Headquartered in Cupertino, California, Apple is the largest information technology company in the world by revenue. It became the first company in the United States to be valued at more than $700 billion, with about 115,000 permanent employees working full time. Moreover, the company has enjoyed higher brand loyalty by being the best global brand for four years in a row. The purpose of the paper is to provide a comprehensive review of Apple Company regarding its software products. The report consists of the company history, size, type, focus, and its primary customers. It also discusses the Apple’s product licensing process and finally examines its position on the market, including SWOT analysis.
Company CIS Offering
Company Introduction and Size
The birth Apple Inc. is attributed to the idea of Steve Jobs along with his friend Steve Wozniak (Apple, Inc., 2016). The two, who were extremely intelligent and innovative, lived in Silicon Valley after dropping out of high school to start a now multibillion company. While working for Hewlett-Packard, they teamed up to start the company at Jobs’ basement where they made their first computer (Dormehl, 2012). Their innovative ideas led to the creation of powerful computers and software that greatly revolutionized the way people listened to music, used computers. and searched the Internet. The company, which operates as a public entity, had a total asset of US$321,686 billion and operating income of US$60.024 with approximately 115,000 employees as of 2015. Apple’s OS X also enjoys huge install base in the United States and other countries. It is estimated that more than 46% of corporations have Apple computers with OS X installed in the United States (EMarketer, 2015). Such companies include CBS that replaced 2500 of its old Windows PC with Macs. About a quarter of Cisco’s employees also use Apple’s Macs running on OS X.
Initially, Apple Inc. was founded by Steve Jobs, Ron Wayne, and Steve Wozniak in 1976, but Ron Wayne left soon after. Having created the first Apple computer, Steve Wozniak introduced the design to Hewlett-Packard, but the company was not impressed and it dropped the venture. However, this did not deter Jobs and Wozniak from their work, and they continued to create and sell computers. The venture gradually grew into a public company with increased sales from 35,000 to 78,000 between 1979 and 1980 with approximately 1,000 employees (Sutherland, 2012). The company then introduced new versions of Macintosh in the 1980s and 1990s. For instance, Apple’s Macintosh computer had immense sales of about 70,000 units after its release in 1984. However, the company faced the challenge of a power struggle among the executives, which led to the exit of Steve Jobs that further led to management problems, translating into massive monetary losses.
The company later experienced a turn around when Jobs’ new company NeXT was purchased by Apple Inc. and Jobs returned as an advisor. He later became Apple’s CEO, increasing the company’s sales to 800,000 when he introduced iMac, thus marking the beginning of a successful era for the business (O’Grady, 2009). Jobs began to introduce innovative products, including the iPod, iTunes Store, and the iPhone. For example, iTunes store exceeded Wal-Mart that was then a leader in music sales. The company’s innovations continued by introducing more products like the iPad, making Apple the best company worldwide as reported by many magazines.
Apple produces a variety of software products to various customers around the globe. Although the company is considered a premium brand, its primary target market demographics consist of teens who are easily moved by new technologies (Danova, 2014). Most teens are attracted to Apple’s iPod that opens the market for other products, including iPhone and Macs. Moreover, iPod appeals to teenagers as it enables them to listen to music, socialize with friends, and access social media platforms like Facebook and Twitter.
Another consumer demographic for Apple products are young people, especially university and college students. Thus, 1 of 4 individuals within the age bracket of 18-34 express strong interest in the company’s products, including iPhones, iPods, and MacBook among others. Such products appeal to the population because they enable them to record notes quickly and perform various school tasks, including research. They use products like MacBooks to store and organize their school work. Furthermore, the products are light, which makes them easier to be carried around.
Other valuable customers for Apple products are business people who are often intrigued by the devices like iPads and MacBook. Such devices enable them to communicate and work efficiently; therefore, they are ideal for business activities (Keller, 2010). Apple’s OS X is also preferred by many organizations because of its safety due to its resistance to computer viruses. Adults also form a significant part of Apple’s customers. Devices like iPhones are preferred by adults for their everyday needs like internet connection, phone calls, cameras, map direction, and documents. Moreover, the devices are small and portable, which makes people’s lives easier.
Apple, Inc. also produces a variety of products, including hardware and software. The hardware products include the iPad tablet computer, iPod portable media player, iPhone smartphone, Apple TV digital media player, Apple Watch Smartwatch, and Mac personal computer. The company also produces software products such as iOS operating system, Safari web browser, MacOS, iTunes media player, iOS App Store, iTunes Store, iCloud and Apple Music.
Max OS X Features
Mac OS X is one of the most important softwares produced by Apple. The operating system is reliable and stable because it uses modern architectural principles. Cases of application hanging or crashing are minimal, with the operating system making it very durable. Thus, OS X is optimized to perform effectively and faster on Mac hardware (Pogue, 2002). Moreover, it takes advantage of the hardware features like modern data buses and faster memory to deliver a high-speed performance that keeps increasing with newer versions. The operating system also has native support for multiple users, where many people can use the same machine, which makes it ideal for business environments.
Another important feature of OS X is security. It is designed on a two-layered system architecture, where the attractive graphical user interface sits on the UNIX core to ensure optimum security. Such architecture makes it difficult for an unauthorized user to install a destructive program or virus without explicit root access. The operating system is also bundled with a highly configurable built-in firewall that also works unobtrusively. Therefore, the OS X users do not need special antivirus software to protect their computers as opposed to other operating systems like Windows. Mac OS X is also designed to be network ready, which makes it support numerous networks, including those made up of Windows PC and Macintosh computers (Pogue, 2002). Its networking system is flexible, powerful, and easy to configure, making it able to automatically search and configure other devices to enhance network communication.
Another crucial component of the OS X system is the developer tools. They are packaged with the operating system, enabling the company control development of various applications both for mobile and computers. The Xcode and other tools are positioned as a future investment on the platform and thus, distributed freely with the operating system. Although not many consumers use the product, it is beneficial for the developers as well as the company as a way of expanding its platform.
Apple targets a wide demographic with its Mac OS X operating system. It is aimed at college and university students who are interested in MacBooks for research and schoolwork (Apple, Inc., 2016). The operating system is shipped with numerous applications, including those for word processing and browsing the internet like Safari. This is ideal for students for performing educational research, writing, and storing notes. Moreover, the development tool Xcode is ideal for computer science students for coding practices. Apple also targets businesses as its operating system is perfect for office activities. It is bundled with word processing applications like the Microsoft Office, a valuable product in office environments for the activities like accounting, preparing spreadsheets, and reports. Companies developing applications and software also rely on the Xcode for development and building activities.
The sales of the computers are combined with that of the operating system, which is a competitive advantage. As compared to Windows, which is sold separately, Apple, Inc. ships its computer hardware with the operating system, and it only enhances the sales of the operating system.
Cost and Licensing
Apple ships its OS X freely with its computers. Moreover, the operating system is bundled with various other applications and shipped together with their MacBooks or iMacs. Therefore, the company does not sell the operating system as a separate package. Furthermore, it offers free updates of the operating system freely to its consumers. At the same time, Apple does not sell its software, rather it is licensed only for reproduction, publication, and modification (Pfleeger, Wu, Lewis, & United States Air Force, 2005). Thus, upon buying the company’s hardware, one is liable for free update if the hardware meets upgrade conditions.
iTunes Store features
iTunes Store is an online digital media store for selling music. It is one of the largest music vendors in the world and the leading one in the United States. It also includes the sales of various media, including TV shows, music movies, and applications. Songs are sold at various prices based on their popularity from various distributors, while those that play for more than 10 minutes are marketed as Album Only (Kelby, 2007). Similarly, movies are sold based on popularity, and those with low popularity cost less while highly popular ones cost more.
One of the best features of iTunes store is the provision of a wide array of digital media. The online application offers consumers both individual tracks and complete albums from numerous artists of various genres. As opposed to other online music vendors that rely on subscription service and that are operated as standalone websites, iTunes store functions as an entire application that is linked with the jukebox software and offered for free download for Mac users.
Unlike other music vendors, iTunes does not place any paid advertisements on the website (Kelby, 2007). The application is operated solely for music and digital content. Thus, consumers are not flooded with numerous ads or the superiority of artists who may interfere with their freedom of choice. Other websites allow artists to promote their songs by enabling their music feature at the top of suggested lists or most watched list, thus interfering with buyers’ choice. However, iTunes store does not allow such an activity, and the algorithms are designed to show fair rating of songs and artists. Moreover, it prevents the selling of iTunes virtual space to the highest bidder, which might control the content consumed by buyers.
The major target market for iTunes is the youth who form a significant percentage of music consumers around the globe. The company also offers varied genres like jazz that appeal to adults. The digital media is made available to the youth through their smartphones for major platforms. Consumers can download the application on their smartphone running on either iOS or Android and purchase their preferred songs. It also includes a category for Hispanic and Latino content known as iTunes Latino (Apple Inc., 2016). Such a platform has made it possible to capture the wide market for Mun2 and Telemundo programs. Additionally, it provides music videos, audio, television shows, and podcast in Spanish, which enables it to target the consumers of Spanish origin.
The digital media industry becomes crowded with many players like Rdio, Spotify, Deezer push, and Amazon. However, Apple enjoys many advantages over its competitors. This is attributed to the company’s huge customer base drawn from the sales of other products like iPods and iPhones. Recent reports show that the company has more than 800 million users for iTunes store (Hayes, 2014).
iTunes Store Licensing and Cost
Although Apple offers iTunes application for free download, it benefits from the sales of songs from distributors. The company operates on reseller agreement with the distributors, it buys songs in wholesale and resells to consumers; thus, they do not license the content (Rustad, 2015). It takes 99 cents of a download and gives the rest to the label that then distributes the benefits to songwriters, artists, and publishers among others. The software is promoted through the seasonal reduced cost of music. Apple offers music promotions incorporation with the labels where it reduces or offers music for free as a way of attracting buyers.
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Apple Inc. enjoys extensive and strong distribution channels, especially in the United States. It uses numerous channels to deliver products to consumers such as direct sales force, online stores, and retail stores. Some of its competitors have physical retail stores, but they do not match Apple’s vast network. The company also enjoys indirect distribution network, consisting of third-party network carriers such as Sprint, AT&T, T-Mobile, Verizon, and Sprint. It also relies on the main wholesalers and retailers like Amazon, Best Buy Wal-Mart, Staples, and Target as well as value-added resellers to expand its network (Hill, 2014). Since Apple bundles its OS X with its iMacs and laptops, the sales of the hardware promote that of the operating system. Apple also enjoys immense consumer trust and brand loyalty that translates to high sales of its products (Interbrand, 2016). This has made the company the largest digital retailer through its iTunes store (Lopez, 2014). As a leader in digital asset management, the company enjoys market dominance in the sales of music videos and TV shows.
The company’s proprietary operating system OS X operates differently with the close rival Windows. Moreover, its hardware design is incompatible with the hardware of other brands (Gillam, 2008). This is a challenge to the company as it affects its expansion. For example, Windows is not restricted to any specific hardware and it can be used by various brands such as HP laptops and desktops, Lenovo and Samsung devices among others. Therfore, it helps increase the market reach of Windows. In contrast, OS X is designed solely for Apple’s hardware, thus hindering its market reach and usage.
According to the International Data Corporation, the market for Internet of Things (IoT) is expected to rise to 1.7 trillion dollars (Norton, 2015). Apple’s unique position on the market can take advantage of the rapid growth of the IoT. Apple’s OS X platform is vital for managing information among connected devices (EMC & IDC, 2014). Moreover, the company also offers various wearable gadgets, smartphones, computers, and tablets that can be integrated and managed through an internet connection.
The company faces stiff competition from other major players like HP, Microsoft, Dell, and IBM in personal computing. The rivals, such as HP and Dell, offer effective personal computing solutions at affordable prices that make it difficult for Apple to cope. The competition has significantly increased, especially since Apple launched the iPad and iPhone devices where its major rivals, including Samsung and Google, are more experienced and well-funded.
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In conclusion, Apple Inc. enjoys immense market dominance in both its hardware and software niche. Despite the presence of many competitors, the company has a significant brand loyalty and customer trust, which helps boost its position on the market. Apple’s brand loyalty is attributed to the high quality and reliability of its products. Its OS X operating system is stable, reliable, and secure, thus giving the company a competitive edge on the market. Moreover, Apple sells its products as premium, which helps improve its brand loyalty. The dominance of digital media management has also brought the company a tremendous competitive advantage. As compared to its close competitors like Wal-Mart and Spotify, Apple Inc. with its iTunes is still ahead in sales of digital content, including music and video. Therefore, through its effective market strategy, Apple is expected to enjoy its unique position for a long time.