APPLE: Company Background Analysis

 Apple Inc. is a company that designs, manufactures and markets mobile

communication and media devices, personal computers, and portable digital music
players.
 Apple Inc. also sells variety of related software, services, periphicals, networking
solutions,third party digital content and applications.
 The company sells products and services such as iPhone, iPad, Apple TV, a portfolio of
consumer and professional software applications, the iOS and Mac OS X operating
systems, iCloud, and a variety of accessory, service and support offerings.
 Furthermore, the company also sells and delivers digital content and applications
through online stores the iTunes Store, App Store, iBookstore and Mac App Store.
 The company sells its products globally through its retail stores, online stores, direct
sells force, through third-party cellular network carriers, wholesalers, retailers, and
value added resellers
 Not only that, the company sells a variety of third party iPhone, iPad, Mac and iPod
compatible products. The company’s target market is end user consumers, small and
mid sized business (“SMB”), and education, enterprise and government customers.
 Steve Jobs, Ron Wayne and Steve Wozniak were the founder of Apple
Inc. In 1976, they invented the first Apple computer which consists of
not only circuit board with costs under $700 in Palo Alto, California.
 They improved the first Apple computer by adding one-megahertz
processor and named Apple II became first mass produced computer in
year 1977. Apple officially became a public traded company in 1980.
Apple Inc. continued developing a better computer in later years.
 On 2007, Apple had kicked off the era of the touch screen smartphone
with the invention of first iPhone. This innovation has made a huge
change in the smartphone market because it caught the attention of the
consumers. On 2010, again Apple unveiled the iPad tablet computer and
Apple has passed Microsoft as the largest US technology company in
terms of market value in May.
Factors affecting the elasticity of demand of an iPhone .

PRICE
 When a percentage change in the price leads to less than proportionate
change in the quantity demanded, demand is said to be relatively inelastic.
 In this case, rise in the price of an iPhone will lead to less than proportionate
change in the quantity demand.
 For example, 10% rise in price of an iPhone lead to 5% fall in quantity
demanded.
 Most of the consumers will still buy the product even if the iPhone price rises.
 An iPhone is considered as a status symbol. Those consumers who have high
purchasing power, taste and preference they will opt for an iPhone.
 This is because brand loyalty created by Apple.
Nature
One of the important determinants of price elasticity of demand is
the nature of the commodity, i.e. whether it is a necessity or a
luxury or a commodity of comfort.
 In this case, iPhone is considered as a normal as well as luxury
product.
 In economically developed countries like US, Canada, Japan and
all Europe countries, iPhone is considered as a normal good
because the consumers have high income.
 While in economically backward countries like India, Pakistan,
Bangladesh, etc., iPhone considered as a luxury good.
For example,
 USA ranks 9th which is considered among the rich countries where GDP
per capita is 70,480(US$). The consumers have high income they are
easily able to purchase expensive iPhones; even if the iPhone price rises
it will not affect their pocket. The demand is always high. Therefore, it
is considered as a normal good.
 India ranks 127th is considered among poor countries due to high
population where GDP per capita is 2,277.43(US$). The consumers
income is low so they cant afford to buy iPhone. If price of an iPhone
falls the quantity demanded will not rise that much because the iPhones
are very costly in India. Therefore, it is luxury product India.
Substitute goods
The most important determinant of price elasticity of demand is the number and kind
of substitutes available for a commodity. If a commodity has many close substitutes,
its demand is said to be elastic. On the other hand, if a good has no or poor
substitute the demand is said to be inelastic.
 In case of iPhone, it has poor substitute the demand for iPhone would be inelastic.
 For example, the poor substitutes for iPhone are other Android smartphones like
Samsung, Xiaomi, Oppo, Vivo.
 If the price of Android smartphones falls, the more consumers will purchase the
smartphone but it will not affect the demand for iPhone.
 This is because of the high brand loyalty that Apple has been able to create. And
its quality is better than other phone. iPhone is superior product than other
smartphones . Its hardware durability is more than others and its more robust.
 Therefore, the consumers will purchase iPhone even if the price is high.
Market structure of apple inc.
 In my points of view, Apple Inc. can be considered stand in difference market structures such as
oligopoly and monopolistic competition. Apple Inc. maintains oligopoly market structure in the
competition of smart phone brands announcements, but Apple Inc. is known as monopolistic
competition in the branded computers. Monopolistic competition in which many sellers are
producing highly differentiated products. Monopolistic competition is also known as
monopsonistic competition. Monopsonistic competition describes the demand-side seems to be
parallel and peer to the monopolistic competition on the supply side.
 Some economist states that monopolistic competition is more realistic than perfect competition
because products produced by the competitors are heterogeneous (non – homogenous). Imperfect
competition does not operate under strict and stringent procedures of perfect competition. In this
market scenario of imperfect competition, the entity enjoys the comfort of increasing the price in
order to earn maximum profits. Apple Inc. sells the un–identical technology in the market. This
enables them to survive in the market effectively and efficiently.
 Compare to oligopoly, monopolistic competition has more competitors, thus the apple’s “super
tablet” computer is considered as a monopolistic competition. Many other branded computer
companies like Samsung, HTC and Dell are strong competitors that share a mobile and tablet
computers market internationally. The sales revenue generated by such competitive companies is
close enough to Apple inc. that keeps themselves stay competitive. As the name ensure,
competitive industry of imperfect nature
Iphone market share in us
2.26% 2.20%

4.93%

30.11%

55.45%

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