Is Apple – Futureproof?

Currently Apple has the highest revenue ($233 billion) in the technological industry, making a profit of $53 billion, with $586 billion market cap for the previous year. These achievements qualify apple as the largest tech organisation as well as lands in the 8th biggest company in the world. And, 4th biggest in the North America on the Forbes Global 2000 (Forbes.com, 2016).

Apple, under Tim Cook’s leadership, still outperforms its competition in every aspect that could be measured. Simultaneously apple also passed the news for the iPhone sales falling-off for the first time ever since its inception. And, with the later news some speculators suspected that the company’s golden period is over (Forbes.com, 2016).

chartoftheday_4149_iphone_sales_n

Source: (Richter, 2015)

Stock price of apple was dipping with the release of iPhone 6 and 6 Plus, in contract to the increase in the shares by 33% in the second half of the year, the increased market swapped the extreme losses in the first half. The downfall in the stock price was seen after the release of the report of the1st Quarter’16. Tim Cook is faced a lot of pressure in context to showcasing lack of innovation (Marketrealist.com, 2016). Since Apple is yet to launch any trendsetting products, although an iTV is speculated. It is believed to be a new bunce opportunity. It will be a totally new genre apple will tap and there’s plethora of information regarding the same (Marketrealist.com, 2016).

The need of the hour for Apple is to turn the tables, specifically for its new iPhone, since the iPhone 6s sales figures did not meet the expectation. And the speculators like the wall street analysts and Deutsche Bank Research Note have noticed about Apple’s Strategy for its new iPhone 7 is that Apple is on a three-year upgrade cycle, as opposed to the earlier strategy it used to follow launching new model every alternate year. It typically took the same hardware and improvised the components. Whereas, the iPhone 7 will have a few upgrades, it will stick to the same external design (due to three-year upgrade cycle). Now, Apple argues it has made a three-year lifespan for its first owner.

 

Strategy analysis – BCG Matrix

growthshare

Source: (Netmba.com, 2016)

At the moment it is a Question mark. So let’s evaluate the iPhone 7 in the market and see how well will it pull out the revenue. (Inc.com, 2016) With the findings of Quartz it suggests that the only 10% of the current iPhone owning adults are hoping to buy the new iPhone in the current year if it is not redesigned. And, as apple supports its three-year plan for its first owner, they will probably make less iPhone units this year. This makes assures us that iPhone 7 will not be a Star. So according to the BCG matrix, if the iPhone 7 is analysed then it will be clear that though the sales volume will not exceed the iPhone 6 unit, but it will still have lots of iPhone 5, 5c and 5s owners who will be keen to upgrade to the latest iPhone version available and it will also attract non-iPhone users as well. Hence without investing huge money on an already successful product Tim Cook will still manage to have an edge in the market by generating maximum profits incurring minimum additional cost/expense on the product development, as compared to the costs involved in developing the new product and which might attract new risks altogether. Hence, iPhone 7 will be a Cash-Cow for Apple, which apple must have already discovered.

 

Product Differentiation

 

(Marketrealist.com, 2016) Apple tries to hike the market demand for its products by differentiation, that requires making its products unique and attractive to the consumers. Apple has always built products with superior quality and never gave attention to the high prices it costed the brand to be the number one brand today. So, understanding that the customers have a willingness to pay more and thus, it maintains a premium price to the cost of unit volume, Apple has managed to create an artificial entry barrier to competitors.

c77a464e4c63b23bc4c2ddb6318b4eee.jpg

Source: (S-media-cache-ak0.pinimg.com, 2016)

Though iPhone’s sales were lower than expected, Apple is still leading the market leaving behind Google and Microsoft its’ industrial competitors’, with a huge difference. Apple is not giving a blind eye to the dipped sales, in fact they have made the made a clever move to reduce the cost on producing a new phone and bringing the new and unexpected risks with it, they have smartly gained on maximizing the profit, investing a little on the upgrades. Apple iPhone initially pulled the customers by surprising them each time with each launch. But now since they are market leaders. It’s time for them to enjoy the fruits, and also hiked the standards for its competitor’s as well.

i’d say Well played.

 

 

dhavalsalla – 215228659

 

 

 

 

 

References

Forbes.com. (2016). Forbes Welcome. [online] Available at: http://www.forbes.com/sites/samanthasharf/2016/05/26/the-worlds-largest-tech-companies-2016-apple-bests-samsung-microsoft-and-alphabet/#3e93084e89ee [Accessed 25 Jul. 2016].

Inc.com. (2016). Why Apple’s New iPhone Strategy Is a Huge Risk. [online] Available at: http://www.inc.com/business-insider/apple-huge-risk-new-iphone-strategy-hopes-boost-sales.html [Accessed 25 Jul. 2016].

Marketrealist.com. (2016). Apple’s premium pricing strategy and product differentiation – Market Realist. [online] Available at: http://marketrealist.com/2014/02/apples-premium-pricing-strategy-product-differentiation/ [Accessed 25 Jul. 2016].

Marketrealist.com. (2016). Why innovation could be the key to Apple’s growth – Market Realist. [online] Available at: http://marketrealist.com/2014/01/apple/ [Accessed 25 Jul. 2016].

Netmba.com. (2016). [online] Available at: http://www.netmba.com/images/strategy/matrix/bcg/growthshare.gif [Accessed 25 Jul. 2016].

Richter, F. (2015). Infographic: Have iPhone Sales Peaked in 2015?. [online] Statista Infographics. Available at: https://www.statista.com/chart/4149/iphone-sales/ [Accessed 25 Jul. 2016].

S-media-cache-ak0.pinimg.com. (2016). [online] Available at: https://s-media-cache-ak0.pinimg.com/236x/c7/7a/46/c77a464e4c63b23bc4c2ddb6318b4eee.jpg [Accessed 25 Jul. 2016].

 

 

 

 

 

 

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