Apple: Strengths, Weaknesses, Opportunities, Threats

One of the best ways to develop a picture of any company is with the SWOT analysis -- a look at a company's strengths, weaknesses, opportunities, and threats. Today, I'd like to focus on Apple (Nasdaq: AAPL  ) , the Mac-, smartphone-, and music player-maker extraordinaire. Some people think the company needs improvement, while others like it just the way it is. Let's see why:

Strengths:

  • Product development. Doesn't invent the market, but its products set high standards for the market.
  • Design and utility. Sleek, not clunky. For instance, the desktop computer is part of the screen, not a separate box with wires; the iPhone has very few buttons and feels nice in the hand. Products are easy to use, almost intuitive.
  • Marketing. Clever and takes advantages of people's frustrations with other hardware.
  • Brand name.
  • CEO Steve Jobs. Visionary and charismatic.

Weaknesses:

  • Very proprietary and controlling. Won't open the operating system to outsiders to develop hardware to work with the products, keeping hardware sales to itself. While this keeps design control inside and up to standards, it has hurt wide adaptation of its hardware, especially computers, where it has a relatively small market share. Apple has veto power over Apps sold.
  • CEO Steve Jobs. He has been described as a control freak and very demanding. When he dies, the company will take a severe blow. When his health was in the news, his secretiveness damaged the company's reputation.
  • Not shareholder-friendly. Has abused option granting in the past and refuses to pay a dividend despite a huge (and growing) cash level, no debt, and gobs of free cash flow.

Opportunities:

  • Very loyal customer base which has expanded beyond the Mac-heads of the 1990s with the iPod and the iPhone. The iPad has had a very successful launch. This seems to be leading to more sales of computers.
  • Has a well-deserved reputation for high-quality products that work smoothly. New products are generally well-received and have a built-in purchasing base.
  • Move into other computer or media product spaces that are not served well. Can continue to design the standard-setter for those spaces.
  • A new version of Apple TV could take advantage of today's more highly developed Web.

Threats:

  • Big ideas are easy to copy. Microsoft (Nasdaq: MSFT  ) copied the graphical user interface, and even Linux has a version. The touchscreen interface is being used in other phones (e.g. Android). Apps are being developed for other smart phones and devices.
  • High-priced products. Apple priced itself out of the personal computer market, and that remains a problem. Other smartphones that look and behave similarly to the iPhone are less expensive.
  • Google (Nasdaq: GOOG  ) is moving into Apple's smartphone space by giving away the operating system, and it has announced that it will also be moving into the TV space. Both companies are well-funded, so any battle between the two could be long and ugly.

What parts of Apple's SWOT need more detail? Fill in the blanks by using the comments section below.

Fool editor Jim Mueller is a beneficial owner of Microsoft. Microsoft is a Motley Fool Inside Value recommendation, Google is a Motley Fool Rule Breakers selection, and Apple is a Motley Fool Stock Advisor pick. Motley Fool Options has recommended a diagonal call position on Microsoft. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy sweats SWOT at every opportunity.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 07, 2010, at 4:20 PM, yikesboy wrote:

    Reasonable SWOT in my humble opinion however the threat "...priced itself out of the personal computer market and that remains a problem..." seems a little off the mark. Apple is a company that has increased share in the PC market dramatically over the last 3 years.

  • Report this Comment On June 07, 2010, at 4:21 PM, tgauchat wrote:

    Why the heck would you consider Apple's propriety market control structure (particularly for the Apps marketplace) to be a "Weakness"?

    Every corporation strives to be a monopoly ... if they can get away with it.

    Apple has 2 strengths: Innovation and Control.

  • Report this Comment On June 07, 2010, at 7:54 PM, Babble100 wrote:

    More than "loyal" customer base. Fanatical would be a better word. One guy said he'd buy their used underwear if they sold it. Now their selling rubber bands for $29 each - those "bumpers" for the new iPhone.

    As Jobs & crew like to say, Amaaazing. Magical. (he really means his power over customer's wallets).

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