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CI Dossier – B2B Marketing 3257-001 November 14, 2012 Apple Computers Prepared for Donna Lazdowski by: Justin Eder Jermyn Voon
CI Dossier – B2B Marketing 3257-001
November 14, 2012
Apple Computers
Prepared for Donna Lazdowski by:
Justin Eder
Jermyn Voon
Maria Atienza
George Isac
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Table of Contents
Page #
Problem Identification ........................................................................... 3
Company Analysis ............................................................................... 4-5
Industry Analysis ............................................................................... 6-10
Suppliers in Depth ........................................................................... 11-13
Competitive Analysis ....................................................................... 13-23
Strategic SWOT Analysis ................................................................. 24-29
Conclusion and Recommendations ...................................................... 30
References ...................................................................................... 31-36
Appendices ..................................................................................... 37-49
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Problem Identification
Apple is one of biggest companies on the entire globe; it has a recognizable brand, customer
loyalty, immaculate design, and products that everyone knows about (iPod, iPhone, iPad, iMac).
Through its pricing strategy however, Apple has isolated many potential customers as their
products are targeted with a higher price point to demonstrate quality and give value to the
customer through design and efficiency. One segment of the market where they have very little
market share is computers in the business sector.
Most companies use PCs (which are Windows based) such as Dell or HP; very rarely will you see
a company using Apple computers. This is because software is much more accessible with
Windows. As well, PCs still have a majority over the consumer market; more people are
comfortable with PCs over Macs. Speaking with companies, another area which is important to
their decision is service and support, and companies such as Lenovo exceed that of Apples.
So how can Apple improve their presence in the business sector focusing solely on the iMac product?
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Company Analysis
Apple Inc. is a public, multinational American technology company founded by Steve Jobs and
Steve Wozniak in April 1967, that started by selling their home-built computer circuit board
called the Apple 1 (Gale Business Insights, 2012). The company is headquartered in Cupertino,
California.
Apple “designs, manufactures and markets mobile communication and media devices, personal
computers, and portable digital music players, and sells a variety of related software, services,
peripherals, networking solutions, and third-party digital content and applications” (Apple Inc.,
2012 p. 2) by designing, manufacturing and selling several different product lines like the
iPhone®, iPad®, Mac® and iPod® (Apple Inc., 2012).
The company also offers a portfolio of consumer and professional software applications, the iOS
and OS X® operating systems, iCloud®, and a variety of accessory, service and support offerings"
(Apple Inc., 2012, p. 2).
Launched in 2007 in the United States, the iPhone is Apple’s smart phone and mobile head-set
device that combines the features of an iPod with the capabilities of a mobile phone (Gale
Business Insights, 2012). Starting in 2002 with the release of Apple’s first digital music player
called the iPod, it has grown to include the iPod shuffle, iPod Nano, iPod classic and iPod touch
(Gale Business Insights, 2012). This allows users to store their music portably and watch videos
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on the go. Apple introduces a revised product to the iPod called the iPod Mini in 2004. This iPod
has the ability to hold 1,000 songs (Gale Business Insights, 2012).
In addition in 2003, Apple launched the iTunes online store while opening its first international
retail store in Japan during the same year (Gale Business Insights, 2012). The iTunes allows the
users to download various forms of media such as music, videos, music videos, TV shows,
movies and games.
The Mac product-line is made up of the “MacBook Pro, MacBook, MacBook Air, Mac Pro, iMac,
Mac mini and Xserve” (Gale Business Insights, 2012). iMac and a MacBook Pro which were both
Apple’s first Macintosh computers were unveiled in January 2006 (Gale Business Insights,
2012). According to Gartner.com, they are third largest seller of mobile devices worldwide to
the end consumer by a vendor with Samsung and Nokia, being first and second respectively
(Gartner Inc., 2012).
For a detailed look at Apple’s history and major milestones refer to Appendix A.
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Industry Analysis
Buyers' Power
Buyers of personal computers, especially for large and small businesses, schools and
governments, are price sensitive. Since they buy in large quantities, bulk pricing is usually
negotiated. Suppliers such as Lenovo have lowered their prices for the business sector market
to remain significant in the industry (Gartner Inc., 2012). Apple with their higher price point
may have to do the same or risk being left out of this market. The buyers also have longer
buying cycles in accordance to replacement cycles of personal computers which industry
analysts says may already have peaked this year (Gartner Inc., 2012). There are a number of
companies that can supply personal computers to the business sector; however, the top 6
computer suppliers take 58.9% of the market (Fingas, 2012). Considering all these factors,
buyers have moderate buyer power.
Threat of Substitutes
There would be a moderate threat in the industry for substitutes. According to Miller,
“Windows-compatible computers (generally called PCs) and Apple computers (generally called
Macs) are the two largest choices in computer shopping” (Miller, J., n.d.). This poses a huge
threat for Apple Computers as they will need to compete to ensure that they offer enough
benefits for businesses to use the Apple Computers instead of going to the well-known PC that
has been used in various businesses before. In addition, Miller goes on to say that “due to PCs
being more common than Macs in homes and business, there are many community programs
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and organizations that teach the computer illiterate about Windows, whereas this is less
common with Macs” (Miller, J., n.d.).
The threat of other substitutes is generally quite high because “PCs are made by several
different manufacturers, including Dell, HP, Gateway, eMachines, and so forth. Almost all the
parts in these separate computer companies are interchangeable; offering a convenience that
Macs lack” (Miller, J., n.d.).
Threat of Rivalry
The threat of rivalry is can be also classified as the “Intensity of Competition" and can be
considered the sum of all the factors. In the case of Apple Inc. the threat of intensity of
competition is moderate-high. Since PCs can be made by several different supplies, this offers a
convenience that Macs lack and cannot provide (Miller, J., n.d.). The technology market places
an importance on features and benefits and how they will help the end consumer or business.
Looking at all the threats; social, buyer powers and technological factors this makes the threat
of rivalry high.
Suppliers' Power
The suppliers in the computer manufacturing industry have large bargaining power due to the
fact that there are few that have the expertise to supply the right product at the right quality.
For example, Intel and AMD are the two top microchip suppliers; they have been around for a
long period of time and have achieved economies of scale allowing them to supply Apple with a
great product at a low price. To reduce the risk of bargaining power of suppliers Apple should
be looking at ways to mitigate that risk. In the case of microchips they are seriously considering
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abandoning Intel and manufacturing their own microchips which will reduce their dependency
on Intel (Santario, A., 2012). Another example of how suppliers have bargaining power is in
Apple's relationship with Samsung. Even though Apple has been in a dirty legal battle with
Samsung, they are still doing business with each other since it is economic to do so. With Apple
being such a big buyer they also have some bargaining power in the relationships with their
suppliers, if Apple stops purchasing from a supplier it could seriously affect the supplier's
revenues.
Threat of new entrants
The threat of new entrants is low overall because there are high capital costs for new
businesses to startup and they would be competing against established brands which have
achieved economies of scale. Because of competition there are also low profit margins in the
computer B2B market so it would make it less attractive for new businesses to enter this
market. On the other hand, this market has a short distribution channel because the
computers would go straight from the manufacturer to the customer (business); this makes it
easier for new entrants to compete. There would also be retaliatory responses from the
established firms if they recognize a new entrant is capturing market share which makes it even
less attractive for new businesses to enter this market.
Political
Threats of new political regulation or any change in the political climate is low. Minimum wage
rules and worker benefits regulations have enticed Apple to outsource production to Foxconn
in China. This outsourcing of jobs has always been controversial and it is a hard issue to tackle
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because it makes economic sense to seek the lowest cost for manufacturing your product.
Apple enjoys great tax rules in the United States and from profits made abroad. For example,
Apple paid less than 2 percent tax on profits made overseas (Cheng, R., 2012). These conditions
are favorable and help the company grow, there is little threat that these conditions will change
in the future.
Economical
Current economic conditions are optimistic; however this is due to governments stimulating the
economy through inflationary policy. If the stimulus wears off or doesn't work as well as
anticipated there is a threat the economy would go into a recession, particularly in the United
States. This could affect Apple, as companies would be tight with their budgets, and if they do
require computers they would make their purchase decision mostly based on price. On the
other hand, companies in emerging markets could still provide good opportunities. The
economic threat is moderate and should be taken into account if Apple chooses to expand their
B2B marketing of computers. Another factor is the fact that Apple's profits are based largely on
the iPhone and the iPad. The iPhone accounts for more than half of Apple's profits because
they have the luxury to have a higher markup due to their brand recognition, as opposed to
their competitors. When expanding into the B2B marketing of their computers they would not
be able to have markups as high as on their mobile devices.
Social
With the social demand for quality and reliability increasing, it is a positive change for Apple,
and the company is in a good position to take advantage of that. This is true as generally PC’s
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are more popular among the personal and home user whereas Mac’s tend to more popular
among the music and design crowd. With businesses becoming more dependent on computers
in everyday functioning, there is low social threat in the industry. The growing popularity of
eBusinesses, the need to process and store large data and the importance of access to the
internet, has computers sales in the business sector rising (Nuttall & Walters, 2011).
Considering this, social would be considered a low threat.
Technological
Technology has a high threat According to Apple. Apple provides "technology that's flexible,
powerful and scalable, supporting simple to complex scientific workflows” (Apple, 2012). The
advances and rapid changes in technology expose Apple to a great risk as they will need to keep
up with the latest technological advances. Apple uses an OSX Mountain Loin system for their
Mac computers and use “Intel processors, advanced graphics, and notebook batteries that last
up to 7 hours on a single charge” (Apple Inc., 2012). Apple also provide accessibility for people
with different disabilities to use their Mac computers such as Voice Overs, Screen
Magnification, Cursor Magnification, Picture-in-Picture Zoom, High Contrast Reverse Video,
Safari Reader, Finder Views, View Options, Dock Magnification, Taking Alerts, Taking Calculator,
Taking Clock, Converting Text to Speech and Safari and Cascading Style Sheets (CSS) for
individuals who have vision impairments.
Suppliers in Depth
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Apple uses over 100 suppliers to manufacture their computers (Moon, B., 2012). The three
main suppliers to Apple and the industry are: Samsung Electronics Co., Ltd., Intel Corporation
and Hon Hai Precision Industry Co., Ltd. (Moon, B., 2012). Some analysts believe that the
suppliers are one of Apple's greatest risks in the future and should be carefully managed
(Moon, B., 2012).
Samsung supplies the displays for Apple's computers and also the memory for their computers
(Moon, B., 2012). Samsung and Apple have a bipolar relationship because on the one hand
they benefit from doing business with each other, and on the other hand they are competing
against each other in the mobile industry. Due to their competition for market share, Apple has
sued Samsung in many different countries claiming that Samsung has infringed on their patents
(Moon, B., 2012). Apple has won their case in a few countries and have been awarded more
than a billion in damages (Rose, M., 2012). Samsung has subsequently countersued Apple on
infringing on their patents. This type of relationship that Apple has with Samsung can be risky
for Apple depending on how easy it is to substitute Samsung as a supplier. So far Apple has
continued doing business with Samsung and vice versa; both companies are perhaps locked in a
mutually beneficial relationship where Samsung doesn't want to lose such a big customer as
Apple, and where Apple don't see any alternatives in displays at the same level of cost and
quality.
One of the most important components of the iMac computers is the microchip (Santario, A.,
2012). The microchips have normally been supplied by Intel which is a major supplier of
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microchips for the whole computer manufacturing industry (Santario, A., 2012). Apple has been
looking at reducing their dependency on Intel chips and has looked at manufacturing their own
chips (Santario, A., 2012). Apple has been using their own chips for a few years in their mobile
electronic products (iPad & iPhone). Through reducing their dependency on Intel they would
be able to improve their profit margin. However, it's not clear that they have sufficient
experience in developing chips for high power iMacs, so maintaining the same level of quality
might be an issue.
Foxconn is a supplier of labor for Apple and many other companies; they supply the labor and
facilities required to assemble Apple products (Apple Responsibilities, 2011). Foxconn also has
contracts with Sony and Microsoft among other companies (Apple Responsibilities, 2011).
There has been much controversy about Foxconn's labor practices and reported situations
where they have had children working in the manufacturing plants (Apple Responsibilities,
2011). All of this controversy has prompted Apple to audit Foxconn and other companies
regarding their labor practices (Apple Responsibilities, 2011). Through their auditing they have
found incidents of child labor as well as other incidents of unethical behavior (Apple
Responsibilities, 2011). The incidents also had notes on what actions Apple has taken to
eliminate further incidents (Apple Responsibilities, 2011). This is a great move for Apple to
improve their image as a socially responsible corporation. Through increasing their
transparency about labor practices Apple is positioning their brand towards the right area.
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Apple has some interesting relationships with their suppliers, and by being one of the largest
companies in the world they are highly scrutinized by the public. Going forward, Apple needs
to maintain the same level of high quality customers have come to expect from their products.
Maintaining that quality could be challenged by the relationships they have with their suppliers.
Competitive Analysis
Apples Major Competitors
In the business sector Apple computers are a step behind their competition in terms of market
share. Companies such as Lenovo, HP and Dell are all ahead of Apple by a healthy margin.
With price being a big concern for companies, historically speaking Apple has never had that
advantage over their competitors. However other factors such as service and support have also
played a huge factor in why companies such as Lenovo are often chosen over Apple. With
Lenovo owning about 15% of the market they are seen as one of Apples main competitors
(Dent, S., 2012). The next two highest are HP and Dell with similar or just lower market share
presence (Dediu, H., 2012). Thus Lenovo, Dell and HP have been chosen to be Apples three
competitors for comparison.
Competitor Trends
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Not is all doom and gloom for Apple, current trends show Apple on the upswing in terms of
gaining market share away from companies (Tecca, 2012). One possible reason as Horace
Dediu puts it, “the secret to Apple’s recent success is the MacBook” (Tecca, 2012). This can be
seen because the MacBook is known for its excellent design capabilities, as well as an
integrated product.
Lenovo however is also on the upswing with its market share seemingly increasing every
quarter over the past few years. Lenovo in 2006 had about 7% of the market and now has
more than double that (Gartner, 2007). Dell has been up and down over the past five years
with a decrease in the mid 2000’s and increasing over the last few years, currently sitting at
about 11% (Fingas, J., 2012).
HP is the one which has seen its market share drop from 18.8% in 2010 to 15% in 2012 (Fingas,
J., 2012. So with HP, Dell and Lenovo all having a similar market share, how can Apple increase
their share? They can either gain market share by cannibalizing the other smaller competitors
(Acer, Asus, etc.) or they can target the three mentioned and try to overtake part of their share.
Either way, Apple would have to change its focus on business to business marketing if they
want a shot at ever reaching a two digit market share.
Dell
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Brief History
Dell was started by Michael Dell in 1984 while still in University (Dell, 2012). He dropped out of
school to focus on his growing company and in four years brought the company public raising
$30 million (Dell, 2012). Dell.com was launched in 1996 averaging $1 million in sales/day within
six months of site launch (Dell, 2012). By 2001 Dell was the number one computer system
provider in the world (Dell, 2012). By being innovative and constantly looking for new
opportunities Dell has become a worldwide recognizable brand and is a top contender in the
computer market in both the consumer and business sectors.
Price Strategy
For Dell their pricing strategy has changed over the years as their market share has fluctuated.
Six years ago Dell continued to decrease their prices to stay competitive with the market
(Montes, 2006). Part of the reason why Dell was able to offer low prices was because of its
partnership with Intel who manufactured all the chips that were used in Dell computers
(Montes, 2006). However that was six years ago and their partnerships are no longer exclusive
and their competitors such as HP have been able to match Dell’s low prices (Montes, 2006).
Currently their prices are average with the market with similar pricing to HP (Montes, 2006).
Distribution, Service and Support
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Dell has a variety of methods of distribution to get their computers to their customers. They
offer online purchase through their store as well as big name stores such as Best Buy and
Staples (Dell, 2012). Having Dell hubs across the globe, Dells delivery is often quick with times
only being held up with production of the computers as Dells are often customized to fit exact
customer needs (Dell, 2012). They offer an array of services for the business sector which
include business consulting, cloud-based services, financing, it consulting, and managed
infrastructure services, to name a few (Dell, 2012). With these services in place Dell has a
strong competitive advantage over their competitors as companies often choose Dell for their
networking needs. Their support is vast with product support available in multiple ways, for
example online, by phone, or in house technicians (Dell, 2012).
HP
Brief History
HP, which stands for its two founders Bill Hewlett and Dave Packard was founded back in 1939
(HP, 2012). As this was 1939 their first product was an audio oscillator which was used by
sound engineers; this product would go on to be used for Walt Disney Studios (HP, 2012).
According to a long search of over five millions pages and 117 journals, the first personal
computer (PC) was by HP, made in 1968 (Clark, A., 2000). One reason for HP’s dominance in
the business sector was because they started early; in the 90’s they targeted businesses,
universities and research users to reach consumers (HP, 2012). In recent years HP has pulled
out of various markets and strategically reformed the company to stay current with trends,
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such as cloud servers and software to deal with enterprise and government markets (HP
Finance, 2011).
Price Strategy
For HP one reason why they have been successful in grabbing a large chunk of their market is
because they have a bundle pricing method which means the more computers you buy the
cheaper they are (Goldstein, A., 2009). They also include free upgrades to their products when
you buy them, to help differentiate themselves from the competition (Goldstein, A., 2009).
They try to differentiate themselves on pricing by offering special prices on their website; as
opposed to not buying from HP.com (HP, 2012).
Distribution, Service and Support
HP computers can be bought from their website which gives consumers a comparison of
various models and recommendations based on your business size and any services you may be
interested in (HP, 2012). For businesses, small to large, they offer services such as networking,
however unlike Dell they don’t offer many of the services Dell does (HP, 2012). HP's customer
support has seen its ups and downs with opinions being that they are just average relative to
the market as their coverage for their products isn’t as good as other companies, such as Dell
(Langer, J., 2010).
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Lenovo
Brief History
Launched in 1984 by Liu Chuanzhi and ten similar minded associates the company was funded
by the Chinese Academy of Sciences (Lenovo, 2012). Their first PC was launched in 1990 in the
Chinese market (Lenovo, 2012). The Lenovo brand was renamed from Legend when it
expanded from its home Chinese market to overseas in 2003 (Lenovo, 2012). Unlike Dell, HP
and Apple who all deal in multiple consumer markets (business and at-home for example),
Lenovo focuses most of its efforts to increase their market share in the business sector, which
has paid dividends over the last decade (Lenovo, 2012). Lenovo is currently the fastest growing
major PC manufacturer (Lenovo, 2012).
Price Strategy
For Lenovo’s pricing strategy they came in under their competition with lower prices as they
realized their brand isn’t as recognizable as their rivals (Dhar, S., 2010). They also have been
implementing a "protect and attack" strategy which is to protect markets they dominate
(China) and attack markets which are emerging (Dhar, S., 2010). With regards to profits, their
protect option is a cash cow as it makes the most of its revenue, their attack option has to do
with company growth and expansion (Dhar, S., 2010). As Lenovo is a global company they run
different strategies around the globe; their European markets for example they adopted a value
based pricing (Dhar, S., 2010).
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Distribution, Service and Support
Lenovo has several different services it offers to meet consumer demands if any problem may
occur. These services include financial, warranty, protection, transition services as well as a
premium support; this wide variety and selection gives customers everything they need in
regards to any issues they may have with their computers/system in the future (Lenovo, 2012).
Their distribution is quite extensive with there being many ways to purchase Lenovo
computers; you can buy directly from Lenovo’s website as well as multiple of online retailers
such as amazon, Newegg and TigerDirect (Lenovo, 2012). In addition you can also purchase
from authorized resellers such as softchoice, insight and CompuCom (Lenovo, 2012). With a
wide array of purchasing options, Lenovo computers are easily available for any size company.
Where does Apple fit?
Price Strategy
Unlike their competitors Apples main focus isn’t on low prices, its pricing structure is set up as
premium pricing (LeClaire, J., 2012). They offer their products at a premium price because they
believe with their innovative design and different software within iOS the companies that need
them, such as design firms, will buy them regardless of price (LeClaire, J., 2012).
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Distribution, Service and Support
Apple offers various ways to purchase their products for business as you can also lease their
products if you don’t want to purchase them (Apple, 2012). Purchase of Apple products for
your business is more limited as if you want their business options you have to purchase
through the Apple Store (Apple, 2012). Apple is excellent with covering their products with
AppleCare. In addition they also offer very useful services for people new to iMacs such as
training programs set up by Apple (Apple, 2012). Those who want to set up their network with
Apple products can do so, and that service is also available for businesses (Apple, 2012).
Advantages
Apples key advantages are its high quality, excellent support and warranty coverage, and its
high integration with all their other products. Apple’s strengths in its integration with all its
products are something that its competitors just don’t have. The iPhone, iPad and iMac all
communicate with one another with ease, speed and efficiency. Apple has overcome the price
issues by offering a higher standard in quality and design over its competitors and if they are to
succeed in the business market, they need demonstrate that quality to their customers.
In addition, based on a survey gathering information on all the computer makers, Apples
customer service, tech support and consumer satisfaction was the highest among the bunch
(Laptop, 2012). With businesses relying on their computers so much in this era, company-
customer relations should be high; with Apple’s superb customer and tech support, they need
to use this to their advantage when getting new customers.
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Competitive Matrix
Assets & Competencies Apple Dell HP Lenovo
Quality/Reliability High Medium-High Low-Medium High
Brand Awareness High High High Medium
Variety of Products Medium High Medium-High Medium
Integration with other Products High Integration
Medium Integration
Medium Integration
Medium Integration
Cost Structure High Cost Medium-Low Cost
Medium-Low Cost Low Cost
Maintenance and Support High Medium-High Low High
Distribution Channels Medium High High Medium
Services Offered Low-Medium High High Medium
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Further Analysis of Matrix
Quality/Reliability
Apple, Dell, and Lenovo have the highest quality and reliability of the bunch based on consumer
reports and our interviews we did with a few local companies. HP has had the worst luck with
quality as they are often at the bottom of consumer reports for quality and reliability.
Brand Awareness
As Apples competitors are the three leading companies in the industry, they all have high brand
recognition. While Lenovo may not be well known with the at-home consumer market, they
are well known in the business industry. This would potentially hurt in small start-up
businesses.
Variety of Products
Everyone offers laptops, desktops, tablets and servers. Looking at each company’s computer
selection Apple has the lowest selection. However they also offer the iPhone which, no other
company offers.
Integration with other Products
Apple has a high integration because with their iOS platform, all their products are integrated
with each other and can be used together. Their competition, while offering tablets cannot
compete with Apple as Apple has more options available. The competition scores medium
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because they all offer server and service based programs which are integrated with a
company’s main network.
Cost Structure
Apples one downfall compared to their competition is price. They simply cannot nor want to
compete with their competition on price. Their competition all offers computers with similar
hardware for lower prices. Apple differentiates itself because they design their computers to
look beautiful, rather than be a hardware beast.
Maintenance and Support
From a survey that took every company into account, Apple scored the highest for customer
satisfaction and customer support. Dell and Lenovo were tied for second and HP brought up
the rear with a rather low score (Laptop, 2012).
Distribution Channels
Apple and Lenovo do not have the same distribution that Dell and HP have. Neither Apple nor
Lenovo computers are as widely available as Dell or HP computers. Dell and HP have their
computers in more stores, such as Staples.
Services Offered
Dell and HP both offer a wide variety of solutions dealing with small to large enterprises while
Lenovo and Apple, while offering some services, such as financial help and product integration,
they don’t offer the sheer amount of services the competition does.
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Strategic SWOT Analysis
SWOT Analysis
Strengths
Strong Brand Value
Integrated platform
Weakness
Price
Product diversity
Lack of PC market share
Opportunity
Increasing usage of the OS X
compared to Windows
Increasing sales in Asia
Threats
Increase of tablet sales
Competition has established presence
in the market
Strengths
Perhaps Apple’s biggest strength as company is their brand value. Interbrand, a brand
management company, ranked them second in their 2012 Best Global Brands survey, while
companies such as IBM, HP and Dell ranked 3rd, 15th and 49th, respectively; in monetary
terms, Apple’s brand value translates to about $76 billion (Interbrand, 2012). Apple’s 129%
brand value increase from 2011 increase also showed the reaction people had to the death of
Apple’s prominent figure, Steve Jobs (Montgomery, 2012).
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According to Shanbhag (2012), their strong brand value not only comes from their product line
but also by the experience people associate with the products - they call it the Apple
experience. Shanbhag further linked the Apple experience with the brand’s reputation as a
leader in innovation and design. Apple can use their strong brand value as a tool in positioning
themselves in the corporate market as a brand that can deliver not only quality performance
but a whole experience.
The corporate sector is already familiar with Apple’s other products such as the iPhone and
iPad, even RIM employees used iPhone over Blackberry, so they are already familiar with
Apple’s operating system, the iOS (Shanbhag, 2012). This familiarity with the operating system
is a strength for Apple computers. Apple has made it even easier to integrate and sync
information between their products with their cloud technology and windows integration
(Apple, 2012). The flexibility of their OS and the easy integration will help the corporate sector
transition from the popular Windows OS to the iOS.
Additionally, Apple has been trying to increase their corporate sales by catering to business
needs. They have simplified setup of their computers to cater business needs with services such
as Business Apps, Profile Manager and VPN Manager among others (Apple, 2012).
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Weaknesses
Price and product diversity are key factors in the battle of the business computer market.
Apple’s desktop iMac 21.5 inch computer retails for $1,499 (Apple, 2012). A similar sized Dell
computer retails for $1,000 (Dell, 2012). It would be expensive for businesses to spend an extra
$500 per computer considering the large order size for computers in businesses. Also,
compared to Dell, Apple’s computer product line is smaller. Dell’s diversified product line is
ideal for any sized business to choose which fits into their needs. Lenovo has recently made
efforts to increase their corporate market share by positioning their products through price
(Gartner Newsroom, 2012).
Another weakness of Apple is their low market share in the PC industry. According to Gartner
(2012), an information technology research company, Lenovo topped the 2012 third quarter
worldwide PC shipment at 13 million units which is 15.7% of the market share; HP and Dell have
15.5% and 10.5% of the market share, respectively. Apple did not rank in the top 5 worldwide
survey but ranked third in the U.S. survey with 2 million units and 13.6% of the market share.
They are trailing behind HP’s 27 % market share and Dell’s 21.4% market share but Apple is
above Lenovo, Acer Group and Toshiba at 8.9%, 6.5% and 6.5% respectively (Gartner
Newsroom, 2012). These figures show that Apple simply doesn’t own a large share of the
overall PC market share and this can translate to their presence in the corporate market as well.
Further, International Data Corporation [IDC] (2012), a global market intelligence company, has
seen a decline in the US corporate market demand for PC’s in 2012’s third quarter, thus making
it especially tougher for Apple to increase their sales in the business sector.
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Opportunities
All is not bad in Apple’s struggle in the computer industry. Jay Chou, a senior analyst of
Worldwide PC Tracker, has said that it is already expected that PC sales will decline with the
launch of the new Windows 8 (IDC, 2012). The launch of the new Windows platform has some
people are either hesitant to embrace it or waiting for reviews of the new operating system.
This is an opportunity for Apple to grab the market with their Mac OS X with the uncertainty
surrounding the Windows 8.
According to the Desktop Operating System Share Trend report by Net Applications (2012), a
market share reporting service, the Mac OS has seen a steady growth of market share from
December 2011 with 6.36% share to October 2012 with 7.26% share. These numbers may not
compare to Windows market share, but there has been a decline of their share from December
2011 with 92.23% to October 2012 with 91.67% (Net Applications, 2012). The declining trend of
Windows’ share is an opportunity to increase Apple’s Mac OS market share.
Another opportunity for Apple to increase their computer sales is with the Asia Pacific Region.
There was a 40% increase in shipment in the 1st quarter of 2012 to the Asia-Pacific region, even
with the lack of new updates then (Hughes, 2012). Although in real numbers, PC’s still outpace
Mac’s performance, this is still an indication of a growing potential market for Apple computers.
Also, according to the same article it was mentioned that Mac sales in the business sector grew
by a combined 10.4% yearly, whereas PC sales only grew by 0.1% (Hughes, 2012).
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Threats
There are two important threats to Apple Mac computers in the industry, the increasing tablets
shares and the competitions' market share.
Tablet computer sales are on the rise compared to other types of computers. It has been
estimated that 25% of computers sold are tablets; plus, additional statistic showed that
worldwide, 27.7 million tablets were sold in 2012’s third quarter alone (Tofel, 2012). This trend
is not a big threat to Apple itself since they still hold a large market share of the tablet industry -
50.4% as of 2012 (Gibbs, 2012). However, the growth opportunity for Apple’s iPad might mean
a potential threat to their Mac computers sales. Personal computer sales were down 8.6%
compared to a 50% increase in tablet sales from last year alone (Tofel, 2012). If this trend
continues Apple can expect further decline in sales of their Mac computers.
Personal computer providers to businesses have continuing relationships with the market
making it harder for Apple to grow into the industry. Dell has successfully established
themselves as a personal computer provider to the business sector. Their revenue in the
business sector alone is estimated to be a total of $15 billion (Menn, 2011). Also, Dell has been
moving towards securing service contracts with large corporations, thus further solidifying their
share in the business sector market (Menn, 2011). As in business to business marketing Dell has
the advantage of already establishing personal relationships with their market, where as Apple
still has to build those relationships.
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Strategic SWOT Analysis
Strengths Weakness
Opportunity
S+O
Combining Apple’s integrated platform and
increasing usage of the Mac OS, Apple has
an opportunity to market their computers
as an all in one hub for all the other Apple
devices the business sector are using
already such as the iPad and iPhone.
W+O
Their high price point and lack of
product diversity can potentially
be overlooked by business buyers
if they can market their computers
as the next step advancing
business through technology.
Threats
S+T
Even though companies such as Dell and HP
already have a strong presence in the
corporate market, Apple can still capture a
portion of the market by using their strong
brand value and their integrated platform.
The other competitors don’t have that mix
as a key strategic advantage.
W+T
The biggest weakness and threat
to Apple’s Mac computers are
their small market share and sales.
They can improve this by
diversifying their computer
product line or slashing prices for
the business market.
P a g e | 30
Conclusions and Recommendations
We posed the question, “How can Apple improve their presence in the business sector focusing
solely on the iMac product”? For Apple to succeed and grow in the business computer market
there are several options available to them that can lead to a higher market share. They need
to use their competitive advantages to get them ahead of the pack, which is to demonstrate
their products high quality, their above-standard support, warranty coverage, tech support, and
their high integration they have with all their “i” based products (iPad, iPhone, iMac, etc.). By
using their competitive advantages, of which they have many, they should continue to grow in
the business market with companies continually searching for that best option. The Apple
brand is a household name; the next step for Apple is to make the Apple brand an icon in the
business industry.
P a g e | 31
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Appendix A
Apple Inc.’s Timeline/Major Milestones
Date Events2004 Sales of the iPod exceed 2 million units. Apple introduces the iPod mini,
which offers capacity of up to 1,000 songs. By the year's end, iPod sales account for 35% of total annual revenues.
September 2005 Apple and Motorola introduce the Motorola ROKR, a $250 music phone with iTunes software that is capable of storing 100 songs.
October 12, 2005 The company launches an iPod capable of playing video on a 2.5-inch color screen.
Apple's iTunes service begins offering approximately 2,000 music videos, as well as episodes of "Desperate Housewives" and "Lost" for $1.99.
October 31, 2005 Apple announces that its iTunes service has sold more than 1 million videos in less than 20 days.
2006 The San Diego-based color correction software company Silicon Color is acquired
January 2006 A new five-year agreement with Microsoft ensures the availability of Microsoft Office software on Macintosh computers.
Apple unveils the very first Macintosh computers--an iMac and a MacBook Pro--based on chips from Intel Corp.
March 2006 A data center is acquired from Newark, Calif.-based Stream Realty Partners LP for approximately $50 million.
May 2006 May: Judge Edward Mann rules that Apple Computer did not violate its licensing agreement with Apple Corps, and may use the apple logo on its iTunes Music Store.
Apple Corps vows it will appeal Judge Edward Mann's decision to Britain's Court of Appeal.
The company opens The Apple Store Fifth Avenue, a glass-cubed flagship location on New York's Fifth Avenue that will be open around the clock, 365 days a year.
June 2006 Plans to build a technical support center in Bangalore, India, are cancelled for reasons of cost and efficiency.
2007 A "green" strategy is developed, calling for the removal of toxic chemicals
P a g e | 38
and an emphasis on recycling.
The company celebrates the 30th anniversary of the Apple II's debut.
Apple acquires the Common Unix Printing System.
The iPhone is introduced in the United Kingdom.2008 In a $278 million deal, Apple acquires the microprocessor design firm P.A.
Semi.
Movie rentals from leading studios are added to iTunes.
The Apple 3G iPhone is slated for debut in Italy without a mandatory service contract, via a tie-up with Telecom Italia Mobile.
The company opens a 20,000-square-foot Apple Store in Boston's Prudential Center.
Apple establishes its first store in China, with a location in Beijing.2009 A major, long-term LCD panel supply deal is made with LG Display.
CEO Steve Jobs takes a leave of absence due to health issues.
Chief Operating Officer Timothy D. Cook takes the reins at Apple in Jobs' absence.
The digital music service Lala is acquired2010 On day one of the iPad's availability, users downloaded some 1 million
apps from the Apple App Store and approximately 250,000 electronic books from the iBookstore.
The Austin, Texas-based semiconductor developer Intrinsity is acquired.
The company's second China flagship store opens in Shanghai.
Plans are made to offer the iPhone with carriers other than AT&T beginning in 2011.
April 2010 Apple unveils its iPad tablet PC and sells 300,000 devices during the first day.
2011 Apple unveils the Mac App Store for Snow Leopard operating system users, providing them with access to more than 1,000 paid and free apps.
Apple adds its subscription service to the App Store, providing users with content from a variety of video and music providers, as well as magazines
P a g e | 39
and newspapers.
A new version of the iMac is introduced, featuring quad-core processors that increase the computer's speed by as much as 70 percent.
A free cloud computing service called iCloud is introduced, allowing users to keep content updated across multiple devices.
Co-founder Steve Jobs passes away.
Users of the new iOS 5 mobile operating system exceed 25 million five days after its release.
Mac App Store downloads exceed 100 millionJanuary 2011 CEO Steve Jobs takes medical leave of absence. Tim Cook assumes
responsibility for the company's daily operations.
The number of apps downloaded from the Apple App Store surpasses the 10 billion mark.
The number of iPad, iPhone, and iPod touch users surpasses 160 million.March 2011 The company introduces the iPad 2, which is 33 percent thinner than the
original iPad, but includes additional features including a camera, as well as a faster processor.
April 2011 The white iPhone 4 makes its debutJuly 2011 Apple App Store downloads surpass 15 billion.
Within one day of Mac OS X Lion's release, more than 1 million users purchase and download the new operating system.
August 2011 Steve Jobs resigns as CEO and is succeeded by Chief Operating Officer Tim Cook.
Steve Jobs remains with the company as chairman.October 2011 The iPhone 4S is introduced, along with the iOS 5 operating system and
iCloud service.2012 Apple unveils a new iTunes U app, allowing students to take online
courses. The app features free content from institutions such as Harvard, Oxford, and Stanford.
A federal jury finds that Samsung is guilty of infringing upon mobile device-related patents owned by Apple.
2012: As part of the patent case, Samsung is ordered to pay Apple $1.05
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billion.
2012: Apple seeks injunctions related to Samsung's production of eight mobile devices, including the Galaxy S 4G, Droid Charge, and Galaxy Prevail.
2012: Apple’s market capitalization reaches a record $635 billion following the Samsung ruling, while Samsung's market value plummets more than $12 billion.
September 12, 2012 Apple launches its iPhone 5 in nine countries, in what is the fastest product launch in the company's history.
After one hour, Apple's online store is depleted of pre-orders for the iPhone 5.
(Gale Business Insights, 2012)
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Appendix B
Interview with Wayne Rothe, owner of Wayne Rothe and Associates Wealth
Management/Manulife Securities
1. What market does your business specialize in?
Full-service financial planning, as well as investment management.
2. Who did you choose to be your provider of computers for your business?
Lenovo for my computer, Dell for my assistant. Her computer is older and when it's replaced I
may go to a Dell.
3. How many computers did you buy?
About three, replaced about every four years.
4. Where did you purchase the computers? Did a salesperson come to you, or did you reach out
to the company?
Always have purchased online from Lenovo or Dell. No salesperson was used.
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5. What were the factors that lead to your decision for choosing the company you did?
In order of importance: quality/reliability, brand awareness, price, customer service and
support.
6. When buying these computers, how important was the OS to your decision (Windows, OS X,
etc.)?
Not that important.
7. Assuming you did market research before purchasing your computers, why did you NOT
choose the competitors?
Lenovo was researched online and found to be highly regarded. Dell was not researched as I
know Dell well and have used their products for many years and found them to be of good
quality.
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Appendix C
Interview with Hatem Alkadri, owner of Seniore’s Pizza Ltd.
1. What market does your business specialize in?
Food service.
2. Who did you choose to be your provider of computers for your business?
HP computers were bought for the non-order related business activities. For the POS systems
they are Stealth Touch computers which are made by Pioneer.
3. How many computers did you buy?
Four computers were bought, two using a POS system, and two for other business related
activities.
4. Where did you purchase the computers? Did a salesperson come to you, or did you reach out
to the company?
We purchased from Futureshop and directly from the POS system company as they are
partnered with Pioneer.
P a g e | 44
5. What were the factors that lead to your decision for choosing the company you did?
In order of importance: price, quality/reliability, customer service and support, and finally
brand awareness.
6. When buying these computers, how important was the OS to your decision (Windows, OS X,
etc.)?
Somewhat important because I wanted the transition to the new system to be easy and as
everyone was familiar with Windows it was a smooth transition.
7. Assuming you did market research before purchasing your computers, why did you NOT
choose the competitors?
HP was simply the cheapest computers to buy and we didn’t need the highest powered
computers so they seemed to be fine. For our POS system, they were partnered with the
company we chose to install the systems. We sought the best POS system though and the
Stealth Touches are among the best in the market.
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Appendix D
Interview with Shelly Eder, owner of Endura Consulting.
1. What market does your business specialize in?
Project Manager for most companies I consult with. I deal in a variety of markets as I am a
consultant. Currently I am consulting for Plains Midstream Canada and they are in the oil and
gas industry.
2. Who did you choose to be your provider of computers for your business?
I chose Dell computers because I’ve had them in the past and they were reliable as well as
price; they were cost effective.
3. How many computers did you buy?
I bought 3 computers for our company.
4. Where did you purchase the computers? Did a salesperson come to you, or did you reach out
to the company?
I purchased directly from Dell through their online website.
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5. What were the factors that lead to your decision for choosing the company you did?
In order of importance: price, quality/reliability, customer service and support, and then brand
awareness.
6. When buying these computers, how important was the OS to your decision (Windows, OS X,
etc.)?
Important because I have been using Windows in business for the past two decades so I am
familiar with everything involved with the operating system. To switch to Apple now would
take me a while to get used to and as my consulting jobs are contracts that only last for roughly
6 months, the transition period would be killer for me.
7. Assuming you did market research before purchasing your computers, why did you NOT
choose the competitors?
I am familiar with Dell and I saw no incentive from any other company to switch to another
brand. They have always been very good with me customer service wise, I like their products
and they are a good valued product.
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Appendix E
Table 1 Quarter 2, 2012
Table 2 Quarter 3, 2012
Preliminary Worldwide PC Vendor Unit Shipment Estimates for 3Q12 (Units)
Company3Q12
Shipments3Q12 Market
Share (%)3Q11
Shipments3Q11 Market
Share (%)3Q12-3Q11 Growth (%)
Lenovo 13,767,976 15.7 12,536,756 13.1 9.8HP 13,550,761 15.5 16,217,987 17.0 -16.4Dell 9,216,638 10.5 10,676,513 11.2 -13.7Acer Group 8,633,267 9.9 9,616,572 10.1 -10.2ASUS 6,380,690 7.3 5,708,807 6.0 11.8Others 35,954,748 41.1 40,683,666 42.6 -11.6Total 87,504,080 100.0 95,440,301 100.0 -8.3
Note: Data includes desk-based PCs and mobile PCs, including mini-notebooks but not media tablets such as the iPad.Source: Gartner (October 2012)
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Appendix F
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Appendix G
