The market for iPad

iPad – An Overview 0 iPad first released in the US on 3 rd April 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 Apples standards.

Accessories! 0 Apple has several OEM accessories for the iPad like Camera Kits! iPad Projector Cables! Docks! 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 consumers 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 Subsititue iPad Price Quantity Price

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 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 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 supplyShortages in iPad People turn to substitutes iPad demand

References 0 earthquake-and-the-possible-economic-tragedy.html earthquake-and-the-possible-economic-tragedy.html 0 competition/ 0 costs-about-323-manufacture.html after-its-release-the-ipad-2-gets-the-teardown- treatment/?mod=googlenews earthquake-affect-apples-ipad-supply-chain/ vent/index.html after-its-release-the-ipad-2-gets-the-teardown- treatment/?mod=googlenews earthquake-affect-apples-ipad-supply-chain/ vent/index.html