APPLE INC. SWOT ANALYSIS 2016

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ABOUT APPLEName Apple Inc.

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)• Internet (iTunes store, iCloud, App Store, Mac App Store)

Geographic areas served Worldwide (retail stores in 18 countries and online stores in 120 countries)

Headquarters Cupertino, California, United States

Current CEO Timothy Donald "Tim" Cook

Revenue US$233.715 billion (2015) increased 27.85% over US$182.795 billion (2014)

Profit US$53.394 billion (2015) increased 35.14% over US$39.510 billion (2014)

Employees 110,000 (2015)

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, Inc. business overview from the company’s financial report:

“The Company designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. The Company’s products and services include iPhone®, iPad®, Mac®, iPod®, Apple TV®, a portfolio of consumer and professional software applications, the iOS and OS X® operating systems, iCloud®, and a variety of accessory, service and support offerings. The Company also sells and delivers digital content and applications through the iTunes Store®, App Store™, iBooks Store™, and Mac App Store .

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BUSINESS DESCRIPTION (1/3)“ ”

• retail stores• online stores• direct sales force• third-party cellular network

carriers• wholesalers• retailers• value-added resellers

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BUSINESS DESCRIPTION (2/3)

Our saleschannels include

“ ”

Our customers

are

• consumers• businesses• enterprises• education

institutions

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]

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BUSINESS DESCRIPTION (3/3) “ ”

Apple’s advertising budget is certainly

not the largest when compared to its

competitors’ budgets, but Apple uses it the

most effectively.

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STRENGTHS

1. Marketing and advertising capabilities, which increase brand awareness and create stronger demand for the company’s products

S WO T

Company 2012 2013Change from

20122014

Change from 2013

2015Change

from 2014

Apple 1 1.1 10% 1.2 9.1% 1.8 50%

Samsung

Electronics4.3 3.8 (11.6)% 3.6 (5.7)% 3.4 (5.5)%

Microsoft 1.6 2.6 38.5% 2.3 (11.5)% 1.9 (17.4)%

Amazon.com 2 2.4 20% 3.3 37.5% 3.8 15%

Google 2 2.4 20% 3 25% 3.2 6%

Figure 1. Yearly advertising budget spending by Apple and its competitors (in US$ billions)

Source: The respective companies’ financial reports[1][4][5][6][7]

1. Overdependence on iPhone and iPad sales

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WEAKNESSES

iPhone and iPad sales account for a higher

share of the company’s total revenue each year.

Figure 5. iPhone and iPad net sales (in US$ billions and percentage of total Apple sales)  2013 2014 2015

  iPhone

Net sales 91.279 101.991 155.041

% of total Apple

sales53% 56% 66%

  iPad

Net sales 31.980 30.283 23.227

% of total Apple

sales19% 17% 10%

Total share 72% 73% 76%

Source: Apple financial report[1]

S WO T

Overdependence on iPhone and iPad sales

weakens the company as shifts in technology, component prices or consumer tastes may

severely decrease Apple’s revenue.

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WEAKNESSES

iPhone66%

iPad10%

Mac11%

Services9%

Other Products4%

Figure 6. Apple revenue breakdown by product in 2015

Source: Apple financial report[1]

S WO T

1. The Internet of Things (IoT) market is expected to grow significantly over the next decade

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OPPORTUNITIES

Currently, more than 20 billion devices are connected to the Internet and this number is expected to grow by 50% to 30 billion by 2020.[21]

International Data Corporation (IDC) forecasts that the worldwide market for the IoT will grow from US$655.8 billion in 2014 to US$1.7 trillion by 2020.[22]

S WO T

Apple could introduce its own OS for IoT industry.

1. Intensifying competition puts pressure on Apple’s market share, revenue and profits

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THREATS

Apple’s main competitors

S WO T

• The markets in which Apple operates are highly competitive.

• In the smartphone sector, developed markets have nearly reached saturation and will grow only modestly in the next few years.

• Competition in the emerging markets is more based on price, product features and relative price/performance, rather than product quality, reliability, and the strong third-party software and peripherals’ ecosystem that Apple provides.

• Apple with its high-end but overpriced devices is likely to lose this emerging markets’ battle to cheaper Android devices.

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THREATSS WO T

1. Apple, Inc. (2016). Form 10-K for the Fiscal Year Ended September 26, 2015. Available at: http://files.shareholder.com/downloads/AAPL/899225436x0xS1193125-15-356351/320193/filing.pdf Accessed May 11, 2016

2. Apple (2016). Apple Store Locations. Available at: https://www.apple.com/retail/storelist/ Accessed May 11, 20163. Apple (2016). Choose your country or region. Available at: http://www.apple.com/choose-your-country/ Accessed May 11,

20164. Samsung Electronics (2016). Annual Report. Available at:

http://www.samsung.com/us/aboutsamsung/investor_relations/financial_information/downloads/2015/2015_con_quarter04_all.pdf Accessed May 11, 2016

5. Microsoft Corporation (2016). Form 10-K for the Fiscal Year Ended June 30, 2015. Available at: http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=10834537 Accessed May 11, 2016

6. Amazon.com, Inc. (2016). Form 10-K for the Fiscal Year Ended December 31, 2015. Available at: http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsannual Accessed May 11, 2016

7. Alphabet Inc., Google Inc. (2016). Form 10-K for the Fiscal Year Ended December 31, 2015. Available at: https://abc.xyz/investor/pdf/20151231_alphabet_10K.pdf Accessed May 11, 2016

8. Forbes (2016). The World’s Most Valuable Brands. Available at: http://www.forbes.com/powerful-brands/list/ Accessed May 11, 2016

9. Interbrand (2016). Best Global Brands 2015. Available at: http://interbrand.com/best-brands/best-global-brands/2015/ranking/ Accessed May 11, 2016

10.Tejada, C. & Dou, E. (2015). China’s Smartphone Market Slows Down. Available at: http://www.wsj.com/article_email/chinas-smartphone-market-slows-down-1431296873-lMyQjAxMTE1MzEyMDQxNzAwWj Accessed May 11, 2016

11.ITU (2015). Internet of Things Global Standards Initiative. Available at: http://www.itu.int/en/ITU-T/gsi/iot/Pages/default.aspx Accessed May 11, 2016

12.Time Tech (2011). Why competing with Apple is so difficult. Available at: http://techland.time.com/2011/07/01/why-competing-with-apple-is-so-difficult/ Accessed May 11, 2016

13.Statista (2014). Apple Beats Competitors in Smartphone Brand Loyalty. Available at: http://www.statista.com/chart/2460/brand-retention-in-the-smartphone-industry/ Accessed May 11, 2016

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SOURCES (1/3)

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SOURCES (2/3)14.Epstein, Z. (2015). Apple Continues to Crush Samsung Where It Matters Most. Available at: http://bgr.com/2015/06/29/apple-

vs-samsung-brand-loyalty-survey-rbc/ Accessed May 11, 201615.Statista (2016). Market share of smartphone shipments worldwide in 2015 and 2019, by country. Available at:

http://www.statista.com/statistics/431224/market-share-smartphone-shipments-countries/ Accessed May 11, 201616.Dediu, H. at Asymco (2013). Apple's International Retail Strategy. Available at: http://www.asymco.com/2013/02/25/apples-

international-retail-strategy/ Accessed May 11, 201617.Jaruzelski, B., Staack, V. & Goehle, B. (2015). Innovations New World Order. Available at:

http://www.strategy-business.com/feature/00370 Accessed May 11, 201618.U.S. Patent and Trademark Office (2014). Patenting by Organizations 2013. Available at:

http://www.uspto.gov/web/offices/ac/ido/oeip/taf/topo_13.htm Accessed May 11, 201619.U.S. Patent and Trademark Office (2015). Patenting by Organizations 2014. Available at:

http://www.uspto.gov/web/offices/ac/ido/oeip/taf/topo_14.htm Accessed May 11, 201620.U.S. Patent and Trademark Office (2016). Patenting by Organizations 2014. Available at:

http://www.uspto.gov/web/offices/ac/ido/oeip/taf/topo_15.htm Accessed May 11, 201621.EMC & IDC (2014). The Internet of Things. Available at: http://www.emc.com/leadership/digital-universe/2014iview/internet-

of-things.htm Accessed May 11, 201622.Norton, S. (2015). Internet of Things market to Reach $1.7 Trillion by 2020: IDC. Available at:

http://blogs.wsj.com/cio/2015/06/02/internet-of-things-market-to-reach-1-7-trillion-by-2020-idc/ Accessed May 11, 201623.Danova, T. (2014). The Wearables Report: Growth Trends, Consumer Attitudes, And Why Smartwatches Will Dominate.

Available at: http://www.businessinsider.com/the-wearable-computing-market-report-2014-10 Accessed May 11, 201624.PwC Health Research Institute (2014). Health wearables: Early days. Available at: http://www.pwc.com/en_US/us/health-

industries/top-health-industry-issues/assets/pwc-hri-wearable-devices.pdf Accessed May 11, 201625.World Health Organization (2015). Diabetes. Available at: http://www.who.int/mediacentre/factsheets/fs312/en/ Accessed May

11, 2016

26.Americans Diabetes Association (2014). Statistics About Diabetes. Available at: http://www.diabetes.org/diabetes-basics/statistics/?referrer=https://www.google.com/ Accessed May 11, 2016

27.Schiff, J. (2015). 8 Enterprise Software Predictions for 2015. Available at: http://www.cio.com/article/2865477/enterprise-software/8-enterprise-software-predictions-for-2015.html Accessed May 11, 2016

28.Lopez, M. (2014). Apple and IBM Just Showed Everyone The Future Of Enterprise Mobile Apps. Available at: http://www.forbes.com/sites/maribellopez/2014/12/10/apple-and-ibm-showcase-a-bold-new-enterprise-mobile-app-frontier/ Accessed May 11, 2016

29.McCarthy, V. (2015). IDC: Mobile Enterprise Management Software on a Tear; Set to Triple by 2016. Available at: http://www.idevnews.com/stories/5471/IDC-Mobile-Enterprise-Management-Software-on-a-Tear-Set-to-Triple-by-2016 Accessed May 11, 2016

30.Radicati, C. (2014). Enterprise Mobility Management Market, 2014-2018. Available at: http://www.radicati.com/wp/wp-content/uploads/2014/01/Enterprise-Mobility-Management-Market-2014-2018-Executive%20Summary.pdf Accessed May 11, 2016

31.Forbes (2014). Apple Is Ceding The Ecosystem Battle To Google. Available at: http://www.forbes.com/sites/terokuittinen/2014/01/28/apple-is-ceding-the-ecosystem-battle-to-google/ Accessed May 11, 2016

32.Unified Patents (2015). 1st Half 2015 Patent Dispute Report. Available at: http://unifiedpatents.com/1st-half-2015-patent-dispute-report/ Accessed May 11, 2016

33.Identity Theft Resource Center (2016). Identity Theft Resource Center Breach Report Hits Near Record High in 2015. Available at: http://www.idtheftcenter.org/ITRC-Surveys-Studies/2015databreaches.html Accessed May 11, 2016

34.eMarketer (2015). Mobile Payments Will Triple in the US in 2016. Available at: http://www.emarketer.com/Article/Mobile-Payments-Will-Triple-US-2016/1013147 Accessed May 11, 2016

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SOURCES (3/3)

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