Porter’s 5 forces:

Threat of substitutes: Medium

● High switching costs for the customers. Also, iPhone runs on the iOS operating system
that makes it difficult for customers to switch and transfer data to other competitor
products.
● Brand comparison: Apple being a market leader, competitors try to bring similar products
thus increasing brand value of apple.
● Technology and security: Apple products have higher technological standards which are
difficult to copy. Also, apple products provide high security features and not allowing third
party applications to run, making it secure for the users.
● High brand loyalty

Threat of new entrants: Relatively Low

● Due to extreme high cost of establishing a company within the industry and building the
brand name recognition takes years of time and very high investment
● Investment in R&D, to develop and produce its own product portfolio to compete with
apple products is also very high
● All the existing players in the industry apart from Apple also has strong brand recognition
and well established which makes it further challenging and difficult for the new entrants
to sustain in the industry

Bargaining power of suppliers : Medium

● Major Supplier was Qualcomm controlled CDMA and 4G

● Apple also bought two ARM microprocessor companies which held majority share in
smartphone CPUs - Jobs wanted control over critical technologies
● The bargaining power of suppliers are weakened due to the high number of available
parts suppliers for Apple hence Apple is free to choose from many of the suppliers
available thus the switching cost is relatively low.

Bargaining power of buyers : Medium

● Low switching costs strengthens the bargaining power of buyers

● The individual bargaining power is weak since a loss of any consumer has a negligible
change on the revenue
● Whereas, the collective bargaining power is high due to the possibility of mass customer
defections
● Apple has been very successful in this area of competition, establishing a large customer
base that, basically, would not consider abandoning its iPhones in favor of another
smartphone competitor.
Industry rivalry : High

● Moving into iphone sector, Industry was dominated by Nokia, Motorola, Samsung with
roughly 60% market share, while PC industry was dominated by Lenovo, HP, and Dell
accounting to 64.5% (2019) market share
● Faces high competition in R&D segment as companies expand significant capital on the
same
● Continually developing new and unique products will help to increase and further
strengthen its market share among its strong and well established competitors
● Low innovation -> Low differentiation of products