Your Life in your pocket

Introduction
Apples entry in the Mobile Phone Market
o Announcement: January 2007 o Launch: 29-June 2007

Hype about the product Consumer Behavior used to mould Marketing strategy Enormous Sales Initially Large Prices cuts to sustain sales later

Mobile phone Market

In 2007 iPhone was launched

Major competitors
BlackBerry HTC Microsoft mobiles Nokia Motorola

specifications

iPhone

iPhone 3G

iPhone 3G S

iPhone 4

OS

iPhone OS 1.0

iPhone OS 2.0

iPhone OS 3.0

iPhone OS 4 960 x 640px, 800:1 contrast ratio

3.5 in, 3:2 aspect ratio, 265 k colors, 480 x 320px (HGVA) Display

Storage/memory 4,8 & 16 GB/ 128MB DRAM

8 & 16 GB/ 128MB DRAM

8GB/ 256MB DRAM

833 MHz

16 & 32GB/ 512MB DRAM

1.2 GHz

Processor

620 MHz Samsung 32-bit RISC ARM

iPhone Primary Contractors

Software and design Apple USA

Assembly TFT-LCD Screen Video processor chip Touch screen overlay Bluetooth chip Chip manufacture Baseband IC WIFI Chip

Foxconn Sanyo Epson, Sharp, TMD Samsung Balda Cambridge Silicon Radio TSMC, UMC Infineon Technology Marvell

Taiwan Japan Korea Germany UK Taiwan Germany USA

Touch screen control chip

CMOS chip NOR Flash ICs Display Driver chip Case, Mechanical parts Camera lens Camera module Battery Charger Timing Crystal Passive components Connector and cables

Broadcom
Micron Intel, SST National Semi, Novatek Catcher, Foxconn Tech Largan Precision Altus-Tech, Primax, Lite On Delta Electronics TXC Cyntec Cheng Uei, Entery

USA
USA USA US, TW Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan

Technology
The Touch screen The sensors The Internet Mac OS X

Objectives
I year objectives - aiming for 2%market share of US & UK - unit sales volume 4,45000 II year objectives - achieve 10% market share - unit sales volume 12,45000

The Marketing & Product Concept

Assumes that consumers will buy the product that offers them the highest quality, the best performance, and the most features Product delivers the desired satisfactions better than the competition Marketing objectives:

o Profits through customer satisfaction

Why not Cheap Price earlier

Rationale
o Production Capacity of 150,000 a month o Production was constrained and Demand would exceed supply o Cheap price could have increased demand many times and consumers would have been disappointed and left to never come back. o Apple would have got bad name for misjudging the demand (PR Fiasco)

Price Reduction after 2 Months..

By holiday season the manufacturers were ready with to meet Apples Demand. With Production increased 3 times production capacity Apple decided to cut the cost of iPhone to $399 ie by 33%. Also iPod Touch was to be launched with similar features so company did not want to face any ambiguity about the pricing of the product. And give consumers full freedom to choose iPhone or iPod Touch.

Target Market

Distribution
AT&T and major cellular providers like Verizon Apple online & Apple stores Major third party online retailers like Amazon.com All major electronics retailers - wall mart - Best Buy - Circuit city Distributors in INDIA - Bharti Airtel - Vodafone

Carriers
No. 1 2 3 4 5 6 Date 29 June 2007 9 Nov 2007 9 Nov 2007 29 Nov 2007 14 Mar 2008 14 Mar 2008 Country United States Germany UK France Ireland Austria Carrier AT&T T-Mobile O2 Orange O2 T-Mobile Flag A-1-1 A-2-1 A-3-1 A-4-1 A-5-1 B-1-1

Communication
Emphasize on brand prominently Associate iPhone with iPods groundbreaking lineage Massive TV campaign in June Newspapers Social Networking sites Apple sites

Marketing Mix
June: Major market rollout at AT&T and Apple stores August: Availability will expand to mass vendors November: New Ad campaign for holidays Early 2008: Build buzz for next generation iPhone 2009: Major technical upgrades, e.g. 3D ability 2010: Goal of at least 50% market share

Market Penetration
Pricing strategy Market skimming - Release new product at high premium - Skim the greatest possible margin - Once sales volume begins to decrease at the original price - Incrementally lower the price to increase sales - Repeat this until stable price with acceptable margin is determined

What happened
In September 2007, barely 10 weeks after the launch of iPhone, Apple announced a steep price cut for the product.
The 4GB version was made inoperable while the 8GB version was available at US $ 399 and a 16 GB version was to be introduced at US $ 499. The early adopters who had waited in queues to buy the product at a much greater price were discontented and annoyed and they therefore took a legal action against Apple and AT&T for the price cut. This issue had a negative effect on Apples share prices.

SWOT Analysis
First mover advantage Ownership of technological patents

Strengths

Apple is one of the most established brand Customers loyalty Cultural, fashion identity

Dependence on third party provider: AT&T, Content Provider, Application provider

Weaknesses

Less appeal to corporate customers

Technological complication Gorilla arm

 Sharp rise in consumer demand 56% of smart-phone buyers prefer iPhone New target market price reduction attract more customers High Potential Software upgradable; can add new features 3G Apple iPhones to captivate business demand worldwide

Opportunities

New powerful entrant Google

Threats

Many similar or substitute products

Intense competition with major rivals Increasing bargaining power of buyers

CORE COMPETENCY --- USER EXPERIENCE

Organizational Hierarchy

Key Success factors

Consumer-oriented Factors
Technology
-------------------

Marketing
-------------------

Skill and Capability

-------------------

Distribution
--------------------

- Value added - Internet driven - A strong network of - Well-know and (cheaper, faster, force wholesale well-respected brand more convenient distributors/ dealers name - Replacing than the alternatives) - Fast introduction communication tools - Market - Design and and application of segmentation - Next generation innovation expertise services experience - Targeting and Pricing effectiveness

Financials
First year sales revenue : $ 2.5 billion avg. Wholesale price $500 per unit, Variable cost $250 Total volume: 10 million $50 million fixed cost Break even at 200,000 units After Break even Apple will make profit of $1.25 billion minus $50 million fixed cost

OS used in smart phones in 2005

OS used in smart phones in 2010

Comparison
Model
Apple iPhone HTC P3300 Motorola RIZR Z8 Mac OS X Windows Mobile Symbian OS

OS
81cc 105cc 77cc

Size
135g 130g 112g

Weight

Screen resolution
320x480 240x320 240x320 Soft Soft

Keyboard
2mp 2mp 2mp

Camera

Other
Accelerometer GPS

Numeric with T9

Nokia 5500 Sport Nokia E61i Nokia E90 Communicator

Symbian OS Symbian OS Symbian OS

87cc 114cc 150cc

103g 150g 210g

208x208 320x240 800x352 & 240x320

Numeric with T9 Full Qwerty Full Qwerty and Numeric with T9 Numeric with T9, Multimedia Full Qwerty

2mp 2mp 3.2mp

Accelerometer, heart rate features

GPS

Nokia N95 Palm Treo 700p RIM BlackBerry Pearl

Symbian OS Palm OS 5 Blackberry OS

110cc 151cc 77cc

120g 180g 90g

240x320 320x320 240x260

5mp 1.3mp

GPS

Numeric with SureType 1.3mp

RIM BlackBerry 8700c Blackberry OS

149cc

134g

Full Qwerty

No

RIM BlackBerry 8800

Blackberry OS

105cc

134g

Full Qwerty

No

Samsung SGH-i607 BlackJack

Windows Mobile

76cc

106g

320x240

Full Qwerty

1.3mp

Sony Ericsson P990

Symbian OS

162cc

150g

240x320

Full Qwerty, Numeric with T9, Soft

2mp

Sony Ericsson W950i

Symbian OS

86cc

112g

240x320

Numeric with T9, Soft

No

Thank you