Understanding Apple's Hardware Business Model

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Requirement #1,
For its hardware business model, Apple first hires employees, primarily engineers and designers, to operate the business. Apple engineers build the applications and operating systems used by the Apple hardware devices, while the designers create the pristine shape of the various Apple products to increase consumer value. Once the engineers and designers at Apple create the blueprints for Apple products. Apple then buys supplies from different companies such as aluminum, silicon, and glass. Then the Apple sends them to a manufacturing plant operated by a 3rd party in China. Apple then sells the finished products to consumers directly through retail stores and online, or through 3rd party authorized resellers. Apple offers additional …show more content…

Apple consistently faces threat of new entrants as its business operates in an easily permeable market space. The cost of entering the computer or cellphone market is a bit expensive due to costs associated with creating the goods being sold. Apple invests a lot of money in research and development to innovate new products. Apple also offers very unique products in terms of its features, so threat of new entrants is low since Apple is unremittingly differentiating its products from competitors. Due to economies of scale, Apple can produce at a far lower cost than new entrants into any of its hardware businesses. For software sales, Apple provides an industry standard marketplace. Though there are competitors, due to the closed environment nature of the App Store and iTunes, Apple’s leadership in creating these marketplaces and gaining a large customer base gives Apple an advantage with app developers and record …show more content…

Apple is a global consumer electronic leader with internationally prevalent products such as the iPhone, iPad, and OSX Computers, and services such as the iOS and OSX operating systems and iCloud, a mobile cloud solution. These products, especially the iPhone, are a significant source of revenue for the company allowing it amass a cash stockpile of $203 billion. Additionally, Apple has a high level of brand loyalty from many consumers and according to Forbes has a brand valued at $143.5 billion (http://www.forbes.com/pictures/mli45fdhfm/1-apple/). Apple’s sheer size allows for economies of scale to make production cheap keeping the company at the forefront of possible

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