Apple’s Competitive Analysis
Apple’s Competitive Advantage Historically
Apple has been founded on the premises of innovative technology that is easy to use and a very pleasing design. This can be considered a competitive advantage because at the time the company has been able to maintain their uniqueness by refusing to license their hardware to third parties. Designing and manufacturing their own products ensure that the company is able to retain the top position in both quality and appearance across all the product categories. This is something that must be maintained at all costs.
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Five-Forces Analysis of the Personal Computer Industry
The PC industry was relatively new when Apple was founded. The concept of a personal computer was still fresh and this company was able to invent something that did not exist at the moment. This means that Apple is among the pioneers in the PC industry. Currently, there are several new competitors with new products on the international market. The only available option for Apple to sustain its success is to create mechanisms that can help overcome competition. There was a time when the Apple PCs were not as popular as the standard PCs, but later the brand was able to attract users based on the uniqueness and high quality.
Barriers to entry: Majority of the electronics companies today have ventured into the PC industry. This means that the barriers to entry are not as high as one may expect. Any companies that have the capacity to manufacture electronics are able to start competing. However, so far none of them has been able to reach Apple’s level in terms of innovation and design.
Buyer power: With all available brands of personal computers in the industry, the buyers have a lot of power in terms of dictating prices. Currently, pricing is determined based on the specifications of computers. Buyers know that they have options in the industry and thus, they must agree with the pricing.
Supplier power: This industry does not have a high supplier power. Suppliers are rather limited to their buyers and thus, companies have the power to demand better quality and prices from the suppliers. Most of the companies, however, have long-term contracts with their suppliers. Although they can terminate these contracts if the quality is below their expectations or in case of a better price elsewhere, the best option is often to negotiate better terms with existing suppliers.
Threat of substitutes: PCs are not as dispensable as one may think. Although, some people have been able to use their smartphones for work they could do on the PC, there are still a lot of things they need to do on the PC. This means that the PC industry is not really under any threat from impressive gadget industries.
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Sustainability of the Competitive Position of Apple
Although Apple can be remembered as the pioneer of the PC industry, it has failed due to the relatively high cost of an Apple PC when IBM and Microsoft have created cheaper variations easily accepted as the industry standards. Currently, the Apple brand is recognized and appreciated mainly because of its uniqueness and high quality and thus, customers are generally Apple loyalists. This is a very sustainable competitive position since not many companies can boast of such proud customers that keep upgrading every time the company unveils a better product. The company may not experience exponential growth, but there is likely to be a stable market in the future as the loyalists continue to upgrade and introduce their friends, family and children to the Apple brand.
The MP3 players are slowly losing their competitive position in the market but not due to external competition. More people are currently using their phones rather than the iPods to listen to music. In this case, it means that the products are no longer as relevant to the customers except when they are far from a power source and they need to conserve the power on their phones. Thus, the company may continue manufacturing iPods but in a much smaller scale than before considering that the market is dwindling.
The Apple smartphones can be considered to have a sustainable competitive advantage in the market. This is because the iPhones are leading the smartphone industry with a growing popularity despite the presence of other high end smartphones in the market. The Apple enthusiasts continue to use iPhones not just because of their loyalty, but because it is almost impossible for other smartphone brands to match the iPhone in terms of quality, efficiency and exclusivity. As indicated in Exhibit 3, a 2015 survey indicated that the Apple iOS owned about 44% of the smartphone market rivaled only by Android with its 51.4%. Furthermore, as shown in Exhibit 1 and 2, Apple is the only company using the iOS and a market share of 44% is considerably larger than the 51.4% shared by all the companies that use Android. Due to its growing popularity Apple is likely to maintain its leading position in the future. If the company continues focusing on their innovation and market leadership, the iPhones will remain the best smartphones in the market with a vast and loyal customer base despite being more pricey than most of the other high end smartphones.
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The Long-Term Prospects for the iPad
The iPad is an impressive gadget that seems to occupy a position between a laptop and a smartphone. For most people, iPads play the role of both a phone and a tablet computer. This means the iPad could replace either the iPhone or the iMac depending on the context of the user. However, the phones and computers both have advantages over the iPad within their specific contexts of use. First, iPhones are easier to make a phone call compared to an iPad. Similarly, the laptop is more comfortable to type a report compared to the iPad. This means that the iPad is in its own product category and it cannot replace any other gadgets. The iPad did not even replace the Kindle readers. Regarding the future, it can be anticipated that the iPads will be used mostly by students and the working classes, who need computers in the field. The portability and classy look of the iPad will ensure that it does not go out of style for a while. The company can expect to reach medium sales in the iPad category because this gadget will not be very popular since people can buy both laptops and iPhones, but it will not be forgotten either as they continue to appreciate the classy design and portability of the gadget. The company can consider improving its battery capacity to make it more practical.