2. Background and History

3. Executive Summary
“What steps does Apple need to take to ensure the future success of the
company and its products, especially the upcoming Apple Watch and
Apple Pay?”
• Internal and External Analysis.
• Recommendations and Product Analysis.
• Implementations.

4. External Analysis
Opportunities
• New product development.
• Apple Watch.
• Apple TV.
• Apple Car.
• Apple Pay.
•Acquisition of other companies, particularly startups.
• Beats.
• Siri.

5. External Analysis
Threats and Competition
• Multiple competitors in multiple spaces.
• Lenovo, Dell, and Hewlett-Packard in PC manufacturing.
• Samsung, Microsoft, Lenovo, and Xiaomi in cell phone
manufacturing.
• Samsung, Amazon, and Microsoft in tablet manufacturing.
• Microsoft and Google in operating systems.
• Lower prices for most competitors.
• Google’s Android devices capturing large amounts of the market.

6. Internal Analysis
Strengths
• Apple’s Mac OS and “Digital Hub” Strategy.
• The Mac was poised to become the preferred “hub” to control,
integrate, and add value to these devices. Apple’s control of both
hardware and software could facilitate this.
• Interactive integration between devices, guiding consumers towards
a closed Apple ecosystem with devices such as the iPhone, iPod,
iPad, and Mac and services such as iTunes, Apple Store, and Apple
Pay.
• Highly consolidated operating system, unlike Android’s fragmented
operating system across different versions.

7. Internal Analysis
Weaknesses
• iOS market share decreases due to the popularity and saturation in the
market of devices from rival companies such as Samsung and Motorola
running the Android OS.
• High price point for Apple’s products.
• Unwillingness of consumers to purchase lower-cost Apple products,
reinforcing the perception of Apple products being luxury products.

8. Alternatives
• Product development.
• Service development.
• Narrow product and service focus.
• Wide product and service focus.

9. Recommendations
• Our first recommendation for Apple is to continue its emphasis on
focusing on only a few products and services with a laser-like focus.
Developing and maintaining a robust product pipeline with a steady
flow of products would ensure both this kind of focus and continued
innovation.

10. Recommendations Continued
Pay particular attention to the execution of its product development
and release of Apple TV and an eventual Apple Car.
• Specifically, manufacture, at scale, a physical Apple TV to
penetrate the market for TVs.
• Also focus on bringing a car to mass market with the similar
elegance of their past products.
• Apple should use Apple Pay to complement its growing
ecosystem.
• Use Apple watch as a springboard into the wearable technology
industry.

11. Recommendations Continued
● Apple should develop an iCar to compete with Google and Tesla.
● As other revenue streams dry up, Apple will need to focus on other
spaces such as automotives.
● Should try to become its own replacement, and“future-proof” to avoid
irrelevance.

12. Recommendations Continued
● Investor Carl Icahn has recommended actual Apple TV sets.
● Validates idea of an iTV.
● Would replace Apple’s set-top box in the product pipeline.

13. Recommendations Continued
● Apple Pay is poised to bring market acceptance to wireless payment
technology.
● Apple should capitalize on this service to grow its already solid
ecosystem.
● Represents an opportunity to grow the services side of its business and
expand into financial technology.

14. Recommendations Continued
• Apple Watch should be used as a springboard into wearable
technology.
● Demand for the Apple Watch has not matched the iPhone or iPad.
● Relatively niche, ancillary product and business in wearable
technology and luxury watches.

15. Recommendations Continued
• Continue to acquire other companies and startups to sustain growth.
• Acquire fast-growing startups and companies in related spaces in
order to sustain growth and innovativeness.
• As acquisitions becomes one of the few ways a very large
business can continue to grow, Apple should increasingly focus
on acquiring tech startups.

16. Apple’s large revenues and profits call for and justify investment in the
acquisition of smaller firms and startups. Otherwise, Apple’s cash
reserves go unused in the bank, representing an opportunity cost for
Apple.

17. Implementations
• Focus on a few premium products.
• Pursue existing product mix and target market.
• Emphasis on product line.
• Avoid markets unrelated to their traditional space.
• Related-Linked Diversification.

18. Implementations Continued
•Sustaining Innovation.
•Continually exploiting its resources and capabilities in product
development
•Introducing new and exciting consumer electronic products
•No one product dominates the product line
•Continuously survey the market.
•Avoid diseconomies of scale.
•Develop large, breakthrough product innovations through increased
R&D as well as develop new attributes to existing products.
•Example: https://www.youtube.com/watch?v=hsEUBLIJvmE

19. Implementations - Apple Pay
•Apple Pay.
•Develop strategic partnerships.
•Fortify existing partnerships.

20. Implementations - Apple TV
• $1 B Revenue in 2013.
• 25 million products sold.
• Combining HDTV with Apple TV.

21. Implementations - Apple Watch
• Position the watch to compete in two markets

22. Implementations - R&D
• 2012-2013 R&D growth rate: 32.36%
• 2013-2014 R&D growth rate: 35.00%
• 2020: (35% + 32.36%) / 2 = 33.68%
• 6,041M x (1+33.68%)^6 = 34,475.25M

23. To Sum

24. Works Cited

25. Works Cited Continued