Apple Inc. is included among the leading manufacturer of electronic devices that has market share in the global industry. The BCG matrix can provide useful insight into the market share and growth prospects of the different products of Apple Inc. The following discussion uses BCG Matrix to evaluate the case of Apple Inc.
Cash Cows
Cash cows as a category in BCG matrix denotes those products that are a rich source of income for an organization due to the large market share captured by the products. The industry in which these particular products are being sold is in the mature stage. Nevertheless, cash cows have the potential to bring in financial capital to the organization from the products that are in high demand. Apple Inc. has developed various products over the years, out of which iTunes can be regarded as the cash cow for the company. The iTunes allows the customers to gain access to digital music files and download them. Even though there are different portals which offer the customers access to digital music, iTunes seems to have a dominant position in the industry. As observed by Bostic (2013), Apple has gained more than 60% of the market share establishing a clearly leading position. In 2012, 44 million people in the US have gained access to a minimum of one digital music file per person, showing the high popularity of the product in the market. The digital music industry is in a mature phase and is not likely to have any massive developments, but iTunes are expected to bring in cash for Apple Inc.
Stars
The business units that represent star of an organization also share the feature of having a high market share, but what makes them different from cash cows is that their respective industry can still expand further. The growth potential of the industry indicates that the products are likely to gain a further increase in the market share with the growth of the industry. The stars can become a cash cow for an organization in future if the industry matures to such an extent that it doesn’t have the potential to grow with rapid strides. In the android phone industry, Apple has been renowned for its iPhones versions, capturing the international market. Among the manufacturers of smart phones, Apple has been ranked at the second position, indicating the high market share possessed by the company. There have been some issues with the sales of iPhones in the international market, specifically lower sales in China (Reisinger, 2016). However, the company has been able to fare well in the international market. The launch of iPhone 7 is expected to become a source of competitive edge for the company as it strives to handle the competition from its rivals. However, some features in the new phone haven’t gained positive reaction from the market. Another product that can be classified as a Star is the smart watch manufactured by Apple. According to Hahn (2015) Apple watch is likely to hold a prominent position in the wearable gadgets industry in future. Since it is a growing and booming market, the smart watch can be placed in the category of Star.
Question Marks
The category of question mark is used to identify those business units or products that have the likelihood of achieving the position of a star for the organization. However, this change in the status of the products is not uncertain, hence being recognized as question marks. An organization can turnaround these business units and position them as a source of advantage. On the other hand, the business units can continue to operate at the low market share position, offering little growth prospects to the organization. The growth potential of the market suggests that these products may become a source of earning in the coming years. The Mac computers and laptops manufactured by Apple Inc. have not been able to capture the market as effectively as done by the rival company over the years. In 2016, the sales of MAC products has declined significantly, indicating an area of concern for the management (Bailey, 2016). In addition to this, the launch of wireless ear phones has not been welcomed by the target market. The customers have considered it an unsuitable product because of the risk of losing the earphones. Nevertheless, the management considers the product to become a high demand product in future.
Dogs
In the BCG matrix the category of dogs represents those products that were perceived to have some potential to grow, however once the product was delivered to the market, the slow market growth makes it hard to achieve the sales target. Failure to deliver the expected results makes the product a source of loss for the organization, propelling the management to withdraw future investment in the venture. Since the product is not expected to bring in any significant capital, future investment is seen as a wastage of company resources, which could be invested in question mark or star category instead. Apple’s iPod classic has been popular for many years, however the recent shift in the market has reduced the popularity of this product. Keeping this into consideration, iPods can be classified as a dog. Statt and Tibken (2014) have stated that iPod classic has become less popular over the years as other music storage devices such as android phones and the option of streaming music online and cloud storage has changed the consumer taste. As a result, Apple Inc. had to consider further investment in the product as it was not able to bring in significant amount of revenues for the organization. The iPod classic was a cash cow few years after their launch as a large number of consumers have purchased them. However, in the recent times, the popularity of the device has declined. The low sales of iPod classic has resulted in the decision to refrain from further investment in the product as it was not offering any further growth chances to Apple Inc.
References
Bailey, B., 2016. Apple’s Mac Laptops Suffer From Falling Sales Even As Others Buck The Trend. The Huffington Post, [online] July 12. Available at: <http://www.huffingtonpost.ca/2016/07/12/apple-mac-falling-sales_n_10940370.html> [Accessed 14 September 2016].
Bostic, K., 2013. Apple’s iTunes rules digital music market with 63% share. Apple Insider, [online] April 16. Available at: <http://appleinsider.com/articles/13/04/16/apples-itunes-rules-digital-music-market-with-63-share> [Accessed 14 September 2016].
Hahn, J., 2015. Report: Wearable device shipments to surpass 214 million in 2019. Digital Trends, [online] December 20. Available at: <http://www.digitaltrends.com/android/apple-watch-leads-smartwatch-market-61-percent-share-android-wear-gaining-ground/> [Accessed 14 September 2016].
Reisinger, D. (2016. As the Smartphone Market Grows, the iPhone’s Share Is Shrinking. Fortune, [online] May 19. Available at: <http://fortune.com/2016/05/19/apple-iphone-smartphone/> [Accessed 14 September 2016].
Statt, N., and Tibken, S., 2014. Apple says a silent goodbye to iPod classic. Cnet, [online] September 9. Available at: <https://www.cnet.com/news/apple-says-goodbye-to-the-ipod-classic/> [Accessed 14 September 2016].
Recent Comments