Strategic Analysis of Apple Essay Example

which may have led to a fine of up to 10% of its annual global revenue.

In 2006, an interesting political and legal case unfolded in Norway when the Norwegian Consumer Council filed a complaint against Apple regarding their DRM scheme on iTunes. This scheme restricted purchased songs to be transferred only to Apple iPods and not any other mp3 players, and could only be copied to Audio CDs, not mp3 CDs. On April 2nd, 2007, Apple established a firm with EMI, but they still need to meet the demands by September 2007 to ensure iTunes is legally operating in compliance with Norwegian law. Failure to do so will result in a lawsuit or termination of production in Norway. The BBC News defines DRM as "Digital rights management (DRM) is a class of technologies that allow rights owners (copyright-holding companies) to set and enforce terms by which people use their intellectual property" (5).

The economic sector is witnessing the emergence of new markets such as China, Japan, and Asia, contributing to a phase of global growth (7). However, Arthur D. Little, a consultancy firm, and the French brokerage house Exane BNP Paribas predict that the European cellular phone market will experience stagnation in the next three years due to market saturation (8). As a result, electronic manufacturers like Apple are seeking new markets for expansion. Despite challenges, Apple has struck a deal with China, which welcomes investment from multinational companies and has embraced the newly launched iPhone (9).

In January 2008, Apple and China Mobile had discussions that came to a halt when China Mobile declined to give up 30% of revenues that locally sold iPhones generated.

Gao Nianshu, the general manager of China Mobile's data department, stated that "Apple had given the impression it wanted to control the value chain" (10). The technology industry is highly competitive for skilled and experienced workers. In addition to Steve Jobs as CEO, the Company is fortunate to maintain high staff requirements.

Apple has been successful in attracting and retaining skilled personnel (2) to meet the increasing demand for electronic devices in society. Sales of gadgets have continued to rise since 2007, with the new iPod nano and iPhone ranking among the top 10 gadgets of that year according to statistics from Gadget Speak and Games Dog (11, 12). The iPhone has evolved into an all-around leisure companion, but waiting periods still exist between activities. To address this gap, Apple offers highly designed and application-based products.

When conducting a PEST analysis, it is crucial to take into account the impact of technology as it can have a significant influence on a company's success. Failing to meet market requirements can lead to downfall. An instance of this would be the present political pressure on Apple to produce or license new technological devices with specific DRM solutions, which remains uncertain if they will accomplish at an acceptable cost and timeframe (2). Another problem is the restricted energy density in portable electronic devices like notebooks, leading users to frequently connect their devices to power outlets resulting in inconvenience and wasted time.

Researchers at Stanford University made a major advancement in battery technology in December 2007. According to Science Daily, their findings showed that by utilizing silicon nanowires as anodes, rechargeable lithium-ion batteries found in laptops, cell phones, and video cameras could

be significantly improved. These nanowires have exceptional capacity for storing lithium and are situated on stainless steel to avoid cracking because of their small size. The team leader, Yi Cui, predicted that it would take roughly five years before the general public can access this breakthrough.

Seagate, a notable manufacturer of hard drives and supplier to Apple, has launched an inventive solution for digital storage called "Green-It." Their approach combines hybrid-notebook hard drives with flash storage resulting in several advantages such as 50% more energy density, faster boot-ups, and enhanced software reliability for laptops. The release date for Seagate's innovative technology is yet to be confirmed; however, it is expected to have a significant impact. To begin conducting a SWOT analysis of Apple, this report will first evaluate the company's strengths.On January 15th, 2007, Steve Jobs revealed that Apple had accomplished a remarkable achievement - creating the world's thinnest laptop that weighed only three pounds and was 0.76 inches thin. Furthermore, Apple's iTunes store has sold an impressive four billion songs worldwide, with a record-breaking number of 20 million songs sold on Christmas Day in 2007 alone (16). Although Apple primarily focuses on selling its products in the United States, Europe, and Japan (2), it continues to be a highly renowned company.

Apple is the sole producer of hardware utilizing the Mac OS, a range of operating systems based on graphical user interface. The company also boasts the world's top mp3 player and entertainment device, as well as the most lucrative music file downloading hub, iTunes store (17). Apple's continuous innovation and upgrading of current products have secured its financial stability for future research and development, catering

to diverse markets and customers. The company upholds its reputation for easy-to-use products that deliver long-lasting entertainment and technological potential (2).

Moreover, the personal computer market has a solid foundation, with machines running on Microsoft Windows operating system. Although the Mac OS is distinctive among operating systems, which can be deemed an advantage for Apple, it only has a small percentage of the market share. Consequently, it is imperative for the company to constantly investigate and enhance its Mac platform; otherwise, it risks losing its share in the market (2). Additionally, Apple has encountered challenges with upholding its reputation as a provider of high-end products. The company is recognized for delivering sophisticated hardware and software that is of superior quality.

Although a large corporation, Apple encounters problems with its product quality, both in hardware and software. Swift action is necessary to prevent revenue loss or reputational damage that could expose it to competition from rivals who may outperform it in terms of service and performance (2). Due to numerous competitors vying for market share, maintaining its distinctive strategy for developing and delivering products and services is critical for Apple. Some competitors even offer comparable products at little or no profit in an effort to undermine Apple's market position (2).

Apple's financial stability could be at risk due to its overreliance on a single cellular network carrier in key markets, such as AT;T in the United States, O2 in Great Britain, T-Mobile in Germany, and Orange in France. To mitigate this potential threat to the iPhone's revenue stream, Apple should consider partnering with multiple carriers in each region for greater market stability. Despite traditionally focusing on the computer sector,

Apple recently entered the ultra-light laptop trend with its Macbook Air release. The product is anticipated to fill a fashionable niche between basic Macbooks and Macbook Pros.

Tim Bajarin from Creative Strategies predicts a 20% growth in the laptop market soon, with around 50% of sales being for thinner and lighter models. The Los Angeles Times discusses how laptops are overtaking desktop PCs as the preferred option for households and businesses due to their smaller size and increased flexibility (18,19).

The year 2007 saw a rise in laptop sales by 21% to a total of 31.6 million, while desktop sales dropped approximately 4% to reach 35 million (19). The modern laptop offers ease of use and portability, allowing for convenient carrying in a briefcase without compromising on storage or performance (20). As the world becomes more mobile, stationary desktops that can only be accessed from one location are no longer preferred.

According to Dag Spicer, senior curator of the Computer History Museum in Mountain View, California, the computer has evolved into more than just a machine. It now serves as a companion, memory, teacher, and entertainer (20). Apple encounters fierce competition in each market sector it has acquired, such as mobile communications, personal computers, and digital sound devices. These markets are currently experiencing technological advancements in hardware and software (2). The mobile communications industry proves to be challenging for novice investors as it is dominated by experienced competitors.

As of Q3 2007, global mobile phone sales reached 289 million units. Apple is now contending with rival companies who may copy iPhone features and integrate them into their own smartphones (2). Gartner, Inc. reports that Nokia leads the top five

market leaders in terms of market share with 38.1%, followed by Samsung at 21%, Motorola at 7.6%, Sony Ericsson and LG both at 7%.

Source (21) reports that despite selling approximately four million units since its release in June 2007, the iPhone holds only a 1% share of the global market. In comparison, the leading companies collectively possess an 81.6% share.

Apple's global market share in the smart phone industry is only 0.13 percent (22) despite being a niche product. This means that Apple needs to gain a reasonable market share to remain relevant and compete with leading products. In addition to facing competitors like Samsung and Huawei, Apple now also faces threats from major music rivals such as Universal Music Group, EMI, and Sony BMG.

Universal Music Group has partnered with EMI for a 6-month trial by offering thousands of albums and tracks for sale without the copyright technology, DRM. However, they have chosen to restrict iTunes from accessing the DRM files, as they believe that Apple is monopolizing the digital music market, and hope to foster competition. (23) This report has conducted a PEST Analysis of Apple, outlining four significant influences that could impact the company. Apple must carefully monitor its political issues to ensure they do not hinder its marketing strategies. Additionally, the company must establish a secure position in emerging markets and cultivate strong relationships with local businesses in response to economic factors.

Regarding social influences, Apple is poised for success with its electronic devices. In terms of technological influences, it is important to keep a close eye on trends such as the "hybrid notebook hardrive" and reinvented lithium-ion batteries, and make necessary adjustments for

future growth. Overall, Apple has achieved economic growth on a large scale through continuous upgrades and new inventions like the iPhone. However, the company must be aware of stiff competition in the digital music (Universal Music Group and EMI), personal computer (Dell and HP), and mobile communications (Nokia and Motorola) markets. While Apple presently maintains its market shares, the future will reveal if it can gain greater market shares. After analyzing PEST and SWOT factors, the primary contemporary obstacle is likely the aggressive competition in all of Apple's businesses.

Over a span of 30 years, Apple has evolved from a small startup in a garage to a global corporation with net sales worth over $24 million (2). The company caters to diverse markets such as consumer electronics, personal computers, digital music devices, and mobile communication devices that are characterized by swift technological advancements in hardware and software. Nevertheless, the competition within these markets has intensified, leading to uncertainty among rivals due to cut-throat price wars. Despite adopting high pricing strategies traditionally, Apple is now grappling with stiff competition from aggressive competitors who offer similar products and services at lower prices without compromising quality.

Just like other products and services, competition is always present, and Apple must consistently create new tactics to outshine their rivals. Apple's merchandise has become a popular technology trend of today, and the company never stops manufacturing and developing new products. (Source: Apple Inc. 2007).

[online image] Apple Inc. jpg. Available at: ;http://www.freeaccess.com.au/wp-images/Applerecallsnotebookbatteries_8893/apple3.pg; [Accessed January 23 2008].

You can access the electronic book "Apple Confidential: The Real Story of Apple Computer Inc." by O. W. Linzmayer in Berkeley through the following link: ;http://www.>. The book

was published in 1999 by William Pollock.

Accessed on January 23, 2008, the website amazon.com provides a reader for the book with ISBN number 188641128X and can be found at gp/reader/188641128X/ref=sib_dp_pt/104-3804915-0570347#reader-link. Additionally, information can be obtained from the United States Securities and Exchange Commission.

The 2007 Annual Report of Apple Inc can be accessed online from Washington via the corporate-ir media website:

Accessed on January 23, 2008, from net/media_files/irol/10/107357/AAPL_10K_FY07. pdf; (3) by Fahy, J.

The second edition of "Foundations of Marketing" was written by D. Jobber in 2006.

The Times. 2007. ISBN 10: 00771918-x. Berkshire: McGraw-Hill Education. [Accessed on January 23, 2008]. (4).

According to an online article from timesonline.co.uk, Brussels is warning Apple of a 330 million euro fine for their pricing practices regarding music.

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discusses accessing the ECE on January 23, 2008, as well as referencing a BBC News piece from 2007 that defines DRM. The information is available online at http://news.The information source for this content is the website bbc.co.uk/2/hi/technology/6337781.stm, which was accessed on January 23, 2008. This information is denoted by a (6) tag.

According to an article on Apple Insider from 2007, a Norwegian official praised the deal between Apple and EMI, and called for similar actions from others. The full article can be found at http://www.appleinsider.com.

On January 23, 2008, The Guardian referenced an article that was accessed on April 2, 2007 via the URL com/articles/07/04/02/norwegian_official_applauds_apple_emi_deal_asks_others_to_follow.html. This article reports on a Norwegian official who praised Apple's agreement with EMI and encouraged other entities to follow their example.

Information about the impact of 2007 on Asia's emerging markets is available at http://www.guardian.co.uk/business/2007/aug/17/useconomy.

Manage it. 2007. [us1].

Accessed on January 23, 2008 (8).

The European telecommunications market information can be found online at and was accessed on January 23, 2008. This source has a reference number of 9 and is enclosed within .The online resource "China's Emerging Market" is available from Private Waterhouse Coopers, dated 2007 and accessed through the website http://www.pwc. The text is enclosed within HTML paragraph tags.The Financial Times published an article in 2008 and a related web page can be accessed at com/Extweb/pwcpublications.nsf/docid/7D8E2273C054823185256FDA006EB5FC, which was accessed on January 23 2008. The information is contained in a paragraph tag.China Mobile has discontinued negotiations with Apple regarding the introduction of the iPhone. The information can be found on the website: .

The website "Gadget Speak" has made predictions for the best Christmas presents for adults in 2007, as accessed on January 23, 2008. (11).

On January 23, 2008 (12), Games Dog read a Gadgetspeak article that predicted the top Christmas gifts. The article could be found on . The text is encased in a paragraph tag.The 2007 edition of the Pocket-lint Gadget Awards was covered on the website ;http://www.gamesdog.co.uk/info/awards2007;.

The following HTML-formatted content serves as a citation for an internet resource that was accessed on January 23, 2008. The resource in question can be located at http://www.sciencedaily.com/releases/2007/12/071219103105.htm. Furthermore, the citation acknowledges a source called "Gm-volt."

In 2007, an interview was conducted with Dr. Cui, the inventor of the breakthrough in silicon nanowire lithium-ion batteries. The interview can be found online at http://www.gm-volt.

The source "gm-volt.com" published an

interview with Dr. Cui, the inventor of the Silicon Nanowire Lithium-ion Battery Breakthrough on December 21, 2007. It was accessed on January 23, 2008. Additionally, Seagate released information in 2007 about their Seagate Hybrid Hard Drive, which promotes environmentally friendly notebook computers.The webpage located at "http://www.seagate.com/ww/v/index.jsp?locale=en-US&name=null&vgnextoid=f9be1194e3085110VgnVCM100000f5ee0a0aRCRD" was accessed on January 23, 2008. The information is available online.

(16) On January 15, 2008, M. Calore wrote about the "Stevenote By the Numbers" in Macworld on Wired Blog Network.

The online source at http://blog.wired.com/gadgets/2008/01/macworld-the-st is available.

On January 23, 2008, the rights information from the 2006 HTML source was accessed.

The online Apple iTunes Music Store is accessible at http://irights.de/index.php?id=501 and was accessed on January 23, 2008.

(18) Wired Blog Network reported that on January 15, 2008, B. Gardiner discussed the analysis of the 'Air' in Macworld among analysts.

The web resource "http://blog.wired.com/gadgets/2008/01/macbook-air-the.html" was accessed on January 23, 2008 and is available online.

(19). While there was anticipation for the iPhone's expansion into Canada, its move into China has been postponed. The Los Angeles Times reported on this in 2008 and the article can be accessed online at <http://www.latimes.>

The webpage source is from the following link: https://www.com/business/la-fi-iphone15jan15,1,3339999.story?ctrack=1&cset=true. Accessed on January 23, 2008.