APPLE CASE

APPLE CASE Team 4 Ankit Sharma Komal Sharma Rahul Sharan Vishal Chauhan

How do you assess Apples competitive position in MP3 players?

Ipod is an mp3 player designed by Apple, was launched in 2001It was designed in such a manner to be very friendly to use, large storage memory, and attractive outlook like very sleek. It could store 1000 songs at first, when other MP3 players offered just several hours of music. Its price was at $399.In 2010 more than 70 % of US MP3 market was captured by Apples Ipod iTunes.Within three days of launch, it was downloaded one million copies of its software, and they paid for that.Analysis The sustainability of Apples Ipod can be identified by the analysis of porters five force model.Threat of Entry : Low Product Differentiation: That means, by opening the iTunes music store there was no much revenue generation by it, because out of 99 cents, 70 went to music labels, 20 cents went to credit card processing, then also apple had to pay for its website, with other direct and indirect costs. Apples Ipod sale for a quarter was on an average of 113,000 units, but after iTunes Music Store launch it went to its own exploratory sale path of 733,000 units, which was 6.5 times of the previous figure, and was continuously increasing.

Cost Advantage:1 Price : When the other players came in to existence, the Average Selling Price of ipods were in position to decrease. They were initially priced by $399 when Apple launched it, but then when the comparison begun apples ipods were higher than the price range of $50 to $100.2 DRM - Digital Rights Management : Initially when the ipod was launched the DRM system named Fair play was an disadvantage for the users. Its main policy is to prevent the iTunes from the piracy issues.3 First Mover: Apple has changed not only the way people listen to music, but it has transformed its parent company Apple into an entertainment giant. The another main advantage it had was the early mover4 Stylish Models: Their look of the ipod was very stylish, which could attract youth largely.Threat of Rivalry: 1 Moderate- Competition for iTunes: Other online music stores took the advantage of DRM system, which apple maintained with music labels and then they become biggest competitors for Apples iTunes music store. They are Amazon.com, Napster, Walmart.com. 2 Competition for Music Streams: Internet radio sites such as Pandora and Last.fm offered free music streaming. 3 Competition from Mobile segment: The competition from mobile phone segment is really a biggest threat for Ipods. 4 The substitutes for ipods can be a mobile phone, CD player, MD player, radio, etc.; The easy of getting the MP3 files has been making customers leave from the other music players. Apples iTunes music store and other online music stores are making download easier and the access of those files are easier to use and convert in other formats. Conclusion :MP3 players from in its future wont be strictly judged by their technical merits, but rather than may be on their value as a style accessory. However iPod also created a whole industry, which must now be characterized as having a broad scope, simply because of its ubiquitous presence. It maybe a unique niche. It certainly will be at the time, because they intentionally did not go for cost leadership, as the price has already come to a reasonable halt.

How do you assess Apples competitive position in smartphones?Apples competitive position can be explained in analysing the Porters five force model. In 2007, Steve Jobs, renowned CEO of Apple, announced new name would just be Apple, Inc. This seemingly trivial change represents a fundamental shift with deep implications that were the result of many changes Apple had engineered over the past six or seven years; transitioning itself from a computer company slugging it out for a meagre share of an increasingly competitive hardware and software market, to a business that promoted an entirely new concept, the digital lifestyle.

Analysis: The sustainability of Apples Iphone can be identified by the analysis of porters five force model.Threat of New Entrant - 1 Product Differentiation: iPhone has add-on functions with technology from their own PC and MP3 player. Mobiles are now focused more on adding feature with them like camera, calendar, watches, memory for Mp3, alarm, internet browsers, mail facility. 2 Cost Advantage: High proprietary technology and favourable access to raw materials. While other competitors were having the price range of $300 to $ 400 with all those features, Apple had the advantages of price range of around $562. 63 Consumers Loyalty: Its loyal customers are always showing a positive response for Apples product. The new customers of their ipod added a significant customer base to Apple iphone.4 Economies of Scale: High demand in R&D and marketing. Todays cell phones come with a lot of add-ons like camera, voice recorder, speakerphone, MP3 player and FM receiver. Memory: They also have built in memories to record and retain voice and pictures and facility to download them to a computer. The price of the products varies according to the memory capacity of the phone. 8 GB memory capacity iphone cost around $ 199 with subsidy from AT & T and the same model cost around $599 without subsidy from AT & T. They have 16 GB memory capacity also. So it always tries to be in a place where and when the customers need increase. Number of available Apps: When we see the exhibit no 9 we can identify that the number of available apps in Apples store was the highest one with 1,85,000,where android has only 30, 000 and Symbian didnt have anything. One study indicates that the iphone users having average of 37 apps, when compared to the Android users having 22 apps.Threat of Rivalry: High There are relatively large number of competing firms such as Samsung, LG, Motorola, etc., but from exhibit 8 we can come to know that Mac OS X was in the third position in over all smart phone market with 14.4 % of market share, when others like Symbian and RIM having the market share of46.9% and 19.9%. of world wide market of smart phones. Microsoft and android gained 8.7% and 4 %in the world market by 2010.Conclusion :1. Premium pricing2. Patents over icons and some other patents, won over samsung.3. Hardware and software independence: means control over hardware and software both.4. Main challenge is from Android and low cost smartphones.5. Enjoys reputation and goodwill of being a highly reliable performance products of company.6. Made unboxing popular as its marketing strategy.7. Ecosystem of company From chip manufacturing to propriter retail store.

8. Revenue generation and updated softwares.9. First app store - Apple store and Apple store V/s Google Play.10. Apple maps up to five times more efficient than Google maps.