Apple Inc. 2010Harjas Bakshi - 2014148 Anubhav Agarwal - 2014137Pooja Dasot - 2014100Shonit Naralkar - 2014172

Pushkaraj kulkarni - 2014163Joe thalIath - 2014151Anshima Agrawal - 2014137Vinod Ramdas - 2014245

Group – 04: Section – B

Competitive advantage

Started with a mission to make cutting edge, industrially designed and easy to use products- launch of Apple ‖ in 1978

Reliance on own proprietary designs

Refusal to license hardware to third parties

Foray into new markets- desktop publishing and education

Offered customers a complete desktop solution

Loyal customer base

Increasing spend on R&D

PC IndustryThreat of Entry- Low• Economies of Scale: R&D is especially a big part of the cost of producing (R&D cost

in computers hovers at 12% of sales by the U.S. industry).• Product Differentiation: Apple’s PC has its own operating system and the unique

design.• Cost Advantage: High demand particularly in proprietary technology.

Threat of Rivalry- High• There are relatively few competing firms compared to other industries, but

Microsoft has most of the market share.• Lower priced PC makers like Dell have been growing in the market.

PC IndustryThreat of Substitutes- Low• Many types of products such as PDA, DVD player, and calculator can exist as

a substitute for PC, but these can substitute only one or two functions of PC

Threat of Suppliers- Moderate• The major suppliers are of raw materials and the labor which is highly

proprietary in technology and has the power to impact price.• Besides the threat of the labor which includes the technicians, there are

relatively various suppliers for the raw materials.

PC Industry

Threat of buyers- Moderate• The number of buyers is huge and growing as new

technologies are introduced at a fast pace.• Apple differentiated by creating its own operating

system and unique design, but other companies like Dell or HP differentiate by lower price marketing.

MP3 IndustryThreat of Entry- Low• Since iPod nano launched, some competitors such as Rio and Olympus had preferred to stop. • Economies of Scale: iPod has 80% of market share and Apple contracted with Samsung to buy

40% of its flash memory production which is two times more expensive than a hard drive.• Product Differentiation: iPod has its own music store like iTunes which allows customers

download music conveniently. The complete set of iPod, iTunes and the accessories for iPod. • Cost Advantage: High demand in proprietary technology. Apple has several patents for iPod and

favorable access to raw materials by the contract with Samsung.Cost Advantage: High demand particularly in proprietary technology.

Threat of Rivalry- Moderate• There are various competing firms such as Samsung, Sony, i-River, etc., but iPod has almost 80%

of the market share.• But if it does not keep the products innovative, the other company’s products which are lower

in price than iPod can be a significant threat in anytime.

MP3 IndustryThreat of Substitutes- Moderate• The substitutes for MP3 player can be a CD player, MD player, radio, etc.; but

cheaper and easier access to MP3 files has been making customers leave from the other music players.

Threat of Suppliers- High• The suppliers for raw materials and labor can be the threat, but the supplier

who holds the main profitability is the song writers, singers and players. • Another big threat is the illegal free music download websites or P2P file-

sharing sources. Easy and cheap access to MP3 files can encourage the MP3 player market, but on the other hand, this can be the threat to iTunes.

MP3 Industry

Threat of buyers- Low• The number of buyers is continually increasing and

they keep demanding new and updated products.• The internet speed and the music file providers are

developing and these environments encourage the MP3 buyers.

• IPod has relatively loyal customers

Mobile ProductsThreat of Entry- Low• Economies of Scale: High demand in R&D and marketing (today’s cell phones

come with a lot of add-ons like camera, voice recorder, speakerphone, MP3 player and FM receiver. They also have built in memories to record and retain voice and pictures and facility to download them to a computer).

• Product Differentiation: iPhone has add-on functions with technology from their own PC and MP3 player.

• Cost Advantage: High proprietary technology and favorable access to raw materials.

Threat of Rivalry- High• There are relatively large number of competing firms such as Samsung, LG,

Motorola, etc., but the latest market data from analyst firm Canalys estimates that Apple took 28% share of US smart phone market in 4th quarter of 2007.

Mobile ProductsThreat of Substitutes- Low• Mobile phones can be substituted by home phones, internet

messengers, etc., but the main convenience of mobile phones which is the portability cannot be easily substituted.

Threat of Suppliers- Low• Today’s phone has a lot of functions in addition to calling/receiving so

there are many kinds of suppliers for the camera, MP3 players, Video players, memories, etc.

• Apple which is already in the industry of PC and MP3 mostly deals with internal mediates and suppliers.

Mobile Products

Threat of buyers- Low•The number of buyers is even huger

than the PCs. Also the buyers keep increasing with the new market of other developing countries

Apple Inc.'s Sustainable Competitive Advantages

Shares of Apple soared 255% over the past five years, more than doubling the Nasdaq's return. Let's discuss two of those key strengths -- a protected ecosystem and brand appeal -- which should keep Apple ahead of its rivals for the foreseeable future.

A protected ecosystem

• Only Apple devices run iOS. By comparison, multiple manufacturers produce devices that use Google Android.• This means that if customers want to remain within Apple's ecosystem and keep their digital purchases, they must continue

buying iOS devices. Last year, a survey by Simonlycontracts.co.uk found that 78% of iPhone owners "couldn't imagine" owning a different phone, while 59% confessed a "blind loyalty" to Apple. Therefore, as iPhone sales keep rising, more new users will be "locked" inside Apple's walled garden.

Brand appeal

• Meanwhile, Apple is also one of the few electronics brands to be considered a luxury brand• The Hurun Research Institute reported that Apple was the top luxury brand for gifting among China's richest men and women in

2014, beating brands including Louis Vuitton, Prada, Cartier, and Chanel. Samsung, the only other electronics manufacturer in the top 10, ranked 10th among men and ninth among women.

• Just as Louis Vuitton can charge hefty premiums on leather handbags, Apple can sell fairly average hardware at premium prices. A comparison between the iPhone 6, Samsung's Galaxy S6, and HTC's One M9 reveals just how average Apple's flagship device is.

Other Sustainable Competitive Advantages

Apple’s vision for Macintosh of becoming a ‘digital hub’.

Real advantage for consumers who are becoming entrenched in digital lifestyle.

Apple can act as a hub to integrate, control and add value to devices like portable music players, digital cameras, mobile phones etc.

Apple revamped its products line to provide highly integrated user experience (2001 onwards). New focus was on home consumers’ lifestyle. Creative marketing and innovative computer products such as ultra-

thin Mac Air, Apple become third largest PC vendor in US.

Apple need to keep working on new and more creative marketing means and developing more innovative products in providing an integrated experience to consumers to sustain its advantage.

Other Sustainable Competitive Advantages (Contd.)

Excellent retail strategy of providing direct use experience of Apple’s software to consumers through its stores will help in sustaining Apple’s competitive position

Apple shall keep focusing on full interoperability with office products which is vital to Macintosh’s viability and it was a part of Apple’s strategy to sustain advantage of Macintosh in future.

To sustain its advantage, Apple need to keep following more open approach in developing and marketing its products like it did with Apple’s iPod which could sync with Windows as well as Mac

Understand and adapt to new markets demands (Apple tried exploring an alternative model to store and play digital music before releasing iPhone).

Combination of multiple carriers, low prices on older models, expanded distribution will keep helping Apple to retain its market share in iPhone industry.

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