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    Apple Case Study Analysis

    Uploaded by

    Kalyan Kumar
    This document analyzes Apple's financial performance in 2018. Key points include: - iPhone sales accounted for $166.7 billion of Apple's $265 billion total revenue. Services also contributed significantly at $37.2 billion. - While iPhone sales grew 18% year-over-year, overall sales were flat, indicating Apple failed to attract new users. - iPad and Mac sales declined as smartphones and larger phones cannibalized the tablet market and Mac faces little competition. - Apple maintains dominance in the smartwatch market but must continue expanding its services ecosystem to drive growth. - The document provides recommendations such as licensing Mac software and exploring new business areas and markets.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Apple Case Study Analysis

    Uploaded by

    Kalyan Kumar
    244 views13 pages
    This document analyzes Apple's financial performance in 2018. Key points include: - iPhone sales accounted for $166.7 billion of Apple's $265 billion total revenue. Services also contributed significantly at $37.2 billion. - While iPhone sales grew 18% year-over-year, overall sales were flat, indicating Apple failed to attract new users. - iPad and Mac sales declined as smartphones and larger phones cannibalized the tablet market and Mac faces little competition. - Apple maintains dominance in the smartwatch market but must continue expanding its services ecosystem to drive growth. - The document provides recommendations such as licensing Mac software and exploring new business areas and markets.

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    Apple case study analysis

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    This document analyzes Apple's financial performance in 2018. Key points include: - iPhone sales accounted for $166.7 billion of Apple's $265 billion total revenue. Services also contributed significantly at $37.2 billion. - While iPhone sales grew 18% year-over-year, overall sales were flat, indicating Apple failed to attract new users. - iPad and Mac sales declined as smartphones and larger phones cannibalized the tablet market and Mac faces little competition. - Apple maintains dominance in the smartwatch market but must continue expanding its services ecosystem to drive growth. - The document provides recommendations such as licensing Mac software and exploring new business areas and markets.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    244 views13 pages

    Apple Case Study Analysis

    Uploaded by

    Kalyan Kumar
    This document analyzes Apple's financial performance in 2018. Key points include: - iPhone sales accounted for $166.7 billion of Apple's $265 billion total revenue. Services also contributed significantly at $37.2 billion. - While iPhone sales grew 18% year-over-year, overall sales were flat, indicating Apple failed to attract new users. - iPad and Mac sales declined as smartphones and larger phones cannibalized the tablet market and Mac faces little competition. - Apple maintains dominance in the smartwatch market but must continue expanding its services ecosystem to drive growth. - The document provides recommendations such as licensing Mac software and exploring new business areas and markets.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 13

    APPLE CASE STUDY ANALYSIS

    TEAM:
    KALYAN GUGGILAM
    SWETHA BOLUSANI
    ABHISHEK
    SRIHARI
    MOHIT
    ROHIT
    PAWAN SHARMA
    PRODUCT WISE REVENUE FOR THE YEAR 2018

    REVENUE(265BN$)

    Other
    I-Phone- I Pad- Mac – Services-
    products-
    (166.7bn$) (18.8 bn$) (25.5 bn$) (37.2bn$)
    (17.4 bn$)
    KEY OPERATING RATIOS
    Ratio 2012 2013 2014 2015 2016 2017 2018
    Current Ratio 1.50 1.68 1.08 1.11 1.35 1.28 1.12
    Total Asset Turnover 0.89 0.83 0.79 0.81 0.67 0.61 0.73
    Debt/Equity 0.13 0.31 0.54 0.68 0.86 1.06
    Gross Profit Margin 43.87% 37.62% 38.59% 40.05% 39.07% 38.47% 38.34%
    Net Profit Margin 26.67% 21.67% 21.61% 22.84% 21.18% 21.09% 22.41%
    ROA (NI/TA) 23.70% 17.89% 17.04% 18.39% 14.20% 12.88% 16.27%
    ROE (NI/TE) 35.30% 29.98% 35.42% 44.74% 35.62% 36.07% 55.56%
    ROI 35.30% 26.35% 28.11% 30.92% 22.43% 20.91% 29.63%
    Price/Earnings Ratio 13.34 10.88 14.48 11.24 13.13 16.38 18.87

    • GP Margin ratio, Net Margin ratio, ROA and ROI is being reduced over years
    • Company is not able to use its and Assets and Equity efficiently
    IPHONES THRIVING IN THE TWO MOST IMPORTANT
    MARKETS - US AND CHINA
    IPHONE DRIVING STRONG REVENUE GROWTH
    • iPhone sales are strong in developed markets as the high
    price premium limited its reach to consumers in lower-
    income groups in emerging markets.
    • Telcos are willing to offer subsidies on iPhones to their post-
    paid subscribers as iPhone users tend to spend more than
    Android users on data usage and paying for services.
    • The iPhone range in 2018 marked the first time that Apple
    launched three models together - iPhone XR being the
    affordable model and iPhone XS and iPhone XS Max being
    pitched as flagship models.
    • Despite its aggressive launch, sales of iPhones failed to
    ignite the highly saturated flagship market. iPhones remained
    flat indicating that Apple failed to lure new users.
    • While iPhone sales were lacklustre in 2018, iPhone remained
    the company’s key revenue contributor. Revenues from
    iPhone grew an impressive 18% in FY2018 over the previous
    year.
    • As Apple’s installed based continues to grow, its users will
    consume more digital content and services, using Apple Pay
    to pay for products and services and buying extended
    warranties, and subscribe to streaming services such as
    Apple Music or Apple TV.
    APPLE HOLDING STEADY DESPITE THE RISE OF HUAWEI
    IPAD SALES CANNIBALIZED BY IPHONE AND MAC
    • Sales of iPads and tablets, in general, are badly affected by the
    growing popularity of large screen size smartphones such as
    Apple’s own iPhone XR and iPhone XS Max.

    • Apple tried to adopt the same approach as iPhone by adding more


    features and larger screen (iPad Pro) with the hope that its
    revenues from iPad sales will increase despite declining volume
    sales.

    • Smartphones are typically bundled with mobile data plans which


    mask the real cost of ownership. By comparison, consumers have
    to fork out more money (upfront) when purchasing an iPad.

    • The reason why iPads (and tablets) were popular in the past was
    because tablets were the cheapest computing device. Consumers
    were reluctant to pay for iPad Pro, which cost almost as much as
    MacBook Air.

    • The other factor hindering iPad sales is that Apple has been rolling
    out OS updates on older iPads and these OS updates are keeping
    the older iPads fresh.

    • The build quality of iPad also meant that older iPads were still
    running well, giving existing iPad owners another reason not to
    buy a newer (and more expensive) iPad.
    MAC IS STILL HOLDING ON STRONG
    • The new MacBook Air was launched in October 2018, a little
    too late to help arrest Apple’s declining Mac sales.

    • The MacBook Air occupies the lowest spectrum of MacBook in


    terms of pricing and should boost sales of Mac for its new
    financial year (FY2019).

    • Sales of Mac dropped 5% to 18 million units in FY2018 but


    Apple managed to maintain its Mac revenues to USD25.4
    billion, only a slight decline of 1% over the previous year.
    Mac Revenues FY2015-2018
    • Apple had been refreshing its product line-up to ensure that
    30
    they are equipped with the latest processors and higher
    25
    resolution displays.
    USD billion

    20

    15 • Apple does not need to spend too much development effort on


    10 Mac as the market is mature and there is very little competition
    5 (Mac vs PC/windows).
    0
    FY2015 FY2016 FY2017 FY2018 • Mac users are extremely loyal to the ecosystem and the brand
    Source: Apple
    (Mac) and do not switch to Windows. Apple can continue to milk
    the Mac market and also enjoy additional revenues from
    complementary products and services such as cables,
    headphones and Apple Care.
    APPLE WATCH AND OTHER PRODUCTS VITAL TO APPLE’S ECOSYSTEM

    • Apple Watch dominated smart wearables despite their


    relatively high prices. Buyers of Apple Watch are
    iPhone users as the smart wearable does not support
    Android.

    • Users can use Apple Pay to pay for their purchases


    which is an added advantage over other smart
    wearables from other manufacturers.

    • Apple Watch, Apple TV and Apple Homepod are not


    massive revenue generators on their own. These
    products are a vital cog to Apple’s ecosystem and help
    drive sales of Apple’s services.
    PROBLEMS AND SOLUTIONS

    Decrease in STOP IPOD MAC


    IPOD and IPAD books/Desktops Make the more
    product Sales completely accessible
    struggle

    Competition in Product and Can’t Sync


    smart phone products with Allow
    industry price variation compatibility
    other brands

    Launch streaming
    Competition in service like No Presence Get into
    music store Netflix in Services services
    SUGGESTIONS

     Macintosh should be freely available and Apple should start licensing model
     Crate new company and launch Budget mobiles
     Penetrate developing countries through JV or Franchise model
     IPOD has to be stopped with immediate effect
     Launch complimentary products like Television segment, Music system etc.,
     Explore Apple search engine.
     Made Apply pay compatible which can be used in any phone and exploit opportunity across the globe

     Operation expense %age is increasing which needs to be relooked


     Go for Franchise model and reduce investment on Fixed assets as it is not given good return.
    OTHER RECOMMENDATIONS

    Apple should start Explore Apple search


    01 licensing model for
    Mac software
    02 engine along with
    Apple maps

    Make Apply pay


    Penetrate developing compatible which can be
    03 countries through JV 04 used in any phone and
    exploit opportunity across
    or Franchise model
    the globe

    Launch complimentary Operation expense


    products like %age is increasing
    05 Television segment, 06 which needs to be
    Music system etc relooked

    Reduce investment on Stop products which


    07 Fixed Assets and
    explore leasing model
    08 doesn’t give enough
    rate of return
    THANK YOU

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