Weakness of Apple Inc. and Reccomended Strategies

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Apple’s ability to compete successfully and maintain attractive gross margins is heavily dependent upon its ability to ensure a continuing and timely flow of innovative and competitive products and technology to the marketplace. As a result, the Company incurs higher research and development costs as a percentage of revenue than its competitors who sell Windows-based personal computers. If Apple is unable to continue to develop and sell innovative new products with attractive gross margins, its results of operations may be materially adversely affected by its operating costs structure. Apple has also been lacking in their business marketing strategies and distribution networks. With regards to the personal computer industry, the familiarity of the Apple software is not there. The original goal of teaching on an apple computer has been over shadowed by Microsoft. Education is now geared toward a version of Windows which is not compatible with Apple hardware. The most important hardware developed by Apple has been the iPod that is capable of downloading mp3 files to a device. Many of Apple’s products are manufactured in whole or in part by third-party manufacturers. While outsourcing arrangements may lower the fixed cost of operations, they also reduce the company’s direct control over production and distribution. This diminished control will have negative effects on the quality or quantity of the products manufactured, or the flexibility of the company to respond to changing market conditions. Apple’s key business marketing strategy in the company’s early years was to market heavily on the educational market. Their assumption was, if students learned computer applications and techniques on Apple computers in school, they would demand Apple products in the business environment, therefore they could migrate their products through assimilation into the business environment. Although Apple was and is successful in penetrating the educational environment, the residual...
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