Weekly SWOT Analysis: Apple
With competitors doubling down on innovation and global uncertainty in the air, how is the industry heavyweight fairing? What does the future hold for Apple?
Published in
8 min readApr 17, 2019
Starting my weekly breakdown of the top publicly traded tech companies, I thought I should begin with the true industry leader.
Apple is years ahead of its’ competitors. Here’s why.
Strengths:
- Management team: If you need to understand why the management team is such an important part of Apple’s success, look at Snap. The social media company has been a revolving door of executives and chock-full of top level missteps. Ignore the Tim Cook criticisms, under Tim’s leadership Apple reached its highest levels of profitability. Yes Steve Jobs was the heart and soul of the company, but Tim Cook is the man behind delivering it all.
Apple is an operational behemoth from its vast retail network, to its insanely complex Supply chain. Tim Cook is the architect behind Apple. Jony Ives is one of the best designers alive. While the “notch” on the screen of the iPhone X was initially polarizing, it has become a standard on other smartphones. The design and operation expertise sets Apple apart from its competitors.
- Brand: This needs very little explanation. The world over knows the Apple brand. Bash it all you want, this is a well respected and often loved company. According to Forbes, Apple is the “World’s Most Valuable Brand”. This is critically important. If you compare the price of Apple products to offerings from competing brands, Apple’s devices tend to be much more expensive. This is because Apple has positioned itself as the “luxury-tech” brand of choice. Apple is more like Gucci and Google is more akin to Herschel or JanSport.
- Retail: Most people in the world have at the very least, set foot in an Apple store. Yes Apple stores are beautiful, iconic parts of each city they exist in. We’ve heard of the above average pay retail employees make. What really makes Apple’s retail endeavours so impressive is how profitable each store is. Apple stores make twice as much revenue per square foot than any other store in the USA. Another advantage is that customers usually don’t need to send their devices to so far away location for assessment and repair. Many repairs can be done on the spot in an Apple store. Other competitors lack this advantage. Moreover, there are very few Samsung, Huawei and Xiaomi retail stores in general. This is a clear advantage for the Cupertino giant.
- Services: Apple Music recently passed Spotify in paid subscribers. Apple has millions of iCloud users and has recently launch a slew of other paid services. The real key to Apple’s services growth will be AppleTV+. Given a historically strong relationship with Disney and tons of money to spend on original content, Apple is poised to become a video streaming titan. AppleTV+ has enough weight to deal Netflix a serious blow. Imagine if Louis Vuitton sold its customers a $10/month service to maintain their products? The fact Apple figured out how to charge a premium for its products and convince customers to fork over cash each month is nuts. Microsoft failed horribly with Groove Music despite commendable efforts and Google is still trying to figure out its music streaming play. Apple is far ahead here.
- Privacy: Frankly speaking, iOS, MacOS, Android and Windows all need to make some serious privacy related improvements. It is still far too easy for apps to collect user data without the user’s knowledge. Tim Cook has publicly taken a strong stance on privacy with Apple’s competition, governments and Apple itself in regards to user privacy. Apple is not immune to hacks to Google and Microsoft lag far behind in terms of securing their platforms. Worse yet, they both monetize user data in many nefarious ways. Apple promising “on device machine learning” means less consumer data floating into the cloud and less room for scandal.
- Hardware: Technical specifications of products can be misleading. There are many phones on the market that have superior on paper components than the current generation iPhone. RAM, cameras, screen resolution and even thinness play into a consumer’s purchasing decision. Samsung is known to make technically superior phones than Apple, but not overall superior. Apple has learned how to make the most of its hardware given it controls the software that runs on their devices. For example, the iPhone XS Max has 4GB of RAM, while Samsung’s Galaxy S10+ has a whopping 8GB of RAM. While the South Korean flagship has double the memory for applications to use, the speed difference between the two phones is negligible at best. This means Apple can keep its cost to produce a competitive phone low, keeping its margins high. Samsung and Huawei do not own Android, Google does. This is how Apple keeps the experience customers have so tight. They control everything.
Weaknesses:
- Partnerships: Apple isn’t the best at partnering with other companies. Steve Jobs said so himself while onstage with Bill Gates. This has always been a weak point for Apple. The recently resolved Qualcomm saga has been a distraction and a waste of money. This likely is the reason Apple has not delivered any 5G compatible devices, while Samsung is ready to do so with the Galaxy S10 5G. Brilliantly, this is being used as a chance to further push the boundaries of the S10 with hardware improvements vs the original 5G incompatible model. Even worse, Intel who is a key Apple partner, has bowed out of the 5G race for now. A blow dealt by none other than Apple. If iOS and MacOS fall behind, it is likely due to a weakness in partnerships.
- International: I recent tweet I made during the AppleTV+ announcement seems to have hit a nerve. Many of Apple’s services are crippled outside of the USA, lacking content and features. Apple’s new credit card is only available in the USA. Almost two years after being launched, Homepod has not even launched yet in critical markets. There are many region specific issues has to address. Apple is not the only tech company that lags behind in international markets but if Apple is looking for growth, they should look for this outside of the USA.
- Marketing: Apple has been known for its advertising campaigns for decades. From Super Bowl commercials, to the iconic iPod silhouettes, Apple was once consider a leader in delivering cool and inspiring ads. Since it began bringing advertising efforts in house, Apple’s ads just aren’t as cool anymore. I can recall being in a movie theatre, where an ad that highlighted how thin the MacBook Air is made the entire theatre gasp. Now Samsung and Microsoft are drawing all the attention for their cool advertising campaigns. Apple is perceived to have lost its “cool factor”. This is a major issue as Apple tries to maintain Beats and launch a gaming service, Apple Arcade.
Opportunities:
- A.I. (artificial intelligence): An area where Apple has done well but does not lead the pack is artificial intelligence. Siri has become a household name and Apple has inserted Siri into MacOS, iOS and watchOS. Apple’s focus on privacy seems to have slowed the company’s Siri advancements a bit. In the long term a focus on privacy may pay off as Amazon’s Alexa is starting to scare consumers. Apple has a much larger vision for A.I. than most people understand. The way you will interact with your iPhone in the future will be driven by Siri. With more developer integrations available and a focus on privacy, Siri may steal Alexa’s spot as the consumer A.I. leader.
- VR (virtual reality): Google Glass failed miserably. Snap’s Spectacles have been quite the miss. Making virtual reality a success is hard, just ask Nintendo. With competitors largely dropping the ball on VR (Oculus and Hololens show promise), Apple has a massive opportunity to drive consumers to a virtual reality device. With a rumoured device on the way, Apple has a chance to capture a potentially huge market, with little competition.
- Asia: Unbeknownst to most people, Apple is dominant in Japan. It is very common to see people use their iPhone to enter the Tokyo metro and even to enter their homes. Apple has a huge, loyal customer base in Japan where it can keep delivering new products that will be embraced. Apple Watch is very popular in Japan. With iPhone manufacturing increasing in India, Apple now has an entry point into a massive, relatively untapped market. Apple needs to get its entry level strategy right. The iPhone SE has not seen a successor, the iPhone 5C short lived and Apple has been resorting to selling old models in India. This is a major opportunity for Apple as China has become volatile in part due to the US trade war. India and Japan are critical markets for Apple and offer tons of growth opportunities.
Apple is clearly the leader in consumer technology. While iPhone is the current cash cow, this will likely change before 2025. How smoothly Apple transitions to a post iPhone business model is yet to be seen.
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