Introduction
In the world of progressive capitalism, many companies rise and fall every day. Some of them last for weeks, some – for months, others may exist for years, providing their services to customers in a never-ending quest for profit. Only a few of them would continue existing ten or twenty years from now, and even fewer would be remembered and written down in history books. To be remembered, a company needs to be known for something outstanding.
It has to bring innovation and change the industry. It needs to be unique. Those that succeed in doing so become legends. One of such legends is Apple Inc. Everybody heard of Apple, and many even own their products. iPhone, iPad, and MacBook – all of these items are associated with quality, status, and innovative thinking. Apple’s creator – Steve Jobs, is widely revered as one of the most visionary inventors and businesspeople of his own time.
While it is beneficial for future managers and economists to study the cases of companies that failed, it is also important to review the stories of success and innovation. The purpose of this paper is to analyze the history and mission of Apple, its current position on the market, its strengths and weaknesses, to understand how it became so successful and reflect on its ability to maintain a long-lasting lead in the international electronics market.
History and Products of Apple Inc.
The history of Apple is a history of hard work, innovative thinking, sheer talent, and pure luck, which have all come together to pave the way for one of the most famous and largest corporations known today. There are several legends surrounding the creation of the Apple Logo. One of them states that Steve Jobs came up with the idea after returning to his partner and co-founder of Apple, Steve Wozniak, from a trip to an apple orchard.
The name was considered catchy and innocent, without the power and glamour that the large companies favored those days. Also, since the name of the company started with the letter A, it was expected to appear at the top of various company lists, which were usually arranged in alphabetic order. Other legends associate the logo various other famous apples in the history of humankind – from an apple that fell on Newton’s head and is considered the symbol of enlightenment, to the apple from the Tree of Knowledge, from which Adam and Eve both took a bite. One of the more obscure theories states that the Apple logo was created in memory of Alan Turing, who committed suicide by eating a cyanide-filled apple (Rawlinson). Either way, the logo of a bitten apple is now one of the most recognizable trademarks in the world.
Apple Inc. is a company of humble beginnings. It was found on 1 April 1976, by Steve Jobs and Steve Wozniak. The third, less known member of the team, is Ronald Wayne. He initially participated in the project by buying off 10% of the company’s assets. However, he bailed out 12 days after selling his share for 500 dollars (Rawlinson). Had he not done so, by now, his fortune would have been worth around 70 billion dollars. Jobs and Wozniak completed one another perfectly – while the former was a peoples’ person and a risk-taker, who managed the company and made impossible deals work, Wozniak was behind all the major technological ideas and breakthroughs.
The first creation of Apple I marked the beginning of computer age. The design was created by Steve Wozniak, who came up with the concept that the computer should look like a mixture between a typewriter and a TV set. This concept translated into every personal computer created since, and its influence can be seen in modern designs as well. The company had massive financial problems when producing the first batch of prototypes – it would have failed had Jobs not secured a deal with the Byte Shop, which supplied the parts on a 30-day credit. Because of that, Apple stayed in business and managed to produce over 200 units in the period between 1976 and 1977 (Rawlinson). It was a great commercial success, which allowed Jobs and Wozniak to work on a more ambitious project – the Apple II.
The Apple II was a great improvement over the Apple I. It featured a color display, a tape-based way of storing data, a plastic body, and 64 kilobytes of memory, which was considered huge at the time. Also, Apple designed a program for the machine, called VisiCalc, which was the first of its kind to perform spreadsheet-like calculations. Although the product was sold at the price of 1,300 dollars, which was a huge price, one of the greatest selling points of Apple II was its visual appearance (Rawlinson). Slick lines and a neat light-gray plastic body made it look lean and neat, compared to the bulky computers of the time that had wires sticking out and looked like creations of radio enthusiasts.
Apple Macintosh followed Apple II in 1984, which was a small computer aimed mostly at families and home users. At the same time, the company developed another product called Lisa, which was bigger, four times more expensive, and had more memory. Both products came into the market, but Lisa was not successful due to being very expensive – around 10,000 USD – the price of a family car, at the day.
The Macintosh, which was introduced to the market at 2,499 USD per piece, was considered a bargain and saw much greater success(Rawlinson). However, frictions between Steve Jobs and John Sculley – the CEO that Jobs managed to bring in from Pepsi, caused Jobs to quit his position and leave the company that he created. His departure heralded a long chain of failures for the company and the rise of its competitors – Microsoft and IBM. During a period between 1985 and 1998, the company released a myriad of products, such as the Macintosh II and Power Macintosh 6100, sales continued to drop (Rawlinson).
While Apple produced excellent machines, its competitors managed to outperform the company in designing operating systems. The company saw its return to profits in 2001 with the creation of its operating system, called Mac OS X, and the appearance of the iPod, which was a massive success. The period between 2003-2007 was very profitable for Apple. Under Steve Jobs’ leadership, after his return to the company in 2001, Apple increased its stock price over ten times(Rawlinson). The creation of Macbook Pro in 2006 was also a massive success, as it secured Apple’s place in the market as a company that spearheaded innovation.
A year later came the product that defined the face of the company as we see it today. The first iPhone was presented to the market in 2007 and changed the image of the mobile industry, heralding the age of smartphones. Apple is now considered the leader in this new market, pushing away giants like Nokia and Samsung, and maintains leading positions ever since. Every iPhone model, such as the iPhone 2, 3, 4, 5, 6, and 7, were all highly anticipated by the market and had large success. As it stands, the current Apple net worth is over 750 billion, and it is anticipated to be the first company ever to hit a 1 trillion dollar landmark. Even though Steve Jobs passed away in 2011, the future for the company is still promising (Rawlinson).
Vision and Mission of the Company
Vision and mission are very important for any business and any company. It encapsulates what the company is doing and why. Without a sense of purpose and a sense of direction, any enterprise, big or small, is doomed to failure. Not only does a competent mission and vision statement motivate the employees, but it also allows the customers to understand the nature of the business and its products. For a very long time, Apple carried the vision statement formulated by Steve Jobs.
It was clear, short, and succinct: “To contribute to the world by making tools for the mind that advance humankind” (Rawlinson). As it is possible to see, the company’s mission was to improve human lives everywhere by promoting excellent products. This statement defined the company and its purpose. As a result, with Steve Jobs at the helm, Apple produced numerous products and applications that had changed the world.
After Steve Jobs died in 2011, the company had a choice between preserving his legacy or moving towards something new and original. The mission statement, announced by the company’s CEO, Tim Cook, states that “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store and is defining the future of mobile media and computing devices with iPad” (Rawlinson). This statement changes Apple’s perception of itself from a force of good that is aimed at improving the peoples’ lives and contributing to society through the production of excellent products to making the products the scope of the company’s very existence.
Customer Base and Competition
Apple products have always been expensive. Priding themselves on providing the most cutting-edge design, the company never opted for reducing prices as a driving point behind their market strategy. As such, the majority of their customers are wealthy. Statistics say that the average household income of Mac owners is around 100,000 USD per year, which is two times more than the household income of an average US family. iPhones share this trait, as they are considered to be the most expensive smartphone products on the market (Khan and Alam 557).
Since Apple is a brand associated with high quality and technological advancement, the majority of its customer base is willing to purchase their products simply on a promise of that, even if the actual technical qualities of the product is subpar. According to the surveys, 54% of the people who bought the latest iPhone used to own an iPhone in the past, meaning that their decision was motivated by brand loyalty (Khan and Alam 557). Another strong point in favor of Apple products is that they represent status. They are associated with the rich and the sophisticated due to elegance and sleek design. Apple aims for the younger population, for whom status and personal perception in the eyes of others are important. The average age of an Apple user is below 34 (Khan and Alam, 557).
Apple programming products are also known for their safety. There is a popular myth that Apple products do not need an antivirus program because these products could not be hacked or infected with malware. While this myth does not reflect the reality of malware, the company does little to dissuade it, as it makes an excellent selling point. However, the myth is not entirely false. The number of viruses written for Mac products is significantly smaller than the number written for Windows-based operating systems. At the same time, Mac OS has internal safeguards built into the system, such as the inability to perform certain modifications and use certain files unless they have the company’s virtual signature.
Apple has several competitors providing alternative hardware and software. The greatest competitor in terms of personal computer software is and will always be Microsoft. Its OS is used on a much greater scale and can be outfitted with different products, whereas the Mac OS can only be run on Apple products. The Windows product family and the Office 365 line became a standard in office and business, which forces Apple to create similar products to fit in.
In regards to smartphone production, Apple faces fierce competition from Chinese and Korean companies. Samsung, Xiaomi, Huawei, and Lenovo, to name a few, produce smartphones at all range process, from the cheapest and aimed at the general population, to the most expensive products aimed at the high-end market (Khan and Alam 558). Samsung Galaxy series, as well as Huawei’s Honor and Nova series of smartphones, are equal or superior to the latest iPhone models in terms of productivity and technological modernization while remaining notoriously cheaper. They also possess an elegant and sleek design, which became a trademark in all smartphones. These companies are intent on becoming high-end brand names themselves and claim Apple’s status smartphone notoriety.
In terms of operational software for smartphones, the greatest competitor to Mac OS is the Android platform developed by Google. This platform is considered the best-selling smartphone platform ever since 2013 and is known for its versatility and modification potential. The vast majority of tablets and smartphones run on this platform. The number of applications and customizations available makes it a superior platform for Apple. The reasons why Apple software is still in use are similar to that of Mac OS for computers – it comes with the Apple product. The customers are forced to use it, whether they like it or not. The company does not plan to change that, as it wishes for its products to remain exclusive and unique.
Current CEO
The current CEO of Apple is Tim Cook – a long-known cohort of Steve Jobs and the ex-vice-president of the company. He was promoted to the position after Steve Jobs’ death in 2011 and had been operating in the position ever since. Tim Cook joined Apple in 1998 after Steve Jobs managed to recruit him from Compaq. It proved to be the right decision, as Apple is now a giant in the computer and smartphone industry, while Compaq was consumed by Hewlett-Packard in 2013 (“Tim Cook”).
Tim Cook worked with Steve Jobs and helped him save Apple, which was in a major decline, with its total worth falling from 11 to 7 billion between 1985 and 1998. As the company’s chief operating officer, he greatly modernized Apple’s supply chains, replacing production values and warehouses with contract manufacturers. He also introduced lean management and storage procedures, which helped reduce expenses and reduce warehouse inventory replenishment rates from months to days. He is credited to be the mind behind Apple’s day-to-day operations, while Steve Jobs was the one to make all the important decisions in regards to the company’s directions (“Tim Cook”).
His leadership style can be best described as very authoritative when compared to the more liberal conduct of Steve Jobs, who valued competition and conflict as a means of progress. One of the first choices he made as a corporate CEO is to fire the people with “personalities that contradict the company,” and whom Jobs used to tolerate despite them being a source of conflict (“Tim Cook”).
This likely has to do with the mentality of a chief operating officer, as when it comes to operations and schedules, democracy is not an option. In five years of his work, Tim Cook is credited with increasing the company’s profits by a large margin. At the same time, he is criticized for making dubious acquisitions and hires, as well as deductions for shareholder interest. Lastly, he is considered less visionary and more down to earth when compared to Steve Jobs, as it is shown in the change of the company’s vision and mission statement, which shifted the company’s focus from the vision and towards the product (“Tim Cook”).
What Makes Apple Special?
What makes Apple special is its long-standing history of innovation and development in the high-tech market. Many of its competitors have, for the most part, jumped the bandwagon. They managed to rise to where they are through intelligent investments in products already developed by someone else. Although all of them have promoted innovation, none of them has achieved the iconic status of Apple, whose products paved the way for the modern computer and smartphone industries. At the same time, Apple is one of the few pioneers that did not lose its touch and fall out of business.
Due to the visionary leadership of Steve Jobs, the company managed to avoid the tragic fate of Nokia, who used to be the flagship of innovation in the mobile industry. Instead of trying to compete with this giant on its turn, Apple managed to create its own by creating a whole new market that rendered the classic cell phones obsolete. Unlike Apple, Nokia failed to adapt, which caused its subsequent downfall and loss of market share.
At the same time, Apple was a company of one man – Steve Jobs. His visionary business decisions and choices of direction were paramount to the company’s success. After he departed from Apple in 1985, the company experienced nothing short of a slow clinical death. His return in 1998 managed to reinvigorate Apple, give it inspiration and a purpose, which was followed by a myriad of groundbreaking products, such as the iPod, the MacBook and the iPhone (Rawlinson). Under his leadership, Apple transformed into a mighty corporation with a huge net value and thousands of people under its employ.
However, it is interesting to see what the future holds for Apple. Without Steve Jobs and under the guidance of Tim Cook, the company seems to be doing fine. However, this progress could be explained by the technological reserve of improvements built into the iPhone model. Tim Cook is a competent manager, but he is not a visionary, like Steve Jobs. Without constant strife for excellence and innovation, it could be possible that the largest corporation up to date will go down as soon as the new innovative product hits the market. It would be interesting to see if Apple will follow Nokia’s example, or if it would survive through adhering to Steve Jobs’ principles of improvement and innovation.
Analysis
PESTEL Analysis of Apple Inc.
P – Political
Apple Inc. is an American company with its HQ and research centers located in California. In contrast, most of its production values are located in China due to the cheap and skilled labor force. As such, it is reliant on political stability in both China and the USA. Apple’s financial assets in the USA, which is over 34 billion dollars, may come under pressure due to the increasing demand for income equity and taxation reforms. At the same time, the political course of bringing industry back to America is dangerous to Apple, as it may cause additional expenses. The destabilization of the political situation in China could also be dangerous for Apple as it may endanger its production assets and cause changes in the exploitable labor market (Khan and Alam 560).
E – Economical
Increases in labor costs in China could potentially provoke an increase in price for Apple products, which is associated with the potential loss of market share. The worsening economic situation in the USA and Europe, as well as the stagnation and shrinking of the middle class, could cause a loss of market share and potential loss of profit as well.
S – Social
Social threats to Apple include the potential loss of its status as a brand. The younger generations lack the strong emotional attachment to Apple products, meaning they will be less likely to pay for an overpriced gadget. Also, the fact that most Apple products are produced in China may cause some accusations because China is a totalitarian state that exploits its citizens. Any political and social tensions between the USA, Europe, and China may cause a decline in the product’s popularity.
T – Technological
Apple’s abilities to promote innovative technological decisions have been significantly reduced in the last years, and the abilities of their competitors to copy them have risen. It is very likely that in the future, Apple will lose its main competitive edge, which is innovation. At the same time, Apple’s computer industry branch has been in decline due to the popularity of smartphones. Lastly, the increasing amounts of cyber-attacks may render Apple vulnerable due to a lack of experience in dealing with viruses and hacking attempts on a large scale.
E – Environment
Increasing demands for the safety of utilization would hurt Apple and force it to increase the product price to make up for the utilization of non-organic components, such as lithium batteries. At the same time, China has been promoting measures aimed at decreasing its greenhouse gas footprint, which may mean an increase in electricity prices and demands. Apple is very vulnerable to electrical shortages and price changes, as it could make the end prices for the company’s products to skyrocket (Khan and Alam 560).
L – Legal
Apple is very dependent on holding a great number of patents to advance its products and waging lawsuit wars against potential competitors. This leaves the company vulnerable to litigation and piracy. Additional points of contention revolve around privacy laws. In the USA, the government has been promoting an agenda of disclosing private information to the police and government officials, under the guise of fighting extremism and terrorism. This comes in conflict with Apple’s policy of protecting its customers’ privacy (Khan and Alam 561).
SWOT Analysis of Apple Inc.
S – Strengths
The strongest point of Apple Inc. has always been its ability to produce innovative and high-quality products that were ahead of its own time. It has a large and developed research base that could facilitate innovation. At the same time, their supply chain is very sophisticated and developed so that any new product can be produced swiftly, efficiently, and in large numbers. Lastly, Apple has an excellent brand, and the brand name alone is considered to be worth 20% of the company’s total net worth (Khan and Alam 555).
W – Weaknesses
The price range has always been considered Apple’s Achilles’s heel. Their prices for comparable products are much higher than those of their competitors. In addition to that, Apple shows no interest in developing low-end products to gain additional market share. Apple product range is considered relatively narrow, with the most profitable one being smartphones. MacBook sales, as well as IPod and IPad sales, have been in a steady decline since 2010 (Khan and Alam 563). One of the greatest weaknesses of Apple products is their incompatibility with other products and systems, which make the users very isolated and exclusive, which is a great detriment when compared to the highly versatile Android-based smartphones. Lastly, iPhone 4 through 7 saw no major alterations between them, which may be a sign of stagnancy and lack of creative ideas.
O – Opportunities
To improve the situation, Apple should consider broadening its product range and discover new ventures, such as the low-cost segment of the smartphone market. Further increasing compatibility with other products may win the company some customers who would rather not choose between Android and Apple OS, and would not want to lose any purchases made in either system. Lastly, investing in research and development may lend the company another breakthrough that would put it way ahead of the competition.
T – Threats
The greatest threats to Apple come in the form of losing market share to the competition coming from India, Korea, and China. Samsung, LG, Sony, Xiaomi, and Huawei smartphones all have compatible functionality and design, while at the same time being much cheaper than Apple products. Unless Apple would create something completely new and innovative to the market, its reputation of the most innovative company in the world would inevitably suffer, and its competitors would claim a good portion of the company’s market share. Another threat presented to Apple is the potential increase in manufacturing costs. Since Apple products are already so expensive, any further increase in price without any major improvements would drive away from its middle-class customer base.
This BCG diagram helps analyze the product portfolio of Apple Inc. Since their number of products is fairly limited, the diagram is not cluttered up, and the differences between product positions can be easily perceived. As it stands, the iPhone is Apple’s Star, as the smartphone market is still in its growth phase. It also accounts for a good portion of the company’s profits. Despite the declining market share, the iPod is still considered a Cash Cow for the company due to the fact it can maintain its sales without any further investments in the product.
Apple’s computer division could have seen better days. It is situated in a strong and mature market dominated by its competitors. Apple’s investments in this area will likely be limited, with the main focus directed towards smartphones. The iPad, once Apple’s rising star, is now being transitioned into a Cash Cow because the market for tablets is already full with competing models, and that Apple has a solid market share in it, meaning no further investments will be solicited to maintain its current profits and positions (Khan and Alam 564).
Conclusions
Apple is a powerful corporation with a history of success and innovation. Under the visionary leadership of Steve Jobs, it became one of the richest and most famous companies in the world. Apple maintains its leading position at this time. However, the company is moving forward not on its own accord, but due to the tremendous boost it had received in 2007 with the appearance of the first iPhone. As the analysis section of this paper had shown, the company’s positions are threatened by a lack of innovation. It has grown too large, and only another breakthrough would maintain its dominance. As it stands, Apple has the resource and research basis for making any innovation a reality. Whether it succeeds and retains its dominance, or lose its market share to competition just like Nokia did – remains to see.
Works Cited
Khan, Usman Ali, and Mohammad Noor Alam. “A Critical Analysis of Internal and External Environment of Apple Inc.” International Journal of Economics, Commerce, and Management, vol. 3, no. 6, 2015, pp. 955-966.
Rawlinson, Nik. “History of Apple: The Story of Steve Jobs and the Company He Founded.” Macworld. 2017. Web.
“Tim Cook.” Biography. Web.