Apple Inc. SWOT analysis 2016
Apple, Inc. SWOT analysis by Strategic Management Insight
www.strategicmanagementinsight.com
2
Table of Contents
Company overview 3
SWOT analysis 5
Strengths 6
Weaknesses 10
Opportunities 14
Threats 16
Sources 20
Apple, Inc. SWOT analysis by Strategic Management Insight
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Company overview
Business description
Apple business overview from the company’s financial report:
“The Company designs, manufactures, and markets mobile communication and media devices,
personal computers, and portable digital music players, and sells a variety of related software,
services, peripherals, networking solutions, and third-party digital content and applications. The
Company’s products and services include iPhone®, iPad®, Mac®, iPod®, Apple TV®, a portfolio
of consumer and professional software applications, the iOS and OS X® operating systems,
iCloud®, and a variety of accessory, service and support offerings. The Company also sells and
delivers digital content and applications through the iTunes Store®, App Store™, iBooks Store™,
Name
Apple Inc.
Industries served
Computer hardware (Mac, iMac, Mac Pro, MacBook, MacBook Air)
Computer software (iOS, OS X, Safari, iLife, iWork, iMovie, iPhoto)
Consumer electronics (iPod, iPhone, iPad, Apple TV and Mac
products)
Internet (iTunes store, iCloud, App Store, Mac App Store)
Geographic areas served
Worldwide (retail stores in 18 countries and online stores in 120
countries)
Headquarters
Cupertino, California, United States
Current CEO
Timothy Donald “Tim” Cook
Revenue
US$233.715 billion (2015) 27.85% US$182.795 billion (2014)
Profit
US$53.394 billion (2015) 35.14% US$39.510 billion (2014)
Employees
110,000 (2015)
Main Competitors
Samsung Electronics Co., Ltd., Amazon.com, Inc., International
Business Machines Corporation, Cisco Systems, Inc., Google Inc.,
Microsoft Corporation, Dell Inc., LG Electronics, Lenovo Group
Limited, Hewlett-Packard Company, Sony Corporation and many
other computer hardware, computer software, consumer
electronics and Internet companies.
Apple, Inc. SWOT analysis by Strategic Management Insight
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and Mac App Store. The Company sells its products worldwide through its retail stores, online
stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers,
retailers, and value-added resellers. In addition, the Company sells a variety of third-party iPhone,
iPad, Mac and iPod compatible products, including application software, and various accessories,
through its online and retail stores. The company sells to consumers; small and mid-sized
businesses (“SMB”); and education, enterprise and government customers.
The Company is committed to bringing the best user experience to its customers through its
innovative hardware, software and services. The Company’s business strategy leverages its
unique ability to design and develop its own operating systems, hardware, application software and
services to provide its customers products and solutions with innovative design, superior ease-of–
use and seamless integration. The Company believes a high-quality buying experience with
knowledgeable salespersons who can convey the value of the Company’s products and services
greatly enhances its ability to attract and retain customers. Therefore, the Company’s strategy also
includes building and expanding its own retail and online stores and its third-party distribution
network to effectively reach more customers and provide them with a high-quality sales and post-
sales support experience. The Company believes ongoing investment in research and
development (“R&D”), marketing and advertising is critical to the development and sale of
innovative products and technologies.”[1]
Apple, Inc. SWOT analysis by Strategic Management Insight
www.strategicmanagementinsight.com
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SWOT Analysis
Strengths
Opportunities
1. The Internet of Things (IoT) market is
expected to grow significantly over the next
decade
2. Health-related wearable gadgets could be
introduced to the market
3. Expanding mobile payments market
4. The mobile enterprise app market will gain
traction as more businesses shift toward
buying subscription-based software
1. Intensifying competition puts pressure on
Apple’s market share, revenue and profits
2. The rising U.S. dollar exchange rate could
negatively affect the company’s revenue and
profits
3. Lawsuits over patent infringements
resulting in damaged brand reputation
4. Risk of data breaches
1. Marketing and advertising capabilities,
which increase brand awareness and create
stronger demand for the company’s products
2. Strong and extensive U.S. distribution
channels
3. Vertical integration
4. Brand awareness and reputation
5. Sound financial performance with one of
the strongest cash flows
1. Overdependence on iPhone and iPad
sales
2. Weak direct distribution channels in China
and India
3. Low expenditure on R&D compared to
other companies leads to fewer patents,
innovations and products introduced to the
market
4. Incompatibility with other OS
Apple, Inc. SWOT analysis by Strategic Management Insight
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Strengths
1. Marketing and advertising capabilities, which increase brand awareness and create
stronger demand for the company’s products. Apple’s annual advertising budget reached
US$1.8 billion[1] in 2015, almost doubling from US$933 million in 2011. The company’s advertising
budget is certainly not the largest when compared to its competitors’ budgets, but Apple use it the
most effectively.
Figure 1. Yearly advertising budget spending by Apple and its competitors (in US$ billions)
Company
2012
2013
Change from
2012
2014
Change
from 2013
2015
Change
from 2014
Apple
1
1.1
10%
1.2
9.1%
1.8
50%
Samsung
Electronics
4.3
3.8
(11.6)%
3.6
(5.7)%
–
–
Microsoft
1.6
2.6
38.5%
2.3
(11.5)%
1.9
(17.4)%
Amazon.com
2
2.4
20%
3.3
37.5%
–
–
Google
2
2.4
20%
3
25%
–
–
Source: The respective companies’ financial reports[1][4][5][6][7]
Apple’s advertising expenses started to climb in 2010 when its new iPhone and iPad products were
launched. However, overall spending on advertising never climbed higher than 1% of total
company sales. In 2015, Apple spent only 0.77% of its total sales revenue on advertising,
compared to Samsung Electronics’ (Samsung) 1.83% of its total sales spent in 2014. This means
that even though Apple spends less on advertising, it still achieves greater returns for the money
spent than Samsung. This is also reflected in the company’s brand valuation growth. Forbes[8] and
Interbrand[9] both listed Apple as the most valuable brand in the world in 2015, valuing it at
US$145.3 billion and US$170.3 billion respectively. Both companies indicated Apple’s brand is one
of the fastest growing in the world, even though Apple has spent comparatively little on advertising.
What does this say about Apple’s marketing and advertising capabilities? It means that Apple’s
advertising money is spent more effectively than its rivals and provides it with greater returns in
terms of revenue, brand value and recognition. It also shows the strength of its marketing and
advertising capabilities. Such strength creates competitive advantages that no other company can
match.
2. Strong and extensive U.S. distribution channels. The U.S. is the second largest smartphone
market in the world[10], and the leading high-end smartphone market followed by China. The U.S.
is also the largest market in the world for almost any other high-end device. This makes the U.S.
the most important market for Apple to compete in as the company’s smartphones, tablets and
computers are premium quality devices. The U.S. is also the most important single market for the
company, generating earnings of US$81.732 billion or 34.97% of total Apple sales in 2015.[1]
Figure 2. Market share of smartphone shipments worldwide in 2015 (forecast), by country
29.73%
11.81%
7.61%
4.4%
2.4%
44.05%
China
U.S.
India
Brazil
United Kingdom
Other countries