Transcript The market for iPad

iPad – An Overview
0 iPad first released in the US on 3rd April 2010
0 Different models (wifi only or wifi+3G)
0 From April to December, over 15 million iPads sold,
generating US$9.5 billion dollars in revenue
0 Was the fastest consumer product in the world selling
3million iPads in 80 days, before being overtaken by
Xbox Kinect in November
0 iPad now has 90% market share of tablet PCs in the
world, having sold more than all other tablet PCs
combined
How is the price of iPad
determined? :o
0 Combination of several
factors!
0 Cost of manufacturing
parts!
0 Depends on the demand
in the Tablet PC market!
0 Based on competing
tablet PC prices!
0 Signalling function of
the market mechanism!
iPad and its related markets
0 Compliments
0 APPS!
0 Accessories
0 Substitutes
0 Other tablet PCs
0 Other devices for reading ebooks
Apps!
0 Apple App Store has over a million
apps!
0 >65,000 are iPad specialized!
0 Over $2b have been earned by
developers accumatively selling
their apps on the App Store
0 Other competitors have tried
copying the App Store concept but
are unable to attract developers
and compete with Apple’s
standards.
Accessories!
0 Apple has several OEM accessories for the iPad like
Docks!
iPad Projector
Cables!
Camera Kits!
Keyboards
Compliments
0 A perfect complement is a good that has
to be consumed with another good.
0 In marketing, complementary goods give
additional market power to the company.
0 Compliments have a negative cross
elasticity of demand (XED).
0 As the price of iPad increases, the
demand for compliments decreases.
Qx – qty of
compliments
Py – price of iPad
Substitutes! D:
0 Other tablet PCs
Motorola Xoom
Samsung Galaxy Tab
Substitutes
0 Other ebook readers
Amazon Kindle
Nook
Substitutes
0 Substitute goods are goods
which, as a result of
changed conditions, may
replace each other in use
(or consumption)
0 Substitute goods have a
positive cross elasticity of
demand. (XED)
0 As price of iPad increases,
the demand of substitutes
increases
Recent Developments
affecting iPad
0 Emergence of competition from other Tablet
PCs
0 More intensive advertising by competitors
0 Production problems in Foxconn China
0 Recent earthquake and tsunami crisis in Japan
Emergence and advertising of
competition
0 More companies have tried to join the success of the
iPad by coming up with their own tablet substitutes
0 Example, Samsung Galaxy Tab, tries to copy the features
and capabilities of the iPad like its design and App Store
0 They have also increased advertising of their products
0 Example, more advertisements on television,
newspapers about their product.
What does this mean?
0 With rise in substitutes, the quantity demanded for
iPad will decrease.
0 With more advertising, this will effect the consumer’s
taste and hence more consumers will shift away from
iPad, quantity demanded for iPad will decrease
Demand
for
substitutes
Demand
for iPad
Total revenue of
iPad
What does this mean?
Price
Price
D1
D2
Quantity
Subsititue
Quantity
iPad
What has been done?
0 Apple has ramped up advertising to compete with
competitors advertising
0 Full building posters
0 More and more TV ads – iPad is ___ series
0 http://www.youtube.com/watch?v=btfbIVGES1I
0 Apple has come up with a new generation iPad
0 iPad 2 has a better design and features like dual
cameras, faster graphics and CPU, 33% thinner
0 Keeps the iPad up-to-date and makes it a better
substitute against other Tablet PCs
Graphic example to show
effect of an iPad 2
0 Some facts
0 30% of iPad 2 buyers are iPad1 owners
0 Currently, iPhone and iPad
are #1 most popular cameras
in the world
iPad Production Problems
0 At Foxconn factory in China, employees are
overloaded to meet high demand of iPads.
0 14 suicides were reported in 2010 due to employees
breaking under stress
0 Thus, productions of iPads had to be declerated
0 Recent earthquake and tsunami in Japan
0 The natural disasters affected the production of iPads
because factories in Japan producing the iPad memory
chips and batteries were closed
What does this mean?
0 This means that the production of iPads will decline
sharply.
0 With less supply, impatient consumers may turn to
other alternatives instead of buying the iPad.
Disruptions in
iPad production
chain
iPad supply
Shortages
in iPad
People turn to
substitutes
iPad demand
References
0 http://www.ismashphone.com/2011/03/japans-
earthquake-and-the-possible-economic-tragedy.html
0 http://www.tuaw.com/2011/03/11/ipad-killing-thecompetition/
0 http://modmyi.com/forums/ipad-news/754457-ipad-2costs-about-323-manufacture.html
http://newenterprise.allthingsd.com/20110313/daysafter-its-release-the-ipad-2-gets-the-teardowntreatment/?mod=googlenews
http://www.zdnet.com/blog/apple/how-will-japanearthquake-affect-apples-ipad-supply-chain/9763
http://events.apple.com.edgesuite.net/1103pijanbdvaaj/e
vent/index.html