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Teaching Note —Apple Inc.
Strengths Weaknesses
Executive talent—Apple has a deep bench with expertise in
Cult-like customer base—Apple customers are fiercely loyal.
Apple ecosystem—Apple surrounds its core products with a
system of complements (such as iTunes) that increase their
overall value. For example, Apple’s iCloud allows data to be
widely recognized corporate brands.
Strong company financials and cash reserves—Apple’s retail
success has permitted it to build an enviable financial portfolio,
providing it with ample cash for future investments.
Loss of Steve Jobs—Despite the company’s deep executive
Loss of other key talent—Apple lost Ron Johnson, the previous
head of Apple Stores, to JCPenney, and other Apple important
its lack of transparency regarding its succession plan for Jobs.
Apple’s board is relatively small and had very close personal
connections with Jobs, which some argued limited its members’
willingness to exercise appropriate oversight. Pressure for
EXHIBIT TN-1 Apple SWOT
(continued)
Teaching Note —Apple Inc.
Opportunites Threats
Mobile advertising—Other sources project that the mobile
advertising industry will grow significantly, and Apple has
Consumer market trends—Generation X and younger
more useful as more applications are created to run on them.
Application sales have the potential to continue to grow and
AppleWatch. It is too early too tell; it was just introduced and
predictions vary widely. Many doubt Apple will be able to create
the wearables category as they did with the iPhone, for example.
ApplePay. There were both initial acceptance and fraud
problems.
launch of its iAds unit reportedly captured the attention of U.S.
antitrust regulators.
Competition—Apple, Amazon, Google, and Microsoft are
Rapid industry change—The technology industry is constantly
growing and changing, with new companies or competitors able
infringement.
EXHIBIT TN-1 (continued)
Teaching Note —Apple Inc.
Strengths Weaknesses
Low-cost, wide product selection—Amazon has a wide selection
of goods, is reliable and convenient, and it offers low prices with
fast shipping.
on efficiency and keeping costs low. For example, Amazon
has placed a distribution center inside P&G factories,
see: http://www.foxbusiness.com/industries/2013/10/15/
wsj-pg-others-share-warehouse-space-with-amazon/.
Negative publicity—Amazon has been criticized for not collecting
sales tax and for work conditions in its warehouses.
customers have bad experiences.
Opportunites Threats
computing services.
Amazon Prime—Amazon has the potential to convert most of its
customers from a transaction business model to a subscription
markets, leading these technology powerhouses into direct
competition (for example, the iPhone versus the Google Android,
or iTunes versus Amazon.com).
infrastructure costs (no warehouses/shipping) than Amazon.
EXHIBIT TN-2 Amazon SWOT
Teaching Note —Apple Inc.
Strengths Weaknesses
is gaining market share both with its Chrome Internet browser
and with its Android mobile operating system. This is reinforced
by Google offering these services for free and having revenues
come from advertising.
succeeding or failing fast to avoid losses.
Acquisitions—Google has integrated YouTube and other assets to
expand its interaction with customers and enable advertising.
Lack of strategy—While Google’s non-advertising revenue was up
72.3 percent in 2013 (Google 10K, 2013), it hasn’t communicated
any plans on how to significantly monetize other products, such
and Marissa Mayer to Yahoo.
Zombie products—Google has a number of products with a
relatively low market share, including media content through
Google Play, and social networking with Google+.
Opportunites Threats
potential Google customers as the Internet becomes more
available throughout the world.
computers.
costs, and the company is vulnerable to changes in consumer
preferences toward Internet access and entertainment.
reputation and revenue. In addition, certain hacks and breaches
may expose Google to criminal and civil litigation (Google 10K,
2013).
EXHIBIT TN-3 Google SWOT
Teaching Note —Apple Inc.
EXHIBIT TN-4 Microsoft SWOT
Strengths Weaknesses
share in new computer operating systems, and businesses
worldwide largely use its Office Suite for word processing and
e-mail.
Patents—Microsoft has an unrivaled portfolio of patents, with
business customers at the expense of a rapidly growing personal
consumption market. The development of Windows 10 and other
signals suggests a move to a subscription business model that
depends on market acceptance.
technology companies having more favorable brand images (e.g.,
the Mac vs. PC advertising campaign).
Opportunites Threats
Office 365 integrates Bing into Microsoft’s highly adopted
suite of business software, increasing usage, adoption,
and opportunities for displaying ads, which represents an
and its acquisition of Nokia offers the potential for better
Windows phones.
or iTunes versus Amazon.com).
Mobile gaming—Xbox console sales are threatened as users play
more inexpensive games on mobile devices.
and gaining familiarity in non-Microsoft software.
Teaching Note —Apple Inc.
Source: Statista.
EXHIBIT TN-5 Increased Reliance of Apple on iPhone and iPad Sales in the Face of Declining
iPod Sales
90
80
70
30
10
0
iPad
iPhone
iPod
2006 2007 2008 2009 2010 2011 2012 2013 2014
01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04 01 02 03 04
Teaching Note —Apple Inc.
EXHIBIT TN-6 Apple Watch in Comparison to Other Wearable Watches
Source: TheWallStreetJournal, March 8, 2015.
Smartwatch Tracker
The Apple Watch, which will be
released next month, enters a
new but crowded market.
Apple Watch LG Watch
Urbane LTE Moto 360 Pebble Samsung Gear 5
Starting Price $349 Unavailable $250 $99 $300 (AT&T full
What Makes it ‘Smart’
receive calls and
messages; sketch
or tap messages;
voice control;
track physical
Apple Pay
send messages
without a
phone; onscreen
keyboard; track
physical activity;
message and app
notifications;
predicts
information you
might want to
control; track
physical activity
for calls, texts,
emails; track
physical activity;
works with
iPhone and
send messages
without a
phone; onscreen
keyboard; voice
control; track
Teaching Note —Apple Inc.
Endnotes
1. Hough, J. 2015. Apple shares could return 15 percent in a year, Barrons, February 23, p. 20.
