Transcript Econs Webquest - 11s402

Demand Supply WebQuest
2011
Market for iPads
Gulliver’s Economics Team
Oscar, Vanessa, Xue Ting and Gabriel
Producer: Oscar Lee
Outline (Part A)
•
Introduction to iPad
•
•
•
When did the iPad first originate?
How is the price of the iPad determined?
What are some of the related/associated products for the
iPad? How are these products related to the iPad?
*All prices stated in the following presentation are in United States Dollars (USD) unless otherwise stated.
Apple iPad
The iPad Story
Pub Trivia
Announced on January 27,
2010
Launched on April 3
16GB, 32GB or 64GB
Wi-Fi only or with 3G
9.7” 1024x768 screen
A4 Processor @ 1GHz
256MB RAM
400,000 Apps on the App Store
Starting from $499
300,000 sold on launch date
12,000,000+ sold to date
The iPad Story
How was pricing determined?
Production Cost per Unit
$229.35* to $346.15**
*For Non-3G iPad 16GB
**For 3G iPad 64GB
Profit per iPad
$269.65* to $482.85**
*For Non-3G iPad 16GB
**For 3G iPad 64GB
iPad 16GB Wi-Fi
iPad 64GB Wi-Fi+3G
Equilibrium Price
What potential customers were willing
to pay for such a new pioneer in the
market?
A sub-$1000 price was
rumoured for a long time by
consumers
The iPad Story
Competition
Launched with no competitors
Competitors finally emerge...
Quite a long time later
Samsung
Toshiba
Research in Motion
HTC
Hewlett-Packard
LG
Asus
Acer
Dell
...
They tried to replicate
the success of the iPad
Samsung launched the
Galaxy Tab
The iPad Story
Comparison
Samsung Galaxy Tab vs Apple iPad
Touch-screen Tablets:
Processor
Cortex A8 @ 1.0GHz
vs
Apple A4 @ 1.0 GHz
RAM
512MB vs 256MB
Flash Memory
16GB Built-in + MicroSD Expansion (up to 32GB) vs 16GB/32GB/64GB
Battery Capacity
4000mAh vs 6600mAh
Battery Life
7 hours vs 10 hours
Network Connectivity
Wi-Fi+3G vs Wi-Fi only/Wi-Fi+3G
Cameras
Front & Back vs None
Touchscreen
7” (1024x600) vs 9.7” (1024x768)
Video-conferencing
Yes vs No
Phone Calls
Yes vs No
Operating System
Google Android vs Apple iOS
Applications
200,000 apps on the Android Market vs 400,000 apps on the App Store
Pricing
$799 vs $499 to $829
Developing Freedom
Open-source vs Closed
UI Customizability
Very customizable vs Non-customizable (unless Jailbroken)
Outline (Part B)
•
Discuss recent developments and how these affect marketing
and pricing decisions for the iPad
Substitutes
Competing brands have
recently launched their own
tablets, which are substitutes for
the iPad
This leads to a decrease in
demand for the iPad
Some substitutes...
Samsung Galaxy Tab
Blackberry Playbook
HP Slate
Consumers will go for such
devices because they are more
unique
Some are cheaper too
Blackberry Playbook: $499
HP Slate: $549
XED: positive; consumers would not
be willing to buy more expensive
goods in the presence of cheaper and
closer substitutes
Pricing of iPads will have to be
lowered to maintain a
competitive edge and maintain
revenue
Increase in income
Due to the announcement of the
Budget 2011, Singaporeans are given
many benefits, including a rise in
disposable incomes due to tax
refunds
Increase in (disposable)
income→Greater purchasing
power→Greater demand for iPad
(normal good)→Elastic +ve YED
News Report on iPad as
textbooks
Use of iPads as educational
tools
E-Textbooks increasingly used in
schools to allow ease of doing
homework and more interactive
learning
Apple should cut prices for iPad
for educational institutes as the
demand for iPad is Price Elastic
Any fall in price of iPad will thus
lead to a more than
proportionate increase in
quantity demanded
Resource deficiency
Sendai Earthquake
9.0 on the Richter scale
Largest earthquake ever
recorded in Japan
Earthquake disrupted factory
operations
Production of key components
of the iPad was slowed down
Supply of Lithium Ion batteries
reduced
Cost of each lithium-ion battery
increases as there is a
decrease in quantity supplied
Production cost of iPad
increased
Profit per unit of iPad decreases
Since iPads are price elastic,
Apple will reduce the quantity
supplied to maximize profits
Any hike in cost of production
would lead to a more than
proportionate fall in supply
Earthquake will hence lead to a
fall in supply of iPads
There are many other factors
which could affect supply and
demand
But that’s all we can show you,
due to time constraints
Fin.
The End
“Merci beaucoup,
“Thank you very much,
comme toujours”
just as always.”