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According to this five forces analysis, it is evident that the threat of rivalry is very high as an external force in the PC and the mobile phone industry as well as in the MP3 player. This is also true in the online music industry. The power of suppliers is the highest external force. However, in the trend seen in the market place, it seems to be destroying the boundaries that exist in each industry. However, it is evident that in the market, a MP3 is not the some audio device anymore. However, it is getting to be more enhanced as a tool for full-motion videos and data storing which is the area of the PC’s. In addition, a mobile phone is also not the only tool for the calling and receiving, but takes the role of a digital camera. As a result of these trends, Apple has emerged to be a very successful company in the analysis of the market profitability as well as in the adoption of the innovative strategies through catching the changes that exist in the market trends. In addition, the most recent step to the mobile industry seems that it is the only way that is best to utilize and maximize the competitive advantage by integrating the PC, MP3 player, as well as, other online music industry.

 

PC

MP3 player/online music services

Mobile products

Threat of entry

Low

Low

Low

 

-         Economies of scale: R&D usually forms the major part of the companies cost of production. In the sector, the R&D cost of the technology devices is approximately 12% of the total revenues obtained by the IT industry, in the U.S.

-         Product differentiation: Apple’s PC has its own operating system and the unique design

-         Cost advantage: High demand particularly in proprietary technology.

-         Since iPod nano launched, some competitors such as Roi and Olympus had preferred to stop.

-         Economies of scale: iPod has 80% of market share and Apple contacted with giant corporations such as Samsung to buy approximately 40% of the products and services such as flash memory production, which is more expensive than a hard drive.

-         Product differentiation: Ipod has its own music stores such as the 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 contact with Samsung

-         Economies of scale: High demand in R&D and marketing (Currently, the cell phones come with al lot of adds-on like camera, voice recorder, speaker phone, MP3player and FM receiver. The products produced by the company also  inbuilt memories used to record  and retain pictures as well as voices  to assist in facilitating easy download to a computer)

-         Product differentiation: some of the products manufactured by Apple, such as, the iPhone have some unique features like the add-on functions. These are created for the company’s technology for the MP3 player PC and computers.

-         Cost Advantage: the company has high technology standards for their properties as well as a better access to product used in the manufacture of their items.

 

High

Moderate

High

Threat of rivalry

-         There are relatively few competing firms compared to other corporations in other sectors. However, in this industry, Bill Gates’ company, Microsoft, has a larger proportion of the market share.

-         The industry has some of the lower priced personal computer makers, such as, Dell. These companies have been  increasing their productivity in the market

-         There are various competing firms such as Samsung, Sony, I-River, but Apple’s iPod maintains over  80% of the market share.

-         If Apple does not the creativity and innovation standards high, the products produced by the rival companies which are lower in price than Apples products, for instance, Ipod can be a threat in anytime

-         There are relatively large number of competing firms such as LG and Motorola, but the latest market data from analyst  estimates that Apple took 28% shares of the US  smart phone market in the 4th quarter of 2007

 

Low

Moderate

High

Threat of substitutes

-         Most products produced by the company such as PDA or the DVD player, can only substitute one or two functions of PC

-         The substitutes for MP3 player can be a CD player, MD player, radio. However, these substitutes are easy to access and relatively cheap. This makes it relatively easy to access the MP3 files. This has an impact on customers to change their attitude on the music players.

-         Mobile phones can be substitutes by home phones, internet messengers, but the main convenience of mobile phones which is the  portability cannot be easily substituted

 

Moderate

High

Low

Threat of suppliers

-         The threat faced by the company is on the suppliers of the raw materials as well as labor. The company operates in an area that is highly proprietary in innovation and creativity in technology and has power and the ability to influence to influence the price.

 Apart from the threat of labor there are relatively very many types of suppliers for the raw materials

-         The raw materials from the suppliers can also be a significant threat. On the other hand, labor can be the threat, but the supplier who are singers, players, or songwriters.

-         The other major threat Apple faces includes the free music downloads that affects the music industry. These are illegal free music download websites. The songs are easy and cheap to access to MP3 files, but forms a major threat to the iTunes.

-         Today’s Phone industry experiences many functions that includes calling and receiving messages. There are various types of suppliers for the products such as cameras and video players.

-         Apple Inc. is a well-established corporation that deals with computers. MP3 mostly deals with internal suppliers.

 

Moderate

Low

Low

Threat of buyers

-         The customer base of the company is big and increasing with new technologies produced at produced at a fast pace.

-         Apple differentiated by its own operating system and unique design, but other companies such as Dell or HP differentiate by lower price marketing

-         The number of customers is increasing. Their numbers rise as their demands since; they keep demanding new and updated products.

-         The speed of the internet as well as the Internet file providers is creating new environments that encourage the development environments that may attract the MP3 buyers.

-         iPod has relatively loyal customers

-         The number of clients are many than the computers. In addition, the clients keep increasing in numbers with the emerging markets, particularly in the developing countries.

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