A Narrative SWOT Analysis of Apple as a Software Company

Apple, once considered the underdog in the realm of software, is now one of the biggest players in the software technology front. The reasons for this are numerous, but, essentially, it comes down to Apple knowing its own customers extremely well and appealing to each customer's specific needs, as well as their own sense of individuality. Since Apple is such a large company, they have a large number of all of the four factors of a SWOT business analysis, that is, many strengths and weaknesses, as well as many opportunities and threats. Many of these threats come as a result of competitors arising to try to take down Apple, which is ironic since that was the very role Apple was playing merely fifteen years ago. This SWOT analysis will also examine some of the factors that continue to make Apple such an effective company in the infamously tumultuous world of software technology.

First, it is necessary to examine the industry that Apple is a part of. This definition can be tricky to pin down since Apple offers such a diverse lineup, which saturates many different price points ranging from $30 to $3000. However, it can be said that Apple is firmly part of the personal technology section of software technology. That is, Apple focuses largely on the individual, and how they can use Apple's software to augment their lives. For example, Apple is currently pushing for extreme connectivity between operating systems (OS), so that those who have one of their older operating systems like OS X can interface with newer operating systems like Maverick. Another facet of the business Apple operates within is that it is fluid. While Apple might have been making OS's desktops predominantly just ten years ago, now they are making mobile products (which utilize unique software) more than anything else. This is why Apple cannot be categorized into a more specific industry; because they are always finding new subsets of the personal technology industry to be a part of. In another ten years, Apple could be exploring entirely new venues within the personal technology software field, it is simply too unpredictable to tell at any given time.

The workforce of Apple is extremely varied and consists of many thousands of workers both foreign and domestic. Currently, Apple employs about 16,000 workers in Cupertino, which is Apple's hometown (Apple, 2013). This accounts for about one-fifth of Apple's 73,000 workers worldwide (Apple, 2013). However, one area that continues to be a public relations headache for Apple is its use of foreign labor to actually assemble most of its products. In fact, the factory in China that assembles most iPhones and other Apple products employs 230,000 workers, far more than Apple's total purported workforce (Duhigg, 2012). Even worse, this workforce, which is actually owned by a company called Foxconn, only pays its employs the equivalent of $17 per day, or less (Duhigg, 2012). The process for assembly is effective, however, but the working conditions of its predominant workforce cause many to be upset. In addition, operating overseas also allows Apple to avoid much of the corporate income taxes that are levied against domestic companies, further frustrating many of Apple's consumers.

The industry that Apple operates in, the personal technology and software industry, is, more than likely, still in its sunrise stage and, at present, shows no signs of ever even seeing an inkling of a sunset stage. This is because the personal technology industry, especially with Apple, continues to evolve with consumer needs. Gone are the static industries that die and are reborn as soon as consumer needs can be reassessed again. Now, companies can dynamically change with their consumers, thanks to software, which is why many of these technology companies, especially Apple, have thrived for so long. Again, this is especially true for Apple, as they have been growing consistently, especially in the last few years. In the fiscal year 2010, Apple reported a net income of just over $14 billion (Apple, 2013). By fiscal year 2011, that net income had risen to almost $26 billion (Apple, 2013). Finally, in fiscal year 2012, Apple reported a net income of $41 billion (Apple, 2013). Clearly, Apple's sun will not set for a long time yet.

Apple is a publicly owned company and has been since 1980 (Apple, 2013). In fact, Apple has been a lucrative source for investors, particularly in the last few years, when its stock prices skyrocketed along with its net income. Being publicly owned and traded also allows Apple to interface with consumers on another level; one that does not even involve technology. It gives the investors, many of whom are Apple product users themselves, incentive to make their opinions known.

Apple's reputation within the industry is a mixed one, but, generally speaking, it is positive. Compared to its competitors, who, in the mobile market, is Google with its Android tablets and phones, Apple is considered the higher quality device and OS, but at a price, literally. Apple products are generally more expensive than its competitor's offerings, and whether the quality that Apple brings is worth these costs is up to the individual consumer. This gives Apple a sort of luxury car appeal, where its products are almost seen as status symbols among consumers. Thankfully, Apple manages to make these prices worthwhile, as their products are generally well-designed and reliable, and are made specifically easy-to-use. Another facet of Apple's reputation is that it is a pioneering company. That is, Apple tends to play the role of "leader" and other companies follow suit. Although most of Apple's ideas and inventions are not entirely original, they are presented in a simple way to consumers and are often the first of that specific type to gain widespread consumer approval. For example, the design the iPhone OS, with an accurate, responsive touchscreen, was soon imitated by many competitors, even though the OS that went into the iPhone was not exactly groundbreaking. One of the negative aspects of Apple's reputation is that it is seen as an expensive brand-name product that is not very different from its competitor's offerings. In addition, many are claiming that, since the death of Steve Jobs, Apple has lost its creative spark, as they have failed to produce any more groundbreaking products such as the iPhone in the last few years. Whether or not this is true remains to be seen.

Performance-wise, Apple is doing extremely well. As mentioned earlier, Apple's net income has more than doubled in the last few years. This is especially true in Apple's international sales figures. They sold a total of $36 billion in product in the fiscal year 2010, yet, by fiscal year 2012, that number had almost tripled to over $95 billion in total sales (Apple, 2013). Domestic sales doubled almost exactly, within that same timeframe, meaning that Apple has been doing a fantastic job of reaching out and promoting its products in international territories, especially tech-savvy ones such as Japan and South Korea. Another reason Apple's performance is so positive is that they have managed to minimize their own operating expenses. In 2010, their operating expenses were about $7 billion, but in fiscal year 2012, those same operating expenses were only about $13 billion; not even a doubling of expenses, even as their net income nearly tripled (Apple, 2013). While the sales numbers for fiscal year 2013 have yet to be seen, at this rate, it seems safe to assume that Apple will continue to perform well, although competition from brands such as Google could be taking away some of their market shares, especially in the mobile phone market.

Apple's target market is a bit of a contradiction. Apple predominantly targets two markets: the young, and the well-off, financially (this does not mean "rich," but simply people who have more money to spend on personal electronics). This is contradictory because young people are generally reluctant to spend more than necessary on electronics, although this concept does not seem to be true for Apple products, for which young people will wait in lines for, in droves. The reason for this is simple: Apple products are a status symbol among youths, so they appeal to both the social crowd who is not as discerning toward the cost, but also to value-oriented customers who are more concerned with a device's long-term performance, which Apple also specializes at. This way, they are able to saturate an entire demographic (that is, youths) with a single product line. This philosophy rings true for almost all of Apple's products, such as iPads, which are marketed as great college note-taking machines (thanks to a detachable keyboard that provides much-needed tactile feedback).

Apple offers a number of unique products, each with unique OSs, although many are imitated by competitors. Its most popular offering is the iPhone, which allows consumers to make calls and also browse the internet on a single network, provided they pay for the data plan. This helps Apple to forge partnerships with companies like AT&T in order to provide service to customers that is not seen in its competitors, which helps to set its products apart. Another of Apple's unique products is the iPad, which is a tablet computer that can be used to surf the internet, take notes, play games, or any other computer function. While these same offerings are sold by competitors, Apple's reputation of quality, strong brand image, and unique OS create an experience for the consumer that is entirely Apple's. Unfortunately, many of its products and software have been accused of patent infringement, which weakens their image somewhat.

The growth potential for Apple is strong. Since the company has effectively doubled its revenues in the last few years, it would appear that the sky is the limit for Apple in the near future. Thanks to Apple's continued reinvention of its own products (such as the various iterations of the iPhone), Apple is able to continue to get sales from consumers, even those who bought their same products previously. However, the rise of Apple's competition creates notable threats for them, and the decline of PC sales, especially desktops, creates a grim future for at least one of Apple's divisions. These issues are not nearly enough to consider Apple a company that does not have massive growth potential. Until or unless Apple's own technology market begins to severely stagnate, Apple will be considered a front-runner with enormous growth potential.

Apple's leadership style revolves around a few key figures who act as figureheads within the company and do things like demonstrate products. While this role was Steve Jobs' for a long time, his death means that this mantle must be taken by Tim Cook, the CEO of Apple (Apple, 2013). According to Apple, Cook's leadership style is considered methodical and "no-nonsense" (Apple, 2013). Cook also represents Apple's core value that it is not afraid to initiate drastic change, should the need arise, such as when Cook fired Human Interface manager Scott Forstall due to an Apple Maps fiasco (Apple, 2013). However, while Cook may be harsh at times, it is difficult to deny his effectiveness or the effectiveness of Apple leadership in general. Even though Steve Jobs has been dead for years, Apple profits continue to soar. However, neither has Apple created any new groundbreaking products like the iPod since Jobs' death, prompting many to wonder how long Apple can ride on the success of its flagship products in the long term.

While Apple certainly has some rough spots within its own company, such as using cheap Chinese labor, patent infringement lawsuits, and the death of its lead visionary, Apple's software continues to thrive, thanks in large part to developing nations like China and India, as well as a large focus on research and development, and user interface, which helps Apple to adapt its products to both new and existing customers. Apple's brand image is strong, which will always cause many brand loyalists to choose Apple no matter what happens, which brings with it financial security. Apple is certainly a key performer in the technology market, and this "big dog" position does not look to be changing anytime soon.

References

Apple, Inc. (2013). Investor Relations. Information on Apple, Inc. Retrieved on November 23,2013 from, http://investor.apple.com/

Duhigg, C. (2012). How the U.S. Lost Out on iPhone Work. The New York Times. 1-4