Apple Incorporated

Background

Apple Incorporated (APPL on NASDAQ) will forever be known as one of the greatest innovative companies of the 21st century. While products like the iMac put them on the map again in the computer world, it was the genius of Steve Jobs and the iPod that skyrocketed their leadership in the consumer electronics industry. Now, with Tim Cook as the CEO and many more companies competing with Apple, the pressure on Apple is greater than ever to maintain their innovative image.

The firm’s strategy is quite straightforward, to be simple and innovative. By releasing quality, easy to use products, their goal is for people to have Apple products for every type of consumer electronic, PC, MP3 player, tablet, and smartphone. Their flagship devices always carry a big price tag, but by reducing the prices of the older models of these types of products, they can reach a more economic diverse population. And this is their goal; they want people to turn to Apple for any consumer electronic need they have. This is very recently true with their release of their Apple Watch. They have also expanded where consumers can but their products, opening their channels.

The consumer electronics industry has created an industry where its consumers demand the most innovative technologies and products. With the variety of competitors that Apple faces now, it will be harder and harder for them to stay on top. In fact, the argument can be made that Apple (under Tim Cook) has become more of follower when it came to certain technologies. They released a smaller tablet and wireless payments years after it was introduced by Android companies (Samsung, Google, Amazon). With demanding consumers in this industry, Apple is at the point where they will need to again introduce something that will create a major competitive gap between them and their competitors. This is how they succeeded before and it is how they can succeed again in the future.

It was this innovation with the iPod that Steve Jobs deserves an A+ for running Apple. Not only did he make Apple profitable, but he made them the leader by far. Tim Cook on the other hand lacks the innovation but is a master at running a company. He deserves a B+ for his ability to maintain the profitability of Apple since the times of Steve Jobs. The true test on Tim Cook will be what or how he introduces as the next breakthrough to again make Apple the clear leader.

SWOT Analysis

Strengths

Product quality/reliability

Customer service

History of innovation

Full consumer electronics product line

Great following of existing customers

Weaknesses

Price

Lack of new innovation

No “new” product/reacting to industry

Proprietary computing and accessories

Opportunities

Low end/cost products

Constant improvement of industry (Moore’s Law)

Merging MacOS and iOS for a single interface type

Partnering with companies for manufacturing

Mergers and Acquisitions (Beats recently)

Threats

Internet/IT Security

Music Streaming Industry (lowering iTunes sales)

More affordable competition

Economy’s effect on luxury goods

International markets and competitors

To summarize the SWOT analysis table, Apples strengths include the physical quality of their products, great customer service, a history of innovative products, an offering in every type of consumer electronics good, and a following of consumers that have grown to love the Apple brand. Some of their weaknesses include high prices for their flagship products, lack of new innovation, not having introduced a revolutionary product in some time, and their proprietary computer programming and product accessories that makes it difficult to work cross platform.

The silver lining then is that some of their weaknesses can turn into opportunities. For example, they can introduce lower end more affordable products that can reach more economic levels of consumers. The computing industry itself serves as an opportunity. Given Moore’s Law that computing power generally doubles every year, this lends to Apples ability to create even better products. They can also merge their MacOS and iOS interface to truly have a seamless transition between all of their products. Also, similar to creating lower end affordable devices, Apple can partner with other manufactures and give them the rights to create their products. Apple has also started looking at mergers and acquisitions with the purchase of Beats. Looking at other companies for M&A would lead to more opportunities.

External threats for Apple include the ever-evolving threat of internet and computer security, and therefore Apple needs to adapt daily to new threats. Their iTunes music sales face a threat since music streaming services are what consumers are using. Also, international competitors are a threat not just because of their international presence but also by offering more affordable products when compared to Apple. Lastly, depending on how the economy performs will be an indicator of how willing and able the middle class will be to pay for Apple’s more expensive products.

Analysis and Evaluation

Apple’s