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The market for iPad. iPad – An Overview. iPad first released in the US on 3 rd April 2010 Different models ( wifi only or wifi+3G) From April to December, over 15 million iPads sold, generating US$9.5 billion dollars in revenue - PowerPoint PPT Presentation
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The market for iPad
iPad – An Overview
0 iPad first released in the US on 3rd April 20100Different models (wifi only or wifi+3G)0From April to December, over 15 million iPads sold,
generating US$9.5 billion dollars in revenue 0Was 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
0Combination of several factors! 0Cost of manufacturing
parts!0Depends on the demand in
the Tablet PC market!0Based on competing tablet
PC prices!0Signalling function of the
market mechanism!
iPad and its related markets
0Compliments0APPS!0Accessories
0Substitutes 0Other tablet PCs0Other devices for reading ebooks
Apps!
0Apple App Store has over a million apps!0 >65,000 are iPad specialized!
0Over $2b have been earned by developers accumatively selling their apps on the App Store
0Other competitors have tried copying the App Store concept but are unable to attract developers and compete with Apple’s standards.
Accessories!0Apple has several OEM accessories for the iPad like
Camera Kits!
iPad Projector Cables!
Docks!
Keyboards
Compliments0A 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.0Compliments have a negative cross
elasticity of demand (XED).0As the price of iPad increases, the
demand for compliments decreases. Qx – qty of complimentsPy – price of iPad
Substitutes! D:
0Other tablet PCs
Motorola XoomSamsung Galaxy Tab
Substitutes
0Other ebook readers
Amazon Kindle Nook
Substitutes
0Substitute 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)
0As price of iPad increases, the demand of substitutes increases
Recent Developments affecting iPad
0Emergence of competition from other Tablet PCs
0More intensive advertising by competitors0Production problems in Foxconn China0Recent earthquake and tsunami crisis in Japan
Emergence and advertising of competition
0More companies have tried to join the success of the iPad by coming up with their own tablet substitutes0 Example, Samsung Galaxy Tab, tries to copy the features
and capabilities of the iPad like its design and App Store0They have also increased advertising of their products
0 Example, more advertisements on television, newspapers about their product.
What does this mean?
0With rise in substitutes, the quantity demanded for iPad will decrease.
0With 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?
D1
D2
SubsititueiPad
Price
Quantity Quantity
Price
What has been done?
0Apple has ramped up advertising to compete with competitors advertising0 Full building posters0 More and more TV ads – iPad is ___ series 0 http://www.youtube.com/watch?v=btfbIVGES1I
0Apple has come up with a new generation iPad0 iPad 2 has a better design and features like dual
cameras, faster graphics and CPU, 33% thinner0 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
0Some facts 0 30% of iPad 2 buyers are iPad1 owners0 Currently, iPhone and iPad are #1 most popular camerasin the world
iPad Production Problems
0At 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 stress0 Thus, productions of iPads had to be declerated
0Recent earthquake and tsunami in Japan0 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?
0This means that the production of iPads will decline sharply.
0With 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-the-competition/
0 http://modmyi.com/forums/ipad-news/754457-ipad-2-costs-about-323-manufacture.html http://newenterprise.allthingsd.com/20110313/days-after-its-release-the-ipad-2-gets-the-teardown-treatment/?mod=googlenews
http://www.zdnet.com/blog/apple/how-will-japan-earthquake-affect-apples-ipad-supply-chain/9763
http://events.apple.com.edgesuite.net/1103pijanbdvaaj/event/index.html