Apple Case Team Assignment

...

with various buyers and sellers already in place, and also has an incredibly strong brand image.

When considering all four aspects of the VRIO framework, the iPhone does not satisfy every category, It is valuable and Apple is organized to capture this value, but it is neither rare nor inimitable. Because of this, Apple will have (and has had) a temporary competitive advantage, but we do not believe they will maintain this competitive advantage from the iPhone indefinitely.

SWOT Framework

Strengths

Apple’s core strength since the return of Steve Jobs has been its ability to design and create innovative products that are easy to use. The iPhone is a perfect example of this. The iPhone has been lauded since its first iteration for being user friendly, which will continue to be a strength for Apple and help to attract new users from their competitors. Another strength for Apple’s iPhone is their interconnectivity with other Apple devices. An iPhone can sync its data through Apple’s cloud service (iCloud) to other Apple devices to create a seamless user experience that competitors can’t easily match. This allows Apple to have a sustained competitive advantage over its peers until a similar experience can be provided.

Weaknesses

While the iPhone certainly has many strengths, they do not come cheaply. The average price of an iPhone in 2015 was $687, 2.7 times the price of the cost of an average Android smartphone (Chowdhry, 2015). This price component puts Apple at a disadvantage when competing for customers with limited budgets. This disadvantage could be reduced by creating a low-cost version of the iPhone, which could allow Apple to capture more market share, however, doing so could also potentially lower consumers’ perception of the iPhone as being a premium product.

In Apple’s most recent fiscal quarter, iPhone sales grew at a pace of 0.4%, their slowest pace since the iPhone’s release in 2007 (Wakabayashi, 2016). Apple cited that the reason for this slowdown was a drop in sales in China due to their worsening economy. Profits at Samsung, Apple’s largest rival in the smartphone industry, were also expected to be negatively affected by the “softening smartphone market” ("CNBC", 2016), indicating that slowing smartphone sales growth is a problem for the industry as a whole and not just Apple.

Opportunities

One of the largest opportunities for the iPhone and other smartphones is to increase sales in emerging markets. The user penetration rate for smartphones in the U.S. was around 76% in January 2015. Apple was ranked as the top smartphone manufacturer with a market share of 41.3% (Lella, 2015). Instead of increasing market share in developed economies such as the U.S., Apple would have an easier time increasing market share in countries where user penetration rates are low. This would ensure that potential customers don’t have to worry about switching costs and being loyal to a specific smartphone brand. These countries could include India and China, which have a user penetration rate of 26.3% and 50.9% ("Statista"), respectively.

Threats

The biggest threat to Apple’s iPhone is Samsung. Samsung smartphones had the second largest market share in 2015 with 29.3% of smartphone sales (Lella, 2015). Samsung’s market share has been steadily increasing since Q3 2014 where they had a market share of 24.4% (Reisinger, 2014) could become a bigger threat to Apple’s iPhone sales in the future. Samsung also has a wide variety of smartphones at many different price points to appeal to both price-conscious consumers and consumers seeking higher end phones. Samsung’s low price smartphones are a threat to the iPhone due to the lack of competition they face in the low-end smartphone market. Samsung phones all operate using the Android operating system that is free for developers to use. This is in contrast to iPhone’s operating system, iOS, which charges app developers a fee to use its software. Developers could be enticed to switch to Android’s operating system from iOS to save money, which would increase the quality of applications on Samsung devices and give them a competitive advantage.

Sources

"China Smartphone User Penetration Rate 2013-2019 | Statistic." Statista. Web. 27 Jan. 2016.

Chowdhry, Amit. "Average IPhone Price Increases To $687 And Android Decreases To $254, Says Report." Forbes. Forbes Magazine, 3 Feb. 2015. Web. 26 Jan. 2016.

Lella, Adam. "ComScore Reports January 2015 U.S. Smartphone Subscriber Market Share." ComScore, Inc. 4 Mar. 2015. Web. 27 Jan. 2016.

"Samsung Q4 Profit Guidance Misses Forecasts." CNBC. 07 Jan. 2016. Web. 27 Jan. 2016.

"Smartphone User Penetration in India 2014-2019 | Statistic." Statista. Web. 27 Jan. 2016.

Reisinger, Don. "Samsung Still Tops in Smartphones, but Market Share Plummeting." CNET. 15 Dec. 2014. Web. 27 Jan. 2016.

Rothaermel, Frank T. Apple (in 2013): How to Sustain a Competitive Advantage. N.p.: McGraw Hill Education, n.d. Print.

Wakabayashi, Daisuke. "Apple IPhone Sales Grow at Slowest Rate Ever." WSJ. 26 Jan. 2016. Web. 27 Jan. 2016.

--------------------

http://www.macworld.co.uk/feature/apple/apple-patents-round-up-clues-future-iphones-ipads-macs-watch-future-tech-3468138/

http://www.patentlyapple.com/patently-apple/2016/01/apple-was-granted-9-design-patents-today-covering-the-touch-id-home-button-apple-watch-band-attachments-more.html

http://www.patentlyapple.com/patently-apple/2016/01/apple-delivers-a-great-quarter-yet-acknowledges-that-weaker-iphone-sales-are-ahead.html

http://www.imore.com/history-iphone-original

http://www.phonearena.com/phones/Apple-iPhone-6_id8346/rivals