Industry Classification
Computer Hardware
and Related Software
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iMac
MacBooks
Mac Pro Desktops
iPad
Mac Displays
Time Capsule
Xserve/ Mac Pro Servers
Mac Mini Server
Mac OS X
Final Cut Studio
Logic Studio
iLife
Aperture
iWorks
Apple Remote Desktop
Media and
Communication
Devices
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iPhone
iPod
Apple TV
iOS Operating System
Digital Media Content
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Music
Movies
E-books
App Store
Computer Hardware Industry
Overview
A highly competitive industry
A mature industry
Market is characterized by frequent product introductions
A few well-established companies, such as:
HP (Global leader with 17.4% market share)
Dell
79.2 % of
Acer
US Market
Apple (Seventh in global market share (4.3%)
Share
Toshiba
Lenovo
Three main operating systems for personal computers:
Microsoft Windows(used in 85-90% of PCs worldwide)
Mac OS X
Different flavors of Linux
Intel Corp.’s processors are used in approximately 80%of PCs
Porter Five Force Analysis of Computer Hardware
Industry in Relation to Apple
The Threat
of Buyers:
Low
The Threat
of New
Entrants:
Low
The Threat
of Suppliers:
Moderate
Level of
Threat in the
Industry:
Moderate to
High
The Threat
of
Substitutes:
Moderate
The Threat
of Rivalry:
High
The Threat of New Entrants
The Threat of Substitute
Low
Moderate
 Economies of Scale
 Product Differentiation
 Proprietary Technology
 Know How
 Favorable Access to Raw Material
 Learning-Curve Cost Advantages
 Customer-Switching costs
 Access to distribution
 Smartphones are the biggest substitutes
 More than 10 billion units being used
world wide
 New smartphone functionalities are on
the rise
The Threat of Rivalry
High
 Intense price competition
 Dominated by Windows, Apple is a
minor player
 Continuous Product Introductions
focusing on product feature
enhancements
 Apple’s iPad competes with low-end PC
market
The Threat of Suppliers
Moderate
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Intel is the sole supplier of
Microprocessors for Apple’s desktops or
laptops
Use of multitude of custom components
that can be usually sourced from one
supplier only
No risk of forward integration from the
suppliers
The Threat of Buyers
Low
 A large number of individual buyers
 Buyers unlikely to engage in backward
integration.
Opportunities for Apple in
Computer Hardware Industry
Apple can continue to gradually increase its
market share in this mature industry by:
Engaging in product feature enhancements
Capitalizing on its excellent service and support
Improving the processes to reduce the
operating costs
Capitalizing on the “Halo Effect” associated
with Apple products
Mobile and Communication
Device Industry Overview
 A relatively new and emerging market
 Smartphone sales increased in 2010 by 72.1 percent
from the prior year, whereas sales for all mobile phones
only increased by 31.8 percent.
 A moderately concentrated though competitive industry
 Product differentiation on the basis of product features,
linkage with other firms(Wireless Carriers), consumer
marketing, and product reputation.
Porter Five Force Analysis of Mobile and Communication
Device Industry in Relation to Apple
The Threat
of Buyers:
Low
The Threat
of New
Entrants:
Low
The Threat
of Suppliers:
Moderate
Level of
Threat in the
Industry:
Moderate
The Threat
of
Substitutes:
Moderate
The Threat
of Rivalry:
High
The Threat of Substitute
The Threat of New Entrants
Moderate
Low
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 Personal Computers, Tablets, Game
Consoles, Portable gaming systems(PSP,
Nintendo DS etc.), and CD Players
 Unable to match processing power and
functionalities of PCs
 Third party digital contents are
complimentary
 All the substitutes do not provide mobile or
portable user experience
Economies of Scale
Learning Curve Cost Advantages
Favorable access to raw materials
Difficult to match the Product Differentiation
Proprietary Technology and Know How
High Customer-Switching costs
The Threat of Rivalry
High
 A few major players
 Intense competition between major players
 Android phones constitute 33% and iPhone
constitute 16% of global market share for
smartphones
 Costumers have choices
 Frequent product launches and rapid
technological advances
 Competitive pricing
The Threat of Suppliers
Moderate
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
Uses a variety of custom components that
can be usually sourced from limited
suppliers only
No risk of forward integration from the
suppliers
The Threat of Buyers
Low
 A large number of individual buyers who
are fragmented
 Buyers unlikely to engage in backward
integration
 Products are differentiated
Opportunities for Apple in Mobile and
Communication Device Industry
Apple can continue to be a dominant player in this
emerging industries by:
 Implementing technological leadership
 Investing in strategically valuable assets
 Adopt business strategies which will create customerswitching costs
Digital Media Content Industry
Overview
 An emerging as well as network industry
 A highly competitive industry; major players are Apple, Amazon,
Netflix and Google
 Most of the contents are developed by third parties
 Most of the contents are platform specific
 Apple is the market leader for Apps and Music
 Apple started the digital music revolution with the launch of iTunes
and iPod.
 Amazon is the market leader for E-books
 Netflix is the market leader for streaming videos
Porter Five Force Analysis of Digital Media Content
Industry in Relation to Apple
The Threat
of Buyers:
Low
The Threat
of New
Entrants:
Low
The Threat
of Suppliers:
Moderate
Level of
Threat in the
Industry:
Moderate
The Threat
of
Substitutes:
Moderate
The Threat
of Rivalry:
High
The Threat of Substitute
The Threat of New Entrants
Moderate
Low
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 Books, DVD’s, Video Games on game
consoles and portable gaming Systems,
Cinemas, and any outdoor activities are
suitable substitutes for digital media
contents
 Substitutes still popular with majority of
population
Apple has market power
High Customer-switching costs
Proprietary Technology
Governmental Regulations
The Threat of Rivalry
High
 Competition is intense between the major competitors
 Competitive pricing
 Competitors engaged in gaining First- movers
advantage
 Amazon challenging Apple in the Apps market
The Threat of Suppliers
Moderate
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Application Developers are fragmented
E-books, Music and Movies developers are
not fragmented
Content providers may have the option to
switch.
Big content providers such as record
companies, movie studios or TV networks
may start the distribution of the content
directly
The Threat of Buyers
Low
 A large number of individual buyers who
are fragmented
 High switching costs for customers.
 Products are undifferentiated, especially
in the case of non-exclusive digital
content