Mobile phone MarketIn 2007 iPhone was launched
Major competitors
BlackBerry HTC Microsoft mobiles Nokia Motorola
Your Life in your pocket
specifications
iPhone iPhone 3G
iPhone 3G S
iPhone 4
OS iPhone OS 1.0
iPhone OS 2.0
iPhone OS 3.0
iPhone OS 4
Display
3.5 in, 3:2 aspect ratio, 265 k colors, 480 x 320px (HGVA)
960 x 640px, 800:1 contrast ratio
Storage/memory
4,8 & 16 GB/ 128MB DRAM
8 & 16 GB/ 128MB DRAM
8GB/ 256MB DRAM
16 & 32GB/ 512MB DRAM
Processor620 MHz Samsung 32-bit RISC ARM
833 MHz 1.2 GHz
Software and design Apple USA
Assembly Foxconn Taiwan
TFT-LCD Screen Sanyo Epson, Sharp, TMD Japan
Video processor chip Samsung Korea
Touch screen overlay Balda Germany
Bluetooth chip Cambridge Silicon Radio UK
Chip manufacture TSMC, UMC Taiwan
Baseband IC Infineon Technology Germany
WIFI Chip Marvell USA
Touch screen control chip Broadcom USA
CMOS chip Micron USA
NOR Flash ICs Intel, SST USA
Display Driver chip National Semi, Novatek US, TW
Case, Mechanical parts Catcher, Foxconn Tech Taiwan
Camera lens Largan Precision Taiwan
Camera module Altus-Tech, Primax, Lite On Taiwan
Battery Charger Delta Electronics Taiwan
Timing Crystal TXC Taiwan
Passive components Cyntec Taiwan
Connector and cables Cheng Uei, Entery Taiwan
iPhone Primary Contractors
Technology
• The Touch screen• The sensors• The Internet• Mac OS X
Objectives
• I year objectives - aiming for 2%market share of US & UK - unit sales volume 4,45000
• II year objectives - achieve 10% market share - unit sales volume 12,45000
Target Market
Distribution• AT&T and major cellular providers like
Verizon• Apple online & Apple stores• Major third party online retailers like
Amazon.com• All major electronics retailers - wall mart - Best Buy - Circuit city
• Distributors in INDIA - Bharti Airtel - Vodafone
Carriers
No. Date Country Carrier Flag
1 29 June 2007 United States AT&T A-1-1
2 9 Nov 2007 Germany T-Mobile A-2-1
3 9 Nov 2007 UK O2 A-3-1
4 29 Nov 2007 France Orange A-4-1
5 14 Mar 2008 Ireland O2 A-5-1
6 14 Mar 2008 Austria T-Mobile B-1-1
Communication
• Emphasize on brand prominently• Associate iPhone with iPod’s
groundbreaking lineage• Massive TV campaign in June• Newspapers • Social Networking sites• Apple sites
Marketing Mix• June: Major market rollout at AT&T and
Apple stores• August: Availability will expand to mass
vendors• November: New Ad campaign for holidays• Early 2008: Build buzz for next
generation iPhone• 2009: Major technical upgrades, e.g. 3D
ability• 2010: Goal of at least 50% market share
Market Penetration Pricing strategy
Market skimming
- Release new product at high premium - Skim the greatest possible margin - Once sales volume begins to decrease at the original price - Incrementally lower the price to increase sales - Repeat this until stable price with acceptable margin is determined
What happened
In September’ 2007, barely 10 weeks after the launch of iPhone, Apple announced a steep price cut for the product.
The 4GB version was made inoperable while the 8GB version was available at US $ 399 and a 16 GB version was to be introduced at US $ 499.
The early adopters who had waited in queues to buy the product at a much greater price were discontented and annoyed and they therefore took a legal action against Apple and AT&T for the price cut.
This issue had a negative effect on Apple’s share prices.
SWOT Analysis• First mover advantage
• Ownership of technological patents
• Apple is one of the most established brand
• Customers loyalty
• Cultural, fashion identity
Strengths
• Dependence on third party provider:
• AT&T, Content Provider, Application provider
• Less appeal to corporate customers
• Technological complication
• Gorilla arm
Weaknesses
• Sharp rise in consumer demand• 56% of smart-phone buyers prefer
iPhone
• New target market –• price reduction attract • more customers
• High Potential Software –upgradable; can add new features
• 3G Apple iPhones to captivate business demand worldwide
Opportunities
• New powerful entrant – Google
• Many similar or substitute products
• Intense competition with major rivals
• Increasing bargaining power of buyers
Threats
CORE COMPETENCY --- USER
EXPERIENCE
Organizational Hierarchy
Key Success factors
Consumer-oriented Factors
Technology
-------------------- Internet driven
force
- Replacing communication tools
- Next generation experience
Marketing
-------------------- Well-know and
well-respected brand name
- Market segmentation
- Targeting and Pricing effectiveness
Skill and Capability
-------------------- Value added
(cheaper, faster, more convenient
than the alternatives)
- Design and innovation expertise
Distribution
--------------------- A strong network of
wholesale distributors/ dealers
- Fast introduction and application of
services
Financials• First year sales revenue : $ 2.5 billion avg.• Wholesale price $500 per unit, Variable
cost $250• Total volume: 10 million• $50 million fixed cost• Break even at 200,000 units
• After Break even Apple will make profit of $1.25 billion minus $50 million fixed cost
OS used in smart phones in 2005
OS used in smart phones in 2010
ComparisonModel OS Size Weight Screen resolution Keyboard Camera Other
Apple iPhone Mac OS X 81cc 135g 320x480 Soft 2mp Accelerometer
HTC P3300 Windows Mobile 105cc 130g 240x320 Soft 2mp GPS
Motorola RIZR Z8 Symbian OS 77cc 112g 240x320 Numeric with T9 2mp
Nokia 5500 Sport Symbian OS 87cc 103g 208x208 Numeric with T9 2mpAccelerometer, heart rate features
Nokia E61i Symbian OS 114cc 150g 320x240 Full Qwerty 2mp
Nokia E90 Communicator
Symbian OS 150cc 210g 800x352 & 240x320Full Qwerty and Numeric with T9
3.2mp GPS
Nokia N95 Symbian OS 110cc 120g 240x320Numeric with T9, Multimedia
5mp GPS
Palm Treo 700p Palm OS 5 151cc 180g 320x320 Full Qwerty 1.3mp
RIM BlackBerry Pearl
Blackberry OS 77cc 90g 240x260Numeric with SureType
1.3mp
RIM BlackBerry 8700c
Blackberry OS 149cc 134g Full Qwerty No
RIM BlackBerry 8800
Blackberry OS 105cc 134g Full Qwerty No
Samsung SGH-i607 BlackJack
Windows Mobile 76cc 106g 320x240 Full Qwerty 1.3mp
Sony Ericsson P990
Symbian OS 162cc 150g 240x320Full Qwerty, Numeric with T9, Soft
2mp
Sony Ericsson W950i
Symbian OS 86cc 112g 240x320Numeric with T9, Soft
No