A Study of Apple Inc.
A Study of Apple Inc.
Professor Keller
Felicia Foster - Eric Eason
Gary Rouse - Dustin Miller
November 23, 2014
i
MEMORANDUM
TO:
Professor Keller - COM 338
FROM:
Group 12 – Felicia, Eric, Gary, and Dustin
DATE:
November 23, 2014
SUBJECT:
Apple Inc.
Research analysis of the fortune 500 company Apple Inc.
The research of Apple Inc. has been enlightening at how competitive of an industry the market
can be. While Apple has been very innovative with their product line, there competitors have
very similar products that often meet or even exceed the performance or function of Apple’s
products.
Apple has a reputation for the innovation of products and changing the way we use computers
or cell phones, but it is the marketing of Apple that makes them unique. There is a long list of
companies that compete in cell phone markets, and Apple’s marketing power remains. When
apple makes an announcement whether you are an Apple product consumer, competitor, or
user of the competitors’ products, you listen. They continue to set the standard at least
product visibility.
The group successfully working together at collaborating on researching Apple. Individual
research and locating the appropriate valid sources is instrumental at the success of this
research.
Thank you for the opportunity to use this assignment as a group project. Portions of this
assignment were both easier and more difficult as we learn to work with each other and rely on
others to perform work.
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TABLE OF CONTENTS
INTRODUCTION………………………………………………………………………………………………………………………….1
Phone and Smartphone History………………………………………………………………………………………………1
Timeline History of Smartphones……………………………………………………………………………………2
Popularity of the iPhone…………………………………………………………………………………………………3
DESIGN………………………………………………………………………………………………………………………………………4
Analysis of Products on the Market………………………………………………………….………………………..……4
Hardware Comparison..………………………………………………………………………………………….………4
Software Comparison.……………………………………………………………………………………………………5
Overall Design and Aesthetics……………………………………………………………..…………………………7
MARKETING……………………………………………………………………………………………….………………………………7
Marketing of Apple Inc. ………………………………………………………………………………………………….………7
Major Influence of Steve Jobs…………………………………………………………………………………………8
Overall Style……………………………………………………………………………………………………………………9
Tactics of Advertising …………………………………………………………………………………..…….………..10
Marketing of Competitors……………………………………………………………………………………….……………11
Various Company Representatives and Their Roles……………………………………………..………11
Style of Advertising//Counter-advertising to Apple……………………………………………..………12
CONCLUSION……………………………………………………………………………………………………………………………14
References……………………………………………………………………………………………………………………….………15
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LIST OF ILLUSTRATIONS
Archaic Cell Phone.………………………………………………………………………………..………………………………..…2
iPhone Introduction Splash.………………………..………………………………………………..……………………………3
ComScore U.S. Smartphone Subscribers, 1/13….………………………………………..………………..……………4
Various smartphones on their home screen displayed side-by-side………………..…..……………………6
iPhone 6 Splash Image..………………………………………………………………………………..……………………………7
Apple 2007 3rd Quarter Statistic.………………………………………,,,………………………..……………………………9
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Today Apple Incorporated is a fortune 500 company. Its roots date back to three
entrepreneurs that officially founded partnership papers for Apple Computer Company on April
Fools’ Day in 1976. Apple Inc. started out as Steve Jobs’ and Steve Wozniak’s passion for
electronics and inspired them to build their first computer called the Apple I. They needed help
gaining momentum and help in providing a tie breaking decision when Jobs and Wozniak were
deadlocked, so they brought in Ronald Wayne. The three made up the struggling startup
company and each had to maintain employment for income and worked on projects on the
side. The Apple I was financed by the two selling a Volkswagen bus and a Hewlett Packard
programmable calculator.
Apple grew into an influential company in the production of consumer electronics. Like
many successful established businesses Apple has had some very successful products as well as
enduring failures of some Apple has created products such as the Macintosh and has several
variations of computer products over the years, as well as iPod, iPad, iPhone, and iTunes. Apple
Incorporated was on the rise in the early eighties then struggled when competitors IBM and
Microsoft jumped into the market. When Steve Jobs took the stage at the MacWorld
Conference in January of 2007 he said “we are going to make some history together today”. He
later introduced the iPhone by saying “every once and a while, a revolutionary product comes
along that changes everything.” “So we’re gonna reinvent the phone.”
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Jobs was right about the iPhone changing everything, including Apple. It revolutionized
the phone industry, beginning a massive trend towards smartphones that continues on today.
But what exactly is a smartphone? What qualities make a smart phone? The iPhone may have
reinvented the phone, but it wasn’t the first phone to have a web browser, music player, or
even a touch screen. Time Magazine wrote that the smartphone is
twenty years old. The iPhone is only seven years old. The first
smartphone is credited to a product released by Bell South called
Simon in 1994. It sold less than 50,000 units and was discontinued
in 1995. Although Simon was unsuccessful at changing the phone
industry it had features such as email, fax, contacts, calculator, and
even had a touch screen.
Bell South’s Simon was the first of many phones to attempt to integrate computer
features into a phone or hand held device. Nokia released a sideways flip phone in 1995 that
had a full integrated keyboard in and was a Personal Device Assistant (PDA) with a 4.5-inch
screen. The term smartphone was actually used in the eighties to describe landlines that had
special features. It wasn’t until Ericsson released the R380 that a cell phone was actually
marketed as a “smartphone” which came out in 2000. Other smartphones that predate the
iPhone include Palm, Handspring, and Blackberry. While some people try to differentiate the
difference between PDA’s and Smartphones, the basics of the first smartphone is a phone that
has features or applications built into it. Today however smart phones are considered phones
that have an operating software that allows it to run applications that can be developed by
third party vendors.
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It is clear that Apple wasn’t first to the market when it comes to Smartphones, it was
very influential in the Market. The IPhone was originally marketed as three products in one.
Apple combined it’s extremely successful iPod with a telephone and gave it web browsing
capability. It was essentially an improved iPod with more features such as a revolutionary color
touch screen with multi-touch technology. It was a larger iPod and a small compact phone with
the ability to simply use your finger to navigate through the menus. Similar to smartphones of
the past it was also able to send emails, manage contacts, had a camera phone, and calculator.
Android was founded in 2003 and started development of their first smartphone in
2005. The first Android smartphone wasn’t released until October of 2008. Due to the gap in
release dates, Apple was able to create customer loyalty and brand loyalty as it was first to the
smartphone wars. Today these company continue to produce newer versions of the phones
and compete for the cell phone market.
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Apple only sells iPhones in its stores yet manages to account for 11 percent of all U.S.
mobile retail sales, whereas large retailers such as Target, Walmart and Costco only make up 12
percent of sales combined, meanwhile Amazon makes up 7 percent of overall sales and former
giant eBay only at 2 percent. (Jones, 2013) Apple clearly has a strong base to make up such a
large percentage of the mobile phone market on its own, even without branching out to
alternative hubs for the sake of increasing
sales. A ComScore survey shows that over
half the U.S. smartphone subscribers are
Android users, yet Apple who sells 11
percent of all U.S. retail smartphones
makes up almost 40 percent of
smartphone subscribers. (McCracken, 2013) A curious occurrence, but the question arises when
the phones themselves are observed as a product and not as a sales statistic – is Apple’s
product superior? Is there a clear advantage in using an Apple phone for some reason or
another?
Direct comparisons between for example – Android Nexus 5 and the iPhone 5s which
were both released in Fall 2013, yield very similar but niche software results. The Android
Operating System (OS) allows for a more Windows-based experience with a built-in “back”
button naturally on most phones along with a “menu” button as well. A typical iPhone will have
neither of this buttons specifically on the phone itself, but instead programmed into the
software used. Almost all smartphones universally have a “home” button that will return you to
a previous screen or the home screen. Android tends to prefer a mixture of app icons, list
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menus and generally logical interface, where iPhone tends to prefer a heavy icon interface
(more recently with minimalistic style) with little listing and some animations for visual appeal.
This isn’t to say that iPhones are not functional – both phones are functional, but with vastly
different interfaces that require somewhat of a learning curve. But of course, even though both
are now more computer than phone, talk and text are still as popular as before and little has
changed.
The divide begins when discussion turns to customization and niche features. Unlike
iPhones, Android is not limited to a single OS by the manufacturer. Android users have a
multitude of supported and unsupported 3rd party operating systems to choose from. Android
is the world’s most commonly used smartphone platform and used by multiple manufacturers
where OSX is only used by Apple. Regardless of popularity most Android operating systems will
allow for vastly more customization than any Apple phone, as for whatever particular reason
one can change almost anything in a typical Android interface, yet iPhone users must partake in
an unsupported activity called “Jailbreaking” to obtain anywhere near the same levels of
freedom in that respect. “Jailbreaking” a phone removes the factory built-in limitations
programmed into the phone, allowing more functionality at the cost of likely voiding the
warranty. One thing that Apple holds over the competition is the voice interactive system Siri,
who will attempt to comply with user requests by vocal interpretation. Google has a similar
function in Android – Google Voice – which is similar but not nearly as popular or functional.
Applications, or Apps, aim to provide functionality for each cellular platform individually.
Apps for each phone are not interchangeable; an Android app cannot function on an iPhone
and vice versa as the OS that they each run on are not compatible – the same way that a PC and
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an iMac are vastly different, yet similar in function. Often times an App will be available for one
platform and not the other and it will be left to the users to develop counterparts for their
medium of choice – or perhaps sell a port to the other medium for a small fee in their Appstore.
Most smartphones on the outside are the same in basic terms – thin, front side
touchscreen, and backside camera with flash. On the inside, they begin to vary greatly from
generation to generation as smartphones are effectively handheld computers with minimal
consumer hardware customization. Within the past 5 years, the glorified new releases by
Google and Apple have resulted in extremely comparable hardware. Comparing popular and
recent examples Samsung Galaxy S5 and the iPhone 6s, processors are nearly identical, built-in
hard drive space in the iPhone is a static 128GB, where the S5 only has 32GB built-in, but can be
expanded with MicroSD cards up to the same 6s capacity of 128GB. The Nexus S5 has double
the Random Access Memory (RAM) of the 6s, dealing a considerable blow to the iPhone for
mobile power users, yet negligible for most others. Relatively minor details between the two
phones includes the S5 screen being a few inches larger than the 6s, the battery in the S5 also
holding a longer charge, and the camera quality having “different goals” (focus on pictures for
the S5, video for the 6s).
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Various smartphones on their home screen displayed side-by-side. Source: Syracuse.com
Aesthetically smartphones all look pleasingly similar front and back, home screens
including splash art background, time and date, and optionally vector drawn icons. The phone
itself dyed a solid color with a large frontal touchscreen. The case is usually made of a sleek,
shiny polished high density plastic although the iPhone 6s case is made of Aluminum, which
poses somewhat of a problem as Aluminum is easily bendable. The case of the iPhone 6s is
likely the only real drawback to an otherwise excellently well rounded smartphone perfectly
capable of contending and even winning against the top competitors. Based on overall specs it
would appear that Apple caters to a majority of casual phone users who simply want to take
pictures, videos, talk and text with occasional internet browsing quickly, easily and efficiently.
Android is capable of these things as well, although the phone specs are more of a concern than
the visual aesthetics that Apple invests in to capture the user’s attention.
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The iPhone was introduced June 2007 the
marketing plan began plain and simple with apple icon
Apple focuses on innovative style without the fluff.
Apple ran four television ads before iPhone’s
release. The first commercials portrayed the iPhone as the next step from the popular iPod plus
it’s a phone. Apple marketed the iPhone as not only a phone but also used to listen to music,
watch videos view photo’s make conference calls, check e-mails browse the web, view maps.
Apple targeted 4 customer segments. The first segment targeted were professionals.
They need to stay in touch on the go through e-mail, instant messaging and phone. The second
group targeted were students they need a device that performs many functions without
carrying many gadgets –iPod, phone TV shows video. Entrepreneurs are the next group
targeted. This group, need to organize contracts, access contracts and schedule details. The
iPhone provides wireless access to a calendar and address book to check appointments and
address book. Corporate users need to input and access critical data on the go. (Their) The
iPhone has applications from Mac OS X for notes and recordkeeping compatible with many
software applications.
Apple computer is a big responsibility for Tim Cook Apples CEO. A company’s business
portfolio analysis requires an organization to locate the position of each of its products to see
where their products are in relationship with their competitors. This evaluation is measured in
a growth–share relationship.
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An organization has limited influence on the market growth rate. A company’s main
goal is to increase market share. Management must decide if a product needs more cash
directed for a product or less. According to Interbrand (a brand management consulting firm),
Apple has been one of the top global brands over the last decade. Revolutionary products in
the technical area and the human touch reaching its customers on the cognitive level as well as
the emotional level has been credited with Apple’s success. The late Steve Jobs core values and
his organizational climate he created are still guiding this company into the future.
The first iPhone used multi-touch interface. Smartphone sales sky rocketed but has
leveled off. By 2017 the smartphone market is expected to grow an annual rate of 13 percent
due to the dropping of cell phone prices. Apples iPhone has a 15 percent market share of the
global smart phone. Apple is only second to Samsung which has a 41 percent market share.
Apple has a powerful store strategy where they own and operate 434 stores in 16 countries (as
of August 2014).
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Apple also has a strategy of letting companies that sell their products, pay for
advertising for them. Apple also controls what these operator’s ads will look like and what
information it can contain. An Apple distributor cannot advertise the Apple trademark without
conforming to Apple’s branding guidelines.
Apple also uses an exclusivity technique which gives a certain group special deal on
goods or services. An example would be apple making special offers to existing customers only.
This approach makes customers feel special, and creates better customer business
relationships. This technique has proven to increase brand loyalty.
When the iPhone first came out it was made available from just one cell phone provider.
Apple restricted the availability of their iPhone on purpose. People who wanted an iPhone
would have to stand in long lines, sometimes camping outside an apple store to get one. These
events attracted media attention thus providing free publicity for Apple.(Sterling)
The shortage of iPhones made people who wanted an iPhone and was unable to buy
one wait weeks before the next shipment were made available. This sparked an interest in
people that knew nothing about the iPhone. They wanted to know what the big fuss was all
about. Some people felt that if this phone is so great then I must have one too. The phone
became a rare item and increased the demand for it.
Apples use of exclusivity technique has worked well for them with the iPhone. This
technique has created free publicity, through media, blogs and word of mouth. This type of
marketing has reached customers on a psychological level making them feel special for owning
their product.
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As the iPhone becomes more and more popular, apples competition is also growing.
Apple has several competitors such as Samsung, LG, HTC, Microsoft and Blackberry. One of the
biggest Android competitors is Samsung. Samsung has created several high end smartphones,
such as the galaxy s5 and the galaxy note. These smartphones have very impressive specs, plus
have other modes unique to their phones. Among other Android competitors are The HTC One
M8 and The LG G3, both of which have been popular consumer choices. Windows top
smartphone has been the different versions of the Nokia Lumia. Blackberry has also seen some
success among its products. All of these companies have a different way of marketing their
products and a different strategy for success.
Samsung and Apple have been rivals for the past few years. They are constantly in
competition to produce the next big thing. Competition is especially high among Apple and
Samsung smartphones. Apple and Samsung account for a lot of the value in the smartphone
market. They are widely known and have both been very popular among buyers recently.
Samsung has two strategies when it comes to marketing. Samsung goes above and beyond to
improve the technology of its devices as well as the actual visual marketing. Over the past three
years, Samsung developed an outsized, familiar presence in TV and mass-media advertising. It is
the biggest ad spender in its category and 16th largest nationwide. (Bergen) Samsung has hired
several celebrities to be in their commercials as well to make the smartphones more appealing.
Compared to Apple, it appears that Samsung’s strategy the past few years was to take the lead
on the media advertising of their devices. Due to financial reasons, it is said that Samsung is
going to reevaluate their marketing strategies this upcoming year. Samsung is finishing up their
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marketing teams move to New York to be closer to its agency partners, venders, and everyone
at Samsung. (Bergen)
The HTC One M8 also runs on an Android operating system. Although it is not as big of a
competitor as Samsung, it is still competition. HTC had its own marketing strategy and plan
when it came to its newest smartphone. The HTC One M8 was on sale immediately after being
released, rather than weeks after the release. (Goldstein) HTC One M8 is a follow up to a
previous device released by HTC. This may have helped HTC develop a better marketing
strategy for this time around by learning from experience.
Another competitor run by Android systems is the LG. LG’s newest release is the LG G3.
LG plans to aggressively market its newest product due to a bigger budget along with its multicarrier approach. (Cheng) The market plan for this is mostly advertisement. The overall theme
of the marketing campaign, mentioned many times over at the launch event, is the simplicity of
the phone. (Cheng) The improvements to the phone seem to be more practical such as the
camera and overall speed, rather than improving just because they can.
Windows phone is Microsoft’s latest attempt mobile attempt. Microsoft has put a lot of
dollars and effort into Windows Phone. The phone will run windows 8.1, which could be an
advantage or disadvantage depending on consumer preference. Microsoft’s strategy was to sell
lots of low-end windows phones into emerging markets, where the most growth is happening.
Also, producing more of the low cost handsets by converting future Nokia X decides into
Windows Phones is a must. Microsoft will allow cheaper handsets by dropping Windows Phone
licensing fees. (Kingsley-Hughes).
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Blackberry is another company that has been in constant competition among Apple and
its iPhone. Blackberry has been successful with some of its previous models even though it has
not been as popular as the iPhones recently. In attempt to increase sales, Blackberry is
currently working on a new marketing campaign. Mark Wilson, Senior VP marketing at
Blackberry said that, “The No. 1 objective is making BlackBerry synonymous with work, and that
means professional mobility, enterprise mobility and really everything we do in terms of brand,
defining our value proposition, defining our go-to-market tactics and ecosystem support
(Maddox).” This just means that Blackberry is working hard to make sure that people can be
productive and secure at the same time. Blackberry is unique in its design compared to other
smartphones and is also known as “professional”, which may give them an advantage this time
around with a campaign that actually fits the device.
Every smartphone platform has its own individual marketing style. Compared to its
competitors, Apple has a few strategies that differ from its competitors. Apple tends to sell
great phones with very impressive specifications and performance ability at a lower cost
compared to high-end prices. Apple also focuses on the higher-end market and the uniqueness
of the phone while competitors tend to focus on quantity rather than quality and end up
appealing to the lower-end markets. Another difference is that Apple offers less products as far
as smartphones. Apple generally releases 1-2 phones every September, but its competitors
have several different models and devices. This means that Apple makes its consumer wait a
year for every smartphone release, where its competitors have several different smartphones
being released throughout the entire year. This could be an advantage or disadvantage
depending on the way it is looked at. There are several different strategies that could be used
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to market smartphones, but the diversity and uniqueness of every companies approach help
keep the smartphone market flowing and the customers happy.
In conclusion, Apple focuses on making primarily high end products to be released once
or twice a year to compete with all other sources. Apple focuses on marketing their polished
product with excellent advertising and customer service. While generalizing the competition
greatly - they sell all varieties of phones in attempt to cover all budget ranges and demand.
Phones have been a complicated thing to sell – as they are no longer just phones, so each
company must find out what people want from their phones, design and then promote it. Many
spokespersons have stepped up within the phone corporations to take upon themselves this
tremendous task – Steve Jobs being quite a notable one as of late. Apple strives to make a
product that anyone and everyone can use without any technical hassles.
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