What’s next – 2014 and Beyond?
Apple White Paper
By Rahul Sarkar
Page 2 by Rahul Sarkar
Contents
Introduction/Problem ........................................................................
Page 3 by Rahul Sarkar
Section 1
Introduction/Problem
Apple will become the world's
first trillion-dollar company when
its...
Page 4 by Rahul Sarkar
Section 2
Current Status
As of September 24, 2011, the company had
60,400 permanent full-time emplo...
Page 5 by Rahul Sarkar
Section 2
Creating this ecosystem has taken time
probably a decade and had equal help from
apple’s ...
Page 6 by Rahul Sarkar
Section 3
Strategic Analysis – Porter’s Five Forces [5]
In order to understand the strategic direct...
Page 7 by Rahul Sarkar
Section 4
Strategic Analysis – grid model
Market/Applications of Hardware and Software products
 B...
Page 8 by Rahul Sarkar
Section 5
Potential Strategy Alternatives
ALTERNATIVE 1: As Tim Cook, the CEO said
“Apple is not go...
Page 9 by Rahul Sarkar
Section 6
Recommended Alternatives
With so many great alternatives, following are the most recommen...
Page 10 by Rahul Sarkar
Section 7
References
1. http://www.wired.com/gadgetlab/2011/08/apple-roadmap/
2. http://www.nytime...
Upcoming SlideShare
Loading in...5
×

Apple - What's next? - 2014 and beyond

417

Published on

Apple, White Paper, What's next for Apple?, 2014 and beyond

Published in: Technology
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
417
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "Apple - What's next? - 2014 and beyond"

  1. 1. What’s next – 2014 and Beyond? Apple White Paper By Rahul Sarkar
  2. 2. Page 2 by Rahul Sarkar Contents Introduction/Problem ..................................................................................................................3 Current Status ...............................................................................................................................4 Strategic Analysis – Porter’s Five Forces..................................................................................6 Strategic Analysis – grid model.................................................................................................7 Potential Strategy Alternatives ..................................................................................................8 Recommended Alternatives .......................................................................................................9 References....................................................................................................................................10
  3. 3. Page 3 by Rahul Sarkar Section 1 Introduction/Problem Apple will become the world's first trillion-dollar company when its shares top $1,000 each, Wall Street analysts have predicted.[8] From its inception in 1974, the company has seen lots of ups and down till date. Steve Jobs, one of the founders had turned this company completely and made it one of the most profitable and most admired enterprises in the world. With over $110 billion in cash, the company is bigger than USA govt cash pile. Apple, Inc as it is fondly known now is a design and sells consumer electronics, computer software, & personal computers. They have redefined consumer preference and are now categorized as Lifestyle Products rather simple electronics gadgets. All this didn’t happen overnight. After the infamous ouster of Steve Jobs from the board in 80’s, Apple had a very rough time and once even were contemplating to file for bankruptcy. But after a decade or so, Steve Jobs came back and made some strategic decisions which defined the company. From outsourcing SCM to cutting down on products, he did take various steps to ensure that Apple is back to the position for what it is known for. It was also then when Steve Jobs reiterated the policy of focusing on designs and innovation. Apple envisioned the changing trends in technology and was the pioneer of creating an ecosystem which would its customers in experience their products phenomenally. But while Apple has achieved phenomenal success till now, what’s next. They have had a wonderful run from 2000s till 2011 but after the sudden death of Steve Jobs, will Apple be able to maintain their staggering growth, come up with new products redefining the future? This paper will try to recommend solutions for the problem What’s next for Apple? Changing society by giving the consumer what they don’t know they want. - Steve Jobs Fig 1: Apple’s many competitive fronts as of 2011 (Source: New York Times)
  4. 4. Page 4 by Rahul Sarkar Section 2 Current Status As of September 24, 2011, the company had 60,400 permanent full-time employees and 2,900 temporary full-time employees worldwide; its worldwide annual revenue in 2010 totaled $65 billion, growing to $108 billion in 2011.[wiki] As of July 2012, Apple has 364 retail stores in thirteen countries, and an online store. What Apple did was to create an ecosystem where technology converged. It integrated ipod, iphone, ipad and macbook so that users had very less difficulty in using each of them. It was a ecosystem in itself and unlike other competitors, Apple owned all the elements of the ecosystem. There was no competition in the ecosystem internally. Apple had numerous competitors for each of its product in the market. Giants like Sony, Samsung, Microsoft, Nokia, Blackberry, Acer, HP etc are all trying to get a pie of Apple share. While individually they may have been able to do it but as a ecosystem it has been really difficult. Only two other ecosystems exist apart from Apple in this space viz: Microsoft Ecosystem and Google ecosystem. While Microsoft played on connectivity supremacy between PC and mobile – OS related, Google is primarily playing on internet connectivity. Another striking difference is both Microsoft and Google ecosystem relies on multiple vendors which in themselves eat up each other share. Perhaps Microsoft joined this ecosystem race late to give any competition. Apple has already mastered the act of ecosystem management and building on customer experience. If we look at the generic strategic model of target market, we realize that apple is no more playing in niche market. Instead apple is available for all BUT differentiated from their competitors, that’s why they have been able to charge premium price and also switching cost from apple to non-apple product is expensive. Fig 2: Product competition-Apple, Microsoft & Google (Source: By Shane Shaw – columnist Gizmodo.com)
  5. 5. Page 5 by Rahul Sarkar Section 2 Creating this ecosystem has taken time probably a decade and had equal help from apple’s exquisite software offering. While they have been taken decisions on hardware every now and then, they have been also focusing on itunes and iOS as the agents for integrating the hardware. They have also been able to put innovation in the software designs, something which competitors have lacked till now. Android, BlackberryOS or Microsoft have been playing catch up and still not been able to overtake apple in terms of design innovations. But the question is how long? "The risk is the sustainability of what they have been doing," said ISI Group analyst Brian Marshall. "They have put up a huge number and the question is can they continue to penetrate with their current existing product portfolio at these price levels?" The fear is that the number of people who can afford an iPad or an iPhone is dwindling. And finally whether it makes sense to be a single vendor in all its product categories. The competition has become immense in all areas and timing is paramount. Fig 3: Apple Strategy beyond ipad (Source: Gadget Lab) Fig 4: Evolving ecosystem (Source: harborresearch.com)
  6. 6. Page 6 by Rahul Sarkar Section 3 Strategic Analysis – Porter’s Five Forces [5] In order to understand the strategic direction that Apple need to take going forward, it is essential to understand the competitive intensity of the industry using Porter’s 5 forces model for Smartphone, music player, lifestyle industry.  Competition: How strong is the rivalry posed by the present competition? - HIGH 1. The number of firms in the industry, there are many firms in the industry with different products. 2. All firms have economies of scale, that is they have relatively high fixed costs and low variable costs, the more they produce the lower their per unit costs become. This results in more intense rivalry between firms as they compete to gain market share; 3. Customers have majorly low switching costs, this intensifies competition as firms compete to retain their current customers and steal customers from other firms; 4. Low levels of product differentiation between firms leads to increased competition. 5. High exit barriers and hence companies stay even if they don’t want  Barriers to entry: What is the threat posed by new players entering the market? – HIGH 1. high capital costs of setting up a business in this industry 2. Industry requires highly specialized equipment, 3. Extensive scale and branding of existing competitors 4. Government regulations are predominant in this industry 5. Individual firms have economies of scale which results in lower cost and threat to new entrants  Substitutes: What is the threat posed by substitute products and services? – LOW 1. The switching costs between the Windows operating system and Apple operating system might be prohibitive because computer programs and accessories are built to work with one operating system or the other; 2. Buyer propensity to substitute is low because it is time consuming. 3. Perceived level of product differentiation is low except for Apple.  Supplier bargaining power: How much bargaining power do suppliers have? - HIGH 1. The number of possible suppliers and the strength of competition between suppliers is pretty high 2. Suppliers produce homogenous products 3. The importance of sales volume is high  Customer bargaining power: How much bargaining power do customers have? - HIGH 1. The volume of goods or services purchased is not in bulk 2. The number of customers are high 3. Brand name strength is high 4. Products differentiation is low except for Apple.
  7. 7. Page 7 by Rahul Sarkar Section 4 Strategic Analysis – grid model Market/Applications of Hardware and Software products  Business continuity plan is needed. Recent virus plus delays in Apple OS delivery have cost loss of sales and shaken confidence in service offerings.  Since Apple also stores customer related data, it is imperative that have a very high secured facility else they will be tangled in legal disputes  SCM and manufacturing should be planned properly and diligently. Recent issues with Chinese child labour and flood in Thailand have both delayed their products and created a bad image of apple resulting in lost sales Differentiation  Apple to continuously innovate and protect its IPR in order to be step ahead in the increased competitive environment.  Apple should now move to look for other products in lifestyle which are essential for consumer while maintaining the synergy with existing products.  Apple’s competitors have started replicating and following the differentiation strategy. Companies like Samsung, LG are catching up in mobile while Sony is becoming a threat in ecosystem space by getting more products near to the customer like TV, play-station, home theatres etc. Apple needs to move beyond creating handhelds to other stand alone products. Fig 5: The evolution of Apple’s Business (Source: Jay Yarrow/Kamelia Angelova – businessinsider.com)
  8. 8. Page 8 by Rahul Sarkar Section 5 Potential Strategy Alternatives ALTERNATIVE 1: As Tim Cook, the CEO said “Apple is not going to change”, it becomes quite obvious that they will play with and enhance the ecosystem. They have already started strategically buying companies and patents to fulfill their goal. With this in mind we expect Apple to take the business enterprise industry by storm. This isn’t quite an innovation in itself on Apple’s part, but a result of their products, their applications and the platform. “Apple is the first and only vendor that really supports the enterprise platform,” says Brian Fino, founder and managing director of Fino Consulting. He further said “With iOS 5′s over-the-air upgrades, users will have untethered management of devices.”[1] ALTERNATIVE 2: With Siri, Apple has already started moving towards voice based commands. No more swiping your finger or entering a pass-code to unlock the gadget. The next wave of iOS devices could use voice identification to switch out of its lock-screen. Apple’s solution would identify users by the sound of their voice. By tracking the voice of each user, the system could be dynamically tailored to their interests and unique needs. Multiple users could share the device, but specific content or contacts would remain unique to each individual user. Tailor made solution for each user will enhance the experience to an altogether different level plus this can be used across all apple products.[1] Fig 6: TAIC business model depicting ecosystems (Source: Juhani Risku’s prediction in abstrationshift.wordpress.com)
  9. 9. Page 9 by Rahul Sarkar Section 6 Recommended Alternatives With so many great alternatives, following are the most recommended to Apple Strategy. RECOMMENDED 1: By the end of 2014, we may see iOS and OSX converge into a unified operating system. This has been doing rounds for quite some time and even suits to Apple’s creating an ecosystem with its products. “Users want to be able to pick up any iPhone, iPad or Mac and have content move seamlessly between them and be optimized for the user and the device currently being used,” said Peter Misek, an analyst with Jefferies. Devices running iOS and OSX currently use different processors. Once all Apple computing devices run the ARM processor, it will be easier for them to support the same operating system. Users could easily share information and files between devices .We’ve already seen how OSX Lion has adopted features from iOS, like natural scrolling and LaunchPad, which resembles the iPad’s home screen. [1] RECOMMENDED 2: Apple’s long time dream is set to come back again in an improved version. With internet speed as never before, we will see more of Apple TV. Infact this will be perfect addition to their ecosystem. Longtime Apple watcher Walt Mossberg says “rumors are rife that Apple is working on re- inventing another common device: the TV. The secretive company won’t say a word about that, but nobody should be surprised if it happens.” A patent for “An Enhanced TV Widget Paradigm” suggests Apple will ditch conventional static widgets in favor of content- aware widgets that provide information or activities that complement what you’re watching. Apple may use this technology on a smart TV with iOS integration probably a 55- inch OLED TV. [1]
  10. 10. Page 10 by Rahul Sarkar Section 7 References 1. http://www.wired.com/gadgetlab/2011/08/apple-roadmap/ 2. http://www.nytimes.com/interactive/2011/10/07/technology/apples-many-competitive- fronts.html 3. http://www.scribd.com/doc/71947382/SCM-Report-on-Apple-By-Harish 4. http://timesofindia.indiatimes.com/tech/news/hardware/Apple-in-2012-A-SWOT- analysis/articleshow/11599618.cms 5. http://www.tomspencer.com.au/2008/08/17/porters-five-forces-model-analysis- framework/#section1 6. http://whitepapertemplate.org/ 7. http://en.wikipedia.org/wiki/Apple_Inc. 8. https://www.google.co.in/search?sugexp=chrome,mod=12&sourceid=chrome&ie=UTF- 8&q=apple+cash 9. http://www.google.co.in/imgres?um=1&hl=en&sa=N&biw=1366&bih=643&tbm=isch&tbn id=18bUpAe5kGiVsM:&imgrefurl=http://www.geekologie.com/2008/03/steve-jobs- picture-made-of- app.php&docid=nzGDaDaLD9MkAM&imgurl=http://www.geekologie.com/2008/03/27/a pple-products-jobs.jpg&w=450&h=450&ei=0MvQT_fNMofSrQeByej- Cw&zoom=1&iact=hc&vpx=335&vpy=284&dur=4280&hovh=225&hovw=225&tx=128&ty =136&sig=101636122188583758919&page=2&tbnh=143&tbnw=143&start=21&ndsp=24&ve d=1t:429,r:7,s:21,i:199 10. http://www.businessinsider.com/chart-of-the-day-apple-revenue-by-product-2011-7 11. https://www.google.co.in/search?q=apple+future+image&hl=en&prmd=imvnsfda&sourc e=lnms&tbm=isch&ei=hvvQT- yyGM2GrAfrzdmQDQ&sa=X&oi=mode_link&ct=mode&cd=2&ved=0CD8Q_AUoAQ&bi w=1366&bih=643#hl=en&tbm=isch&sa=1&q=apple+vision&oq=apple+vision&aq=f&aqi=g 2g- S8&aql=&gs_l=img.3..0l2j0i24l8.129449.133960.4.134464.22.15.0.0.0.3.169.1258.12j3.15.0...0. 0.0XKPwykt3fI&pbx=1&bav=on.2,or.r_gc.r_pw.r_cp.r_qf.,cf.osb&fp=200213315a02c66b& biw=1366&bih=643

×