Strictly speaking, Apple’s iconic products, iPhone and iPad, are approaching the end of their respective lifecycles. Therefore, the company is expected to present a change in its corporate strategy.
However, there is no clear necessity for that change. On a macro level, Apple’s strategy is simple and ingenious. The company has invented plain yet effective marketing innovation (touchscreen smartphone/tablet) and perfected it by introducing minor innovations on every step of its lifecycle. First changes were quantitative, somewhat of a search for perfect combinations. That’s how we got bigger, cheaper, and premium iPhones. The following changes were qualitative: the whole range of products has been gradually updated in accordance with technical advancement, the operating system is constantly being improved. The last stage of product development here is introduction of supporting secondary products, like Apple Watch, iPen, AirPods, and others.
Meanwhile, one of Steve Jobs’ Apple’s cornerstones is innovation (“Apple’s Next Products: Is a New Strategy Needed?”, 2013). And there nothing to fill the space left for technical innovation. Apple has been striving to found the next step (while the competitors are striving to catch up with Apple), but there is not much technical innovation to change the whole paradigm. And this is Apple’s sword of Damocles. Yet one cannot blame corporate strategy for this, it is an inherent vice of knowledge, especially now, when we are approaching singularity.
Regarding Porter’s Five Forces (“Porter’s Five Forces a Competitor Analysis tool – Michael Porter”, 2012), one should admit, that Apple has been preparing to battle all of them.
However, the pressure is strong. The specificity of the market is that new entrances have been quite frequent lately, especially on the part of Chinese electronic giants. This is due to the accessibility of the material base (electronics) to the manufacturers.
Suppliers present a diversified market with sound competition; however, Apple uses CPUs produced by outsource suppliers, one of which is Samsung (from time to time) (Smith, 2015). Nonetheless, thanks to pricing policy and hence immense reserves of money, Apple is able to secure this front.
Buyers are the foundation of Apple’s success; therefore, this is its Achilles’ heel. However, many of the buyers are already dependent on the iOS: its interface, synchronized data, iCloud (even if it is hacked). And in terms of migration to the new iPhone from the previous, it is not that costly: $100-200 a year. To summarize: thanks to corporate strategy, Apple’s buyers are loyal and ready to pay.
The availability of substitutes derives from the ease of entrance into the market. There are numerous competitors, who are relatively close to Apple’s niche. But they are just close, not better. They might even be better in some aspects, but no one is able to provide a solution which would be more integral, balanced and easy-to-use in out-of-the-box state. This is the innate problem of Android: no manufacturer (except for Apple) can provide permanent support and development of its operation system.
Competitive rivalry as a factor is once again related to the previous one. Market of electronics provides a steady flow of products and buyers. Even in this situation Apple has an advantage of loyal buyers and admirers. It is a religion, really. Have you ever heard of anybody converting from Apple to Samsung? Neither have I.
Apple’s strategy is not flawless, but other options are even worse. Apple is waiting for a technological or conceptual breakthrough, as well as other players of the market. But do the competitors have the resources to wait long enough? Apple has enough to wait for decades (Wang, 2016).
- Apple’s Next Products: Is a New Strategy Needed?. (2013). YouTube. Retrieved 28 January 2017, from https://www.youtube.com/watch?v=glnTz5HD05U&feature=player_embedded
- Porter’s Five Forces a Competitor Analysis tool – Michael Porter. (2012). RapidBI. Retrieved 28 January 2017, from https://rapidbi.com/porterfiveforces/
- Smith, R. (2015). Apple’s A9 SoC Is Dual Sourced From Samsung & TSMC. Anandtech.com. Retrieved 28 January 2017, from http://www.anandtech.com/show/9665/apples-a9-soc-is-dual-sourced-from-samsung-tsmc
- Wang, C. (2016). Apple’s cash hoard swells to $237.6 billion, a record. CNBC. Retrieved 28 January 2017, from http://www.cnbc.com/2016/10/25/apples-cash-hoard-now-nearly-238-billion.html