Strategic Issues Facing Apple

StrategicIssues Facing Apple

Growthin the Company Beyond the iPhone

Oneof the major strategic challenges facing Apple is the lack of areplacement for its most valued income generator – the iPhone.According to Kingsley-Hughes (2015), the device generated about 46%and almost 63% returns for the organization in 2012 and 2015 businessyears respectively. Given that it presently accounts for more thanhalf the revenue of the company, declined sales would mean the lossof a substantial income that will have an incredibly huge impact onthe organization. The biggest challenge lies in that the organizationis yet to develop competitive products that can replace the iPhoneonce its fame dwindles. It is noteworthy that the high sales in theprevious year were attributed to the new markets that Apple createdfor the devices, particularly, China and the developing countries.Once everyone manages to purchase the product, growth of sales willdiminish drastically. Kingsley-Hughes (2015) notes that the returnsfrom the iPhones have already begun to nosedive. Furthermore, theauthor uses data based on the recent quarterly returns of theproducts from the same organization, namely, the iPads and iPods, toprove that Apple has never been able to revive the sales once theystarted to fall. Given that a similar trend is evident from itsearnings lately, the company should be worried about its futurewithout the massive gains from the iPhone and a new product to carryon the legacy. The organization failed to achieve the salesprojections given by the Wall Street, which further cements thetheory that the iPhones have reached the peak of their demandtherefore, the returns would begin to decrease.

SoftwareImprovements

Appleneeds to improve the quality of its software. For many years, theloyal clients have put their trust in the applications released bythe organization hence, they readily upgrade the systems evenwithout being confident that the engineering is functioningperfectly. Nonetheless, the year 2015 was an exception. The iOS andOS X updates were a big fiasco since many bugs affected them.According to McElhearn (2015), a seasoned reviewer of Apple products,some of the notable issues the clients experienced after upgrading tothese platforms included the inability to synchronize the iTunes andthe iOS devices, malfunctioning of the AirDrop, faulty Apple’sFamily Sharing application and failure to make Handoff and Continuityto work properly. The outcome of these flaws made the organization tolose its reputation as the leading functional power. Prior to theproblems, enthusiasts of the company updated their systemsimmediately a new version of the software was released because theywere confident it was faultless. However, the author finds thatseveral people now view Apple upgrades with high skepticism appliedto competing brands such as the Windows OS. Subsequently, the usersare reluctant to upgrade the systems before they have been tested andapproved as perfect. Unfortunately, the reluctance of clients topurchase the new systems implies that the organization is losing onpotential income (McElhearn, 2015). It is highly likely that thecustomers may decide to purchase substitute products from Apple’scompetitors given that a decline in the quality of software isuncharacteristic of the company. Perhaps, the faulty software is anindication of even bigger issues that are still pending.

IncreasingCompetition

Lackof confidence in loyal clients leads to a drastic fall in the salesvalue and the market share. Several customers who have relied onApple products are unsure whether the operation systems would havebugs that would make it hard to use them in the future. One of thenotable features of Apple Inc. is the high price tag on its products.Nonetheless, Yueh (2016) observes that competing brands will soontake away the position of the company as the leading Smartphonemanufacturer. The author reasons that the majority of the clients paytop dollar for iPhones and other accessories from the enterprisebecause of its unrelenting effort to deliver devices with undisputedquality. However, the recent cases of technical difficulties,including faulty updates, the inability of clients to place ordersthrough the website of the organization, and long delays to deliverthe products would make them consider changing allegiance. Theanalysts suggest that Lenovo, Xiaomi, and Huawei smartphones are at avantage point to take the mantle. Further evidence points out thatthe major iPhone market, two-thirds, is located outside the UnitedStates. Within the last three years, the popularity of the iPhoneshas decreased from a third to slightly more than a fifth in China. Further investigation indicates that the clients would preferaffordable devices to the Apple’s premium products since theengineers are releasing gadgets that fail to reach the expectationsof the customers. China, a major market of the iPhones, is alreadymanufacturing a variety of high-end mobile phones that could surpassthe sales and reputation of Apple Inc. Yueh (2016) further arguesthat most of the Chinese companies manufacture classy gadgets thatcan compete successfully with Apple, given their affordability andthe incorporation of the leading technology. However, themanufacturers were previously making products with the local economyas its primary market. Fortunately, the success of Alibaba’sinitial public offering (IPO) has encouraged other enterprises toexpand internationally. Furthermore, other technology companies,including Samsung and Microsoft, among others are constantlyintroducing innovative technology that will soon overpower Apple’sdominance.

ManagingExpectations

Lastly,the majority of Apple’s clients believe that the organizationoffers perfect devices, upgrades, and technology. Nonetheless, thetheory has proven unsustainable after the enterprise sufferedmultiple failures in 2015 and 2016 respectively. The flaws wereblamed on weak management on the side of Tim Cook, the ChiefExecutive of Apple, as well as the engineering team. Furthermore, thehigh competition in the market has forced the organization tointroduce innovative products in the market every year, which, inturn, boosts the sales and keeps the clients loyal because they havesomething new to purchase. Unfortunately, the engineering departmenthas focused too much on tweaking the existing devices and addingmultiple features for incorporation in the yearly upgrades to theextent that it is no longer able to maintain the regular quality.This explains the reason so many features are failing to work. One ofthe management’s failures included the naked selfie. Some clientssuspected that hackers had compromised the iCloud due to the weaksecurity features it utilizes. However, the company refuted theclaims by arguing that some clients were victims of phishing fraud.Whichever the case, iCloud was using weak security measures, as asecurity analyst had sometimes warned back, but the weak point wasfixed. Other management disappointments include the launch of iOS8.0.1, which jammed phones, thereby, prompting the users to revert tothe iOS 8.0 (McElhearn, 2014). Bottom line,loyal clients areunwilling to pay handsomely for technologies that could be surpassedby some of the competing and affordable devices offered by the rivalsof the company.

Recommendations

Inlight of the multiple challenges facing the Apple Inc., theorganization needs to develop better strategies, which would, inturn, help it to remain relevant in the industry. The company growth,for instance, requires the introduction of new products that willkeep the income from the organizations streaming steadily.Fortunately, the organization has a lot to offer, including, theApple Watch, the highly confidential ‘Project Titan’ and theSmart television series. According to Keach (2016), Project Titancould be Apple’s best-kept secret since it is specializing indeveloping electric cars. Despite the launch of the automobiles beingpredicted that it could be around 2019 or 2020, the green cars are apromising source of income. Several reports indicate that the primaryproducers of fossil fuels will run out of stock within a century’stime. Subsequently, electric cars will take over the industry. Giventhat Apple has proven to the technology geeks that its inventions arefirst class, automobile aficionados are eagerly waiting for theintroduction of the new player in the market. The entry of thecompany into the industry is not a big surprise given that it hasalready acquired patents of vehicle technologies such as the how onecan use an iPhone to control a car (Keach, 2016). The world is alsoin need of gadgets that could help to maintain good health. The Applewatch is an inventive device that focuses on measuring metrics suchas calories burned, steps taken and one’s pulse rate. The gadgetalso comes with built-in fitness applications that assist individualsto monitor their personal health. Such cutting edge technology, amongothers, will help the business to continue dominating the industry.

Inthe case of software development, Apple is a legendary in the sector.For many years, it has managed to lead the technology sector withevents that have made substantial long-term improvement on humanlives. For example, the Apple watch is waterproof hence, it issuitable for swimmers intending to keep track of their physicalactivities. Similarly, Keach (2016) predicts that Apple Car will be adriverless automobile, which would make it suitable for the disabledand the blind, as well as other people in need of assistive drivingtechnology. McElhearn (2015) states that Apple has focused so muchon marketing, as it strives to introduce yearly upgrades for all itsleading devices. Nevertheless, the engineers and developers areunable to keep up with the rush. As a result, the reviewer proposesthat the organization should slow down the rate of launching newproducts so that it can allow its engineers adequate time to developand test the workability of the new features before releasing them tothe clients. That way, the organization will retain the loyalty ofits trusted clients due to the high level of reliability (McElhearn,2015). Besides, the management has learned from its past mistakes oflaunching poorly tested upgrades therefore, future updates will bethoroughly evaluated and the flaws fixed in time. The testing processcould make the annual introduction of new devices far-fetched, but itwould help to restore the trust of the clients in the reliability ofthe technology applied by the organization. Finally, Apple shouldensure to improve security features of synchronizing and storagetools such as iCloud to guarantee the clients’ data is safe fromunauthorized parties (McElhearn, 2014).

Dilger(2016) predicted that no technology company could beat Apple in 2016since the organization had invested heavily on Research &ampDevelopment, and product differentiation that all result in thecreation of high-value brands. The group has established many stepsthat would help it to stay ahead of the competition. One of thesesteps includes market penetration. In the recent past, over 50%(precisely two-thirds) of its market for iPhone is situated out ofthe U.S. The new markets have helped to boost the returns fromvarious products offered by the manufacturer such as the iPhones,iPads, MacAir and iPods among others. Besides, the companyascertains to deliver premium and easy to use gadgets, thus, keepsthe allegiance of the customers (Dilger, 2016).

Formany years, the competitors have used Apple Inc. as a benchmark forinnovation. As a result, the management is always under duress todeliver products that surpass the customers’ expectations. Forexample, the team has seen the release of classic devices such as theApple Watch, which targets workout enthusiasts. Besides, the teamhires the best talent in the industry, as well as provides theemployees with a friendly working atmosphere. Everyone has thefreedom to contribute to the growth of the company through ideas andinventions that make the products attractive in the market (Dilger,2016).

Tothe naysayers, Apple is on the verge of collapsing. Nevertheless, thestatement is fanciful given that a team of top notch managers in thetechnology industry leads the organization. Consequently, there isstill a lot in store for the loyal customers. First, the designersare working on improving the outlooks of the devices so that they cancontinue to dominate in the competitive market. Since the batterylife has been one of the major complaints, the future gadgets wouldcome with durable and improved versions that can retain charge forlonger periods. Yoshikami (2016) indicates a possibility of endingthe older products, as well as stopping its support so that all theclients can upgrade to the latest technology models. Furthermore, theauthor observes that Apple is still a strong organization in spite ofthe iPhone 7s failing to achieve the earnings projections of itsfirst quarter that the Wall Street had set. It has a healthycombination of products, which include the Apple Pay, cloud services,and music offerings that will help it to cover for the decreasedreturns. Furthermore, it is essential to understand that most of theglitches that had faced the upgrading system were solved soonafterward. The reduction of the income generated from the iPhonesales is attributed to the weak economy in China, which is a majormarket for the products (Yoshikami, 2016). Subsequently, the companycan still improve its sales through selling the gadgets in othermarkets that are presently stable.

References

McElhearn,K. (2014, Sep 25). Why has so much gone wrong for Apple recently?Kirkville.Retrieved fromhttp://www.mcelhearn.com/why-has-so-much-gone-wrong-for-apple-recently/

McElhearn,K. (2015, Jan). Apple’s software problems are eroding confidence inthe brand. Kirkville.Retrieved fromhttp://www.mcelhearn.com/apples-software-problems-are-eroding-confidence-in-the-brand/

Kingsley-Hughes,A. (2015, Dec. 7). Three huge challenges facing Apple in 2016. ZDNet.Web. Retrieved fromhttp://www.zdnet.com/article/three-huge-challenges-facing-apple-in-2016/

Dilger,E.D. (2016, 9 Jan.). Apple`s competition is going to have a toughyear in 2016. AppleInsider.Web. Retrievedfromhttp://appleinsider.com/articles/16/01/09/apples-competition-is-going-to-have-a-tough-year-in-2016

Yueh,L. (2016, Feb 8). Huawei, Xiaomi and Lenovo will soon snatch atApple’s crown. Financial Times. Web. Retrieved fromhttps://www.ft.com/content/814c1fd4-cc08-11e5-a8ef-ea66e967dd44

Yoshikami,M. (2016, 27 April). Apple is not doomed! Four reasons why youshouldn`t give up on the stock. CNBC.Retrieved fromhttp://www.cnbc.com/2016/04/27/apple-is-not-doomed-four-reasons-why-you-shouldnt-give-up-on-the-stock-commentary.html

Keach,S. (2016, 17 October). Whatis the Apple Car? – Everything you need to know.TrustedReviews.Retrieved fromhttp://www.trustedreviews.com/news/apple-car-news-rumours-driverless-price-release-date-electric#UyqI0Q2x5a6TVprP.99