Kinda interesting writing a post on the weakness and threats of Apple when this post is being typed on a MacBook and am keeping track of time on my iPhone because am about to head out to Sky Gardens for a quick meeting. For the 1 or 2 people who do not have an idea who Apple is, this is a short description of Apple.
Apple Inc. (or “Apple”) designs, manufactures, and markets mobile communication and media devices, personal computers (PCs), and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. The company operates globally across the US, Europe and Asia Pacific. It is headquartered in Cupertino, California and employed over 100,000 people globally.
Apple has been able to become very successful and gain non-replicable and sustainable competitive advantage within its marketplace with the “Horizontal and Vertical” integration model. This model simply means their devices and software are interwoven with one another. The iTunes for example is compatible and integrated on the iPhone, iMac, iWatch and so on…I think you get the gist. However, operating in complex,challenging and competitive environment could have a negative impact on the market shares and growth rates of Apple.
Below I intend to share a Weakness and Threat Apple faces as a company within its industry.
Weakness: High dependence on iPhone and iPad product lines
Although Apple as a company started with its first products being early versions of a personal computer. The iPhone and iPad has grown to become its strongest and most lucrative product lines. According to Statista.com “In the first quarter of its 2015 fiscal year, Apple generated 68.61 percent (68.61%) of its revenue from iPhone sales and according to MarketLine, “The iPhone and iPad product lines together accounted for 76.3% of the total revenues in 2015″.
With both products being the strong hold and growth drivers of the business, any future decline in sales and growth rate of those product could affect Apple’s performance. Also, dependence on few product product line especially in a marketplace of fast paced movers and competitors with strong revenue and research & development capability may be risky to Apple.
This risk in loosing comes from word on the street that Apple has been declining in the tablet markets, as of 2001, Apple had 90% market share of tablet industry but as of 2015, the number dropped drastically to 20.3%. As of 2015, with tremendous competition from Samsung, the iPhone marketshare has dropped to 15.3%. The market share losses of their key products could have a drastic impact on the company’s growth prospects.
Threat: Lawsuits and litigations [Credit: MarketLine]
Apple is subject to various legal proceedings and claims that have not yet been fully resolved and that have arisen in the ordinary course of business, and additional claims may arise in the future. For instance, in April 2016, Apple agreed to pay $24.9 million to Dynamic Advances to settle Siri patent lawsuit. As a result, Apple will be allowed to continue loading its devices with Siri.
Earlier, in February 2016, Apple was ordered to pay $626 million in damages after finding that iMessage, FaceTime and other Apple software infringed VirnetX’s patents. In the same month, Apple faced $862 million in damages after patent lawsuit loss to University Of Wisconsin. Apple’s A7, A8, and A8X chips used in iPhone 5S, iPhone 6 and the new iPhone 6S violate the technology covered by a 1998 patent filed by the Wisconsin Alumni Research Foundation (WARF).
Regardless of the merits of the claims, lawsuits are often time consuming, and cause significant diversion of management attention. Adverse decisions may have an adverse effect on the company’s business, consolidated financial position and results of operations.
I believe Apple is a strong brand and possibly will be aware of its weaknesses and threats as they affect the business’s position in the market but sometimes these threats and weaknesses maybe so little in the eye of a big player like Apple, I just hope they are aware and have measures in place to put things in perspective.
Thanks for reading 🙂