Music Systems Like The Apple I Pod example essay topic

Technology has changed in the terms of portable music and with the invention of the Apple i Pod in 2001, the ease and accessibility to download and listen to music has never been easier; and until recently as competitive. The Apple Computer has developed a device that weighs no more than 6.2 ounces (and as few as 3.6 ounces) and can hold up to 10,000 songs. Despite the weak market overall, the market for digital media is undeniably hot and barring a consumer spending meltdown, it should stay that way. In light of current computer market conditions, Apple is wise to leverage a moderately priced consumer product like i Pod to generate revenue. The i Pod is an excellent opportunity to drive an additional revenue stream.

Despite current global economic conditions, information technology is forecast to grow significantly over the next several years. Importantly, many experts believe that IT innovations like the i Pod will particularly help drive consumers to electronic stores to purchase ground-breaking technologies due to the cost. Being in business for almost 30 years, Apple Computers started with two friends in high school; considered outsiders because of their love of electronics. Steven Wozniak "had been dabbling in computer-design for some time when, in 1976, he designed what would become the Apple I". His friend, Steven Jobs, "who had an eye for the future, insisted that he and Wozniak try to sell the machine, and on April 1, 1976, Apple Computer was born". (web).

It was not until the Apple II was introduced at a trades how in 1977 that the business started to take off. One of the most recent products developed by Apple which has become very successful has been the i Pod. The i Pod is a slick, tiny device that allows users to download songs from a specific website and this unit "holds" the songs in which they can be played at any time. The i Pod is thought of as a handheld jukebox.

It has not been any easy success ride for this product. First launched in October 2001, at a cost of $399, many skeptics were uncertain that this product would become an item that would be found in homes. The concern was the fact was that "only Macintosh users, less than a twentieth of the marketplace, could use it". (web). Strictly for personal entertainment, this product has recently been remodeled to allow holding more songs and now is facing strict competition. The biggest advantage of the newest version is the lower price down to $299". Sony Electronics will begin selling two hard-drive music players this fall which, combined with its new music download service, will create an i Pod-like parallel universe". (web).

Sony will now become a competitor against the original portable device. The difference will be about $100 - $200 higher in price for Sony product; but storage space is higher is this unit. This fall will bring additional players to the market as a number of companies are introducing their own versions. "Creative Labs will unleash its Zen Portable Media Centre" (web) in August which includes a 3.8 video screen and plays 80 hours of music. At the same time, Samsung will release their version of a portable music device. Both of those will retail at $499, again higher than the i Pod, but with additional features.

"September also sees the release of Hewlett Packard's entry into the digital player market with a re-branded version of the i Pod. It is rumored to have a 60-GB capacity". (web). This market is going to become very cluttered with each company trying to outdo the other with extra benefits. Although sales of the i Pod have already beat expectations, the reduction in price will create even more buzz resulting in continued exceeding sales. Like any technological product, the i Pod has a demand that is price elastic.

By having the ability to download legal songs within seconds and keep them on a unit that is lightweight and easily mobile; customers are in high demand for the i Pod. Having the dependable Apple name behind the product has and will continue to assist in demand. With advances in technology and the ability to make computer chips smaller but yet more powerful, this will remain a competitive item. Apple's strategy is to lose money on the music store and make it back when people buy the i Pod, the player that works with the store.

This is a great except the i Tunes Music Store (where songs are downloaded for a fee) is not going to be the default forever no matter how superior it is to the competition. Apple would be best advised to practically give the cheap players away to get people locked into the iTMS and subsequently locked into i Pod's. The only way to guarantee this is to make sure they have been using iTMS from the beginning. Apple and low-price are like mixing oil and water. Nevertheless, this pricing strategy is similar to what movie theatres charge for overpriced popcorn and soda. For a mere 50 cents more you can get the super jumbo size.

I think this is the same strategy. The present i Pod models are very expensive, and so the rumors were that the new ones would cost $99, turned out to be wishful thinking. It was announced that the new 4 GB models would cost $249. If you pay $50 more, you can get a 10 GB i Pod. There are many MP 3 players which offer the same set of features offered by i Pod, but none of them can match the elegance of an i Pod.

Also Apple is not a company known for low priced devices. They may not be market leaders in terms of hardware, but they have a cult following, which swears by their products. Some strategies to enhance revenue of this product can include: o Stay dedicated to the advertising, others may come on strong but will their funding be able to continue? o Dominate the market with the originality of the product - i Pod is the leader not follower. o Create a buzz with available downloadable songs. Offer exclusives for an additional cost by signing with record labels not available through other companies. o Keep up with technology and availability of new product so Keep the costs low. With continued market dominance and high demand, sales will remain high. o Develop business relationships with other players (i.e. Real Player) so customers can download off those sites as well. Apple Computer has introduced lower-priced versions of its i Pod digital music player with longer battery life, positioning itself against rivals trying to use lower prices to undercut i Pod sales.

The new i Pod has up to 12 hours of battery life, compared with eight hours in previous models. Poor battery performance in some i Pod's has drawn criticism. The most publicized enhancement (besides a $100 price drop) over previous i Pod versions is the longer battery life. The major difference between the available versions of the i Pod is the GB hard drive of the models. The 20-GB model, which can hold about 5,000 songs, has a list price of $299, lower than the previous price of $399 for a 20-GB i Pod. The 40-GB model costs $399.

"Hitachi is going to double its production of high-capacity disk drives which hints at the production volumes involved in the forthcoming war over disk-based music systems like the Apple i Pod. This war will also extend to an ever-widening range of devices that are now made feasible by cheaper, smaller, more resilient disk drives". web storage plant Apple addressed the two biggest issues it had with their original - cost and battery life. The songs that are available for legal download are accessed through the online music store from Apple at a rate of $. 99 per song. There are also numerous accessories ranging from wrist band adapters to earpieces to enhance the performance and sound quality of the i Pod.

There are a lot of lessons still being learned from devices like Apple Computer's i Pod music player, and not all of them have to do with how the music business is changing. These lessons include what else is changing the consumer electronics business in general, and how that industry now has to look at data storage. One important trend that bears watching is the phenomenon of the small hard drive. Apple, with its i Pod and i Pod Mini, along with their many imitators, have proved that with a small hard drive designed into a ingenious product you can make big changes in the consumer electronics industry.

With the fall in prices of computer chips and the ability to make these chips smaller, Apple is able to take the current i Pod and make them even smaller, better, and more importantly affordable for anyone to purchase. Apple Computers, when it is concerning the i Pod, can be described as an oligopoly. "An oligopoly exists when a few companies dominate an industry. This concentration often leads to collusion among manufacturers, so that price sare set by agreement rather than by the operation of the supply and demand mechanism. For an oligopoly to exist, the few companies do not need to control all the production or sale of a particular commodity or service. They only need to control a significant share of the total production or sales.

As in a monopoly, an oligopoly can persist only if there are significant barriers to entry to new competitors. In an oligopolistic market, competition often takes the form of increased spending on marketing and advertising to win brand loyalty rather than on reducing prices or increasing the quality of products". web Since there is required hardware to produce this product, entering into the market could be difficult for any organization. It takes a company with the knowledge of technology to produce a product that can be comparable - if not better - than the i Pod. In an oligopolistic market, there is usually price stability because of the interdependence of sellers. This results in a form of behavior whereby suppliers act like players in a game acting and reacting to the moves of their competitors. Competition tends to take place on a secondary level of: product differentiation; technological innovation; and, diversification, i.e. producing more than one commodity.

With the ever change in technology, there are some strategies that Apple can apply to enhance their sales of the i Pod. o Customizable plates like cell-phones to personalize the mo Increased download speeds of songs from the interne to Representation of established record labels for legal download so Ability to download songs from home / office telephone so Free i Pod with Apple computer purchase and a free set amount of downloadable song so Retain strong relationship with Microsoft License the software and give customers the ability to "shop" at other online store so Find additional large corporations for partnerships o Develop an i Pod that allows music, video (downloaded from MTV channel), and pictures (personal digital cameras) to be displayed Hamed Khor sand, a senior research analyst at BWS Financial in Los Angeles, is quoted as saying, 'You can basically look at Apple as the Coca-Cola of that market with everyone else trying to be Pepsi,' Still, taking on the i Pod amid rising competition will be tough. web sv/. Over two million i Pods have been sold since its introduction, solidifying its position as the number one digital music player in the world. "Apple sold 807,000 i Pods the first quarter of this year, up 909 percent (not a misprint) over last year". (web paul 26. html). Where Apple really stands out is in marketing.

The company simply seems to understand what will get people excited about its products, and then it executes on that vision. You don't see the company mainly talking about features or technology, but about how their prod cuts will make your life better. Apple has been losing some share as its machines have become pricier while competitors' models have become cheaper. Apple would be wrong to think that it doesn't need to bring prices down to remain competitive. When it comes to technology, knowledgeable customers realize that prices will drop when the excitement for the product diminishes and technology allows for less-expensive parts. Apple needs to understand this and market the i Pod cheaper from the start and adjust prices if warranted because of competition.

By selling a quality product at an affordable price, customers will be interested and purchase the product. When it comes to factors in the economy that will impact the demand for the i Pod; o Industry fundamentals with respect to customer demand or product / service pricing could change and adversely impact expected revenues and earning so Issues relating to major competitors or market shares or new product expectations could change consumer attitudes "Sales of consumer electronics products will total a record $99.5 billion in 2003, marking a 3.5 percent increase over 2002, according to figures released today by the Consumer Electronics Association (CEA). The figures were issued as part of CEA Market Research's annual U.S. Consumer Electronics Sales & Forecasts report. The association also announced that 2002 sales are estimated to total $96.2 billion rising a healthy 3.7 percent over 2001. Broadly speaking, the U.S. economy experienced a significant recovery in the latter half of 2003 and appears to be maintaining that momentum in 2004. Technology in particular has had a surprisingly rapid rebound.

However, the computer accessory space is increasingly a commodity business and while the economic turnaround helps, prices are generally flat or falling as demand rises (web) Exhibit 1 Forecast of U.S. Aftermarket Shipments of Selected Computer Accessories (Millions of Dollars) 2002 2006 CAGR 2002-2006 Non-Electric $1,116.50 $1,551.20 6.8%Electronic / Electrical $1,913.60 $2,625.90 6.5%Total $3,030.1 $4,177.10 6.6%o Hard drive cost per Megabyte or even Gigabyte has fallen dramatically since the advent of the hard disk drive. This has been led by new technology being able to produce larger sized drives and by the advances in manufacturing being able to produce drives in mass at lower costs. web Accurate and timely information about what is likely to happen to the economy and society in the future has always been of value to business decision makers. One of the key suppositions for most forecasters is that the past serves as the most important guide to the future. That does not mean that the future is a re-run of the past or that data about the past should be the only basis for a forecast.

Obviously, economic conditions and global economies do not remain constant over time. Nevertheless, data about past trends and activities, when fit into a theoretical framework, provide some of the best information available. "Neglect of the forecasting effort can cause expectations about the economic environment and its ramifications for future operating results to be grossly inaccurate. It also can contribute to divergent views among staff and line units about the outlook for the economy. The consequences can include conflicting business plans and strategic and tactical decisions having adverse consequences for the organization. The bankruptcies of many corporations offer tangible evidence that the cost of erroneous economic expectations can be very high". (web m 1094/is n 2 vs. 24/ai 7544055) Income elasticity of demand is used to see how sensitive the demand for a good is to an income change.

The higher the income elasticity, the more sensitive demand for a good is to income changes. Very high income elasticity suggests that when a consumer's income goes up, consumers will buy a great deal more of that good. Very low price elasticity implies just the opposite, that changes in a consumer's income have little influence on demand. The demand for the i Pod continues to grow despite consumer's income and selling price. This is a hot product that is receiving great word of mouth exposure and sales will continue to sky rocket.

Bibliography

web m 1094/is n 2 vs. 24/ai 7544055 web 01. htm web paul 26. html web sv / web storage plant.