the latest trends.
Apple has introduced some groundbreaking products so far. However, Apple has yet to announce its new product strategy.
3. New competitors
Apple still faces threats from competitors despite its prominence as a brand. Technological advancements have allowed Samsung, Google, and Dell to challenge Apple.
There are other options available. The most serious threat is the appearance of strong competitors who offer similar products at a lower price. Samsung offers both high-end and low-cost products. Additionally, Sony, Asus, and Nokia are all growing in size.
Apple will have to release new technology or change its pricing strategy to remain competitive as the competition grows.
4. Imitation and Counterfeits
Several third-world countries have illegally used Apple’s brand image to sell counterfeit items. Apple counterfeit products are sold at the same price as genuine Apple products by unauthorized merchants.
Throughout history, it has posed a significant danger to well-known companies. When Apple releases a new product, other companies release a duplicate product. Technology is sometimes stolen.
There are also a lot of fake products on the market. Recently, six counterfeit iPhones built by Chinese producers were discovered in the Chinese market.
Counterfeit products may lead potential customers to believe they are purchasing a low-quality Apple product. Unfavorable reviews and negative exposure for the company can emerge from breaking news.
5. Coronavirus Outbreak
Apple’s manufacturing and supply chain are heavily reliant on China. Furthermore, China accounted for around 14.5 percent of its $274 billion revenue. The outbreak has considerably impacted Apple’s revenues and may continue to do so in the fiscal year 2021.
Apple has been hit with 60 class-action lawsuits. When Apple acknowledged that it purposely throttles CPU performance on iPhone models with older and deteriorated batteries, customers were outraged and perplexed.
The tech behemoth stated that it had done so to avoid sudden shutdowns. Despite the clarification, customers felt cheated since Apple did not value transparency. As a result, several people have filed lawsuits against the corporation.
Apple’s actions seem to be reducing the resale value of its devices and forcing its customers to switch over too soon to newer versions, according to the first class-action lawsuit filed a month ago.
7. Market Penetration
The smartphone market has undergone a major shift in brand penetration. Android software is now being used by companies like Samsung, HTC, and Lenovo to produce new devices.
Apple holds only 24.55 percent of the global market share, while Android holds 72.23 percent.
8. Backdoor Protocol
Government agencies have consistently pressed Apple to unlock the iPhone using a backdoor, which entails decrypting it and gaining its contents.
In some instances, Apple has rejected offering the backdoor mechanism, claiming that it can be exploited by malicious actors, exposing the security of millions of iPhone users.
9. Competitive environment in blue-chip corporations
Blue-Chip companies become increasingly competitive as the number of them grows. Apple’s products come from China at a much lower price than Apple’s.
10. Market Potential for Tablets and Smartphones
There has been a decline of 3% in smartphone demand throughout history. This may be due to several reasons, of which one seemed most important. Therefore, an individual keeps a smartphone for about 2.5 to 3 years after they purchase it.
Most people do not see any compelling reason to buy a new mobile phone when their old one works perfectly well. The sales of smartphones have slowed as a result.
Final Words on Apple SWOT Analysis
According to Apple’s SWOT analysis, it is clear that its strengths and opportunities provide it with a strategic edge over its threats and weaknesses, owing to its reputation and consumer devotion.
However, it will be advantageous for the business to address the weaknesses mentioned above by implementing effective management methods and removing potential dangers that it may face in the future.
Apple’s SWOT or strategic analysis reveals that the quality and originality of its iPhone are key strengths.
Distribution channels in the countries are limited, and the price is high, but there may be a way to resolve it. There are numerous prospects for this organization and significant challenges from competitors.