COMPANY ANALYSIS: IPHONENicole Webb

NATURE OF APPLE:

• Established 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne as Apple Computer

• Publicly –Traded Company • Largest Shareholder:

The Vanguard Group, Inc.

• Designs and Sells:• Consumer electronics and

Computer Software• Mac Computers, IPod,

IPhone, IPad, IOS Software

• Sells Products Worldwide through:• Retail stores• Online stores• Third-party cellular

network carriers (AT&T, Sprint, Verizon)

Mission Statement:“ Design the best personal computers in the world"“Lead the digital music revolution" “Reinvent the mobile phone“ “Define the future of mobile media and computing devices"

Company Goals:• Satisfy personal consumer

demands• Improve performance and

stability

IPHONE MAKES HISTORY

• First release: June 2007 as a • Combination of an Internet-enabled

smartphone and the iPod

• Major Breakthrough in cellphone technology

• Product Innovation Introduced:• iOS mobile operating system• App Store (2008 release)• Internet Communications • Navigating Screen (Pinch and Swipe)• Built in software capabilities

• Target Segment:• Professionals, students,

corporate users, entrepreneurs ,and health care workers

• Same as all other Apple products

• Apple Stores the Apple website distribution

COMPANY STRATEGY

• Brand Loyalty• Provide superior software

• iOS operating system• Mobile applications in the App Store

• Design (Ease of Use)• Use Product Differentiation, positioning the iPhone as the versatile, convenient, and a device

for personal and professional use• Convenience of having one device for communication, but also music, pictures, and video, and

full Internet access

• Promotion• Press Releases• Presentations (producing a new product, Videos)

• Hype (Secrecy Prior to launch)

• Promotion of Apps

COST STRUCTURE:

• The 16GB model carries a bill of materials approximately worth $199, $207 when manufacturing costs area added to produce the iPhone 5 at a low cost.

• The iPhone 5 costs Apple an estimated $200 in materials.

• While the 16GB will cost $200, it also requires a two-year wireless contract.

• Buying it off-contract would require $649 for the 16GB model, $749 for 32GB, and $849 for 64GB

• Apple products are designed low cost to make maximum profit

Major Cost Drivers Hardware & Manufacturing Cost (16GB for iPhone 5)

Display + Touchscreen (Cover Glass)

$44.00

User Interface & Sensors $6.50

Battery $4.50

Camera (8 Megapixel +1.2 Megapixel)

$18.00

Wireless Section/BT/GPS $34.00

NAND Flash $10.40

SDRAM (1 Gbyte) $10.45

Processor (A6 Processor) $17.50

Dual Band Wireless $5.00

Mechanical/Electro-Mechanical

$33.00

Power Management (4G LTE $8.50

Box Contents $7.00

Total: $198.85

APPLE’S REVENUE SOURCE IPHONE

• 60% of Apple’s revenue consists of iPhone and iPad sales

• 4th Quarter: $36 billion in revenue• $8.2 billion in net profit by selling 26.9

million iPhones

• Geographic Market:• 250 carriers in over 100 countries

• Increase of unit sales

CONSUMER DEMAND• iPhone demand spikes immediately

following an iPhone release and then returns to a lower mark

• Remained higher following the iPhone 4S launch because of voice and speech comprehensiveness of Siri

• iPhone 5 had the highest consumer demand when it released but also dropped 21% in consumer demand (biggest decline since iPhone 3G release in 08’)

• Reasons for Consumer Drop:• Demand satisfied• Threat from Competitors• Expectations not fulfilled

COMPETITION:

• Samsung with the highest percentage of market shares and units sold

• Nokia units sold and market share decreased but dominated Apple’s market share and units

• Market Share for Android O.S. increase 18% knocking the iOS down 3%

• Samsung widened market lead

SWOT ANALYSIS

(S)trengths: Innovative Compatibility Ease-of-Use Brand Awareness

(W)eaknesses: Cost Structure Limited Editions (O)pportuniti

es: Partnerships Upgrades Innovation

(T)hreats: Increased

Competition

SOURCES• Rassweiler, A. (n.d.). Retrieved from http://

www.isuppli.com/Teardowns/News/pages/Many-iPhone-5-Components-Change-But-Most-Suppliers-Remain-the-Same-Teardown-Reveals.aspx

• Tamer , Y., & Moustafa, H. (n.d.). Retrieved from http://www.scribd.com/doc/21275028/Apple-iPhone-Marketing-Plan

• Rob van der Meulen. Gartner says worldwide mobile phone sales declined 1.7 percent in 2012. Retrieved from http://www.gartner.com/newsroom/id/2335616