Reasons Behind Success of Apple Company
In 1974, Intel developed the first single chip microprocessor available to the public at a reasonable price. By 1975, this single invention enabled dozens of individuals and small companies to introduce the first personal computers that we would recognize today. Both Microsoft and Apple were a couple of these personal computer trailblazers and the founders are now some of the richest people in the world.
Apple’s roots can be traced to the Homebrew Computer Club in 1976, which was a computer club for hobbyists in the Silicon Valley in California. Steve Wozniak and Steve Jobs, members of the Homebrew Computer Club brought their invention, the Apple-1 to a meeting and introduced the world to what would become the largest business in the world by market capitalization today (Rothman, 2015).
Apple is one of the most successful companies in history. From its start in a garage, it has seen many successes and some failures during its 45-year history. The Apple Computer Company had a lot of early success with its second personal computer, the Apple II. By the early 1980’s, IBM jumped into the personal computer world and that created a lot of competition for Apple. In 1984, Apple introduced the Macintosh, which was a big leap forward, but it still struggled to compete with the IBM/Microsoft based computers.
These struggles caused Apple to fire CEO Steve Jobs and bring in a new CEO, John Sculley. Apple was profitable during this period, but sales were stagnant for their premium priced computers. Looking for renewed energy, Apple rehired Steve Jobs in 1997 and he immediately came up with the new strategy of “Think Different” (Beattie, 2019).
Jobs understood that Apple’s strength was branding and marketing, but the real differentiator was the design and beauty of its products. The emphasis on the user experience and the modern designs became the normal for Apple’s development team and whole organization.
Apple’s user-friendly innovations include the iPod, which owned the category from the beginning in 2001. As Apple expanded into streaming services, iPods and iPhones in 2007, the word computer was dropped from its corporate name and is now Apple, Inc. Today, the Mac personal computer is a distant third in sales for Apple at 10%. The iPhone is Apple’s leading product with about 50% of sales and its services category is second with 20% of Apple’s sales.
Purpose of this report
The purpose of this report is to understand and identify the reasons why Apple has become so successful. After reviewing the reasons for and the strategies Apple has incorporated over the years, what can other companies learn from Apple to improve their businesses. Competition has been fierce for the last 45 years and Apple has come out on top.
Apple’s tactics and strategies have changed over time to adapt to the customer needs. Today, its mission is “to bringing the best user experience to its customers through its innovative hardware, software, and services” (Rowland, 2019). What can other businesses learn from this groundbreaking company?
Aims and Objectives
The aims and objectives of this report will be to identify the main reasons Apple has become so successful. The report will review the early innovations and strategies that launched Apple. The competition forced Apple to rethink the way it did business. The current Apple vision statement is “We believe that we are on the face of the earth to make great products and that’s not changing” (Rowland, 2019).
The Apple product mix has changed dramatically over the last 20 years due to changes in their business strategy driven by Steve Jobs. An analysis of the change in product mixes over time will be performed to show how the changes in Apple’s strategy has affected its product mix.
A comparative analysis of revenue sources from 2006 to 2016 will also be reviewed. A review and analysis of worldwide media consumption will show what the current trends are and where they might be heading. The main goal will be to identify the reasons that Apple has been successful and see if these strategies can be used by other companies to improve their business results.
Apple is known worldwide. Apple’s leading product is the iPhone which represents about 50% of total sales revenues. The next largest revenue generator is their services. Services include Apple Music, the App Store, iCloud and Apple Pay. iTunes has been retired as of September 2019. Apple’s services are their fastest growing revenue generator.
The iMac personal computers have continued to increase in sales over the last 20 years, but only represents 11% of Apple’s revenues today due to the massive increase in sales of iPhones and increased services revenues.
With the introduction of the iPod in 2001 and the iPhone in 2007, Apple began to create a tight hardware, software and content “iEcosystem” (Beattie, 2019) that has become the business strategy used today.
You can now buy music online and download it to Apple Music and software can be purchased in its App Store. Whenever you buy books, movies or use Apple Pay, Apple gets a small cut. Wearables, Home, Accessories plus the iPad represent the rest of the revenues currently generated. Apple has created premium products that are user friendly. The brand loyalty they have created is almost fanatical.
A review of the worldwide media consumption will show how Apple has been able to continue to grow even as sales of iPhones are in a slight decline. By understanding the global trends over the last 10 years and seeing how Apple capitalized on these trends will give a better understanding to how their strategies worked.
The introduction of the iPhone in 2007 revolutionized the way we use the internet. Mobile phones were now mobile internet devices
and the interactive ease of use made the iPhone an instant success. and is now the largest driver of revenues for Apple.
Item 1 Analysis
Currently, more than 30% of mass media is now consumed by mobile internet users. Mass media consumption has increased from about 5 hours a day to over 6 hours a day in 2019. Television is still the most consumed, but it is in a slow decline with the other media types of desktops, radio and newspaper.
Mobile internet has been the largest growth sector in mass media consumption and Apple has been able foresee this and be the leader in this sector as it grew. Not only did the iPhone launch them, but by they recognized that by focusing on their services and mobile content they continue to grow as a company (Molla, 2017).
Item 2 Analysis
A comparison of sales revenues by product over has changed dramatically since 2006. In the last 10 years, the iPhone has grown to represent 50% of Apple’s revenues from zero. The iPod, which represented 40% of Apple’s sales in 2006 does not even exist in 2019. Apple has shown the ability to listen to its customers and adapt to the fast-changing technology world.
Apple’s mission statement says, “to bringing the best user experience to its customers through its innovative hardware, software, and services” (Rowland, 2019). Creating the best user experience through innovation, design and customer service has been focus for Apple since the concept of integrating the hardware/software/content that was developed by Steve Jobs in the early 2000’s (Molla, 2017).
The final chart shows the sales trends by quarter for the last 10 years. The one thing you will notice is the yearly sales revenues spike each year with the introduction of new products in the spring. Steve Jobs was a showman and his yearly tech releases were always highly anticipated and sales spiked after the introduction of new products. Apple has grown over 5 times in revenues over the last ten years, largely due to growth in China, which is not reflected in these charts (Molla, 2017). China represents about 25% of Apple revenues today and a majority of Apple’s products are produced there also.
KEYS TO APPLE’S SUCCESS AND WHAT CAN BE LEARNED
Keys to Success
Innovation, design and vision was needed to create the iPhone. The impact iPhone has had on mobile internet communications unmatched. Apple has created a premium brand and they have developed many loyal customers.
The ease of use of Apple products and the confidence that they will work are keeping loyal customers. Apple has developed a wide range of products and is not afraid to introduce other well-designed products and services regularly.
They are not afraid to lead and innovate while being flexible enough to change their business plan to allow for the changes they see in the market. The branded retail Apple store has been a huge success. The experience is pure Apple with great customer service in a unique environment. Another big key to success was Steve Jobs’ ability to envision a partnership with Bill Gates of Microsoft to let Apple put the Office Suite of programs on its computers. This has helped Apple lead the way in its App Store to keep loyal customers.
What Other Companies Can Learn
There are many strategies and tactics other companies can learn from Apple to improve their businesses. Apple’s strategies do not just apply in the tech industry, but in all industries. The focus on user experience can be applied to all businesses. Apple says user experience is a priority in the mission statement which is a value every company can learn from. The long-term strategy of having premium products driven by innovation and flexibility can be applied to all industries.
Building loyal customers by providing outstanding products and services can be applied to any business. Understanding that brand building is important for the growth of any company and will determine its success. Partnerships with the competition can actually improve growth and profits as Apple saw with its partnership with Microsoft in the late 1990’s.
Steve Jobs is one of the most recognized names in the world and is synonymous with Apple. He expanded Apple into the music industry with iPod and the mobile digital age with the iPhone. He co-founded Apple and has been CEO twice in Apple’s pursuit to innovate, grow and become one of the most liked and profitable companies of all time.
Apple has continued to grow and innovate since Steve Jobs died of cancer in 2011. A lot of people feel Apple is not a strong a company since Steve Jobs death. It will be hard for Apple, much less any other company to have a visionary leader like Steve Job, he was one of a kind and can never be replaced.
Steve Jobs, Steve Wozniak and Apple have been innovators and visionaries since their introduction of the personal computer in California in 1976. Apple, Inc. has been able to introduce loyal customers to new innovative, premium products and services for 45 years. Their customer base is now worldwide, with a quarter of its sales and a majority of its production in China. The ability to adapt and changes its business strategy over time has been a key Apple’s success.
The personal computer represents about 10 % of sales now. Very popular products like the iPod have come and gone. The iPhone has been the success story in the last 10 years, but Apple is seeing sales slowdown and even drop in the last few months. Apple will come out strong. Maybe in 10 more years the iPhone will be gone like iTunes and the iPod.
The dynamic business plan, services, premium products, sleek designs and incredible customer loyalty will continue to drive growth and profits to Apple’s bottom line.
We probably will not see someone like Steve Jobs lead a company like Apple again, but there is still a lot that can be learned from his ideas. Apple will need to continue to “Think Different” (Beattie, 2019) and be flexible to continue to excel.
Apple has developed a loyal customer base by exceeding expectations, exceptional customer service while producing high quality products. The strategy of integrating hardware, software and content that was developed by Steve Jobs is still being used today and should continue into the future.
The product mix has changed dramatically over the last twenty years because of Steve Jobs strategy. Apple should continue to look at trends and stay ahead of the competition. What new product will be Apple’s bestseller in twenty years? As long as Apple continues to bring the best user experience through innovative products, they will continue to succeed, and we will find out what is next.
There is a lot to be learned from Apple’s success. Building brand loyalty by having great products and focusing on the customer service can be done in any industry. It takes vision and focus over time to grow a company like Apple. Apple’s amazing rise to the top has taken forty-five years and will stay there if it follows its own strategy for growth and follows its mission and vision statements.
Beattie, Andrew. (2019, September 22) The Story Behind Apple’s Success.
Molla, Rani. (2017, June 26). How Apple’s iPhone changed the world: 10 years in 10 charts.
Porter, Sarah. (2018, August 2018) Five Big Things That Have Changed Apple.
Retrieved from https://www.bbc.com/news/business-45044963
Rothman, Lili. (2015, March 5). More Proof That Steve Jobs Was Always a Business Genius.
Retrieved from https://time.com/3726660/steve-jobs-homebrew/
Rowland, Christine. (2019, February 13). Apple Inc.’s Mission Statement and Vision Statement
(An Analysis). Retrieved from http://panmore.com/apple-mission-statement-vision-statement
Viswanathan, Priya. (2019, November 13). What Makes Apple so Profitable and Unique?
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Reasons Behind Success of Apple Company
Reasons Behind Success of Apple Company