Apple S.W.O.T. Analysis

Topics: Apple Inc., IPhone, Smartphone Pages: 7 (2204 words) Published: March 18, 2010
S.W.O.T Analysis- Apple Inc.
Eleanor Arlook
DMP- Thursday 6:30-9:20

Apple designs, manufactures and markets personal computers and related software, portable digital music players, and related accessories.The company markets third party audio and video products, and provides related services.The company has a strong brand image, which enables it to command a premium price for its products, giving it an edge over regional as well as other global competitors. However, intense competition threatens to erode the market share of the company.

Strong brand image
The Apple brand is well recognized amongst most consumers. Apple also enjoys a high level of brand awareness and brand recognition for its products in all its markets. The company’s brand value, as per the Interbrand rankings, has improved from 39 in 2006, 35 in 2007 to 24 in 2008. The brand value of the company improved to $13,724 million in 2008 from $11,037 million in 2007. Apple leverages its brand image to differentiate its product offering and drive sales. The company’s strong brand enables it to command a premium pricing for its products such as iMac, iPod and iPhone, giving it an edge over regional as well as other global competitors such as Sony.

Robust financial performance
Apple reported robust financial performance in the past few years. The company’s total revenue increased from $6,207 million in FY2003 to $32,479 million in FY2008, representing a compounded annual growth rate (CAGR) of 39%. The company’s operating income recovered from an operating loss of $1 million in FY2003 to an operating profit of $6,275 million in FY2008. As a result, the company operating profit margin has improved from 3.9% in 2004 to 19.3% in FY2008. Apple’s net income increased from $69 million in 2003 to $4,834 million in 2008. Following the trend, Apples net income margin improved from 1.1% in FY2003 to 14.8% in FY2007.

The net sales increased around 35% in 2008 as a result of increased sales of Mac, iPods, iPhone, other music related products and services, peripherals and other hardware, and software, service, and other. The net sales of Mac, iPods, other music related products and services, peripherals and other hardware, and software, service, and other increased by 38%, 10%, 34%, 32%, and 46% respectively in FY2008. Net sales of iPhone and related products and services were $1.8 billion for 2008, with iPhone handset unit sales totaling 11.6 million.

The company’s cash from operating activities reached $9,596 million in FY2008, as compared to $289 million in FY2003. Strong growth in revenues and cash flows indicates better financial position of the company and helps it to strengthen investor confidence.

Focus on research and development
Apple has a strong focus on research and development as continual investment in research and development is critical to the development and enhancement of innovative products and technologies. In addition to evolving its personal computers and related solutions, the company continues to capitalize on the convergence of the personal computer, digital consumer electronics and mobile communications by creating and refining innovations, such as the iPod, iPhone, iTunes Store, and Apple TV.

The company’s research and development expenditures were $1.1 billion, $782 million, and $712 million in 2008, 2007, and 2006, respectively. The company’s R&D spending is focused on further developing its existing Mac line of personal computers, its operating system, application software, iPhone and iPods; developing new digital lifestyle consumer and professional software applications; and investing in new product areas and technologies.

In January 2009, Apple introduced the new 17-inch MacBook Pro featuring a new built-in battery that delivers up to eight hours of use and up to 1,000 recharges for more than three times the lifespan of conventional notebook...
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