Abstract
This paper uses a business model framework to analyze the main limitations of Apple Inc. post-2003, a significant turning point in the company's history. As such, we move beyond an exclusive focus on what makes Apple unique or different by evaluating the mundane and out-dated elements of its business model. To do so, we examine the end-to-end supply chain, from source to store, to present a more holistic evaluation of the Apple business model. Drawing on the existing literature, we argue that the quintessential element of the Apple business model is its ability to ‘own the consumer’. In short, the Apple business model is designed to drive consumers into its ecosystem and then hold them there, which has been hugely successful to date and has allowed Apple to wield enormous power in the end-to-end supply chain. We demonstrate this through a detailed evaluation of Apple's physical and content supply chains and its retailing strategy. Moreover, we find that the very business processes that enable unparalleled corporate control bring with them new problems that Apple has thus far been unable, or unwilling, to adequately address.
Highlights
The Apple business model affects its direct shareholders and moves markets, which impacts overall macroeconomic performance
We examine the end-to-end supply chain, from source to store, to present a more holistic evaluation of the Apple business model
We argue that a key facet of the Apple business model is ensuring that Apple content can only be played on Apple devices, as this helps maintain digital download market share and in turn drives sales volume for profitable hardware devices
Summary
The Apple business model affects its direct shareholders and moves markets, which impacts overall macroeconomic performance. The objective of this paper is to analyze the post-2003 Apple business model to highlight the weaknesses created by its perceived strengths This requires us to move beyond an exclusive focus on what makes Apple unique or different when evaluating their business model and include the mundane and out-dated elements of its processes that may be undermining its ability to compete and grow in a changing market. The Apple business model is designed to drive consumers into its ecosystem and hold them there, which has been hugely successful to date and allowed Apple to wield enormous power in the end-to-end supply chain This business model gives Apple the unique ability to maintain a low cost sourcing strategy while maintaining high price points and subsequently locking the consumer in through high switching penalties. We consider how more detailed research into Apple can help us understand how market leaders are created and, inevitably, decline
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