IB Business and Management Coursework SL - Will Apple Be Able To Remain The Leader in The Tablet Market Over The Next Few Years?

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Will!Apple!be!able!to!remain!the!leader!in!the!tablet!
market!over!the!next!few!years?!
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Marc!Wierzbitzki!
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Business!and!Management!!
Standard!Level!Coursework!
Hockerill!AngloBEuropean!College!
IB!Session!May!2012!
00B0815BXXX!
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Word!Count:!1499!
Marc%Wierzbitzki%
00:0815:XXX%
Business%and%Management%SL%
Internal%Assessment%
Hockerill%Anglo:European%College%
IB%Session%May%2012% %
Table&of&content&
Introduction*......................................................................................................................................*2%
Market*situation*in*2010*..............................................................................................................*3%
SWOT*analysis*Apple*iPad*in*the*tablet*market*...................................................................*4%
Pricing*strategy*................................................................................................................................*4%
Positioning*map*...............................................................................................................................*5%
Distribution*chain*...........................................................................................................................*6%
Product*life*cycle*and*extension*strategies*............................................................................*7%
Predicted*market*situation*..........................................................................................................*8%
Conclusion*.........................................................................................................................................*9%
Sources*.............................................................................................................................................*10%
5*Main*Documents*..................................................................................................................................*10%
Other*Sources*...........................................................................................................................................*10%
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1%
Marc%Wierzbitzki%
00:0815:XXX%
Introduction&
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Apple%Inc.%first%launched%the%original%version%of%the%iPad,%a%touchscreen%tablet%computer,%
in%the%United%States%in%April%2010.1%Then,%one%year%later,%the%company%released%the%iPad%
2,%which%only%brought%minor%improvements%compared%to%its%predecessor;%but%it%was%and%
still% is% a% success% nevertheless.% At% the% annual% developers% conference% WWDC,% Steve% Jobs%
(at% that% time% CEO% of% Apple% Inc.)% was% very% happy% to% announce% that% the% company% was%
selling%one%iPad%every%three%seconds.2%%
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Figure*1:*Steve*Jobs*revealing*the*iPad*to*the*public*in*2010.3*
!
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The%company%literally%managed%to%create%a%whole%new%industry%that%was%not%existent%in%
2009% with% its% device% and% analysts% predict% that% the% tablet% market% could% be% worth% about%
$49bn% by% 2015.3%This% makes% it% very% attractive% not% only% to% Apple,% but% more% and% more%
companies%decide%to%enter%the%market%to%define%the%post:PC%era.4%%
In%2010,%Apple%held%a%market%share%of%83.9%5%(measured%by%volume)%because%it%was%one%
of% the% few% companies% offering% a% tablet% computer.% Will% it% be% able% to% remain% the% market%
leader% over% the% next% few% years% now% that% competition% starts% to% arise?% This% is% what% the%
following%coursework%will%examine%using%different%business%tools%and%theories%taught%in%
the%International%Baccalaureate.%%
%
Word!count:!203!
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%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
1%http://ipad.org/release:date:update/%,%accessed%August%27,%2011%
2%http://gigaom.com/2010/06/07/ipad:at:wwdc:one:sold:every:3:seconds:ibooks:gains:adobe:pdf:
support/%,%accessed%July%27,%2011%
3%http://www.computing.co.uk/ctg/news/2044766/tablets:worth:gbp30bn:2015%,%accessed%August%27,%
2011%
4%http://blogs.forrester.com/sarah_rotman_epps/11:05:17:
the_post_pc_era_its_real_but_it_doesnt_mean_what_you_think_it_does,%accessed%August%27,%2011%
5%http://www.gartner.com/it/page.jsp?id=1626414%,%accessed%August%27,%2011%
2%
Marc%Wierzbitzki%
00:0815:XXX%
Market&situation&in&2010&
%
%%%
2010*Tablet*Market*Share*(By*Volume)*
iOS%
Android%
MeeGo%
WebOS%
QNX%
Other%Operating%Systems%
Figure*2:*Tablet*Market*Share*(By*Volume)*in*2010,*Source:*Gartner*Research6*
%
The% above% diagram% shows% the% tablet% market% share% of% different% operating% systems% in%
2010.% The% iPad,% running% iOS,% Apples% mobile% operating% system% (OS),% owned% a% share% of%
83.9%.%Last%year,%there%were%only%competitors%running%Google%Inc.s%Android%OS%(14.2%)%
and% MeeGo% (0.6%).% 17,610,000% units% were% sold% in% total,% which% means% that% Apple% alone%
sold%more%than%14.7%million%iPads.%With%that%number%of%units%sold%over%a%timespan%from%
April% % December% 2010,% the% company% generated% $15bn% in% revenue,7%which% makes% it% a%
very%attractive%and%important%product%to%focus%on%in%the%future.%%
%
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7%http://www.theaustralian.com.au/australian:it/android:may:catch:ipad:market:share:by:2015/story:
e6frgakx:1226015242926%,%accessed%August%27,%2011%
3%
Marc%Wierzbitzki%
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SWOT&analysis&Apple&iPad&in&the&tablet&market&
%
%
Positives%
Internal%
Negatives%
Strengths*
*
The%iTunes%ecosystem%
The%Apple%brand%
Strong%marketing%
Excellent%distribution%chain%
Ease%of%use%
Weaknesses*
Closed%operating%system%
Only%two%models%available%
%
External%
Opportunities*
*
Growing%demand%for%tablet%
computers%
%
Threats*
Android%
Cheaper%products%from%
competitors%
%Patent%wars%
%
Figure*3:*SWOT*analysis*of*the*Apple*iPad.**
%
A%SWOT%analysis%is%a%very%useful%tool%to%display%the%strategic%position%of%a%company%or%
product% within% a% market.% Apple% has% got% a% very% positive% brand% perception% since% it% is%
commonly%associated%with%quality,%good%design%and%ease%of%use.%But%there%are%also%some%
threats%:%most%notably%Android%:%Googles%OS.%Since%manufacturers%do%not%have%to%pay%in%
order% to% use% the% OS,% they% would% be% able% to% offer% tablets% at% a% cheaper% price% that% Apple,%
which%develops%both,%the%hardware%and%software%themselves.%%%
%
Word!count:!89!
Pricing&strategy&
%
Apple%follows%a%price%leadership%strategy.%They%have%been%first%to%the%tablet%market%and%
the%original%iPad%was%priced%starting%at%$499.%Before%they%launched%it,%they%were%able%to%
consider%the%costs%and%decide%on%a%desired%profit%margin%before%setting%the%retail%price.%
Competitors%entering%the%market%mostly%place%their%products%at%the%same%level,%but%they%
have% the% disadvantage% that% their% devices% are% often% regarded% of% lower% quality% than% the%
iPad% since% their% brand% is% not% as% strong% as% Apples.% This% can% be% seen% on% the% positioning%
map%below.%%
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Word!count:!93!
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4%
Marc%Wierzbitzki%
00:0815:XXX%
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%
Acer Iconia
A500
Apple iPad
Motorola Xoom
Samsung
Galaxy Tab 10.1
low price
high price
low (perceived) quality
%
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%
%
%
%
%
%
high (perceived) quality
Positioning&map&
Asus Eee Pad

Transformer
Acer Iconia
W500
Viewsonic
Viewpad 100
Lenovo
IdeaPad K1
Figure*4:*A*positioning*map*showing*the*iPad*compared*to*seven*other*tablet*devices*of*the*same*category*
(10.1*inch*touchscreen)*
Taking%a%closer%look%at%the%positioning%map%above,%it%can%be%noticed%that%the%iPad%is%the%
device%with%the%highest%(perceived)%quality.%This%is%mainly%due%to%Apples%strong%brand%
perception.% It% can% also% perfectly% be% seen% that% Apple% clearly% was% a% leader% in% terms% of%
pricing,% which% was% discussed% above.% They% priced% the% iPad% at% $499% and% 4% of% the% above%
shown%7%other%tablets%now%cost%the%same%(dotted%green%line).%It%is%also%noteworthy,%that%
there%is%only%one%device%with%high%quality%and%a%(relative)%low%price.%This%might%be%the%
space%where%Amazon%is%planning%to%launch%its%tablet,%since%there%are%rumours%that%they%
are%planning%to%launch%a%tablet%device%that%is%running%on%Android%for%hundreds%less%than%
Apples%iPad.8%The%problem%for%Apple%would%be%that%Amazon%also%has%got%a%good%brand%
perception%and%they%have%a%big%platform%to%sell%it%from,%since%in%June%2011,%1%in%5%Internet%
users%visited%the%Website.9%%
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8%http://9to5mac.com/2011/08/26/amazon:prepping:android:powered:tablets:for:hundreds:less:than:
apples:ipad/%,%accessed%August%27,%2011%
9http://www.comscore.com/Press_Events/Press_Releases/2011/8/Amazon_Sites_Visited_by_1_in_5_Glob
al_Internet_Users_in_June%,%accessed%August%27,%2011%%
5%
Marc%Wierzbitzki%
00:0815:XXX%
Distribution&chain&
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%
%
%
%
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%
Figure*5:*Diagram*showing*Apples*distribution*channels*for*the*iPad*
%
Apple% has% built% its% own% distribution% channels% :% its% retail% and% online% stores.% Both% can%
already%reach%many%potential%customers%and%the%company%is%still%expanding%them.%One%
reason%for%doing%this%is%to%sell%more%products,%but%particularly%the%retail%stores%provide%
an%excellent%opportunity%to%increase%brand%awareness.%Apple%already%has%a%very%strong%
brand% perception% due% to% the% iPod% and% iPhone.% It% recently% became% the% worlds% most%
valuable%brand.10%Since%a%strong%brand%will%allow%a%business%to%differentiate%itself%from%
its% rivals, 11 %Apple% might% have% an% advantage% compared% to% its% competitors% who% are%
offering%their%tablets%at%the%same%price%(positioning%map).%When%there%is%no%noteworthy%
difference%in%the%price,%people%will%buy%the%iPad%because%of%the%strong%brand%behind%it.%%%%
Also,% having% own% channels% is% a% huge% advantage% for% Apple% compared% to% other%
manufacturers.% As% Charlie% Wolf% from% Needham% &% Co.% notes,% tablets% will% not% be% sold% by%
carriers,% like% smartphones% are.12%This% means% that% competitors% will% have% to% establish%
other%distribution%channels%to%sell%their%products.%%
However,%just%relying%on%own%channels%would%not%be%a%good%idea%since%this%would%imply%
that% people% already% have% a% certain% interest% in% Apple% before% going% to% one% of% its% retail%
stores% or% visiting% it% online.% Therefore,% it% is% important% that% the% company% also% offers% the%
iPad%in%third%party%stores%such%as%BestBuy%or%on%Amazon.%%%
%
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10%http://www.bloomberg.com/news/2011:05:09/apple:brand:value:at:153:billion:overtakes:google:
for:top:spot.html%,%accessed%September%26,%2011%
11%Clark,%Paul;%Golden,%Peter;%ODea,%Mark;%Weiner,%John;%Woolrich,%Phil;%Olmos,%Jorge%:%Business%and%
Management%Course%Companion,%Oxford%2009%
12%http://blogs.barrons.com/techtraderdaily/2011/08/05/apple:needham:ups:target:to:540:ipad:to:
hold:share/%,%accessed%August%27,%2011%
6%
Marc%Wierzbitzki%
00:0815:XXX%
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sales volume
Product&life&cycle&and&extension&strategies&
iPad 2
time
iPad
Figure*6:*Product*life*cycle*displaying*the*original*iPad*and*the*iPad*2*
%
The% original% iPad% was% on% the% market% for% about% a% year% before% the% iPad% 2% was% launched.%
Rumours% are% that% Apple% will% launch% the% third% generation% early% in% 2012.13%The% second%
generation% was% launched% in% the% beginning% of% 2011% and% it% can% be% seen% as% Apples%
extension% strategy% to% the% product% lifecycle% of% the% product. 14 %But% despite% this,% the%
company%does%not%use%any%other%extension%strategies%%it%does%not%make%any%changes%to%
the%product%and%the%price%also%stays%at%the%same%level%all%the%time.%%
%
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13%http://www.zdnet.com/blog/hardware/ipad:3:with:retina:display:coming:in:2012:rumors:wont:
die/13315%,%accessed%September%26,%2011%
14http://blogs.computerworld.com/sites/default/themes/cw_blogs/cache/files/u175/Screen_shot_2011:
09:27_at_10_51_07.jpg%,%accessed%October%2,%2011%
7%
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Predicted&market&situation&
%
Tablet*Sales*by*OS*in*%*
90%
80%
70%
iOS%
60%
Android%
50%
MeeGo%
40%
WebOS%
30%
QNX%
Other%Operating%Systems%
20%
10%
0%
2010%
2011%
2012%
2015%
Figure*6:*Sales*of*Media*Tablets*by*Operating*System*in*%,*Source:*Gartner*Research15*
!
Note:! On! August! 18,16!HP,! the! owner! of! the! rights! of! WebOS,! announced! that! they! would! no! longer! build!
tablets!and!smartphones!using!the!OS,!therefore!the!market!share!might!change.!!
%
Looking% at% the% figures% provided% by% Gartner% Research,% one% can% see% that% the% iPad% will%
dominate% the% tablet% market% until% at% least% 2015.% Then,% it% will% have% a% market% share% of%
47.1%% compared% to% Android% with% 38.6%.% The% firm% argues% that% this% is% mainly% due% to%
Apples%strong%ecosystem,%but%Android%will%gain%more%and%more%of%the%market%because%of%
its%open%approach%where%it%licenses%the%OS%to%manufacturers%such%as%HTC%or%Samsung.%
Meanwhile,%iOS%will%only%be%running%on%iPads.%%%
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16%http://www.wired.com/gadgetlab/2011/08/hp:webos:tablet:touchpad/%,%accessed%August%28,%2011%
8%
Marc%Wierzbitzki%
00:0815:XXX%
Conclusion&
%
Looking% at% the% figures% provided% by% Gartner% and% the% other% arguments% from% above,% it%
seems%quite%likely%that%Apple%will%dominate%the%tablet%market%until%2015.%%
They% were% first% to% this% new% market% and% thanks% to% their% very% strong% ecosystem% (which%
many%people%are%familiar%with%due%to%the%iPod%or%iPhone),%they%will%continue%to%attract%
customers.% The% firm% also% has% advantages% in% terms% of% marketing% and% their% worldwide%
brand% perception,% which% is% second% to% none.% As% Apples% brand% is% closely% linked% to% high%
quality,%they%will%most%probably%have%the%advantage%that%customers%will%chose%the%iPad%
instead% of% another% device% which% are% sold% at% the% same% price.% Looking% at% the% positioning%
map,% it% becomes% clear% that% most% devices% follow% Apples% price% leadership,% while% the%
quality%that%is%offered%is%often%lower.%%
Apple%is%able%to%offer%the%iPad%at%just%$499,%because%of%economies%of%scale%(it%has%to%buy%
similar% parts% for% the% iPad,% iPhone,% iPod% and% Macs)% and% it% follows% a% just:in:case% stock%
control%strategy,%which%means%that%it%is%not%affected%by%events%such%as%the%earthquake%in%
Japan%%unlike%other%manufacturers.17%%
However,%Amazon%could%be%a%threat%to%Apple.%They%are%a%company%that%is%able%to%produce%
a% good% quality% tablet% sell% it% cheaply% (placed% in% the% upper% left:hand% corner% on% the%
positioning% map% above).% Furthermore,% Amazon% owns% its% own% MP3% and% book% services,%
which% also% directly% compete% with% Apple.% This% means% that% Amazon% is% able% to% provide% a%
good% ecosystem% for% their% tablets,% which% currently% is% a% unique% selling% point% for% Apple.%
They% also% have% a% good% customer% base% and% an% excellent% distribution% chain,% which% could%
compete%with%Apple.%%
There%are%also%reports%that%Google%might%open%its%own%retail%stores%in%the%near%future,18%
which%it%could%use%to%sell%Android%tablets,%but%it%will%certainly%take%time%until%they%are%as%
established%as%Apples%chain.%%
As% Gartner% suggests,% Apple% will% have% a% market% share% of% 47.1%% in% 2015% compared% to%
83.9%%in%2011.%This%also%seems%very%likely%because%Apple%is%only%offering%one%device%at%a%
time% (product% lifecycle)% and% a% new% generation% is% regarded% as% an% extension% strategy% for%
the%iPad%product%line.%This%means%that%the%choice%for%the%customer%is%very%limited.%
%
To%conclude,%it%can%be%said%that%Apple%will%likely%be%the%leader%in%the%tablet%market%until%
at%least%2015%because%of%its%excellent%distribution%chain,%a%very%well%positioned%product%
and%the%very%strong%Apple%brand.%%
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17%http://9to5mac.com/2011/04/29/component:shortages:likely:to:delay:may:shipments:for:ipad:
rivals/%,%accessed%October%1,%2011%
18%http://9to5mac.com/2011/09/30/first:apple:then:microsoft:now:google/%,%accessed%October%1,%2011%
9%
Marc%Wierzbitzki%
00:0815:XXX%
Sources&
%
5&Main&Documents&
%
1. Business%Insider%%Heres%Why%Apples%iPad%Will%Dominate%The%Tablet%Market%
For%Years%
http://www.businessinsider.com/tablets:2011:2%,%accessed%August%28,%2011%
%
2. Tech%Trader%Daily%%Apple:%Needham%Ups%Target%To%$540;%iPad%To%Hold%Share%
http://blogs.barrons.com/techtraderdaily/2011/08/05/apple:needham:ups:
target:to:540:ipad:to:hold:share/%,%accessed%August%28,%2011%
%
3. G+%:%The%future%of%tablets?%
https://www.gplus.com/Computer:Hardware/Insight/The:future:of:tablets:
51423%,%accessed%August%28,%2011%
%
4. iPadAppCafe%%What%is%the%Future%of%iPad%and%the%Tablet%Market?%
http://ipadappcafe.com/what:is:the:future:of:ipad:and:the:tablet:market/%,%
accessed%August%28,%2011%
%
5. Gartner%Research%%Gartner%Says%Apple%iOS%to%Dominate%the%Media%Tablet%Market%
Through%2015,%Owning%More%Than%Half%of%It%for%the%Next%Three%Years%
http://www.gartner.com/it/page.jsp?id=1626414%,%accessed%August%28,%2011%
%
%
%
Other&Sources&
%
iPad%SWOT%analysis%%%
http://www.slideshare.net/amkr4u4ever/ipad:swot:analysis%,%accessed%
August%27,%2011%
%
Apple%IPad%to%Dominate%Tablet%Market%Through%2015,%Gartner%Says%%
Businessweek%:%http://www.businessweek.com/news/2011:04:11/apple:
ipad:to:dominate:tablet:market:through:2015:gartner:says.html%,%accessed%
August%27,%2011%%
Koreas%emerging%tablet%marketbut%only%Apple%iPad%is%available%:%*
http://asia.cnet.com/blogs/koreas:emerging:tablet:market:but:only:apple:
ipad:is:available:62209500.htm%,%accessed%August%27,%2011%%
%
Tablets%to%be%worth%30bn%by%2015%:%%
http://www.computing.co.uk/ctg/news/2044766/tablets:worth:gbp30bn:
2015%,%%accessed%August%27,%2011%%
%
10%
Marc%Wierzbitzki%
00:0815:XXX%
%
Gartner%Says%Apple%iOS%to%Dominate%the%Media%Tablet%Market%Through%2015,%
Owning%More%Than%Half%of%It%for%the%Next%Three%Years%:%%
http://www.gartner.com/it/page.jsp?id=1626414%,%accessed%August%27,%
2011%
WITH%IPAD%3%APPLE%TO%HOLD%THE%TABLETS%MARKET%TIGHTLY%:%*
http://www.zanura.com/blog/reviews/ipad:review/with:ipad:3:apple:to:
hold:the:tablets%E2%80%99:market:tightly/%,%accessed%August%27,%2011%
%
Post:PC?%What%Apples%iPad%sales%and%PC%trends%tell%us%about%computings%future%:%*
http://www.guardian.co.uk/technology/blog/2011/jul/21/post:pc:apple:
products:show%,%accessed%August%27,%2011%
IHS%ups%tablet%forecast,%still%sees%Apples%iPad%share%shrinking%through%2015%*
http://www.bgr.com/2011/08/24/ihs:ups:tablet:forecast:still:sees:apples:
ipad:share:sinking:through:2015/%,%accessed%August%27,%2011%%
%
Android%may%close%iPad%market%share%by%2015%:%*
http://www.theaustralian.com.au/australian:it/android:may:catch:ipad:
market:share:by:2015/story:e6frgakx:1226015242926%,%accessed%August%27,%
2011%%
%
The%Post:PC%Era:%Its%Real,%But%It%Doesnt%Mean%What%You%Think%It%Does%:%*
http://blogs.forrester.com/sarah_rotman_epps/11:05:17:
the_post_pc_era_its_real_but_it_doesnt_mean_what_you_think_it_does%,%
accessed%August%27,%2011%
%
The%iPad%2:%What%Wasnt%Said%%
https://www.pcworld.com/article/221215/the_ipad_2_what_wasnt_said.htm
l%,%accessed%August%27,%2011%
%
Apple%Brand%Experience%:%%
http://www.slideshare.net/korhan/apple:brand:experience:presentation%,%
accessed%September%26,%2011%
11%

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