Apple Swot Analysis

INTRODUCTION

Apple Computer, the Cupertino, California-based company ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Apple computer is one of America's most inventive companies. It developed many of the features that computer users have come to take for granted, including the graphical user interface, the mouse, the laser printer, and the color monitor. In the last 10 years alone, the company has issued more than 1000 patents.

In the 90's Apple made the momentous strategic decision not to license its technology and Microsoft with its Windows operating system quickly dominated the market. Apples share of the worldwide market for PCs decreased continuously to the lowest level of just about 2%.

Steve Jobs, one of the founders of Apple Computer, who left the company in 1985 to start his own business with NeXT Computer and Pixar Animation Studios, returned to the company as CEO seven years ago. Since then Apple enjoys a renaissance. Jobs' company has surprised with the iMac, introduced OS X a new Unix based operating system and rolled out the PowerMac G5, arguably the fastest desktop computer ever built.

And now Apple makes a bold move. For the first time in his history Apple moves away from its core business of computer into the music business and kicks of a revolution again. Apple introduces the iPod, which have become the most selling portable music player in the world and the iTunes Music Store a revolutionary online service to buy digital music.

The aim of this report is to evaluate the threats and opportunities that Apple has in the market, not looking only at the normal market but also to the digital music market.

SWOT ANALYSIS

Strengths

* Apple is a very successful company. Sales of its iPod music player had increased its second quarter profits to $320 (June 2005). The favourable brand perception had also increased sales of Macintosh computers. So iPod gives the company access to a whole new series of segments that buy into other parts of the Apple brand. Sales of its notebooks products is also very strong, and represents a huge contribution to income for Apple.

* Brand is all-important. Apple is one of the most established and healthy IT brands in the World, and has a very loyal set of enthusiastic customers that advocate the brand. Such a powerful loyalty means that Apple not only recruits new customers, it retains them i.e. they come back for more products and services from Apple, and the company also has the opportunity to extend new products to them, for example the iPod.

Weaknesses

* It is reported that the Apple iPod Mini may have a faulty screen. The company has commented that a batch of its product has screens that break under impact, and the company is replacing all faulty items. This is in addition to problems with early iPods that had faulty batteries, whereby the company offered customers free battery cases

* There is pressure on Apple to increase the price of its music download file, from the music industry itself. Many of these companies make more money from iTunes (i.e. downloadable music files) than from their original CD sales. Apple has sold about 22 million iPod digital music players and more than 500 million songs though its iTunes music store. It accounts for 82% of all legally downloaded music in the US. The company is resolute, but if it gives in to the music producers, it may be perceived as a commercial weakness.

* Early in 2005 Apple announced that it was to end its long-standing relationship with IBM as a chip supplier, and that it was about to switch to Intel. Some industry specialists commented that the swap could confuse Apple's consumers.