Startups, Turnarounds and Things...
I was talking to someone about Apple today. Yes, they appear unstoppable and blew the doors off their most recent quarter. I decided to do a SWOT (Strength, Weaknesses, Opportunities and Threats) Analysis for my blog. Please comment below and let me know if you agree or disagree with any of my bullet points. I had a tough time coming up with more weaknesses. I would really like to review this post in two years and see what we got right, and what we may have missed. So please, comment today!
Apple Inc. designs, manufactures, and markets personal computers, mobile communication devices, and portable digital music and video players. The company also sells various related software, services, peripherals, and networking solutions.
The company sells its products worldwide through its online stores, retail stores, direct sales force, third-party wholesalers, resellers, and value-added resellers. In addition, it sells various third-party Macintosh, iPhone, and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and various other accessories and peripherals through its online and retail stores, and digital content and applications through the iTunes Store.
The company sells its products to consumer, small and mid-sized business, education, enterprise, government, and creative customers. As of March 1, 2012, it had 361 retail stores, including 246 stores in the United States and 115 stores internationally. The company, formerly known as Apple Computer, Inc., was founded in 1976 and is headquartered in Cupertino, California.
- iTunes Online Store is an excellent source of revenue derived from sales of music and applications for Apple’s iPhone, iPad and iPod touch devices.
- Excellent brand loyalty by its customers. Many own multiple products (Mac, iPhone, etc.)
- No debt, excellent cash flow. $13bn Net Income in most recent quarter. (Dec 2011).
- Excellent Research & Development division that is able to deliver (premium) products that customers will stand in line to buy.
- Global reach, Apple’s brand is strong around the globe.
- They own their own Operating System (iOS), which is used across their entire product line allowing them to sell a complete product without paying large royalty payments to their competitors.
- Apple is an innovator and technology leader.
- Apple’s first time customers, buying iPhone, iPods and iPads, are buying other Apple products, including Apple’s desktop and laptop computers based on the most recent quarter.
- Weak integration with Microsoft Office makes their product line less attractive to business enterprises.
- Google’s Android Operating system is slowing Apple’s growth rate in the mobile phone market.
- High price. Apple’s products are typically higher in price than its competitors. Price sensitive consumers tend to not consider Apple in buying decisions.
- Apple tends to lead innovation and then watch other companies control the market once it has reached the tipping point and wider consumer adoption.
- iTunes will continue to generate sales from music and applications, however I believe in the next two years Applications for the iPhone, iPod touch and iPad will generate more revenue than music downloads. Apple receives a 40% gross margin on all application sales.
- Cross product sales will continue to increase as more and more people choose Apple.
- Product development cycles have shortened in the mobile phone market, giving Apple a bigger opportunity in upgrade sales. Excellent iPhone 4 sales are an excellent example. Consumers are willing to update their phone hardware every two years.
- A new release of Apple’s iPod touch, featuring video chat, will likely be a huge revenue generator.
- A new release of Apple’s iPad, featuring video chat, will also likely be a huge revenue generator.
- Apple’s direct online sales channel will continue to grow, helping improve their already impressive gross margins.
- Apple new iAd advertising platform for Applications designed for the iPhone, iPad and iPod touch could be a significant revenue generator.
- Mobile Phones based on Google’s Android Operating System.
- Mobile Phones based on Microsoft’s new Mobile 7 Operating System.
- Cheaper laptop computers from Dell, Toshiba, HP, Sony and IBM.
- New Tablet computers based on Kingle Fire or Google’s Android Operating System could hurt their iPad sales.
- Online Music Stores from Amazon, Yahoo! and Wal-Mart offering music cheaper.
- New online music models that including renting the entire music library for a low monthly rate could change how consumers pay for music.
- Technology moves quickly, new threats from new startups are likely.
So there you have it. If you're a student, using this blog for your research, I would appreciate it if you would support our advertisers by clicking either the ad above or below this post before you leave the page. Your support will encourage me to update this post each Fall.
Finally, I would love to hear from you. Go on record now, use the comment below (on my blog) and we’ll see how we did in a year or so.