Apple Corporation Inc. Case Study

I. Introduction.

This external analysis of Apple Corporation uses an amalgam of Porter’s Five Forces, complementors, and elements of a PEST analysis to examine the threat levels in Apple’s market environment. Even though the analytical scheme is an amalgam of the various models, certain items are broken out for special attention below.

First, in order to obtain an appreciation of that macroenvironment, an overview of Apple is offered. Apple is really involved in two businesses: the computer market and the entertainment and media market. Its approach has been to integrate its new products around its core industry in an effort to construct a digital lifestyle that encompasses not only its line of computers but its new products such as the iPod, the iPhone and online services such as iTunes.

The various models are presented and then applied to the market that Apple inhabits. Additionally, since the Five Forces are dynamic and because Apple’s responses are dynamic, an assessment of Apple’s opportunities, threats, strengths and weaknesses is presented in light of those threats to its markets. It is important to understand the impact of the external forces in light of some of Apple’s internal responses and mechanisms so that an appreciation of the dynamic is understood.

Finally a conclusion is offered in light of the result of the forces assessment. Attention is paid to several outstanding issues and to what actions Apple Corporation needs to be sensitive to and to act upon if it is going to continue to be successful.

II. Overview

Apple, Inc. and its wholly-owned subsidiaries design, manufacture, and market personal computers, portable digital music players, and mobile communication devices and sell a variety of related software, services, peripherals, and networking solutions. Apple sells its products worldwide through its online stores, its retail stores, its direct sales force, and third-party wholesalers, resellers, and value-added resellers. In addition, Apple sells a variety of third-party Macintosh ("Mac"), iPod and iPhone compatible products, including application software, printers, storage devices, speakers, headphones, and various other accessories and peripherals through its online and retail stores. Apple sells to education, consumer, creative professionals, business, and government customers.

Apple Computer’s 30-year history is full of highs and lows, which is what we would expect in a highly innovative company. They evolved throughout the years into an organization that is very much a representation of its leader, Steven Jobs. Apple made several hugely successful product introductions over the years. They have also completely fallen on their face on several occasions. They struggled mightily while Jobs was not a part of the organization. Apple reached a point where many thought they would not survive. Less than 10 years later, BusinessWeek ranked Apple as the top performer in its 2006 BusinessWeek 50. Apple attributes their recent success to robust sales of iPod music players (over 32 million in 2007). They are optimistic about the economies of scope with media giants, such as Disney and Pixar.

Yet Apple rarely introduces a new type of product. Thus, instead of being the pioneer, they are an expert “second mover” by refining existing products. Portable music players and notebook computers are examples. Apple increases the appeal of these products by making them stylish and more functional. They now appear poised to make significant strides in the home computer market and to creating a total digital lifestyle whereby the home is a multimedia hub.

As noted above, Apple now offers a wide range of personal computing products including desktop and portable—laptops and notebooks-- personal computers, related devices and peripherals, and various third-party hardware and software products. In addition, Apple offers software products including Mac OS X, Apple's proprietary operating system software for the Mac; server software and related solutions; professional application software; and consumer, education and business oriented application software. Apple also designs, develops and markets to Mac and Windows users its family of iPod digital music players and its iPhone mobile communication device, along with related accessories and services including the online distribution of third-party content through Apple's iTunes Store.

Apple believes a high-quality buying experience with knowledgeable salespersons who can convey the value of Apple's products and services greatly enhances its ability to attract and retain customers. Apple sells many of its products and resells certain third-party products in most of its major markets directly to consumers, education customers,