• Apple Pestle Analysis 2018
• Apple Swot Analysis 2018
• Apple BCG Matrix Analysis 2018

Apple Porters Five Forces Analysis 2018

4.1 Bargaining power of suppliers

The smartphone industry is supplied by quite specialized tech firms such as Intel, Foxconn and AMD who supply various components including chips, and processors to major tech companies like Huawei, Lenovo, Apple, among others. While many suppliers to the industry are big and established companies with considerable power, Apples dominance and premium positioning gives its suppliers very low lower bargaining power. In a move designed to give Apple even more power over key components as well as minimize costs, Apple has been planning to replace X86 Intel processors in its mac computers 22with its own ARM-based chips that are valued for their efficiency by 2020, (King and Gurman 2018). If implemented, Intel stands to lose 5% of its revenue as Apple contributes 5% to Intel’s annual revenue.

In 2017, Apple ended its supplier relationship with UK chip Imagination Technologies, a move that collapsed the chip makers share price, leading it to its sale to Canyon Bridge, a China-backed private equity firm (Ram et al., 2018).

A major strength of Apple, giving it immense power of its suppliers compared to Android rivals, is the fact that it owns its operating system, the IOS. It has also developed extensive Silicon Valley expertise especially in power management, an increasingly powerful differentiator as smartphones become commoditized (Ram et al., 2018). As Apple moves more into smaller and personalized devices such as Airpods or upcoming Augmented Reality glasses, it turns to specialized suppliers such as Dialog, makers of its power management chips. But the specialized nature of supplying Apple also makes suppliers dependent on Apple as need to fully stretch to allocate supply to Apple, leaving suppliers such as Imagination Technologies bankrupt when Apple pulls the plug (Ram et al., 2018).