SWOT analysis of Apple (5 Key Strengths in 2018)

Ovidijus Jurevicius | May 12, 2018

SWOT analysis of Apple Inc.

This Apple SWOT analysis reveals how one of the most successful world’s companies used its competitive advantages to become the dominant player in the tech industry.

It identifies all the key strengths, weaknesses, opportunities and threats that affect the company the most. If you want to find out more about the SWOT of Apple, you’re in the right place.

For more information on how to do a SWOT analysis please refer to our article.

Keep reading.

Company Background

Key Facts
Name Apple Inc.
Founded April 1, 1976
Logo
Industries served Computer hardware (Mac, iMac, Mac Pro, MacBook, MacBook Air)
Computer software (iOS, OS X, Safari, iLife, iWork, iMovie, iPhoto)
Consumer electronics (iPod, iPhone, iPad, Apple TV and Mac products)
Digital distribution (iTunes store, iCloud, App Store, Mac App Store)
Geographic areas served Worldwide (retail stores in 22 countries and online stores in 100 countries)
Headquarters Cupertino, California, United States
Current CEO Tim Cook
Revenue (US$) 229.234 billion (2017) 6.3% increase over 215.639 billion (2016)
Profit (US$) 48.351 billion (2017) 5.8% increase over 45.687 billion (2016)
Employees 123,000 (2017)
Main Competitors Samsung Electronics Co., Ltd., Amazon.com, Inc., International Business Machines Corporation, Cisco Systems, Inc., Google Inc., Microsoft Corporation, Dell Inc., LG Electronics, Lenovo Group Limited, Hewlett-Packard Company, Sony Corporation and many other computer hardware, computer software, consumer electronics and Internet companies.

Apple business overview from the company’s financial report:

“The Company designs, manufactures and markets mobile communication and media devices and personal computers, and sells a variety of related software, services, accessories, networking solutions and third-party digital content and applications.

The Company’s products and services include iPhone®, iPad®, Mac®, Apple Watch®, Apple TV®, a portfolio of consumer and professional software applications, iOS, macOS®, watchOS® and tvOS™ operating systems, iCloud®, Apple Pay® and a variety of accessory, service and support offerings.

The Company sells and delivers digital content and applications through the iTunes Store®, App Store®, Mac App Store, TV App Store, iBooks Store™ and Apple Music® (collectively “Digital Content and Services”).

The Company sells its products worldwide through its retail stores, online stores and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers and value-added resellers. In addition, the Company sells a variety of third-party Apple compatible products, including application software and various accessories through its retail and online stores.

The Company is committed to bringing the best user experience to its customers through its innovative hardware, software and services. The Company’s business strategy leverages its unique ability to design and develop its own operating systems, hardware, application software and services to provide its customers products and solutions with innovative design, superior ease-of-use and seamless integration.

The Company believes a high-quality buying experience with knowledgeable salespersons who can convey the value of the Company’s products and services greatly enhances its ability to attract and retain customers.

Therefore, the Company’s strategy also includes building and expanding its own retail and online stores and its third-party distribution network to effectively reach more customers and provide them with a high-quality sales and post-sales support experience.

The Company believes ongoing investment in research and development (“R&D”), marketing and advertising is critical to the development and sale of innovative products and technologies.”[1]

Apple Inc. SWOT Factors

Strengths

1. Unique ability to design and develop proprietary hardware, software, applications and services

Apple Inc.’s ability to design and develop its own hardware, software, applications and services allows the company to introduce unique, innovative and easy-to-use products and solutions for its customers.

Unique, innovative and easy-to-use products and services that integrate seamlessly into one Apple ecosystem are the reasons why customers buy Apple’s premium products and enjoy using them. In other words, it creates a competitive advantage no other company can match.

Figure 1. Apple’s product ecosystem

The diagram shows Apple's product ecosystem divided into four separate categories: hardware, software, services and application software.

Source: Strategic Management Insight

Apple’s ecosystem is the result of the company’s ability to design a wide variety of integrated proprietary hardware, software, applications and services.

Many of Apple’s competitors have tried and still try to imitate the success of Apple’s product ecosystem, but fail due to not having strong capabilities in designing, manufacturing and developing both hardware and software, applications and services.

Samsung Electronics, Apple’s strongest competitor, lacks a comprehensive OS and has very few apps and services to offer its customers. Google, Apple’s second largest competitor is very strong on software, application software and services, but has only developed a few unsuccessful hardware products.

Except for Google and Samsung Electronics, no other company could seriously attempt to challenge Apple’s competitive advantage.

2. Powerful brand supported by strong advertising and marketing capabilities

Apple is the world’s most valuable and recognizable brand. According to Interbrand [2] and Forbes [3], the Apple brand is worth US$184.154 billion and US$170 billion, respectively. Brand value is closely related to its recognition, meaning that Apple is also one of the world’s most recognizable brands. Their brand recognition is supported by its vast product ecosystem.

Moreover, Apple has a reputation of developing highly innovative, well designed, and well-functioning products, as well as for delivering a great customer experience and sound financial performance.

The company has been able to achieve such strong brand recognition and reputation through its strong advertising and marketing capabilities.

Apple’s excellence in creating spectacular marketing campaigns, its superior advertising capabilities, premium quality products and ability to deliver an excellent customer experience has allowed the company to build the most powerful brand in the world.

3. The most loyal customer base in every major product market where the company operates competes

Apple enjoys a very loyal customer base, considering that it doesn’t even have a loyalty program. Customers praise the company’s products for their innovation, design, ease-of-use, reliability and the status they convey. This is why they continue to buy and use Apple’s products even when there are better or cheaper options available in the market.

Brand Keys, a consultancy agency, issues a “Customer Loyalty Engagement Index” study each year. It examines the world’s top brands in many industries and how loyal customers are to these brands. According to their latest study[4], Apple’s brand enjoys the most loyal customer base in the following industries:

  • Laptop computers;
  • Online music;
  • Smartphones;
  • Tablets.

Figure 2. 2017 Brand Keys’ Customer Loyalty Engagement Index (Apple’s market leader positions)

According to Brand Keys, Apple is the market leader in laptop computers, online music, smartphones and tablets.

Source: Brand Keys[4]

Apple’s retention rates in the smartphone market are growing and are the highest among its major rivals. According to Morgan Stanley, Apple retains 92% of its customers, compared to Samsung’s retention rate of 77% and LG’s 59%.

Figure 3. Retention Rates in The Smartphone industry

In the smartphone intdustry, Apple has 92% retention rate, Samsung 77%, LG 59%, Motorola 56% and Nokia 42%.

Source: Statista[5]

Apple also enjoys the most loyal customers in the tablet and laptop markets, where the company was able to grow its market share even when both markets shrunk last year.

Customer loyalty is a key to every technology company’s success. Apple’s ability to retain its customers and do it so well brings it a competitive advantage no rival can match.

Access the full analysis... more Apple strengths, weaknesses, opportunities and threats

Published: May 12, 2018
Format: PDF + PowerPoint
Pages: 26
Words: 5,300
Charts/tables: 11
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What you get

PDF analysis
PowerPoint presentation
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Visualization of data
Comparison against rivals

Table of contents

  • Company Overview
  • SWOT Analysis
  • Strengths
  • Weaknesses
  • Opportunities
  • Threats
  • Summary
  • Sources

Sources

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About Ovidijus Jurevicius

Ovidijus is the founder of SM Insight and the lead writer since 2013. His interest and studies in strategic management turned into SM Insight project, the No.1 source on the subject online.

He's been using his knowledge on strategic management and swot analysis to analyze the businesses for the last 5 years. His work is published in many publications, including three books.