Apple Swot

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SWOTApple SWOT

Strengths
o   Apple Love: “The majority of IBM and compatible users ‘put up’ with their machines, but Apple’s customers ‘love’ their Macs” o   Perception of being a “hip” alternative & cultural force o   Multimedia & design capabilities/software

o   Now compatible with Windows/Microsoft Office suite, and supports plug and play “peripherals” such as printers designed for Wintel PCs o   Intel allowed Macs to run Windows and thus remove a long-standing disadvantage o   Dominance in designing UI technology (intuitive, attractive design and interface) o   Digital convergence/entire Apple platform, not just a single PC or device o   Retail channel strategy

o   Economics of Mac/Apple devices

Weaknesses
o   Lingering perception that Apple computers are not intuitive to use, or are not compatible with Microsoft Windows systems/software o   Perception that Macs are over-priced as compared to other PC options o   Limited scale/penetration within PC market (largely concentrated market)

Opportunities
o   PC product offering(s) with lower price point
o   Obtaining more of the mainstream consumer base
o   Large consumer base with iTunes/iPods – convert more to Mac with additional engagement? o   Expand availability of iPhone/providers

Threats
o   Smartphone platforms – particularly Android
o   Other music platforms – subscription & streaming, both paid and free UI/design aesthetic could be copied, with resulting products sold at lower price

Questions

1. What were Apple’s competitive advantages?
o   “PFM.”  Or “Pure F’ing Magic”
o   Ready “out of the box”
o   Multimedia & design capabilities, and sought-after proprietary software such as iLife suite o   Perception of being a “hip” alternative to the PC, and being a “cultural force” o   Apple Love: “The majority of IBM and compatible users ‘put up’ with their machines, but Apple’s customers ‘love’ their Macs” o   Superior operating system (OS X) and frequent upgrades not only attracted new users, but also helped build loyalty with current Mac users o   Channels Management: Apple retail stores gave consumers a chance to interact with their products and thereby drive trial o   Half of the 1.4MM Macs sold during Apple’s F’2007 are reported to have been to never-buyers of Macs Key factor in bringing traffic to stores (and thus driving consideration of the Mac comptuers) was the iPod

2. Analyze the dynamics of the PC industry. Are these dynamics favorable or problematic for Apple? o   Although Apple was first-to-market in making a “usable” personal computer, IBM was the first to make it “mainstream” - and thus captured the lion’s share of the market in 1980s o   Throughout 90s, “Wintel” devices replaced IBM/”IBM-compatible” devices (in came Dell, Compaq, etc)            o   This was problematic for Apple due to the “closed system” of its devices o   From 1980s to 2000s the PC industry grew at about 15% per year, but revenue growth declined due to competitive pricing o   Competitive pricing of the industry would prove problematic for Apple due their premium pricing o   In 2008, an average PC was $400 in costs and would retail for $500 (full range was ~$300-$3,000), whereas Mac products ranged from $1,000-3,000. o   As parts became standardized many PC manufacturers cut R&D spend o   This would be an advantage for Apple as Jobs was committed to maintaining/increasing R&D spend

o   In 2007, top 4 PC manufacturers accounted for >50% of sales o   Highly concentrated market could make it difficult for Apple to drive increased household penetration
o   Microprocessors & Operating Systems had limited sources – only Intel and Microsoft o   2007: 85-90% of all PCs in the world ran Windows
o   Consumers were accustomed to these products and interfaces, so it was essential for Macs to be compatible with them
o   By 2008, PCs were much more user friendly than they had been in the past – so whereas Apple products had a...
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