Apple SWOT analysis uncovers some of the big challenges Apple faces in 2020 and beyond. One big issue though can’t be ignored.
Apple is a US-based consumer electronic company that has an estimated worth of over a trillion dollars. Equally impressive, is how Apple has retained the top slot of being the number one brand in the world for seven consecutive years.
Apple though is at a pivotal point in its history. Competition is now fierce and Apple’s growth is stalling.
There’s a lot to love about Apple, its history iconic leaders and pioneering design. But let’s face it, others have caught up.
Apple is now looking quite exposed with over 55% of revenue from a single product line which is facing fierce competition, particularly from Asia. Is Apple is in jeopardy of following in the footsteps of Nokia?
Part of any SWOT requires is an analysis of the company’s financial performance, market and the Apple business model.
In this Apple SWOT analysis, I’ll take a look into the external challenges Apple faces – the Opportunities and Threats, as well as its internal capabilities to realize the opportunities and deal with the threats – Strengths and Weaknesses.
What is the SWOT analysis For Apple?
The SWOT analysis of Apple analyses the internal capabilities of Apple (strengths and weaknesses) as well as the external environment (opportunities and threats). The result shows Apple is at a pivotal point in its history.
Financial Analysis of Apple
To see the full breakdown of Apple’s financial results
Apple SWOT analysis – 2019 revenue and profits
Apple’s Strengths
Apple’s Weaknesses
High Priced Products
The iPhone represents over 55% of Apple’s revenue in 2019. However, iPhone sales recently slumped, dropping from $165 billion in 2018 to $139 billion in 2019.
Apple charges premium prices across all its products and in developing Countries Apple is pricing itself out of the market. Lower-priced smartphones are taking market share and in Asia Apple is losing ground to brands such as Huawei
China now accounts for 30% of the smartphone market but Apple saw a sharp decline in sales of over 30%.
Narrow Product Set
Apple has focused on a very slim set of products and often has limited the number of varieties. The high-prices and narrow range may restrict growth in developing Countries where smaller competitors have a similar feature set phones at lower prices.
A further weakness is that not all products in the range are successful. The HomePod is not a very good smart speaker and has had no impact in the market. Amazon and Google still dominate with their range of speakers.
Incompatability with other software
Apple has long been criticized for how poorly Apple devices and software connect with other non-Apple devices.
Lack of innovation
There has been plenty of improvements in the Apple range – new features with the iPhone (and the high price to go with it), new features for the IPad but no real groundbreaking products have been launched recently. Many analysts are questioning if Apple has lost its innovative spirit and is simply playing safe by expanding into services rather than creating new products.
Competing in non-core markets
Apple’s move to service could pay off but Apple hasn’t been a platform business before. It is now going up against pure born-platform leaders such as Netflix, Disney and Amazon. Most people will favour one maybe two services at most and Apple is just breaking into this market – whether it will be successful in the long run remains to be seen. In the meantime, Apple is facing tough market conditions in its traditional product markets.
Limited Distribution and Partnerships
Apple has a limited number of stores and distribution network. It has stores in 25 Countries which leaves a lot of gaps in worldwide retail distribution. Although Apple deals with retail partners these are carefully selected and are limited.
China and Asia
Sales in China are declining and there is no real growth in the rest of Asia. This could present a problem for Apple in the future. If the western countries fell into a recession sales of the Apple premium products would drop leaving Apple exposed. You can see from the Apple infographic of the last three years revenue the China and Rest of Asia performance.
Apple’s Opportunities
Apple’s Threats
Corona virus Outbreak
Apple manufacturers like Foxxconn were forced as a result of the coronavirus in China. Additionally, Apple stores in China shut their doors creating a further problem. China accounted for $43 billion of sales in 2019, roughly 16.5% of total sales, but now sales have plummeted. Not only has Apple’s supply chain has been disrupted but retail across the globe has suffered from lockdowns in major markets.
Intensity of Competition
Smartphones are a crowded market where more and more consumer electronic companies have now compete. The strongest brand at the moment is Samsung, but the market for smartphones, music streaming, entertainment streaming is becoming more competitive. As an example, Disney used to license its content to Netflix but has more recently launched Disney+.
Asia has seen its own homegrown streaming video services such as Youku Tudou and Hooq.
New Disruptive Brands
Oppo which is largely unknown in the west has grown to become China’s top smartphone – a clear case of disrupting the established players. These disruptive newcomers could expand and erode Apple’s dominance by offering lower-cost phones with similar features to gran the lower end of the market then move upmarket with higher-end phones.
China Tariffs
The US government has imposed a tariff on imports from China. Inevitably this will lead to an increase in the overall cost of Apple products. This could create the perfect storm and along with coronavirus and talks of a downturn in the economy, even devoted Apple fans might seek solace in lower-cost smartphones.
Rising Costs in China
The cost of labour in China has and continues to rise as the China economy evolves. In turn, this could place further pressure on pricing at a time when Apple continues to push premium products over more economical versions.
Intellectual Property Infringements
Apple and Broadcom had to pay out $1.1 billion for infringing the California Institute of Technology’s patents. While Apple has money to pay for this, it brings into question their ethics and approach to intellectual property and the potential for related cases.
Apple is probably one of the most iconic brands of our time. The Apple business…
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