Swot Analysis For Microsoft And Apple Marketing Essay

Microsoft is a Multinational Company that works in more than 60 countries and by working in different countries; they can reduce the cultural dissimilarities. Microsoft also adept in software industry and their products was acceptable globally. One of the software that had been used throughout the world is their Window series and it is well known from the users, window series such as Window XP, Window 7 and others. Other than window series, Microsoft also produces excellent software like Microsoft Office. This software is very practical in business and also very useful for student. They also have produced smart software for the window’s interface known as Neptune. Having decent software had given Microsoft with strong brand name as a software manufacturer and this achievement had increase the revenue and profit of the company for 30 % a year with investment in 92 companies over past five years(Hafner, Arthur W.,& Hibbert, Erica L., 2001). Microsoft is serious in developing their product where to provide the best quality customer service. Microsoft tends on updating their products by developing it rapidly which to meet the demand of the market.

Weakness

A successful company like Microsoft also has weakness that is their productivity in internet space industry such as browser and other application. Microsoft only produces a few products for internet applications and this unproductiveness means they will fall behind their competitor in internet space industry. Microsoft also uses their dominant in market position by monopolizing their product in the software industry; however this greedy act had made them known as a cut-throat competitor and affects their reputation with other competitor. Other than that, Microsoft are well-known their products that is Microsoft Office, unfortunately the product is unaffordable for those small business and non-profit organization, hence this will lead them to no choice but to choose other products which are cheaper than Microsoft product. Furthermore, other weakness is that the dependency of Microsoft on the hardware manufacturer, they are too depending on hardware manufacturer to pre-install their personal computer operating system which they can pre-install it itself.

Opportunities

The demand for personal computer and global markets are still remain strong even though the popularity of handheld devices such as iPad, Samsung tablets and others are increasing. This means Microsoft still have opportunities to maintain their competitiveness in the market for their product. Other than that, Microsoft does have the advantage by having a strategic alliance to enter the market for mobile phone applications. Microsoft also has chances in the internet industries due to increasing of popularity among people for internet access. They can introduce new products in the internet market to gain more profit from it. Other opportunities are when Microsoft makes decision to enter the video game market by introducing products such as Xbox. The video game market also expected will gain about $66 billion revenue in 2012 compared to $12 billion in 2008.

Threat

There are many threats to the Microsoft Company such as the courts fight with competitor about developer lawsuits and antitrust that can give bad reputation to Microsoft. Not just that, Microsoft also has a threat from Linux and Apple because both companies have snatched about 88 percent market share of the desktop operating market from Microsoft (Hafner, Arthur W., & Hibbert, Erica L., 2001). New alternative products or known as substitute is being manufactured and had threatened Microsoft by increasing the bargaining power of buyers. High bargaining power of buyers means buyers now have variety of products to choose from other products other than Microsoft products. Nowadays, there are rapid developments in the mobile devices which mean this development can displace or replace personal computer. This mobile device also threatens Microsoft because it does not require Window operating system to function and this will decrease the sale of Microsoft products. Products from Microsoft nowadays also had been pirated and many people have preferred to choose the pirated products because it’s cheaper than the genuine products from Microsoft.

SWOT Analysis for Apple

Strengths:

Over the years, Apple has developed by offering superior products compared to the competitors, and it has stated itself to be an innovator in the private computer industry, where by in the market it takes, controls it products manufacturing and also its operating system by making its one of the original hardware producers. Apple stands as an independent manufacture where it produces its personal internal components for the core of its computer. In order to meet the requirement of the customer Apple has set up to standardize their product for high quality which to give satisfaction to the customer. In order to create new products it is dedicated to research and development, which are expected to make Apple’s products more efficient and practicable to use. As for the result, this makes most of the Apple products compact and simple to operate. Furthermore, Apple is well known for its faithful buyers that purchase its product for quality, regardless of how much it cost thus is makes Apple a successful company, based on the analysis it shows that the sales of Apple product had increased its second quarter profits to $320 (marketingteacher, 2005). Apple has risen to the stated of perfection in the computer industry, which produce a successful net income, and this bring the company the highest stock price in the private computer industry. In addition, Apple does not have any debt, so investor would accept less threat by holding Apple’s stocks. The buyers give an applause to its customer service because it capable handling the needs of a customer.

Weakness:

Apple faced some uncertainty on its products which is to ensure consistency and quality, for example the Apple iPod Nano, which is an advanced technology that had been developed and produced for the customer but there is an issues concern where it reported that it have faulty screen, however, the Apple company commented on the issues and had replacing all the faulty items which cost them a total lost. Besides that, Apple tends to increase the price of its music download file where they face pressure, because most of the companies make more money from iTunes than from their original CD sales. However, due to this tense that Apple faced they continue to invest more on the Research and Development department to remain its competitiveness. Furthermore, Apple seems to have financially stabilized organization, which brings them to a prospective weakness for the organization as it forms prospective threat for stock purchase by other collaboration.

Opportunities:

“An opportunity is any feature of the external environment which creates positive potential for the business to achieve its objectives”. Apple is a creative organisation; they have been innovating and modifying their products according to the modern environment. Apple is been availing all the opportunities to achieve more business all over the world. IPhone, iPad and iPod are the examples of the products of Apple that has been developed with immense technology for the costumers. Apple has the opportunity to develop the iTunes and music player technology in mobile phone format. Availing this opportunity to increase its business Apple made strategic alliance with some companies and developed a modified version of ITunes that is compatible with the phones of the partnering companies. The new releases of Apple IPod touch and iPad featuring the video chat will be a revenue generator. “Podcasts are downloadable radio shows that can be downloaded from the Internet, and then played back on iPods and other MP3 devices at the convenience of the listener. The listener can subscribe to Podcasts for free, and ultimately revenue could be generated from paid for subscription or through revenue generated from sales of other downloads”. Taking advantage of their MAC operating system Apple proved to be more reliable laptop. Leopard Operating system around 4million copies of this software was sold.

Threats:

A threat is a forecast environmental condition that is out of control and has the potential to harm your businesses profitability. The technology is getting advanced day by day and there is an enormous amount of competition between the companies. There are more competitive companies entering in the market with innovative products. Each company has the same aim to i.e. to be successful and make revenue. The major threat for Apple is the companies like Microsoft, HTC and Samsung because they all make the same kind of products. Apple’s threats includes the increasing popularity of Google’s android software, mobile phones that uses Microsoft Mobile 7 operating system, online music store from Yahoo, Amazon and wall mart. Smartphones from Nokia, Samsung and HTC. Tablets from Samsung and Acer. Any gadget that is having the same technology and concept copied or modified or even newly invented is a threat for Apple because people will have a lot of options to consider in buying a product. This can affect the growth and productivity of the company.

Five Competitive Forces

Threat of new entrance:

“In Porters five forces, threat of new entrants refers to the threat new competitors pose to existing competitors in an industry”. In early 1990’s when the computer and mobile technology was not that famous and was at the initial stage the threat of new entrance for both Apple, Microsoft was significant. That time unsurprisingly new firms engaged and forced the industry to be innovative and creative if they needed to increase their sale. Initially Research and development was complex but assembling of the products was easier, there were less government restrictions. The competition between the companies that time forced Apple and Microsoft to create an impression on their costumers about their products and at the mean time they were getting well established and reducing threat of new entrants. Apple and Microsoft are less threatened now by the new comers because to enter an industry that created products like apple and Microsoft takes a lot of money and man power. It is not easy to enter a new company in the market that can compete with Apple, Microsoft. Whereas on the other hand we can see that the threat of substitute products are quite high. It is still possible that a new company or industry becomes a threat for the Apple and Microsoft but in order to do so they will have to bring in some thing that really diverts the attention of the strong followers of the two companies. Price is another factor that can be a threat for Apple and Microsoft. For example , Hp and Acre selling cheap products that do affect the companies to some extent .

Threat of Substitutes

According to Porter’s, threat of substitute is the availability of a product that the consumer can purchase instead of the industry’s product. A substitute product is a product from another industry that offers similar benefits and functions to the consumer as the product produced by the firms within the industry offers. According to Porter’s 5 forces, threat of substitutes shapes the competitive structure of an industry.

Threat of Substitutes for Microsoft

Consumers now are seeking for more cost saving substitutes for creating documents as a result from the recent economic downturn. Previously, the only suitable word processing software was offered by Microsoft. Most of the substitutes did not offer as many features as the Microsoft product, but it contains the same key characteristics to produce professional documents. Presently, Openoffice.org, AbiWord, gOffice, and Buzzword are available to the consumers as an alternative substitute. These products provide the user with an import/export function that allows the user to open documents created in Microsoft Word and open saved documents from the substitutes programs in Microsoft Word. This product pose a very high threat risk to Microsoft as the product can be downloaded by anyone for free.

At the of 2010, a cloud and Linux based product called IBM Client for Smart Work was introduced by IBM and Canonical in the United States. It has the capability to be used on a network for multiple computers within an organization or simply on a single computer for a single license user. The cost of purchasing and implementing the IBM Client for Smart Work was 50 per cent less than any of the existing Microsoft operating systems (Help Net Security, 2009). With this, the threat risk for consumer to switch product is high since the switching cost is very low.

Open source operating system software, such as Linux, showed that consumers are willing to switch to these products as a substitute. Key features that are important to the consumer are available in these products and it offers for compatibility with various platforms, such as the Microsoft Office products and Macintosh systems. This proved to be a high threat risk since the consumer is willing to switch to a product with an equal performance to the industry product

Threat of Substitutes for Apple

Threats for substitutes for Apple’s iPod product is low considering that existing rival product from Microsoft called Zune, which slightly cheaper than Apple’s own iPod, Apple is still in control of 71 per cent in the market share.

Close rival of Apple iPhone product, Samsung has come out with various product and update that have similar feature and quality close and similar to the iPhone and cheaper in price. This could pose a high threat risk for substitute to Apple.

Alternative means to acquire music such as Napster and Rhapsody also pose a moderate risk for Apple iTunes since they have more advantages and feature that Apple don’t. They also offers more free music than Apple and have subscription fee more or less the same with iTunes.

Bargaining power of buyers/customers

The bargaining power tends to influence the prices of goods or services that produced by the company. In the competitive market, the customer does not have the ability to set the prices, instead it had set by the supply and demand, on contrary, price will fall when the amount of the supplied increase, however, price will raise if the demanding of the amount is high. In this case, the profit that had gain from the company is based on the buyer power either is strong or weak, where by it indicated the difference between Apple and Microsoft where they have strong buyer power which bring this two company into a competitive stated. Refer to Figure 0.0 where to determine the power of buyers is strong or weak:

Figure 0: Buyer Bargaining Power (wikicfo, 2010)

Bargaining Power of Buyers in Apple

Apple focuses on differentiating its product in both the personal computer market and the portable music product, hence both of it production have its own unique style and innovative features that move them separately from their competitors. For example, Apple production is Macintosh and iPod, which make the customer less price sensitive when it comes to choose these two products because it is not easy to search a product that has the same features or stylish look that is why Apple tends to use its own style by following the market trend. Besides that, Apple products tends to give satisfaction to the customer due to its durability and exciting features that had been produce, for example, the launching of iPhone 4s brings big profit to the company because the product is undifferentiated where by it have dominant the market industry of cell phone which makes iPhone 4s as a top selling products. Besides that, the buyers are well educated on the products because it is easy to adapt with just one button that had been create by Apple, thus iPhone 4s is just an upgrade of the component from iPhone 4, where by buyers with iPhone 4 will purchase iPhone 4s because it is affordable and come with even greater components.

Bargaining power of Buyers in Microsoft

Microsoft has produced a product that is The Windows operating system; it is a general operating system for the buyers of personal computers and laptops. However, Microsoft faced issues that certain user prefers Apple’s Macintosh although the price is much higher than The Windows due to Apple product is undifferentiated from Microsoft. Nowadays, the buyers have the choices to download open source and other free products, and those open source and free products are well tested and widely used which produce by the multiple developers.

Apple and Microsoft have a strong brand name which makes them competitive in the market and a part from it their products are well known, therefore Microsoft tends to produce a product which can be easily adapt and much more comfortable because now consumers are not brand loyal but they rather choose a product which is easy to use and comfortable with it. Furthermore, Microsoft is also well known as a monopoly in the software industry, and this may bring in low bargaining power of buyers.

Bargaining power of suppliers

This is one of the forces that were stated in the porter five forces analysis. It also can be called as market of inputs. Suppliers supply raw materials, labour, component and other supplies to the firm to produce their product. The firm needs the supply to keep operating and if there’s only a few substitutes, suppliers can overpower the firm by charging high prices for their resources. Being powerful suppliers, they can gain some of the firm’s profit. Weak or powerful suppliers can depend on many aspects such as supplier concentration, threat of forward integration, switching cost of firms in the industry, presences of substitutes input and many others.

Bargaining power of supplier for Apple Corporation

As a large manufacturing company, Apple needs several of raw materials from a large variety of suppliers to manufacture their product such as computers and portable music players. In decreasing the bargaining power of their supplier, Apple had considered to not be limited to only single supplier to supply various components for manufacturing its product. By using more suppliers, it reduce the bargaining power that concern in pricing for the components from the suppliers. Suppliers need to be competitive among them to make sure they can retain their business with Apple.

In manufacturing their computers, Apple needs to use many components such as the video cards, motherboards, display unit and others in their products. For video cards, Apple has two choices of suppliers which are NVIDIA and ATI. By having two choices, Apple can choose which suppliers they want to go to. This situation also same for Apple’s motherboards use in its computer, which they use motherboards from ASUSTek and Ambit Microsystems. While for display units, apple use components from Samsung, Toshiba and International Display Technology and for the storage devices, its can choose from Hitachi Global Storage Technologies, Western Digital or Seagate. Samsung, Hitachi Global and LG. Phillips Co. will supply Apple for CD/DVD drives. Apple gain advantage from using several of suppliers because they can switch supplier to get the best deal in term of cost. The situation in manufacturing Apple’s Macintosh computers and iPod parts also same.

Apple has high bargaining power of suppliers for all the parts in manufacturing its products except for its processor. Apple use G series processor develop by IBM and if Apple want to change its processor, its need to create a customized chip for processors to well-function with PC and Macintosh computers because it use completely different technologies. These leave Apple with a low bargaining power over its supplier because if they want to switch to new processor, it would have extremely high switching costs. Apple had taken solution to overcome their situation by forming an alliance with IBM and integrating Intel chips. This act have reduced the bargaining power from IBM and integrating Intel chips.

Apple uses a tactical purchasing to sharpen the company’s pricing edge. They buy components in large quantities and by doing so; apple can get a significant leverage against suppliers. Using this leverage, Apple can negotiate for a good term and pricing with suppliers. These huge orders from apple will make the suppliers low in components and can make a sudden increase in price for the components and leave competitor to pay higher for the same components Apple’s bought. This tactic can strengthened the bargaining power of supplier for Apple. Apple also has the ability to vertically integrate. Its means, some of component can be produced by apple itself.

Bargaining power of supplier for Microsoft Corporation

Microsoft is a large company in manufacturing software for computer. Microsoft overcomes their supplier power by introducing a product that was important for buyer. When it is so important to buyer, the supplier don’t have any choice but to choose product from Microsoft. Microsoft had introduce operating system known as Windows 8 and it was installed in each of PC sold. There are no other operating system like Windows 8 and this leave supplier with no other choice because there are no substitutes for this product.

Microsoft are expertise and skill in software sector, hence this has influence Nokia to create an alliance with Microsoft so that they can use Microsoft’s software in their product. This agreement is important to Nokia hence it gives advantage and power to Microsoft as a supplier to negotiate better price and share. Microsoft has a very high supplier power over Nokia because there are not much rival that are more skill than Microsoft in software. 

In manufacturing the Xbox, Microsoft have many choice to choose the hardware suppliers that prepare the component to manufacture the console for the Xbox. This gives higher bargaining power to the Microsoft in dealing the cost with the hardware suppliers. Microsoft can change suppliers due to low cost switching cost among the suppliers. While for some crucial part such as the graphic card from NVIDIA and processor from Intel, these suppliers have more power over Microsoft but they think, having a good relationship with Microsoft is more important due to expertise of Microsoft in PC business. The influence of Microsoft in PC business has made them more powerful over suppliers.