This article is part of our Business Strategies series, an insight and analysis into the makeup and model of some of the world's most successful startups.
One of the most iconic brands of the 21st century, Apple is a technology and consumer phenomenon. With a global legion of fiercely loyal customers, an almost cult-like employee devotion to its leadership, and a legacy of innovation, it is a case study in branding, growth and masterful marketing.
To find out how it has gone from a California driveway to one of tech's 'big four', we're taking a closer look at Apple's business strategy, as well as all the other significant factors that have driven its success - and what you, as a business owner, can learn from them.
Vital Information
Apple's corporate strategy – one of creativity, innovation, and the pursuit of excellence – can be summarised in its mission and vision statements:
Apple is dedicated to the empowerment of man—to making personal computing accessible to each and every individual so as to help change the way we think, work, learn, and communicate.
Man is the true creator of change in this world. As such, he should be above systems and structures, and not subordinate to them.
Key Details
- Founded: April 1976
- Founder(s): Steve Jobs, Steve Wozniak, and Ronald Wayne
- Headquarters: Cupertino, California, USA
- Current CEO: Tim Cook
- Global Employees: 132,000 (2018)
- Type: Public (floated December 1980)
- Initial Funding: $250k angel investment (Mike Markkula, 1977)
- Key Products: iPhone, Macintosh, iPad, iPod
Apple's Business Strategy
While the sale of consumer tech products has been Apple's modus operandi since 2003, the crux of its commercial success lies in its forced marriage of hardware with software. If you buy an iPod, for instance, then you need to download, install and subscribe to iTunes, while if you want to use the revolutionary Apple Pay service at a checkout, then, yes, you guessed it: you need to buy an Apple Watch, iPhone or iPad.
This practice – dubbed "owning the consumer" by University of Manchester academics in a 2013 paper – is nothing new of course; after all, people were buying Windows-operated machines for the sole purpose of using Microsoft Excel as far back as the late 1980s. However, no other company has employed or implemented this strategy as effectively as Apple, before or since.
As you can see below, iPhones still make up the core bulk of the company's unit sales, although the market maturity of smartphones has somewhat stunted growth in this area; moving forward, this is arguably the next big growth challenge for CEO Tim Cook, who has already sought to appease investors by acknowledging the plateau.
Apple Net Sales by Unit for the Period Sep 2018 to Jun 2019:
Apple, 2019
Value
In terms of value, meanwhile, Apple's is unique. Its product upgrades are heralded almost fanatically by loyal consumers, regardless of the actual levels of innovation involved in their design, yet this is what has set Apple apart since its "rebirth" in 2003: brand status.
Essentially, Apple devices are as much consumer accessories as they are mobile telephones or computers. Through a combination of the legendary marketing techniques employed by Steve Jobs, and the unique design and usability features implemented by Apple's engineers, its products have long since exceeded mere functionality.
As already mentioned, there is enormous value in Apple's software and services, too. Consumers may buy iPhones en masse because of their sleek and revolutionary design, but this hardware is just a gateway to what really hooks them in: platform-exclusive programmes, such as the App Store, iMessage and FaceTime.
Partners
As part of its business model, Apple also needs to maintain solid relationships with key partners – particularly its manufacturers. Given the number of units it sells per year, this has inevitably lead to issues with contractors, with accusations from critics of poor labour and environmental practices.
The company also needs to forge productive relationships with telecommunication providers around the world to gain access to telephone and internet data networks, while indirectly, it relies on publishers, content creators and app developers to populate its software services, such as iTunes, the App Store and its other digital content providers.
Key Figures
Apple's entire culture is linked intrinsically to its leadership or, more specifically, to that of its co-founder and legendary former CEO, Steve Jobs, who was responsible for much of the company's marketing bluster and creative vision in the late 1990s and early 2000s.
CEO: Tim Cook (2009, 2011-Present)
Although it's difficult to pinpoint an exact management style for Apple's current CEO, it's fair to say that he shares few similarities with the predecessor who appointed him. Although Cook does possess elements of Jobs' autocratic streak (as evidenced by his dismissal of several senior executives following a disappointing fiscal return in 2013), it's unfair to describe him as a visionary.
Instead, Cook's style is more democratic; he is far more hands-off in terms of product development, preferring instead to cultivate a more cooperative culture at the company. This approach is undoubtedly favoured by Apple employees, who rate him as one of the top CEOs in the world.
COO: Jeff Williams (2015-Present)
Having followed a similar career trajectory as Cook, Jeff Williams has been Apple's COO since December 2015; he is considered a highly influential figure within product design – the heart of Apple's core business – especially since the departure of long-time design guru Jony Ive (the man responsible for Apple’s iconic minimalist designs) in 2019.
Apple's Branding Strategy
As previously mentioned, Apple has enormous brand value – the largest in the world, in fact.
Forbes, 2019
This success is built upon several factors, such as the company's perceived value when compared to competitors, but the critical ingredient is Apple's "think different" mantra. The exclusivity of their product launches is more akin to a luxury brand, for instance, while users develop an emotional attachment to the brand that is almost unprecedented; this has resulted in a consumer environment where people are not buying Apple products because they are the best on the market – they are buying them simply because they are Apple.
Competition
For much of the 1970s and 1980s, Apple's primary competitor was, of course, Microsoft, with the rivalry very much driven by the personalities of Jobs and Microsoft founder Bill Gates. Despite what CIO refers to as "hot and cold periods" in their willingness to collaborate, Apple's modern-day approach to its competition is more definitive: it's open for business – or at least when it comes to technology.
In terms of consumer goods, Apple famously dethroned the hitherto undisputed king of mobile phones, Nokia, with the advent of the iPhone in 2007, although it now appears to be losing ground to its main competitors, Samsung and, increasingly Huawei.
On the services front, things aren't so cosy, either; Apple, as with all established firms, faces new and different challenges, such as from the music streaming app, Spotify (although, at the time of writing, Apple is seemingly giving way to Spotify's demands to be accessed through the Siri voice technology, despite previously refusing to do so).
Apple's Company Culture
As an enterprise that is almost entirely reliant upon the technical and artistic vision of its employees, Apple has sought to create an environment that, in line with its mission and vision statements, is all about innovation; as Jobs himself once remarked, the company doesn't hire people to tell them what to do, but rather "hire(s) smart people, so they can tell us what to do".
Cook is clearly attuned to this mantra, preferring to manage the experts rather than instruct them, but all employees must buy into the organisational culture of the company. Secrecy is one such characteristic, with the company seeking to maintain its competitive edge by protecting its intellectual properties.
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Ultimately, Apple's growth and success are attributable to two things: vision and branding. From the Apple II computer in the 1970s to the iPod and the iPhone in the early 2000s, the company has been able to identify where the next significant technological shift is going to occur - and then capitalise on it. In Apple's case, this can be credited to the company's leadership – particularly under Steve Jobs and Steve Wozniak.
Apple also represents a masterclass in branding. It can be (and regularly is) argued whether or not the iPhone is the best in class from a functional and technological perspective, but the bottom line is that it doesn't matter: Apple has cultivated an almost fanatically loyal consumer base through the power of its brand, which is a lesson in itself for entrepreneurs who doubt the importance of a brand strategy.
Key Takeaways:
- Find the Right Investor – Not only did Mike Markkula have the funding, but he had a technical background, enabling trust and understanding between himself, Wozniak and Jobs. Find a funding source that aligns with your goals in the long term.
- "Own" the Consumer – Don't just sell a product; sell around it, too, whether it's accessories, subscriptions or software.
- Create a Brand Strategy – Good branding and a loyal customer base are invaluable assets.
- Build Strong Relationships – If your product requires B2B interactions, ensure that you are building strong and robust relationships with your partners.
- Understand Your Business – Whether you are driving its vision or enabling others with the requisite abilities to do so, know/blog/business-strategy-apple what is best for the business – not for you.
For similar insights, don't forget to take a look at our breakdowns of Netflix and Uber's business strategies, either!
What other vital lessons can we learn from Apple's business strategy? Let us know your thoughts in the comments below.