Plotting Apple on the BCG matrix
Because Apple run a relatively limited line of products it is quite simple to plot their portfolio of products onto the BCG matrix. Perhaps the findings might be a little bit surprising, but it does go to highlight the inadequacies and limitations of the BCG matrix at times.
Apple and the BCG matrix
As can be seen in the this example BCG matrix for Apple, the main product portfolios have been mapped onto the matrix.
On a relative market share basis, looking at unit market share (rather than dollar market share), we can see that Apple is the number two provider of smart phones behind Samsung. At this time they hold around half the market share as compared to the market leader of Samsung.
Obviously this is a on a unit market share basis, and the position would be somewhat different if dollar market share was considered.
The smart phone market is still in a growth phase – and as a result, smart phones for Apple plotted as a half a star and half a question mark on the BCG matrix. If dollar market share was considered, then it is likely that the Apple smartphone portfolio would be clearly classified as a star.
The same principle of plotting relative market share against market share growth is then continued for Apple’s main product portfolios.
This approach gives a Apple a diversity of product portfolios across the four quadrants of the BCG matrix. The MP3 market, where Apple is a market leader, is in decline due to sales switching to smart phones instead. Despite this declining market size, the iPod portfolio is still classified as a cash cow for Apple.
This is because it remains quite profitable without any real need to continue to support the portfolio to any significant extent. Therefore, at this time, it is a cash generator, whose profits can be reallocated to other parts of the business that offers great potential.
The computer division would be classified as a dog. This means it is operating in a mature market and they are a relatively small player in the market. As a result, the BCG matrix considers this portfolio to provide little long-term potential and the outcome of the matrix guidance would be to limit future investment.
However, as we know, many of Apple’s products are interrelated – as they use the same operating system and rely upon each other’s components – Apple would see their PC division as having strategic value in an overall customer relationship strategy. This means that Apple would adopt a different reinvestment strategy than the one suggested by the BCG matrix due to this strategic outlook.
Their tablet portfolio – the iPad – is currently making the transition from a star to a cash cow. This is happening because the tablet market is maturing and as a result the BCG matrix suggests that less reinvestment will be required in this product portfolio, primarily because market shares and stabilize and the level of competition intensity should reduce.
Obviously technology advancements will continue, so Apple will continue to reinvest sufficiently to ensure that there product offerings remain leading edge.