proprietary operating systems

Rivalry amongst competing firms – Apple is in the unique situation that it has its own proprietary operating system and only used by Apple. So although the competition is fierce for customers, it is a different type of battle for Apple than for others such as Samsung, Google or Microsoft. Apple does face stiff competition but it is in the battle for use-case preference. The Android or Windows OS is different than the Apple iOS and consumers make a choice as to which road they are going to go down.

Apple is competing for winning this important thought process and decision-making process. They are not competing on hardware alone because Apple alone produces their products with their OS. The competition will continue for easily the foreseeable future, 10 years and beyond, as the world becomes more digitized. Force: Moderate Potential Entry of New Competitors – The barriers to entry in this industry are steep. Cost of production is very high for new entrants until significant economies of scale are reached.

Over the next 10 years there will be many new entrants into the industry though either brand new, or companies already in similar technology markets that will branch out into markets that compete with Apple. Again, that would be a competition for OS preference, not hardware per se. There is always the possibility of an entirely new and 4th, or more, operating systems being developed as technology advances. Moore’s Law tells us this is likely but difficult to ascertain from where it will come, whether it will be significantly better than any existing, and if it will gain wide user acceptance.

Force: Weak to Moderate Potential Development of substitute products – Again, since Apple has its own exclusive OS, substitute products are only a threat as being other choices of entirely different OS’s from Microsoft or Android producers, or any other possible future OS development. But Apple does not have any substitute for its own products. Force: Weak Bargaining Power of Buyers – Apple users tend to stay Apple users. Their loyalty is strong and they love Apple products.

Apple charges a premium for its products but the image and allure of Apple products and their perceived high quality keep unit sales strong. Although technology economies of scale have certainly been reached in Apple production, they have continued to keep their products priced higher that competing products. Buyer choice based on price alone should affect growth amongst some new customer segments, but will have little effect on the current loyal Apple user base.

Unless their products begin to lose some of their luster and appeal and effectiveness, they should remain strong for the future. Force: Weak Bargaining Power of Suppliers – With Apple’s exclusive product line and OS and the relatively small number of products, they are not threatened by supplier power. Apple can easily find factories more than willing to be a part of the Apple supply chain. As their products gain more market share and production increases, Apple is in an ideal situation to manage their suppliers effectively.