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It slipped to fifth place in 2010, but Apple Inc. reclaims the top spot in our list of the Top 50 Employers in Electronic Design, a title it has held multiple times before. The Cupertino company designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players. It also sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications.

Apple’s products and services include the iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and Mac OS X operating systems, iCloud, and a host of accessory, service, and support offerings. The company also sells and delivers digital content and applications through the iTunes Store, App Store SM, iBookstore SM, and Mac App Store.

Since its release, Apple’s iPhone has spurred a revolution in cell phones and mobile computing. The company also continues to innovate its core Mac desktop and laptop computers, all of which feature its OS X operating system, including the iMac all-in-one desktop for the consumer and education markets, the MacBook Air ultra-portable laptop, and the high-end Mac Pro and MacBook Pro for consumers and professionals.

Apple scored a runaway hit with its iPod digital music players and iTunes online music store. Its iPad tablet computer has become another game-changer in the consumer market. Apple currently holds about 80% of the digital music player market and anywhere between 60% and 70% of the tablet market.

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1. With products like the iPad (a), iPhone (b), MacBook Air (c), and iPod Touch (d), Apple dominates the mobile consumer market.

Competitive Landscape

Apple’s markets are highly competitive. Frequent product introductions and rapid technological advances have substantially increased the capabilities and use of mobile communication and media devices, PCs, and other electronic devices.

Competitors that sell mobile devices and PCs based on other operating systems have aggressively cut prices and lowered their product margins to gain or maintain market share. Apple is focused on expanding its market opportunities related to mobile communication and media devices. These industries are highly competitive and include several large, well-funded, and experienced participants.

Competition in these industries will continue to intensify as competitors attempt to imitate some of the features of Apple’s products and applications within their own products and/or collaborate with each other to offer solutions that are more competitive than those they currently offer. These industries are characterized by aggressive pricing practices, frequent product introductions, evolving design approaches and technologies, rapid adoption of technological and product advancements by competitors, and price sensitivity on the part of consumers and businesses.

Apple’s digital content services have faced significant competition from other companies promoting their own digital music and content products and services, including those offering free peer-to-peer music and video services. However, Apple believes it offers superior innovation and integration of the entire solution including the hardware (iPhone, iPad, Mac, and iPod), software (iTunes), and distribution of digital content and applications (iTunes Store, App Store, iBookstore, and Mac App Store).

Market Segments

Apple’s customers are primarily in the consumer, small & medium enterprises (SMB), and education, enterprise, and government markets. Direct and indirect distribution channels, such as its retail stores, online stores, and direct sales force, and third-party cellular network carriers, wholesalers, retailers, and value-added resellers are used to distribute its products. No single customer accounted for more than 10% of net sales in 2011 or 2010.

Apple believes that sales of its innovative and differentiated products are enhanced by knowledgeable salespersons that can convey the value of the hardware and software integration and demonstrate the unique solutions that are available on its products. The company further believes that providing direct contact with its targeted customers is an effective way to demonstrate the advantages of its products over those of its competitors and providing a high-quality sales and after-sales support experience is critical to attracting new and retaining existing customers.

Apple continues to expand and improve its distribution capabilities by expanding the number of its own retail stores worldwide to ensure a high-quality buying experience for its products in which service and education are emphasized. Also, the company has invested in programs to enhance reseller sales by placing high-quality Apple fixtures, merchandising materials, and other resources within selected third-party reseller locations. Through the Apple Premium Reseller Program, certain third-party resellers focus on the Apple platform by providing a high level of integration and support services, as well as product expertise.

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Competitors

Apple’s rivals include Microsoft, Google, Nokia, Dell, Samsung, Sony, LG, Toshiba, Real Networks, Amazon, Cisco, and other traditional PC and phone manufacturers. When it comes to providing a complete solution for the consumer, Apple’s dominant market position as a digital content manager makes it very difficult for other companies to compete head-on.

Other than Apple’s, there is no Web or cloud-based OS and user interface (UI) that presents a simple approach to managing a user’s digital assets, managed by a single password, tied to multiple purchasing options, allowing for both localized and online apps, and usable across any device that can access the Internet through a browser.

According to PC Magazine, the main competition may not come from the traditional PC and phone makers but instead from content companies such as Amazon, Google, Real Networks, and Sony. Not only do Apple’s OS, UI, and Apps simplify digital content management, they provide direct content to the user in terms of music, movies, and applications for dedicated mobile devices such as the iPhone, the iPod touch, and the iPad.

Amazon clearly has become competition with its content commerce model, which delivers digital music, movies, TV shows, and books to end users. Its cloud-based approach has made it easy for customers to access and even manage some of that digital content around a simple UI. But it has a long way to go before it can deliver a localized approach to managing and accessing this content beyond standard PCs and basic mobile devices and across a broad range of products like Apple can.

Real Networks may also be a competitor to watch with respect to content. However, it has not created anything like Apple has in terms of an easy, commerce-based solution to access, manage, distribute, and play back digital content. Meanwhile, Sony has movies, music, e-books, and console and mobile games. Yet the company has been unable to create a user environment to manage its own content across multiple products like the PS3, PS Vita, digital music players, and phones.

Google does have a Web-based UI with its Chrome browser that can manage a single user’s digital content. Android, Google’s OS and apps for smart phones, is quickly evolving into a product that could challenge the iPhone. If content providers make themselves available to both Android and iOS, Google could turn out to be Apple’s biggest competition.

By The Numbers

Apple’s success continues in 2012 as its first quarter sales grew by 59% fueled by 132% growth in the iPad segment, 85% growth in the iPhone segment, and 32% growth in the music segment. U.S and European sales were up 41% and 46% respectively. Japan grew by 91%, and Asia-Pacific grew by 114%. While Apple’s biggest markets remain the Americas and Europe at 35% and 26% of net sales respectively, Asia-Pacific has grown to represent 21% of sales and is growing the most rapidly.

From a product standpoint, the iPhone is still Apple’s number-one profit center. Every iPhone model has been successful. The second most profitable segment is the iPad, already surpassing Apple laptop sales in the first quarter by 88%. The iPad currently is and will be the fastest growing product segment, as it is fairly new and will continue to cannibalize PC sales.

According to Canalys, for the first time ever, shipments of smart phones have exceeded those of PCs, a category that includes tablet computers, or “pads” as Canalys calls them, by 73.1 million units. In the first quarter of 2008, Apple sold 2.3 million iPhones. In the last quarter of 2011, it sold 37 million, breaking the record for the largest number of smart phones shipped worldwide in one quarter by a single vendor. The previous holder of the record, Nokia, shipped 28.3 million devices in the final quarter of 2010.

According to ComScore March 2012 data, in the U.S., Apple has gained market share from 28% in 2010 to 31% in 2011 as a result of two factors: Apple’s release of the iPhone 4 and its broadened distribution to Verizon and Sprint, instead of just selling iPhones through AT&T. Apple should get another revenue boost once the iPhone 5 is released, which is expected around the fourth quarter of 2012.

Interestingly, according to Business Insider, the global smart phone movement may still be in its early phases. There are only around 835 million people using a smart phone, versus around 5.6 billion feature phone users. Globally, there are still fewer than 1 billion smart phone users estimated for 2012, while the forecast for 2016 is around 1.5 billion, so there is still a very large market to sell iPhones to.

Since the U.S. is leading in terms of conversion to smart phones—46% of cell phone users in the U.S. have a smart phone, against 41% with feature phones—new smart phone sales will have to be directed at the rest of the world, and Apple will have to release a new iPhone every year or so to keep U.S. customers upgrading to the newer versions. Cheaper, smaller-featured versions of the iPhone may have to be implemented in certain global markets to reach as many potential customers as possible, as the feature phone conversion cycle is just getting started.

Gartner Inc. reports that for the first quarter of 2012, Android leads the pack with 56% of the smart-phone market with Apple at 23%. Symbian at 8.6% and Blackberry at 6.9% both continue to decline. Microsoft is negligible at 1.9%.

The fastest growing market is for tablets, with current global sales around 150 million units a year, forecasted to grow to around 400 million units sold annually by 2015 according to Business Insider. There is no real competition to the iPad at this point. Apple continues to solidify customer loyalty as both the iPhone 4S and the iPad 3 blew away the launch performance of previous iterations with respect to units per day.

Whither A 7-in. iPad Mini?

The iPad’s most serious competitors have been the Amazon Kindle Fire and the Barnes & Noble Nook. The Google Nexus 7 is just launching, and Microsoft’s Surface has not launched yet. According to a February IHS estimate, Amazon sold about 3.9 million Kindle Fires in 2011. Barnes & Noble disclosed a $220 million income from the Nook in the last fiscal quarter of 2011, although it’s hard to obtain unit sales figures.

Smart-phone use continues to rise, so although sales of the Fire and Nook are not significant compared to those of the iPad, the market has demonstrated that smart-phone users are willing to purchase 7-in. tablets. Many consumers largely use tablets for content consumption, not creation, which means less interaction and fewer difficulties at the 7-in. size than Steve Jobs foresaw in 2010.

Even with the recently introduced Google Nexus 7, there is no real competitor to the iPad. The Nexus 7 looks like mainly a response to the Kindle Fire and the upcoming Kindle Fire 2, both of which use a version of Android customized to Amazon’s commerce platform. The Nexus 7, Kindle Fire, and Nook are all undercutting Apple but at the expense of very slight margins at best. Their entry level models all sell for $199. The hope is to make money on content sales.

Given Apple’s track record of success, it could launch a 7-in. iPad, for $299, right behind the iPad 2 at $399 and the new iPad at $499. Would consumers jump at a 7-in. iPad for just $100 more? Upon releasing the second version of the device, the “new” 7-in. iPad could take over the $299 price with the “original” 7-in. iPad reduced to $199.

While this doesn’t immediately compete with the Nook and the Fire on price, a 7-in. iPad would be “just $100 more,” instead of “twice as expensive.” This pricing could make the jump to an iPad easier for consumers. The 7-in. iPad would become price competitive when Apple releases the second version of the device.

At $299, it should be priced high enough for Apple to turn a profit, and the size of Apple’s app store may be enough to disrupt the competition. Also, if Apple uses a 4:3 aspect ratio, its tablet would be 40% larger than most other 7-in. tablets.

The rumor persists that Apple may announce some sort of 7-in. tablet by October. Even though it risks cannibalizing the larger iPad, Apple would rather see the iPads dominate the market instead of leaving open an avenue for Android to take away market share. Having something you can hold in one hand seems to matter to some people and may matter in emerging markets, where they are growing significantly.

The smaller-screen iPad would be highly portable—more portable than the 9.7-in. iPad and with more functionality than the iPhone. Users may prefer the portability of a smaller-screen iPad, especially those who use the iPhone for a lot of work. However, watching a movie or gaming would be better on a larger-screen iPad with the high-resolution Retina display. A smaller-screen tablet may be better for reading e-books or using custom applications designed for the display size, but it could also be stressful on the eyes in some cases, like when playing games or watching a high-definition movie.

A smaller-screen iPad would be attractive to students and also fit well in schools and universities. In 2012, Apple started offering iBooks 2, a tablet application that brings multimedia textbooks to students. Decisions about which tablet to buy will also be tied to mobile broadband contracts with carriers, as it remains to be seen if Apple will be able to sell both iPads to users who have 3G or 4G subscriptions, which are usually tied to specific devices. However, many users are happy with Wi-Fi only devices.

Things should get interesting by October. The Nexus 7 and Microsoft’s Surface would have great pressure to succeed, as they have already risked alienating their hardware partners by producing their own tablet. Whether it’s an iPad 7-in. Mini or the next-generation 7-in. iPod Touch, look for Apple to grab control of the nascent 7-in. tablet segment. Once Apple achieves 50% market share in a segment, it is very difficult for any competitor to make significant inroads.

Download the Top 50 Employers list in .PDF format
See which companies are ranked the highest by their employees.