Analysis of iPad Product

from Apple Inc.

BUSINESS ECONOMICS CLASS

LECTURER: PROFESSOR YUTANI

APRIL, 16 2018
KWANSEI GAKUIN UNIVERSITY
 Company Background
o The Company is a California corporation established in 1977.
o The Company designs, manufactures and markets mobile communication and media
devices and personal computers, and sells a variety of related software, services,
accessories, networking solutions and third-party digital content and applications.
o The Company products and services are include iPhone, iPad, Mac, Apple Watch, Apple
Tv, iOS, macOS, watchOS, tvOS, iCloud, ApplePay, and variety of accessories.
o The Company sells its products worldwide through its retail stores, online stores and
direct sales forces, as well as third-party cellular network carriers, wholesalers, retailers,
and value-add resellers.
o The Company believes ongoing investment in research and development (R&D),
marketing and advertising is critical to the development and sale of innovative products,
services and technologies.
Determinants of Demand from iPad series
Qd= f(Po, Ps, Pc, Aa,b,…, Yd, W, T, C, E, POP)

Po : Price of Product W : Wealth Effects

Ps : Substitute Goods T : Consumers’ Tastes
Pc : Complementary Goods C : Cost and Credit
Aa,b : Level of Advertising E : Consumers’ Expectation
Yd : Disposable Income POP : Changes in Population
Price of Product MEMORY
12.9” iPad
Pro
10.5” iPad
Pro
iPad iPad mini 4

Wi-Fi

32GB - - $329 -

64GB $799 $649 - -

128GB - - $429 $399

256GB $949 $799 - -

512GB $1149 $999 - -

Wi-Fi + Cellular

32GB - - $459 -

64GB $929 $779 - -

128GB - - $559 $529

256GB $1079 $929 - -

512GB $1279 $1129 - -

 Price of Product

https://venturebeat.com/2012/03/17/ipad-teardown-reveals-375-10-total-cost/
 Price of Product

https://www.cnet.com/news/apples-ipad-air-2-costs-275-to-358-to-make-teardown-reveals/
 R&D Expenses
Consumer Expectation & Tastes 2017 2016 2015
$11.6 $10.0 $8.1
Level of Advertising
Selling, General &
Administrative Expenses
2017 2016 2015
$15.3 $14.2 $14.3
Changes in Population and Wealth
Target Market
Small Mid-Sized Business
Education
Enterprise
Government Markets

Sell the products by directly (28%) or indirectly (72%) to the customers

Provide Apple Store as the main official store of Apple products & services
Complementary Goods Substitute Goods
Sensitivity of the Prices

iPhone (Price & Sales)  iPad (Price & Sales) (Q4-2017 & Q4-2016)

Cross-price Ed = (5.47%/6.18%) Percentage change in the demand for iPad

(10,326-9,267)/(10,326+9,267)= 5.47%
= (0.0547/0.0618) Less than 1:
= 0.088 inelastic cross-price
elasticity Percentage change in the price for Mac
(1330-1175)/1330+1175)= 6.18%
 Classification of Product
Inferior Products Normal Products

Vablen Products
Price: £1447 - £1677
Provide by Gold Genie
Thank you!