Apple

Case Study Overview

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  • Strategic Resellers Apple partners with strategic resellers, like Best Buy, to create a 'store within a store'
  • Authorized Service Providers: Apple runs an Authorized Service Provider program to ensure high-quality repairs for its customers
  • Software and Hardware Developers
  • Key manufacturing partners, like Foxconn

Detailed Overview

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  • Strategic Resellers Apple partners with strategic resellers, like Best Buy, to create a 'store within a store'
  • Authorized Service Providers: Apple runs an Authorized Service Provider program to ensure high-quality repairs for its customers
  • Software and Hardware Developers
  • Key manufacturing partners, like Foxconn

Business Model

Partners

  • Strategic Resellers Apple partners with strategic resellers, like Best Buy, to create a 'store within a store'
  • Authorized Service Providers: Apple runs an Authorized Service Provider program to ensure high-quality repairs for its customers
  • Software and Hardware Developers
  • Key manufacturing partners, like Foxconn

Activities

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  • Develop operating systems and core apps
  • Provide surprise-and-delight features like Siri and Shazam
  • Fund media production like Apple TV+, Apple Radio One, and Apple Fitness
  • Manage licensure of third-party content through Apple Music, TV, and News
  • Operate innovative retail stores
  • Support and repair hardware and software
  • Curate the App Store platform, which connects software developers with end-users
  • Provide common technology functions and standards through a Developer Program
  • Connect users to each other through iMessage, the Game Center, and features like SharePlay
  • Engage in privacy-related politics, education, and activism

Resources

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  • Software developers
  • Patents
  • Reusable software and hardware, including iOS, Mac OS, optimized microprocessors, and machine learning/AI
  • Trusted, highly-valued brand, known worldwide
  • Unusually large amount of cash-on-hand
  • Media assets

Value Propositions

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  • Apple provides an integrated, high-quality technology ecosystem, with more privacy, better user interface, and fewer stability issues than competitors
  • Apple TV+ provides top-quality original content, unlike streaming services or cable subscriptions that serve up content of widely varying quality (some original, some third-party) which may be overwhelming to navigate
  • Apple provides cloud and repair subscriptions that make the ownership experience less stressful
  • Apple develops hardware and software components that have an unusually high standard for privacy and does not count on advertising revenue, unlike competitors whose business models are premised on monetizing users' data for advertising or direct sale

Customer Channels

  • Apple.com
  • Apple retail store network
  • Online Apple Events for end-users, media, and developers
  • Embedded Apple stores within big-box stores and apple-authorized resellers
  • Online resellers
  • Placement on third-party ecosystems (eg Apple TV+ on Samsung televisions)

Customer Relationships

  • Web / chat / e-mail
  • Phone
  • Apple Store & Genius Bar
  • Authorized Service Providers & Resellers

Customers

  • Everyday smartphone users and desktop or laptop users
  • Families with children
  • Mainstream enterprise clients
  • Specialty groups like multimedia artists, educators
  • Specialized enterprise clients (such as airlines who build flight-attendant tools around an iPhone)

Cost Structure

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  • Software development
  • Hardware development
  • Manufacturing (often in advance of sale)
  • Legal costs
  • General business overhead
  • Licensing fees and talent for original content

Revenue Structure

  • Hardware sales
  • Service contracts
  • Media and cloud service subscriptions
  • Licensing fees
  • Direct app sales
  • App Store and media commissions
  • Repair and parts

Value Propositions

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Business Model Environment

Technological Trends

  • Smartphone replacing dedicated cameras
  • Falling price of semiconductors
  • Exponential increases in processor performance (until recently)

Social Trends

  • Near-total penetration of markets for smartphones in adult populations
  • Increasing use of advanced technologies by youth, especially teens
  • Privacy breaches and awareness of data ethics
  • Social media and social software

Industry & Domain Forces

  • Software-as-a-Service pricing models
  • Imitation of Apple products and features
  • Challenges to app-store commission rates by key developers
  • Crowded accessory markets

Market Forces

  • Expectations of low-cost hardware and free software
  • Windows dominance in the business world
  • Smartphone saturation in many markets

Macroeconomic Forces

  • Variability in stock market (including several volatile periods and recessions) made or broke many tech companies
  • Venture capital drives cutting-edge innovation, corporations acquire mature startups

Value Model

Value Models Explanation

Apple engages in a full spectrum of value models, using cutting-edge hardware devices, unsurpassed customer services, a number of intellectual properties, advanced technology and datasets, as well as networks of people and machines. While initially experiencing major challenges in executing several of these value models, Apple has managed to be successful in nearly all of them. While not completely undefeatable, it is incredibly challenging to unseat Apple's leadership in areas they choose to compete in.

Things

  • iPhone, iPad, and Apple Watch
  • Beats Audio and AirPods
  • Apple TV (device)
  • MacBook, iMac, and other desktop computers

People

  • Sales and Genius Bar staff
  • AppleCare support teams
  • Highly-skilled programmers, product leaders, and industrial designers
  • Legal, privacy, moderation, and security teams

Ideas

  • Highly-advanced operating system and app software
  • Custom-developed, best-in-class hardware components (processors, chips, etc)
  • Apple TV+ content (original and partner)
  • Apple News+ content (original and partner)
  • Apple Music content
  • Proprietary business and manufacturing processes
  • Globally-recognized brand identity
  • Siri
  • Shazam
  • Apple Card
  • Protected user data stores (using its secure Health, Research, Care, Home, and other APIs and data stores)

Networks

  • App Store
  • Developer ecosystem, including API infrastructure for interconnected apps
  • Game Center network
  • An exclusive user base for iMessage and FaceTime (messaging and video calls)
  • Apple Pay
  • Devoted user/fan base spanning decades of experience
  • Loyal media creation professionals
  • End users devices that gather anonymized data to refine AI algorithms

Platform Elements

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MSP: Community

Users create new value for the App Store by discovering and reviewing apps, and for other communities, like Nike+, where users can connect for fitness ideas, encouragement, and friendly competition.

Shared Purpose

MSP: Marketplace

The App Store functions as a centralized marketplace and distribution channel for app creators to sell their products. For example, users can download apps like Nike+ or Strava, which tap into data about a user’s health via the HealthKit API.

MSP: Infrastructure

Apple has developed an extensible operating system with APIs and SDKs that enable third-party developers to create on top of their own hardware and software platform, minimizing their own cost and risk. The company’s HealthKit is one such API, which allows wellness apps and wearable sensors to use each other’s data and functions.

MSP: Data

Apple creates both on-phone and in-cloud datasets about their customers. This data isn’t used primarily for Apple’s purposes—it’s for customers to gain further insight about themselves or to receive better functionality from their devices and apps (for example, health data that can be used securely across multiple apps).

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General Information

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