the competitive environment of the ipod jonna heliskoski and charlie driver december 2006
TRANSCRIPT
The Competitive Environment of the iPodThe Competitive Environment of the iPod
Jonna Heliskoski and Charlie DriverJonna Heliskoski and Charlie DriverDecember 2006December 2006
ForewordForeword
The value of the competitive intelligence depends on the ability to identify and analyse:
1) current and potential new competitors and
2) current and potential changes in customer needs.
Competitive intelligence is
1) future oriented
2) used to identify threats and opportunities
The Competitive Environment of the iPodThe Table of Contents
PART 1 – The Introduction Introduction History and development What is an iPod? Competition
PART 2 – The Analysis Competitive Environment Industry & Market Customer Needs Technology & Society Market Network
PART 3 – The Conclusions Future Predictions Recommendations
The Competitive Environment of the iPodThe Table of Contents
PART 1 – The Introduction Introduction History and development What is an iPod? Competition
PART 2 – The Analysis Competitive Environment Industry & Market Customer Needs Technology & Society Market Network
PART 3 – The Conclusions Future Predictions Recommendations
Sales
1979 1985 1990 20001995 2005
The IntroductionHistory Of Portable Music
10
20
30
40
50
60
70
20052004 20062003
Million units
The IntroductioniPod And MP3 Phones
“It makes me one hell of a cool human being”
The IntroductionWhat Is an iPod?
Product form
Product category
Generic competition
Budget competition
The IntroductionCompetition
Microsoft Zune
Product form
Portable media device
The IntroductionCompetition
Sandisk SansaSony WalkmanCreative Zen
ArchosCowon iAudioiRiver ClixMeizu miniplayerMobibluMPIOQ-BESamsung YeppToshiba GigabeatDell
Product category
Digital audio player
The IntroductionCompetition
MP3 phones
Motorola E398Nokia 6230Nokia N seriesSony Ericsson K700iLG U8110LG ChocolateSiemens SX1Sharp GX15Samsung E800Motorola RAZR
Home stereosPortable stereosDesktop computers
Generic competition
Home stereo, music playing devices, mobile phones or desktop computers
The IntroductionCompetition
Luxury goodsEntertainmentHolidaysGiftsHobbies
Budget competition
Entertainment, holidays, luxury goods, hobbies
The IntroductionCompetition
The Competitive Environment of the iPodThe Table of Contents
PART 1 – The Introduction Introduction History and development What is an iPod? Competition
PART 2 – The Analysis Competitive Environment Industry & Market Customer Needs Technology & Society Market Network
PART 3 – The Conclusions Future Predictions Recommendations
INDUSTRY➢ Structure➢ Trends➢ Attractiveness
CUSTOMERS➢ Behaviours➢ Needs➢ Trends
SOCIETY &TECHNOLOGY➢ Innovations➢ Values➢ Trends
Competitive Intelligence
PRODUCT DEVELOPMENTOPPORTUNITIES
NEW ENTRANTS
NEW SUBSTITUTES
The AnalysisCompetitive Environment
Intensity of rivalry is moderate. Market is growing fast but is concentrated with one dominant player. Due to the attractiveness of the industry, it is likely that we will see new players entering the market.
Intensity of rivalry is moderate. Market is growing fast but is concentrated with one dominant player. Due to the attractiveness of the industry, it is likely that we will see new players entering the market.
The threat of substitutes is increasing.The key drivers are
1) increasing amount of consumer usage,2) diversity of usage and3) fast changing technology.
The threat of substitutes is increasing.The key drivers are
1) increasing amount of consumer usage,2) diversity of usage and3) fast changing technology.
Entry barriers to the industry arerelatively low and mainly related tointellectual property. But the costof entry has decreased due to availabilityand use of technology.
Entry barriers to the industry arerelatively low and mainly related tointellectual property. But the costof entry has decreased due to availabilityand use of technology.
The bargaining power of the suppliers is low. The componentry is simple and therefore there are many suppliers.
The bargaining power of the suppliers is low. The componentry is simple and therefore there are many suppliers.
The bargaining power of the buyersis very low. In this consumer market the
price sensitivity is low. Also the brand loyalty and the switching costs are high.
The bargaining power of the buyersis very low. In this consumer market the
price sensitivity is low. Also the brand loyalty and the switching costs are high.
IndustryCompetitors
Intensity ofrivalry
PotentialEntrants
Suppliers Buyers
Substitutes
Threat of new entrants
Threat of substitutes
Bargaining powerof buyers
Bargaining powerof suppliers
The AnalysisIndustry & Market
17
iPodiPod80%80%
20%20%
10 millionThe stand-alone
MP3/MP4s players
The AnalysisIndustry & Market
18
48 millionMobile Phones with MP3/MP4 players
iPodiPod80%80%
20%20%
10 millionThe stand-alone
MP3/MP4s players
The Mobile Phone Industry The MP3sIndustry
The Market
The AnalysisIndustry & Market
Basic need Music for commuting and during exercise Also encompasses all of the services that are offered – a total entertainment package Common theme - stylish Complaints about the battery life, durability
Changes In Customer Behaviour Not loyal to Apple 50% of all music is downloaded onto phones Like to have one device for phone and music
If we look at the wider scopecan we find another way to meet these needs?
The AnalysisCustomer Needs
20
Changes In Technology
Mobile & wireless technologies Multimedia Convergence Social software Sharing & downloading
Changes In Society Sociality & communication Speed of adaptation IP Rights
The AnalysisTechnology & Society
The Phones The EntertainmentThe Data Management
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The AnalysisMarket Network
The Competitive Environment of the iPodThe Table of Contents
PART 1 – The Introduction Introduction History and development What is an iPod? Competition
PART 2 – The Analysis Competitive Environment Industry & Market Customer Needs Technology & Society Market Network
PART 3 – The Conclusions Future Predictions Recommendations
The ConclusionsFuture Predictions
Wednesday, November 22, 2006
Palm CEO brushes off Apple cell phone threat
By AppleInsider Staff
Palm chief executive Ed Colligan doesn't plan on losing any sleep over rumors that iPod maker Apple Computer is on the verge of breaching the cell phone market with a new handset device.
Responding to questions at a Churchill Club breakfast gathering last Thursday, Colligan reportedly “laughed off the idea" that the Cupertino, California based company would experience any immediate success in delivering a device to the fastidious smart phone market.
"We've learned and struggled for a few years here figuring out how to make a decent phone,'' he said. "PC guys are not going to just figure this out. They're not going to just walk in.''Asked what to expect if Apple indeed were to deliver an iPod phone to market, Colligan theorized the device would likely employ WiFi and be sold through the company's retail chain rather than carriers like Verizon or Cingular.
Over the course of the last month, Apple is reported to have released its first mobile handset to contract manufacturers while it continues to work feverishly on a second device with additional collaborative capabilities.
entertainment, entertainmententertainment, entertainmententertainment, entertainmententertainment, entertainmententertainment, entertainmententertainment, entertainmententertainment, entertainmententertainment, entertainmententertainment, entertainmententertainment, entertainmententertainment, entertainmententertainment, entertainment
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The ConclusionsFuture Predictions
Predictions: There are going to be three markets, created around different customer needs. iPod and Zune are going to enter the mobile phone market, forcing the mobile phone industry to revise their strategies. The convergence will continue, increasing the influence of the content providers.
The ConclusionsRecommendations
Apple should
Create a blue ocean by combining
1. their core competence of integrating the mobile device (iPod) with high quality content services (iTunes) with
2. the key features of the mobile phones - the communication and connectivity (3G)
Lifestyle of unlimited entertainment & communication
Look out for
Microsoft, Palm etc. who could threaten their position by creating a new market around the need of data management & device synergy.
Implement
Competitive intelligence
Thank You For Your AttentionThank You For Your Attention
IndustryCompetitors
Intensity ofrivalry
PotentialEntrants
Suppliers Buyers
Substitutes
Threat of new entrants
Threat of substitutes
Bargaining powerof buyers
Bargaining powerof suppliers
Determinants of Supplier Power Differentiation of inputs – Low Switching costs of suppliers - Low Presence of substitute inputs - Low Supplier concentration - Low Importance of volume to supplier - High Impact of inputs on cost or differentiation - High Threat of forward integration relative to threat of backward integr. by firms in the industry - High
Entry Barriers Economies of scale – Moderate Initial investments and fixed cost - High Brand loyalty of customers - Moderate Switching costs - Low Access to distribution - High Cost advantage due - access to inputs – High - proprietary learning curve - High Protected intellectual property - High Expected retaliation - Low
Rivalry Determinants Industry growth – Moderate Fixed costs / value added - Low Product differences - High Brand identity - Low Switching costs- Low Concentration and balance - High Diversity of competitors – High Corporate stakes – Moderate Exit barriers - Low
Determinants of Buyer PowerBargaining Leverage Buyer concentration – Low Buyer volume - Low Buyer switching costs relative to firm switching costs - Low Buyer information - High Ability to backward integrate - Low Substitute products – HighPrice Sensitivity Price sensitivity - Low Product differences – High Brand loyalty – Low
Determinants of Substitution Threat Brand loyalty – High Close customer relationship - Low Switching costs- Low Buyer propensity to substitute - Moderate Current trends – High Relative price performance of substitutes - High
iPOD Market Today Analysis Using Five Competitive Forces – Evaluation Of Determinants
Determinant strengthens the force
Determinant weakens the force:
Determinant has neutral effect on the force:
The Core Product● Samsung: media processor, NAND flash memory chips● Audible: Technology for downloading audible versions of books etc. ● Synaptics: makes the click wheel● SigmaTel, PortalPlayer: Chips and processors
The Accessories● Digital Lifestyle Outfitters: accessories● XtremeMac: accessories● Griffin Technology: accessoriesover 3,000 iPod accessories available
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