Apple SWOT Analysis – The Big Problem It Can’t Ignore

Apple SWOT analysis uncovers some of the big challenges Apple faces in 2024 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

Gary Fox

Apple Swot Analysis Latest

Apple SWOT analysis uncovers some of the big challenges Apple faces in 2024 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 several 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 50% 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?

Apple Quick Facts

. Company name:

Apple

Founders:

Steve Jobs, Steve Wozniak, and Ronald Wayne

Launch date:

April 1, 1976

Year founded:

1976

Company CEO:

Tim Cook

Headquarters

Cupertino, California, USA

Number of employees

(FY 2019): 161,000

Ticker symbol

AAPL

Annual revenue

(FY 2023): $383.3 billion.

Profit | Net Income

FY 2023: $97.0 billion

Market Cap

(Feb, 2024): $2.82 Trillion

Apple Products and Services

  • Mac
  • Macbook
  • iPad
  • iPhone
  • Apple Watch
  • TV+
  • Apple Music
  • Apple Arcade (Gaming Platform)
  • App Store
  • iCloud
  • Vision Pro

Apple Competitors

Apple SWOT Analysis

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.

The following table presents the revenue and gross margin (as a proxy for profitability since net profit by line is not provided) for Apple Inc.’s product and service lines for FY 2023:

Product/Service LineRevenue ($ Billion)Gross Margin ($ Billion)Gross Margin Percentage
iPhone200.6N/AN/A
Mac29.4N/AN/A
iPad28.3N/AN/A
Wearables, Home and Accessories39.8N/AN/A
Services85.260.370.8%
Total (Products & Services)383.3169.144.1%
  • Products Gross Margin: For products (iPhone, Mac, iPad, Wearables, Home and Accessories), the specific gross margin is not discretely listed, but the overall products gross margin was $108.8 billion​​.
  • Services Gross Margin: The services gross margin was $60.3 billion, with a gross margin percentage of 70.8%​​.
  • Overall Gross Margin: The total gross margin for Apple Inc. across all products and services was $169.1 billion for the fiscal year 2023, with an overall gross margin percentage of 44.1%

Apple’s Strengths

Brand Value

Apple maintains its status as a globally recognized and prestigious brand. Interbrand.

Financial Performance

At the end of 2023, Apple had $28 billion cash in hand. Apple continues to showcase strong financial health, with a substantial cash reserve for strategic initiatives.

Intellectual Property

Apple excels at innovation and The company’s investment in R&D fosters innovation, securing patents that protect its technologies and products. Apple’s commitment to best-in-class design is evident in its products, including the new Vision Pro headset.

Global Coverage

Apple operates has 500 stores in 25 countries worldwide. It is estimated that the stores alone account for around $16 billion in sales placing it in the top tier of retail stores.

Management Team

Consistently growing a business, remaining ahead of the competition and producing new and innovative products is the dream of most CEO’s. Yet few companies can boast that level of success. Beyond the legacy of Steve Jobs, many other senior members of Apple helped create that success.

Services

Apple has strategically diversified from only selling products to creating an ecosystem of services. Services account for a gross margin (60%). Digital services provide higher margins and a platform for growth by tapping into their product user base. (see digital business models)

Digital services include: iCloud storage, Apple TV+, Apple news+, Apple Pay, and Apple Arcade (gaming). All are based on a subscription business model.

Scale

Apple’s scale gives it an advantage in being able to produce products at low costs (see economies of scale). As an example, when Apple launched Arcade their gaming platform they already had over 900 million iPhone users as potential customers.

Design

Apple creates innovative technologies but it also creates innovative customer experiences. How Apple applies the technology and designs the user experience continues to give it a competitive edge

Number Of Patents Granted To Apple
Patents granted to Apple

Apple’s Weaknesses

High Priced Products

The iPhone represents over 50% of Apple’s revenue in 2023. However, iPhone sales have recently slumped.

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

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 mostly incremental improvements

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

Growth and Investment in Services

Apple is cash-rich and could use its money to aggressively market its services to capture market share. It’s particularly, important for Apple to establish market share in the US and Europe.

Product Diversification

The Vision Pro headset represents a significant step into augmented reality (AR), virtual reality (VR), and mixed reality (MR), opening new markets.

Acquisitions Asia

Apple has had a history of acquiring other companies but nowhere near the pace and scale of Amazon for instance. With a sizeable amount of cash in hand, Apple could buy new existing companies with products that show promise in Asia. Apple has previously purchased other brands such as Beats for over $3 billion to expand its reach and enhance its core capabilities.

New Partnerships

There are a number of creative ways that Apple could create new partnerships and drive revenue growth. These include working with car manufacturers to produce in-car sound and technology systems, forge new retail partnerships to improve distribution or simply align its services with other device manufacturers.

Address Circular Economy/Sustainability

Governments and corporates are feeling the political and social pressure to reduce global reliance on natural resources, extend the lifetime of products and make recycling more efficient.

More Wearables

Wearables, the Apple Watch, has been a runaway success and without doubt, has been a redeeming factor in an otherwise poor performing portfolio of products. The Apple Watch apps have also contributed revenue to the services pot of revenue, although exact figures are not known.

The healthcare opportunity is a big market and Apple is in a good position to seize both personal and professional aspects of it through wearables.

Shifting Geographies:

The company’s suppliers have reportedly invested $16 billion since 2018 in moving manufacturing from China, aiming to reduce dependence on the region and mitigate risks associated with geopolitical tensions, labor unrest, and strict COVID-19 policies.

Apple’s Threats

Global Economic Conditions:

Economic uncertainty may affect consumer spending on high-end electronics.

The recent disruptions at Foxconn’s plant in Zhengzhou, which significantly impacted iPhone production, highlight the risks of over-reliance on Chinese manufacturing. These incidents underscore the importance of diversifying supply chains to ensure stability and resilience against external shocks.

Intensity of Competition

The smartphone, tablet, and now AR/VR markets are highly competitive, with several players vying for market share.

Regulatory Challenges:

Apple Inc. is currently navigating significant legal and regulatory challenges, particularly concerning its App Store, which plays a crucial role in its $85 billion annual services business. These challenges stem from both the United States and the European Union and could significantly impact the company’s operations and financials.

In the European Union, Apple has introduced changes to iOS, Safari, and the App Store to comply with the Digital Markets Act (DMA). These changes, which take effect in March 2024, include more than 600 new APIs, expanded app analytics, and options for processing app payments and distributing iOS apps. Notably, Apple will offer reduced commission rates on transactions for digital goods and services, allow developers to use alternative payment processors, and impose a Core Technology Fee for apps distributed from alternative marketplaces.

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.

The Apple SWOT Analysis

Apple Swot Analysis
Apple swot analysis

Free SWOT Analysis Templates

If you’re interested in creating your own SWOT analysis then download these free SWOT analysis templates now.

Join The Ecosystem Community​

Enter your email address to register for our fortnightly newsletter to get the latest research and updates on ecosystems. Topics include strategies, case studies, sustainability and circularity, as well as key actionable insights you can use.

BDL Inline