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Final Project Karen Cotts South University Abstract When it comes to IT Information Planning, it is very import to lay out the details of each area of this business. The IT Information Planning stage is when to decide on the IT Infrastructure which encompasses the technology and equipment required from the front end to the backend of the system. In this case, that will involve beginning with the customer as they enter a Starbucks store, browse the Apple iTunes music store, browse, and purchase and then download music back to the customers’ device.

This will include the technology and equipment required from the customer, Starbucks and iTunes to make the transactions all complete. Along with the planning for the successful completion it is necessary to plan for when failures will occur. This includes planning for the points in the process where the failure(s) can occur and what resolution for each failure will be, along with who will be responsible for the resolution. It is important to understand what the long term effects of the failure could mean to the business. One very good way to document this information is with an Information Flow Diagram.

This will depict the resources involved in the flow of information throughout the process. Mobile Technology is expanding daily. It seems to be one of the fastest growing kinds of technologies in the news today. With the advancements in Personal Area Networks (PAN) and Wireless Access Protocols (WPA) mobile devices of today can be developed that are more secure than ever. They can be more accessible than ever before and provide faster and more accurate data transfer. The uses for the mobile devices have begun to expand into more and more areas of daily life. The iPhone mobile phone developed by Apple, Inc. s one of the most popular and bestselling mobile phones on the market today. In order for the iPhone to be at the head of the industry several of the most important technological features are required. The protocol for connecting wirelessly to access points must be of the highest quality. The security of the connection between access points must be the best it possibly can be. And finally, the security from the device itself must be effective to safeguard any monetary transactions and data. Information Flow (Part I) ITunes has made it very easy to log on and create an account with them.

Creating an account is free. All you need to do is log on to http://www. itunes. com . There is a button you can click on to log-in and another you can click on to register. Click on the button to register. You will need to enter your email address, First and Last Name, Billing Address and Credit Card Information. Your email address will be used if ITunes needs to contact you about your account for any reason. Your Name and Address, along with your Credit Card information will be used to bill for any items you purchase from the ITunes store. Using banking services for micropayments is very expensive.

ITunes is able to avoid the high cost because of the volume of business they conduct. They are able to negotiate a transaction fee with the credit card issuers and banks that cost them very little. Figure 1. 1 is the Information Flow Diagram which will show the process for registering with iTunes and then ordering music for downloading. Customer accesses iTunes store online to purchase music. Customer clicks on Registration Button, and then enters Registration Information. iTunes verifies Credit Card information from Bank. Sends Customer confirmation. Bank verifies Credit Card information for iTunes.

Customer searches for item(s) to purchase. Click buy, confirm. iTunes sends payment information to customers’ bank. Once confirmation is received the download process is initiated. Bank deducts payment amount from customer account and sends it to iTunes account. Music is downloaded to Customer. iTunes retrieves the correct music from the database. Database of music stored in . mp3 format ISP ISP ISP ISP ISP ISP ISP I = Internet Service Provider Figure 1. 1 Information Flow Diagram Customer accesses iTunes store online to purchase music. Customer clicks on Registration Button, and then enters Registration Information. Tunes verifies Credit Card information from Bank. Sends Customer confirmation. Bank verifies Credit Card information for iTunes. Customer searches for item(s) to purchase. Click buy, confirm. iTunes sends payment information to customers’ bank. Once confirmation is received the download process is initiated. Bank deducts payment amount from customer account and sends it to iTunes account. Music is downloaded to Customer. iTunes retrieves the correct music from the database. Database of music stored in . mp3 format ISP ISP ISP ISP ISP ISP ISP I = Internet Service Provider

Figure 1. 1 Information Flow Diagram After purchasing music for download from ITunes, sometimes the download can be interrupted or will fail for various reasons. These download instructions are directly from the http://support. apple. com/kb/ht1725 website: Restart the download with the following steps. Resuming downloads from a computer 1. Open iTunes. 2. Choose Store > Check for Available Downloads. 3. Enter your account name and password. 4. Click the “Check Downloads” button. 5. Click the Resume or Resume All button, or the resume arrow to resume the download.

You can manually resume the download on your device with the following steps. Resuming downloads from an iOS device 1. From the Home screen, tap the iTunes icon. 2. For iPhone/iPod touch, tap More > Downloads. For iPad, tap Downloads. 3. Enter your account name and password. 4. Click the “OK” button. 5. Click the Resume, Resume All, or button to start the download. Business Use Case (Part II) Beginning on October 2nd, 2007, Apple and Starbucks began their music partnership. This partnership involved Starbucks supplying the T-Mobile Hotspot Wi-Fi network to its customers as it already had been doing.

This network allows customers at participating Starbucks to automatically connect to the iTunes Wi-Fi Music Store where they can browse, search and preview millions of songs available on iTunes. Customers wishing to participate would need to bring their iPod® touch, iPhone™, PC or Mac® with them to Starbucks. The customers have the ability to just sit and listen freely to music. If they find a song or an album they are interested in purchasing they can easily buy and download the items directly to their device. Both the Apple Corporation and Starbucks benefit from this opportunity in more than one way.

Because both corporations have excellent reputations, forming a partnership makes good business sense. Starbucks Coffee Company was founded in 1971 and is committed to ethically sourcing and roasting the highest quality Arabica coffee in the world. (Starbucks) The idea of offering the extra perks that iTunes offers in a social setting where people gather with friends is a wonderful concept. Starbucks customers that may not formerly have used iTunes might become customers because of the free access to the trial of iTunes previews and features.

This would increase iTunes customer base and sales revenue. This would also increase the number of customers returning to Starbucks for the purpose of iTunes usage. ITunes users that had not previously frequented a Starbucks might start to, for the benefit of iTunes access. And they might bring their friends along. This in turn would increase Starbucks profits. In October, 2007, Starbucks and iTunes offered ‘Song of the Day’, allowing customers to download a handpicked song every day for a month. Six million songs were downloaded.

Realizing the huge potential with an audience hungry to discover new music and entertainment content, Starbucks and iTunes worked together to create an ongoing version of the program. In April, 2008 Starbucks announced a new program with iTunes called ‘Pick of the Week’. The program offered coffeehouse customers a complimentary new music and music videos each week. Each Tuesday Starbucks 7,000 US based stores would stock a download card redeemable on the iTunes Store (www. itunes. com). The available music or video of the week was hand-picked by the Starbucks Entertainment team and iTunes. Starbucks) As of August, 2011 new offering from the partnership between Apple and Starbucks allows customers to now get paid apps free at the coffee chain. Physical cards are available with redeemable codes printed on them. This offering is a way for Apple to offer customers who normally only download free apps, a chance to try out some of the paid apps for free. If Apple can impress customers enough with the quality of the paid apps, they have the opportunity of turning some of them into customers who buy apps in the future. (Etherington). The Business Use Case diagram in Figure 2. shows the interaction at Starbucks from the customers’ point of view. The Starbucks and customer interaction is a physical one. Then there is the customer interaction with iTunes. Starbucks Cafe Starbucks Cafe ITunes Music Store ITunes Music Store Search items Search items Enjoys Starbucks refreshments while browsing iTunes Enjoys Starbucks refreshments while browsing iTunes Browse items Browse items Starbucks/iTunes Customers Starbucks/iTunes Customers View recommended items View recommended items Customer authentication Customer authentication Add to shopping cart Add to shopping cart

Download to customer Download to customer Payment Processing Payment Processing Add to wish list Add to wish list Figure 2. 1 Business Use Case Diagram- Apple and Starbucks IT Information Planning (Part III) The IT Information Planning stage is a very important one for a business in terms of how successful they will be. The planning that goes into the infrastructure of a company can have a long term effect on the bottom line. If the backbone of the IT structure isn’t built soundly, with adequate flexibility for growth and adaptability, it can affect the way the system can be built upon for years to come.

Apple/iTunes Technology Infrastructure The Apple/iTunes music store is a widely popular music and video distribution service. In general, owners of iPods, iPads and computers can download music after purchasing the item from the iTunes store. The music is in an MP3 format. ITunes itself is a browser, but only for the Apple iTunes Music Store. Web browsers such as Microsoft Internet Explorer and Firefox are excluded from access. The only authorized way to transfer media files to the iPod is by use of the iTunes program. ITunes also serves as a media player for audio, video (MP3/MP4 variants) and Internet radio stations.

Starbucks Infrastructure Starbucks coffee house is where the customer will come to enjoy refreshments and listen to music either with or without friends. With an iPod, iPhone or a PC, the customer will be able to connect wirelessly to the Apple iTunes store. Starbucks has been using the Wi-Fi network from T-Mobile to service all of its hotspots. This was prior to entering into the partnership with Apple/iTunes. That was not changed when the partnership began. This is an important piece of information which must be included in the Information Flow Diagram.

Information Flow Diagram As can be seen from the Information Flow Diagram in Figure 3. 1 different pieces of information are required at various steps in the flow to make a transaction possible. In this simplified example, a customer enters a Starbucks store. Upon entering they connect to the T-Mobile Wi-Fi hotspot that Starbucks currently has a contract with to provide their wireless internet connection. Next the customers device will be populated with a list of the 10 most recently played songs in the cafe. This information is kept updated on a continuous loop by iTunes.

Every time a new song is played the recently played playlist is updated. The customer can then request to preview a song from the list. This long is retrieved from the iTunes MP3. db and returned for preview. If the customer chooses to they can then select the song for download. At that point the song is downloaded to the customers’ device and their account is charged a fee for the transaction. There are several points in the process where a failure in the transaction could occur. It is important to plan ahead for the possible fail points to plan for prevention if possible, correction if necessary and damage control.

The first point of failure is if there is a problem with the connection between the users device to the T-Mobile hotspot. Unless it is a problem within the users’ device, Starbucks would be the first line of customer assistance to try to troubleshoot the problem. If it is a broader issue and a problem has occurred with the access point it would be up to T-Mobile to correct the cause of the problem. Another possible failure point that would be of key importance is the download to the customers’ device. If the download is interrupted it can be restarted in several ways.

If the problem is with one of the physical storage units iTunes would be responsible to have a backup plan to repair/replace the database or other piece of equipment. T-Mobile Wi-Fi Access point T-Mobile Wi-Fi Access point Starbucks Cafe Starbucks Cafe iTunes Music Distribution iTunes Music Distribution Connect to T-Mobile Wi-Fi hotspot Connect to T-Mobile Wi-Fi hotspot Automatically plays songs at Starbucks and updates the playlist of the last 10 songs played. Automatically plays songs at Starbucks and updates the playlist of the last 10 songs played. Retrieves and plays songs in Cafe from MP3. b Retrieves and plays songs in Cafe from MP3. db Request music to preview Request music to preview Retrieves list of last 10 songs played Retrieves list of last 10 songs played Song retrieved from MP3. db and downloaded to customer device Song retrieved from MP3. db and downloaded to customer device Selects song for purchase Selects song for purchase MP3. db MP3. db Figure 3. 1 Information Flow Diagram- iTunes and Starbucks Revenue Model (Part IV) Apple/iTunes Revenue ModelThe customer requirements for iTunes are to be able to listen to the last 10 songs played at the Starbucks they are visiting.

If the customer finds a song they would like to buy, they want to be able to select purchase by clicking on a button and have the song downloaded to their mobile device. The customer’s account will be billed by the method stored on their account profile for the amount of the purchase. The cost to the customer is $. 99 for a single song. Apple receives $. 29 as profit from this. The competitive advantage for iTunes is that they offer the only music being played at Starbucks. ITunes is also the only music compatible for direct download for iPhone and iPod. The clientele are the customers at each particular Starbucks location.

This means the music must be chosen by locality to maximize profits. Starbucks Revenue ModelFor Starbucks in this partnership, the customer requires the usage of the T-Mobile Wi-Fi access. This allows them to have access from the Starbucks location to the iTunes store. This is the wireless protocol access plan used to securely connect the customer’s mobile device to the iTunes store making the possibility of purchasing and downloading music or other content both easy and secure. In a deal with Apple, Starbucks receives eleven percent of the net profits each quarter on the songs downloaded.

The competitive advantage for Starbucks is that they have the name and reputation of the Apple/iTunes store behind the music system they are partnered with. This can be a draw for more customers to their coffee shop for the music experience alone. This adds to the current client base increasing the clientele. Benefits All AroundThere are many benefits to be had by both companies in the partnership. Both companies can benefit indirectly. Starbucks has increased coffee and other refreshment sales due to the increase in customers. ITunes has been able to bring in new customers by offering free ‘songs of the week’.

This has let customers who may never have started out buying get a taste and decide to buy music. The suppliers to the Starbucks stores also benefit indirectly, as Starbucks does more business they need to order more supplies and that continues on down the supply chain. Location Changes EverythingFor a Starbucks located in the Brewery district in Columbus, OH the choice of music played would be very different than what is played in New York City in Manhattan. Should Apple choose to just play the same song list at all of the Starbucks locations it partners with, there would be a large loss of potential revenue.

Song choice by location makes a huge difference for the clientele as to whether they will be interested in purchasing a song or not. Other Potential PartnershipsThe type of partnership that has worked so well with Apple and Starbucks could work equally well with some other types of businesses. I think that any type of business that caters to a rather quiet environment where a soothing music background would add to the enjoyment could benefit from this kind of arrangement. In particular two of the businesses I had in mind are Laundromats and certain types of Restaurants.

For the Laundromat business I see no reason that adding music to the mix wouldn’t make for a much more enjoyable experience. I think an extra benefit to iTunes would be that someone doing Laundry might want a little pick me up by way of purchasing a new favorite tune during the rather boring process of doing such a chore. For the Laundromat, one that offered free Wi-Fi and iTunes availability would seem far more attractive than just a mundane, boring Laundromat. It would be a much more pleasant way to spend a few hours. On the restaurant front, it would be nice for a small diner to offer the same type of service.

I often see people who are eating alone. When they don’t have someone to converse with, it would make for a nice way to enjoy the meal. They could browse their favorite genre of music and then choose a song to download. This may take a little different song choice selection than the Starbucks selection does. I do think this possibility is something to consider. Revenue Model (Part V) Apple/iTunes Revenue ModelThe customer requirements for iTunes are to be able to listen to the last 10 songs played at the Starbucks they are visiting.

If the customer finds a song they would like to buy, they want to be able to select purchase by clicking on a button and have the song downloaded to their mobile device. The customer’s account will be billed by the method stored on their account profile for the amount of the purchase. The cost to the customer is $. 99 for a single song. Apple receives $. 29 as profit from this. The competitive advantage for iTunes is that they offer the only music being played at Starbucks. ITunes is also the only music compatible for direct download for iPhone and iPod. The clientele are the customers at each particular Starbucks location.

This means the music must be chosen by locality to maximize profits. Starbucks Revenue ModelFor Starbucks in this partnership, the customer requires the usage of the T-Mobile Wi-Fi access. This allows them to have access from the Starbucks location to the iTunes store. This is the wireless protocol access plan used to securely connect the customer’s mobile device to the iTunes store making the possibility of purchasing and downloading music or other content both easy and secure. In a deal with Apple, Starbucks receives eleven percent of the net profits each quarter on the songs downloaded.

The competitive advantage for Starbucks is that they have the name and reputation of the Apple/iTunes store behind the music system they are partnered with. This can be a draw for more customers to their coffee shop for the music experience alone. This adds to the current client base increasing the clientele. Benefits All AroundThere are many benefits to be had by both companies in the partnership. Both companies can benefit indirectly. Starbucks has increased coffee and other refreshment sales due to the increase in customers. ITunes has been able to bring in new customers by offering free ‘songs of the week’.

This has let customers who may never have started out buying get a taste and decide to buy music. The suppliers to the Starbucks stores also benefit indirectly, as Starbucks does more business they need to order more supplies and that continues on down the supply chain. Location Changes EverythingFor a Starbucks located in the Brewery district in Columbus, OH the choice of music played would be very different than what is played in New York City in Manhattan. Should Apple choose to just play the same song list at all of the Starbucks locations it partners with, there would be a large loss of potential revenue.

Song choice by location makes a huge difference for the clientele as to whether they will be interested in purchasing a song or not. Other Potential PartnershipsThe type of partnership that has worked so well with Apple and Starbucks could work equally well with some other types of businesses. I think that any type of business that caters to a rather quiet environment where a soothing music background would add to the enjoyment could benefit from this kind of arrangement. In particular two of the businesses I had in mind are Laundromats and certain types of Restaurants.

For the Laundromat business I see no reason that adding music to the mix wouldn’t make for a much more enjoyable experience. I think an extra benefit to iTunes would be that someone doing Laundry might want a little pick me up by way of purchasing a new favorite tune during the rather boring process of doing such a chore. For the Laundromat, one that offered free Wi-Fi and iTunes availability would seem far more attractive than just a mundane, boring Laundromat. It would be a much more pleasant way to spend a few hours. On the restaurant front, it would be nice for a small diner to offer the same type of service.

I often see people who are eating alone. When they don’t have someone to converse with, it would make for a nice way to enjoy the meal. They could browse their favorite genre of music and then choose a song to download. This may take a little different song choice selection than the Starbucks selection does. I do think this possibility is something to consider. | Starbucks Customers Starbucks Customers Starbucks Cafe Starbucks Cafe Starbucks CafeT-Mobile Wi-Fi AccessiTunesArtists supply music to iTunes databases Artists supply music to iTunes databases | Figure 5. 1 Supply Chain Diagram- iTunes and

Starbucks is the ideal location for the partnership with Apple/iTunes for the music partnership. One of the reasons for this is that Starbucks locations already offered free Wi-Fi access which allowed iPhone users to be able to connect to apple. com and the iTunes Store. The wireless service provided at Starbucks is from T-Mobile. The Hotspots offered are 802. 1x authentication standards and WiFi Protected Access (WPA). This is better than the required basic WEP encryption (Landesman, 2011). The WPA protocol is used to make the connections from customer to access points to the iTunes store and back in reverse for a secure, fast transaction.

The security is an important requirement for all parties concerned. This protects the customers monetarily and also their identification information. The security also protects iTunes corporate concerns allowing them to authenticate their customers and accurately process the payments for the transactions. The iPhone is one of the ideal mobile devices to download music at Starbucks locations for several reasons. Beyond the obvious reason that the iPhone was created by Apple and the iTunes Music store also belongs to Apple. As purchased, the iPhone can securely connect to guest Wi-Fi networks. The ease of connection is a great customer benefit.

The WPA2 Enterprise with 128-bit AES encryption provides users the highest level of data protection. The iOS installed on the iPhone enables it to securely access corporate services and protect important data. IOS provides strong encryption for data in transmission, proven authentication methods for access to corporate services, and hardware encryption for all data at rest. IOS also provides secure protection through the use of passcode policies that can be delivered and enforced over the air (Apple, 2011). References Apple. (2007, September 5). Apple and Starbucks Announce Music Partnership. Retrieved from http://www. pple. com/pr/library/2007/09/05Apple-and-Starbucks-Announce-Music-Partnership. html Apple. (2011). Deploying iphone and ipad Security Overview. Apple, Inc. Retrieved from http://images. apple. com/iphone/business/docs/iOS_Security. pdf Apple. (2011). Deploying iphone and ipad Wi-Fi. Apple, Inc. Retrieved from http://www. apple. com/iphone/business/integration/http://images. apple. com/iphone/business/docs/iOS_WiFi. pdf Bishop, T. (2011, February 15). Starbucks: Mobile payments catching on — 1 million so far. Retrieved from http://www. techflash. com/seattle/2011/02/starbucks-a-million-mobile-payments. html Dominus, S. 2006). The Starbucks Aesthetic. The New York Times. Retrieved from http://www. mktgsensei. com/AMAE/Retailing/Starbucks%20and%20Culture. doc (2004, February 2). Enabling the Future of Wi-Fi® Public Access. Wi-Fi Alliance. Retrieved from http://www. wi-fi. org/files/wp_2_Future%20of%20Wi-Fi%20Public%20Access_1-2-04. pdf Ee, L. (2001). Essential components of e-commerce education: Supply chain and logistics management. In A. Herrmann and M. M. Kulski (Eds), Expanding Horizons in Teaching and Learning. Proceedings of the 10th Annual Teaching Learning Forum, 7-9 February 2001. Perth: Curtin University of Technology. ttp://lsn. curtin. edu. au/tlf/tlf2001/ee. html Etherington, D. (2011). Now you can get an app with your grande chai latte. Retrieved from http://gigaom. com/apple/now-you-can-get-an-app-with-your-grande-chai-latte/ Hirano, K. , Nakantani, Y. , McCarty, S. (2007). Applications of Mobile Research in Japan. WAOE. ORG. Retrieved from http://waoe. org/president/ubiquity. pdf (2010, April 13). How Much Do Music Artists Earn Online? Information is Beautiful. Retrieved from http://www. informationisbeautiful. net/2010/how-much-do-music-artists-earn-online/ Ian. (2011, July 27). Difference between mp4 and m4v.

Retrieved from http://www. differencebetween. net/technology/difference-between-mp4-and-m4v/ iTunes: How to resume interrupted iTunes Store downloads. Retrieved from http://support. apple. com/kb/ht1725 Jordan, J. M. (2007, February). Beyond Servicization: The Rise of Digital Hybrids, Retrieved from http://www. smeal. psu. edu/cdt/pubs/white-papers/beyond-servicization-9. 07. pdf Landesman, M. (2011). Using your laptop at starbucks: Is it safe?. Retrieved from http://antivirus. about. com/od/wirelessthreat1/a/starbucks. htm Levere, J. L. (2004, July 27). Wi-Fi Service Expands Its Reach. The New York Times.

Executive Summary:

In today’s world ‘Information’ is seen as being very valuable and knowledge is considered as a power. Amazon made it easy to increase this knowledge and power through the new innovative device we know as the Kindle e-book reader. This huge availability of information is an ongoing trend and Amazon is exploiting it to the highest potential possible with this device. Its major competitors include companies such as the Sony e-Reader, Apple I-Pad, Barnes and Noble’s Nook, and Samsungs’ Papyrus etc. However, the Amazon Kindle has highest market share in the e-book reader industry and has become a leader.

This report will analyze the Amazon Kindle strategy to achieve competitive advantage using a set of valuable frameworks such as the Porter’s five forces, Resource Based Value of the Firm and SWOT analysis. The findings of this report suggest that Amazon kindle is facing high level of Supplier Bargaining Power, Competitors and Substitutes as well as threat of e-book piracy. Also it is becoming difficult for Amazon Kindle to compete with new entrants in the market such as Apple I-Pad due to lack of experience in the hardware industry and its tendency to rely on content and service to achieve competitive advantage. However Amazon Kindle has used its Information system resources to best possible way and by making positive strategic moves, it has achieved its current leadership position in the e-book reader market.

1. Introduction:

Amazon is online retailer company of millions of products. Amazon.com started out as an online book-seller by Jeff Bezos in 1995. Now it has grown to a web selling range of products such as DVD, CD, toys, cookware, hardware and software as well as other consumer electronics and thus, acting as a virtual Walmart. However the main focus of the product still remains the books. Though Amazon started with selling printed books it is now selling more e-books compared to printed books. According to a research Amazon has sold out 143 e-books for every 100 hardcover books in 2010 (Miller, 2010). The definition of e-book according to Oxford Dictionary of English is “it is an electronic version of book.” It can be read by computers, laptops, netbooks and other electronic devices. Electronic device made specifically for reading book is known as e-book reader. The growth of Devices used for reading e-books is depicted in Figure no. 1.1.

Figure 1.1: Growth of Devices used for reading e-books.

There are many e-book readers available in the market, however, Kindle; e-book reader developed by Amazon.com has occupied highest e-reader market share. At the end of June 2012, Amazon’s Kindle family of reading devices was used to read e-books by 55% of e-book buyers, compared to 15 % of Apple through I-phone and I-pad and 14% of Barnes & Noble’s Nook (figure 1.2) according to figures compiled by Bowker Market Research (Milliot, 2012).

Figure 1.2: e-book reading market share of the Kindle, Apple, Barnes & Noble and others.

This report is going to present the strategy of Amazon in making Kindle, a leader in e-book reader industry using the Porter’s 5 forces Model framework and some points of Resource Based View of the Firm (RBVF). This report will also look at the strengths, weaknesses of Kindle and potential threats/risks to the Kindle from the existing and emerging market competitors and the opportunities to exploit advantage (SWOT analysis).

Research Procedure:

To understand the framework of Porter’s five forces and RBVF, the books available in the library, lecture notes/slides, academic article and the lecturer’s support has been used. The Information about the Amazon Kindle was collected through various academic journals and articles accessed through library search and Google scholar as well as Google search. Read also G oogle’s business model relies on which of the following to generate revenue

2. Conceptual Framework:

A) Porter’s Five Forces:

Porter’s five forces framework was developed by Michael E. Porter in 1979 for the industry analysis which in turn leads to the change or development of new business strategy (Stair et al, 2008).

This framework helps the industrial organization to determine the competitive intensity and therefore the overall profitability of a market. If the combination of these five forces drive down the overall industry profitability, than it is called an “unattractive” industry (Laudon & Laudon, 2004).

B) Resource based View of the Firm:

According to RBVF a subset of the resources possessed by the firms enables them to achieve competitive advantage (Barney 1991). Resources can be defined as assets and capabilities which are available and useful in detecting and responding to market opportunities or threats (Wade and Hulland, 2004). Dynamic capability is the capacity of integrating, generating and reconfiguring competences to address the changes in dynamic environments. Dynamic capabilities focus on the development of resources and their integration within the firm so that capabilities can not be eradicated quickly in rapid changing environments of competitive market (Wade and Hulland, 2004). Wade and Hulland have addressed few Information System (IS) Resources that help in building the dynamic capabilities are: Manage external relationships

Market responsiveness
IS-Business partnerships (manage internal relationships)
IS planning and changing management
IS infrastructure
IS technical skills
IS development
Cost effective IS operations

C) SWOT analysis:
SWOT analysis is a structured planning method used to evaluate Strengths, Weaknesses, Opportunities, and Threats involved in a project, can be carried out for a product, place, industry or person, originated by Albert S Humphrey in the 1960s.

3. Findings/Analysis:

A) Porter’s Five forces:

1. New Entrants: The force of new entrants for Amazon Kindle is about Low. Amazon has created a name in the e-reader market industry though being a second mover after the Sony e-reader. It has built a reputed brand name across the world which is difficult to imitate (Barney, 1991). However the challenge is to convince and make an agreement with the publisher to release the printed material as an e-book. Amazon Kindle has succeeded in doing this. By 15th February, 2013 there were 1,715,400 books available for download (Amazon.com).

2. Industry Competitors: The degree of rivalry for Kindle is high. The major existing competitors for the Amazon’s kindle are Sony e-reader and the Apple’s I-pad with touch screen as well as other tablets with touch-screen facility. However the facility of downloading books free via kindle’s whispernet is great advantage to the Kindle. Also Kindle has now launched the Kindle Fire colour tablet to overcome the “touch feeling” advantage of other tablets over the kindle.

3. Supplier Bargaining Power: Factors determining the supplier bargaining power are the number of suppliers, substitutes and the cost associated with switching to alternative inputs. The main suppliers of Kindle are 3: screen, network technology and publishers.

Kindle has electronic paper display screen provided by E-Ink corporation. E-Ink provides this to many other E-reader manufacturers available in the market which includes iRex technology, Sony, Bookeen, Barnes and Noble, Condor Technology, Icarus readers, Jinke, Kobo, Pocket book, Onyx international and Samsung (Qian, 2011). Thus the supplier power of E-Ink is very high.

Amazon Kindle uses EVDO network technology which is provided by Sprint network. The supplier power of the Sprint is relatively low because of the availability of substitutes Verizon and Alltel who are the other EVDO network technology providers available in the market (Cuddy, 2008).

Publisher’s supplier power is also very important as Kindle is useless without the availability of e-books. To increase the size of Amazon’s e-book library, it has to obtain publisher permission for each book it converts to e-book. Thus publishers are having a great deal of supplier bargaining power since they essentially decide which books will be available for the Kindle. Also the availability of other eBook providers has increased to publishers. Apple’s iBook store has taken some of the Amazon’s publishers: Macmillan, Hachette, Simon & Schuster, HarperCollins, and Penguin in 2010, which in turn have decreased the Amazon’s e-book market share from 90% to 60% (Auletta, 2012). Still Amazon Kindle is having most available titles compared to other competitors in the market.

4. Buyer Bargaining Power: Kindle buyers have very low bargaining power. Because the Kindle use DRM scheme i.e., books purchased for the Kindle cannot be transferred to other manufacturer’s devices. This is advantageous from Amazon’s point of view as it increases switching costs and creates buyer lock-in.

5. Substitutes: There are many substitutes for Amazon Kindle. The alternatives are paperback books, textbooks, magazines, and newspapers. The Amazon bookstore can be substituted by bookstores, and local libraries. The advantage of Kindle to these substitutes is that it is easy to carry, lighter in weight than book and can have many books in a single device.

The other substitutes are laptops, computers, notebooks and tablets as well as smart phones. However the Kindle display looks like an ink on the paper which is more comfortable to eye compared to LCD screen of laptops, computers and tablets. Also Kindle has its own whispernet to download eBook compared to these alternatives which require internet. For these reasons, Kindle compares favourably to these substitutes.

Thus Amazon Kindle has made many strategic moves to become a leader in e-book Reader market industry. Figure 3.1 represents the strategic moves of the kindle.

B) Resource Based View of the Firm:

Manage External Relationship: Strong relationship with publishers. IS Business Partnership: Connection of Kindle to Amazon’s storefront website. IS Planning and Change: Amazon’s development journey from Kindle to Kindle DX and Kindle Fire HD. IS Infrastructure: Assessing the online bookstore anytime without the limitation of Wi-Fi needs, with the availability of whispernet provided by Sprint. IS development: Development of Kindle application and Amazon’s own tablet Kindle Fire. Cost Effective IS Operations: Customer lock-in strategy by providing only AZW format eBooks from Kindle bookstore as well as allowing publishers to set the price of eBooks and in return getting the 30% commission from the sale instead of paying large amount of money to publishers to get their books converted to eBook.

C) SWOT analysis:

4. Conclusion:

1. After applying the Porter’s five forces and the Aspects of Resource Based View of the Firm, it can be noticed that Amazon Kindle has medium level of Supplier bargaining power. 2. Amazon’s Kindle has high level of competitors, and substitutes available in the market due to which its e-book Reading market share is dropping and the risk of potential new entrants can increase. 3. However Amazon Kindle has used its resources and capabilities
as much as possible to get the competitive advantage. It has made significant strategic moves to become a leader in eBook Reader market industry (figure 4.1) and in the future as well by making such wise Information strategic moves Amazon kindle can still have stable and leading position in the market.

5. Recommendations:

1. Marketing: The primary marketing medium which Amazon is focusing on is its own index page of the storefront website. Amazon can advertise the Kindle aggressively and can target its campaign to group of people who travels a lot or for whom travelling is the part of profession such as business managers, marketing persons, persons involved in politics. For this group of people the e-book Reader is more convenient to carry compared to printed books, thus creating more demand.

2. Pricing: Though Amazon is reducing the price of the eBooks and Kindle, overall Amazon is committed to premium prize strategy for Kindle compared to e-books (Loebbecke et al, 2010). But consumers are less sensitive to e-book prices than hardware prices, and so decision to purchase Kindle will be triggered by the cost of the Kindle itself and with the increase in number of e-book readers sold, the revenue generated by the sale of e-books is going to be higher. Thus, Kindle price still needs to be decreased in accordance with the maturity of the eBook reader market and to capture more consumers.

3. Translators: Amazon Kindle provides application to translate the paragraph into other language. This web tool supports 38 languages but not for all versions of Kindle; only 16 languages are available for the Kindle touch (Kowalczyk, 2012). Amazon can focus on providing such a translator tool compatible with all kindle versions and which can convert the whole book into another language compared to a paragraph. This can differentiate Kindle from other e-book readers available in the market and thus competitive advantage.

4. Long term positioning: In the long run the market for e-books themselves is not going to make significant profits because of the emergence of large amount of publisher bargaining power. So Amazon will face similar difficulty in getting profits from e-books. The only substantial barrier for new entrants in the e-book reader market is its reputation and ‘Brand’. Thus Amazon should maintain comparable hardware quality, switching costs and brand identity to competitors, which will allow Amazon to keep a stable customer base and to achieve sustainable profits.

5. Publisher lock-in: Amazon should create publisher lock-in strategy as of customer lock-in strategy to reduce the publisher’s bargaining power and thus can persuade them to provide their e-books exclusively to Amazon and thus to Kindle owners only. This way Amazon can get better competitive advantage.

References:

Annual Report of Amazon (2011)

Auletta K (2012): Did publishers and Apple collude against Amazon?, The NewYorker, 25 June 2012 (http://www.newyorker.com/reporting/2012/06/25/120625fa_fact_auletta); retrieved on 20/02/2012

Barney J. (1991): Firm Resources and sustained competitive advantage, Journal of Management, vol 17 (1), p: 99-120

Cuddy C (2008): E-book readers, Journal of Electronic Resources in Medical Libraries, 5:4, p: 389-394

Jo Y., Novianty J., Suhardiman A., Suryadin D., and Wijaya R (2010): Amazon Kindle Consultant’s Report by Southern California Consulting Group.

Kowalczyk P (2012): How-to: Use Instant Translations in Kindle Touch, TeleRead, 17 april 2012
(http://www.teleread.com/paul-biba/how-to-use-instant-translations-in-kindle-touch-screenshots/); retrieved on 20/02/2012

Loebbecke c., Soehnel A., Weniger S., and Weiss T (2010): Innovating for the Mobile End-User Market: Amazon’s Kindle 2 Strategy as Emerging Business Model, Ninth International Conference on Mobile Business, p: 51-57.

Laudon K and Laudon J (2004): “Porter’s five forces”, Management Information System, Eighth Edition, Pearson Education publication, p: 99-101

Milliot J (2012): Kindle Share of E-book Reading at 55%, Publishers Weekly, 09 November 2012 (http://www.publishersweekly.com/pw/by-topic/digital/devices/article/54705-kindle-share-of-e-book-reading-at-55.html); retrieved on 20/02/2012

Nevo and Wade (2010): The formation and value of IT-enabled resources: Antecedents and Consequences of synergistic relationships, MIS Quarterly, vol 34 (1), p: 163-183

Qian J (2011): Evaluating the Kindle DX e-book Reader: Results from Amazon.com customer reviews, Performance Measurement and Metrics, vol 12 (2), p: 95-105

Staire R., Reynolds G., and Chesney T. (2008): “Competitive advantage”, Principles of Business Information Systems, Published by Cengage Learning, p: 48-50

Wade and Hulland (2004): The Resource Based View and Information System Research: Review, Extension, and Suggestions for Future Research, MIS Quarterly, vol 28 (1), p: 107-142

Audit Exercise Paper Two Student Name MGT/497 – Strategic Technology Planning for Organizations Professor Name January 16, 2012 Introduction This paper will refer to two audit exercises from Chapter three and Chapter four of the textbook. The first one will refer to demand for product, competitive response, level of novelty of the innovation, factor that could block the good outcome of an innovation, and other factors. The second audit exercise will involve the assimilation of a checklist for innovation with respect to the considered organization. It will also determine the readiness of the organization to implement an innovation strategy.

The company chosen for these audit exercises is Apple. Everyone has heard about this company and knows that the products of it are very important in our lives. According to Apple Inc. (2012), they mission statement says that they design Macs, the best personal computers in the world and they lead the digital music revolution with their iPods and iTunes online stores. The mission statement also says that the company has reinvented the mobile phone with their revolutionary iPhone and that they define the future of mobile media and computing devices with the iPad.

The goal of this company is to make the best mobile product from their phone. Remember what Steve Jobs said when people asked him about the purpose of this company. He said that the company will try and offer with their mobile phone what the people need and not what they want. Audit Exercise Chapter 3 This audit exercise will address demand for the product or products of Apple, factors possible to block the success of an innovation, their standards, competitive response, the level of novelty of the innovation, as well as other factors.

White and Bruton (2011) give the following factors to determine the value of an option: favorability of demand for products, factors to speed adoption, factors to block the success of an innovation, the chances of strong competitive response, the likelihood that the possible competitive advantages are sustained, factors inside the company that allow setting standards, the costs to commercialize, the resources available to commercialize, the level of novelty that is captured by the innovation, development costs, certain opportunities that could be advantageous, and possible areas where damage might occur.

In dealing with all these factors, we will refer to the iPhone, the innovation that took Apple on its highest peaks of success. First we refer to the demand for this product. Ever since it was released to the public this product has been nothing but a success. The early prototype that went on sale in June, 2007 blew up the market. According to Vogelstein (2008), analyst were speculating that customers would snap up about three million units by the end of 2007, making from this phone, the fastest-selling smartphone in the history.

It was the same story with the following generations of the smartphone and the demand was higher even though they had their first powerful competitor by the end of 2008 when Android came to life with they G1 smartphone. In order to speed up the adoption of this product the company needs to make sure that they keep their quality standards as they are now. Innovation could be blocked if Apple makes structural changes inside the company or if the key employees in this position want to leave the company. Apple has received a big hit when the heart of this company left us.

Steve Jobs was the brain behind all the innovation at Apple and people will remember him a lot of years from now. Their direct competition is the Android operating systems with all the smartphone adopting it. Android is a powerful competitor which has gain a lot from the market of the smartphone and as it currently is, Google’s Android has a higher portion of the market in this area compared to Apple. To sustain a competitive advantage, Apple needs to keep innovate and offer quality to their dedicated customers.

When it comes to costs of commercialization, the company does well enough because the prices of producing the product are small compared to the prices at which the product is sold in the market. It seems that Google with their Android OS is a little in front of Apple with respect to technological advancement; this is why Apple need to direct some of their costs to research and development to keep up or become better than their competitor. They could leverage opportunities by being able to maintain their devoted customers and offer to them discounts or special promotions for the products.

This would attract other potential customers. The potential damage may occur if Apple is not able to stay in the competition or cannot innovate; they are threatened if Google’s Android is advancing faster and faster because people like to stay in touch with the technology and would choose the best product in the market. Audit Exercise Chapter 4 This audit exercise from the end of chapter four requires analyzing a figure which contains a checklist for innovative organizations to consider.

The questions at hand refer to ways of using the checklist in determining a company’s readiness to implement a strategy that would be innovative. It requires identifying at least a major area to be examined and addressing important considerations from this area. Figure 4. 7 is divided into four categories. It talks about vision, leadership, processes, and resources. We would refer to all of them in consideration to the company Apple. This time the chosen product will be the iPad. The same way Apple was ingenious by bringing the iPhone to the world, the same way was the story about the Ipad.

It was the same brain behind this product as well. The iPad was the first tablet pc in the world. People have seen the concept only in science fiction movies and they were very thrilled when the product came out to the market. It had the same success, the same higher demand as the iPhone did. Now, referring to the vision category and to the first question which asks whether or not the team (or the company here) has a clearly articulated vision, mission, or set of objectives, it has to be noted that Apple has it all clear up, even though things have declined a bit when Steve Jobs died.

However, all the employees in the company need to share the same vision so that they could put all their efforts in continuously creating the same quality products as they did so far. However, not everyone participated in creating the vision because this would be a tough thing to do. The vision came from Steve Jobs and it was shared progressively with all the important players from this company. The vision was to offer the people what they need most and not what they want.

This is attainable; however, it is attainable with a higher price because the company needs to invest time and resources in research and development to spot the necessities of the client and to try to satisfy them. When it comes to leadership, Steve Jobs is the name that perfectly connects to this term. According to Miami University (2007) leadership is the reciprocal process of mobilizing by individuals with specific values and motives, various politic, economic, and other resources in an environment of conflict and competition, to be able to realize goals independently or mutually held by both the followers and the leaders.

It may be a complex definition, but it has the power to point out all the important aspects of this discipline. The textbook asks: “Is excellence of central importance to the team? ” The answer in the context of Apple is “yes” because they are reaching their purposes through excellence, hard work, and a lot of skill. All the employees in this company are committed to fulfill the same vision and the present leader Tim Cook has the purpose of taking forward the words of Steve Jobs and encourage open idea exchanges.

The next category from the checklist for innovation strategy is about processes. At Apple probably not all the employees participate in decision making because this would not be appropriate. Imagine how would be to give a worker in assembly the power to make decisions about marketing strategies for the company. It would surely not be appropriate. However, all the employees are welcome to share their ideas and make recommendations to improve processes or products. They are even rewarded if their propositions are efficient. There is a climate of trust inside this company and it is mportant to maintain it because without good relationships, without communication, there will be conflicts, which lead to inefficiency and to lower productivity. When it comes to resources, Apple has a good way of managing them. Not only they try to make their quality products with a lower consumption of resources and money, but they have the possibility to charge more for their products in comparison with other companies in the same sectors. They are successful; however, this may not be the best strategy on the long-term. They should considering lowering a bit the prices; this would most likely increases their sales.

Conclusion Apple is a market leader and it represents a business model to other companies. Its position offers the company the ability to innovate, invest extensively in research and try to be better than it self. The company has been around for a while now, so they know how to do business efficiently. However, recent competition has absorbed some of its market. This should not be seen as a bad thing in the company but as a motive, as a spark to make the company constantly innovate and make the world a better place with their products. References Apple Inc. (2012).

Apple Corporate Information. Retrieved from http://investor. apple. com/faq. cfm? FaqSetID=6 Miami University (2007). What is Leadership? Retrieved from http://www. units. muohio. edu/saf/leadership/students/whatisleadership. html Vogelstein, F. (2008). The Untold Story: How the iPhone Blew Up the Wireless Industry. Retrieved from http://www. wired. com/gadgets/wireless/magazine/16-02/ff_iphone? currentPage=all White, M. A, & Bruton, G. D. (2011). The Management of Technology & Innovation: A Strategic Approach (2nd Ed. ). Mason, OH: South-Western/Cengage Learning.

Apple Inc. is a successful developer of both computers and consumer electronics. The company’s most popular products include Macintosh computers, iPod mp3 players, iPhone smartphones and most recently the iPad, which is a hybrid of a tablet computer, and an eReader. Apple’s Macintosh computers, iPods, iPhones, and iPads all share characteristics that make them part of the general information technology industry. However, since they are very different products each belongs to a more specific industry.

The Macintosh computers are included in the personal computer industry, iPods in the personal media player category and, depending on the model, the mobile internet device (MID) market and iPhones to the smartphone and MID industry. The iPad has not been released to the general public yet, but considering its various features it could belong to many markets. However, it will most likely be competing with the internet tablets, netbooks, and eReaders. Considering their competitors, one could surmise that the iPad will belong to both PC and eReader markets.

By incorporating market assessment and predictions for each of Apple’s products, as well as consumer research into the promotional strategy, Apple will be able to improve its product sales 10% over 2011. Macintosh computers are Apple’s oldest product category. Their price point is significantly higher than Windows based PCs. This knowledge, combined with Apple’s popular Mac vs. PC television ads, can tell us a little bit about Apple’s target consumer. In the Mac vs. PC ads, Mac is represented by a young, trendy individual while PC is represented by a middle-aged nerd.

This depiction of Mac, coupled with its higher prices (the cheapest Mac sells for $999), tells us that Mac is trying to attract younger individuals, within the 18-24, 25-34 and 35-44 age bracket with a higher-than-average income of the $50,000-$79,000 bracket and above. Due to the higher price point, Apple is targeting college graduates, because they tend to make more money. In the famous Mac vs. PC ads, Mac is portrayed by a male actor indicating that the company’s target market may be slightly more aimed at males than females (Get a Mac – Watch the TV Ads).

Maintaining the current target market appears to be a wise strategy since reducing prices now in order to attract less affluent consumers could risk Apple’s image as a status symbol and its brand equity, especially when one considers a recent study of Apple consumer psychographics in which Mac users were considered to be less modest and more assured of their self superiority than the general population. I would recommend, however, that the Macintosh not entirely dismiss the female audience or older consumers.

Older consumers tend to have more disposable income than the younger consumer. Therefore, with the brand’s higher price point, it would make sense to include the 45+ consumers in promotional strategy as well (Fried). As part of the personal computer industry, Macs are subject to several trends occurring within the industry. First, industrial design is becoming much more important in the minds of consumers than technological features. Consumers want computers that are more portable and can handle work and school requirements.

Lower-priced mini-notebooks are becoming increasingly popular with consumers. It should be noted that the according to Gartner, ‘mini-notebooks were the only growing PC segment in 2009. ’ In another recent study by Gartner, it was predicted that by 2014 in a mature market, design would be the primary reason 20% of consumers will decide to purchase a new computer. However, computer firms should consider not only the outward design of the machine. Consumers also want user-friendly systems that work well with their other electronic devices.

The second factor impacting the personal computer market is increased concentration on targeting even younger consumers. The main features expected to entice these youths are touchscreens and cheap mini-notebooks. Gartner has predicted that ‘by 2015, more than 50% of PCs sold to users under the age of 15 will have touchscreens. ’ Similarly the research company predicted that 20% of mini-notebooks would be sold to consumers 12 years of age and younger by 2012. It is also predicted that mini-notebook sales to children will be the quickest growing segment among PCs (Kitagawa).

Considering this information there are many routes Apple can take to increase their market share in the personal computer industry. First, for consumers who want cheaper options, portability, and great design, Apple should use this as an opportunity to position the iPad as an alternative to the mini-notebook. The $499 device is capable of running Apple’s version Microsoft Office, iWorks, and in the future the iPad application store may include Microsoft Office apps.

The device basically allows consumers to do more or less the same things as a mini-notebook but has the sleeker design and more user friendly interface that consumers are demanding. An alternative to this would be for Apple to design a mini-notebook version of the Macintosh since at present, the closest thing Apple has to compete with this product is the Apple Air, which while it does weigh less than most computers on the market, the product is still very wide in comparison to the standard mini-notebook (IPad – See the Web, Email, and Photos like Never Before).

If Mac wants to continue to compete against its Windows counterparts, Dell, Toshiba, HP and Asus, the company needs to be prepared to compete in the mini-notebook arena. Apple could do this by positioning the iPad as a mini-notebook in consumers’ minds or by creating a new product, a Macintosh mini-notebook (Kitagawa). A second route Apple could take to improve its sales involves the trend of multi-touch surface computers becoming increasingly important in targeting younger personal computer users.

Gartner noted that due to this trend, new markets will be developed for lower cost, with touchscreen computers targeted toward younger users. Apple could define this market with its iPad, or a version of the iPad. Especially since younger users have an easier time using touch screens that are horizontal (like the iPad) than vertical screens (like a netbook). It is important that Apple work on defining this market now, because the new Windows 7 operating system is fully equipped to allow PCs, Mac’s biggest competitors, to enter the portable touch-screen PC market (Kitagawa).

To solidify the best strategy in increasing sales in the personal computer industry, Apple should conduct research surveys to determine if an Apple mini-notebook is something consumers would be interested in, and if given the choice at the same price (currently $499), would they prefer an Apple netbook to an Apple iPad? This would enable Apple to determine whether or not a new product needs to be created to compete in the mini-notebook market. In addition, since design is becoming increasingly important in the computer industry, Apple should seek consumer feedback concerning ways Macs could improve their current designs.

To effectively promote the iPad as a netbook, Apple can take several avenues. First, because the iPad could be easily adapted by children, Apple could greatly bolster its iPad sales by developing educational software for the device and targeting elementary schools with sales promotions and direct marketing emphasizing the product’s educational benefits. To employ this strategy, Apple should send direct mail to public schools and include discounts on iPads based on the schools economic need.

Marketing the iPad as computer for children via direct marketing and not the mass media will also help avoid associating the iPad solely as a children’s computer. Apple’s iPad has already done a great job of utilizing public relations to create a buzz about the product. In fact, the product won’t be released until April, 2010 but the United States government is already worried that its popularity will slow down the internet as new iPad users access the internet (Bellaria).

To market the product as a netbook, Apple should consider emphasizing the attachable keyboard that would allow the product to be better positioned as mini-notebook (IPad). The best way to do this would be to put ads on the big four broadcast networks, ABC, CBS, FOX and NBC. Apple targets a wide range of consumers and advertising on these networks prior to the product’s release would reach a wide range of the target market. As far as marketing Macintosh computers, Apple should keep the current Mac versus PC ads, but incorporate female versions of the ads to entice more females to switch from PC to Mac.

Finally, because the older consumer is a great potential market, Apple should include advertising in news magazines, a medium popular with older adults (Newsmagazine Demographics: A Graying Market). Since many older consumers are apprehensive about technology, the ads should emphasize Macintosh computers’ ease of use and small learning curve. Currently the Apple iPod personal media player offers lower price points and has garnered a market share of around 70%, exceeding all mp3 players for several years.

The iPod is to mp3 players what the Sony Walkman was to tape players (Elmer-DeWitt). For this reason, Apple’s target demographic is definitely broader for iPod than its Macintosh brand, partly because of the mix of low and high prices of iPods ranging from the $59 iPod Shuffle to the high-end $399 iPod Touch. Apple still focuses its attention on younger consumers for the simple reason that this age bracket is more comfortable with technology. The iPod targets age brackets from the 12-17 range to the 35-44 age range.

Males are typically more tech savvy so they make up a slightly higher percentage of the gender demographic. Since the iPod is a cheaper product, household incomes, with the exception of the $15,000 and below bracket are potential consumers. High school students are another great market for the iPod so those with some high school education and beyond are also targeted by Apple. As for psychographics, the consumer base for the iPod is so broad it would be hard to narrow down consumer similarities to anything more than a love of music (Play Music and More on IPod).

The portable mp3 industry is reaching its penetration point and sales are starting to stabilize (Elmer-Dewitt). Portable media players like the mp3 are also following a more connected trend. This means more and more devices, such as the iPod touch are allowing users to access the internet through Wi-Fi networks. Because the iPod is doing so well and has such a loyal brand following, all Apple needs to do is continue to invest just enough in R&D to stay with the competition (Baker). The iPod has reached the maturity age as sales have stabilized in this area.

It is time for Apple to start thinking about cutting costs in this department and milking the brand by reducing costs to increase profit margins (Aaker). The iPod can employ a flighting schedule, going on flight hiatus until before and during the peak holiday period to cut costs. iPod only needs to maintain its image as the mp3 player to have. This can be done by continuing some television advertising to general audiences on the 4 major broadcasting networks as well as channels popular with youth, like MTV and the Disney Channel, in which new music is promoted along with the Apple device, thus linking the iPod with youth.

Also, since online advertising is extremely effective with younger consumers, commercial banners on youth oriented sites such as MTV. com or Hulu. com will continue to keep the iPod positioned as the definitive music player for the 12-17 and 18-24 year old consumers. Sales promotions allowing consumers to get a discount on a new iPod if they turn in their old model could also be effective for the product. This would also maintain brand loyalty and create a unique selling proposition among mp3 players.

The iPhone is very similar to the iPod, especially the iPod touch, in that it can play music and video, (and like the iPod touch, access the internet); however, the device also acts as a cell phone. Over the course of the first quarter for 2010, Apple sold 8. 7 million iPhones, a 100 percent growth in sales from 2009’s first quarter. (Reports First Quarter Results) However, in the smartphone industry, Blackberry still leads the market and Google’s Android has gained a 4% increase in market share. Currently, these smartphones are Apple’s biggest threat.

The iPhone has only gained a . 04% market share (Turner). The problem iPhone is likely facing here is the demographics the product is targeting and attracting. The average buyer of the iPhone is almost evenly split among the 15-24, 25-34 and 35-49 age brackets (31, 32 and 31 percent, respectively). 74 percent of iPhone consumers are males and 58% have graduated college. Finally, the average household income of the iPhone is $75,600, so the target consumer likely falls into either the $50,000 to $79,000 or $80,000 to $94,000 household income range.

The psychographics of the Apple iPod are the same as those of Mac users because both products, iPhones and Macs, are considered status symbols (White). In the case of the iPhone, Apple needs to work on targeting older users. Only 6% of iPhone users are above the age of 50; however, these consumers have more money to spend. Also, because of the intuitive touch interface, the ease of use of the iPhone could be a strong selling proposition for older consumers without much technological experience.

Apple should continue researching ways to improve the ease of use of its product since as the smartphone industry progresses, large screens and touch interfaces are becoming commonplace. Improved usability, longer battery life, and network optimization is where smartphone will be competing in the future (Baker). To improve the user experience of the iPhone, Apple should conduct ethnographic research on current iPhone users. These studies could uncover user frustrations concerning the iPhone experience and focus on the features consumers currently like about the product.

This will help Apple improve the user experience even more and enable the company to more effectively market the device to a wider range of less technologically inclined users. Apple could also include an ‘easy interface’ application specifically designed for the older consumer (Aaker). Like the promotional strategy discussed for Macintosh computers, Apple should take out ads in news magazines like Time and Newsweek ,which are targeted to an older demographic, in order to promote the iPhone’s ease of use and possibly the new ‘easy interface’ application to more senior consumers.

In regards to the newest Apple iPad, this product has a lot of potential to increase Apple’s sales over the next year. It has already been discussed how the product could increase sales by positioning itself as a competitor in the netbook and touch PC market. In addition, the device can also be positioned as competitor in the eReader market. Gartner recently suggested that the eReader industry would great potential if some current issues were resolved. The first issue is that the eReader industry has not agreed on a proprietary file format for eBooks.

This means that currently, there is not a standard book file format that can be transferred from one eReader to another (Baker). However, Apple has enjoyed much success with its iTunes and Application stores for its iPhone and iPod devices. Apple can leverage it online media store competencies to really make the iBookstore a success. If the iBookstore can be as successful as iTunes, not only will this increase eBook sales for Apple, it will also be good for the industry as a whole as it may provide eBook readers with a common file format (Aacker).

The Apple company needs to be cautious and strategic however since Barnes and Noble, the owner of one of Apple’s eReader competitors, The Nook, has announced plans to create its own free online bookstore application for the iPad (Hamblen). Another element that has been afflicting the eReader industry is the price relative to the benefit. The Amazon Kindle’s cheapest version sells for $259 (Kindle Wireless Reading Device) and Barnes and Noble’s Nook sells for the same price (Nook, EBook Reader, EReader). The Sony Reader has a pocket version of its reader, set at a price of $199 (Sony – Reader Pocket Edition).

These prices are currently considered to be too high for most consumers considering the only function of the eReader is to allow consumers to read. The cheapest version of the iPad is to sell at $499. Even though this is almost twice as high as the Kindle, Nook, and Sony Reader, the iPad offers many more benefits, such as video and audio playback, and access to the internet (IPad). Consumers are therefore more likely to forgive the relatively higher price of the iPad since it offers so many more benefits (Baker).

The iPad should continue its mass media commercials on the major networks and work to emphasize its iBookstore in commercials in order to edge out the Barnes and Noble reader application being designed to compete with the iBookstore. Historically, new Apple products are much sought after and are considered status symbols. Because of this, the iPad will be targeted to higher household incomes, primarily the $50,000 to $79,000 and $80,000 to $94,000 brackets. Like other Apple products, the target market will likely lean more toward the male audience and include primarily college raduates. The age range will also likely be 18-24, 25-34, and 35-44 as older consumers typically avoid newer technologies. To generalize all Apple products and their promotional strategies, CEO Steve Jobs does an excellent job of using PR to introduce Apple products and create a buzz for them. However, after the initial buzz wears off, so does the PR. One way Apple could keep its name in the news is by creating a charitable organization, such as an after school technology learning program for inner city high school students, incorporating Mac products into that organization.

Overall, Apple is in a very good position to increase its sales over 2011. Consumers are embracing technology, especially mobile media technology. More and more people are watching videos online and embracing smartphone technology (Bhatia). Apple should continue to emphasize the user-friendliness and great design of its products to the young, old, and everyone in between. If Apple does this, in addition to the many promotional strategies outlined above, a 10% increase in sales over 2011 will be very probable and Apple will have a lot of potential for future growth as well.

The and Initial Success: . ‘s success story is pretty much centered around its charismatic leader Steve Job’s vision and continuing ability to come up with the next wave of products that not only change the rules of the game (Eg: , iPod, ) but also are able to form new consumer behavior.

Founded in 1976 by and Steve Wozniak, Apple’s early success was the result of Steve Jobs acute aesthetic sense coupled with Steve Wozniak’s technical brilliance which helped them produce Macintosh, which was not only a beautiful computer in terms of its structural design, but was also revolutionary in introducing the concept of Graphical User Interface (GUI) thus enabling its use by less tech savvy consumers leading to an explosion of the PC market. They also introduced the revolutionary 2D pointing device, the mouse, to the common people.

The successful marriage of aesthetics and technology led Apple to create the and in it. Although Wozniak was the engineer behind the Macintosh, it was Jobs uncanny ability to turn technology into products, which marked the success of Apple in its first phase of operations. But just like any other industry, others follow suit and competition emerges. So was the case with PC industry when IBM entered it, giving a stiff competition to Apple (Exhibit 3), who was till now enjoying the early mover advantage.

Sustaining Momentum – Competing with IBM and clones: IBM’s entry into PC market with a “Wintel” based PC led to the emergence of cheaper computers and provided price-sensitive consumers with an alternative to the premium Macintosh. Apple (headed by Sculley and later by Amelio) replied by adopting various strategies: a) Market development: Complete desktop solution – hardware + software + peripherals. Educational customers. b) Product development: Professional Products – desktop publishing, high-end laser printers.

c) Competitive Pricing: Low priced Mac Classic, to compete with cheaper IBM PCs, which were attracting majority of new application developments. Losing Momentum: Jobs had the knack to read consumer trends and even more importantly he had the ability to form consumer preferences and shape their lifestyles. In his absence, Apple was reduced to being a “regular” competitor of IBM, losing its focus and was not able to achieve a much-needed breakthrough, either in the form of a new product or in the form of a better OS.

Also, Apple wasn’t able to maintain its differentiating factors of superior product at a right premium, it also couldn’t converge and adopt Intel chips, which had by now became the industry standard. Failure on all fronts lead to Apple’s near bankruptcy in the 90s. Restoring the original : Apple’s success was because of its differentiation, and that was exactly what Jobs restored after his return. He undertook numerous measures to restore the exclusivity that defined Apple.

He launched the revolutionary iMac to make a statement that Apple is back as a cult. The same focus was communicated using extensive ad campaigns and expansion of . This move helped Apple stand apart from the growing clutter of low-cost PC manufacturers, in which anyway they wouldn’t have been able to compete given their costly proprietary hardware and software. In essence, Jobs did exactly what needed to be done (restoring exclusivity instead of competing with low-priced competitors).

Shaping the 21st century: Apple returned to supremacy, like the one it enjoyed back in 80s, because of its ability to successfully predict the lifestyle of consumers of the digital age. They were able to predict the media consumption pattern of people and were successful in forming consumer behavior by supplying mobile entertainment devices. Just like Macintosh was revolutionary in introducing the GUI, iPad too was a revolution because of its flash based memory that allowed a huge improvement in terms of storage capacity. This, coupled with an easy, intuitive and elegant interface made iPod the industry standard.

Similarly by introducing touch screen phone without a regular keyboard, iPhone again reinvented the mobile phone. Here it is noteworthy that just like Apple didn’t invent GUI, they brought it to the public, similarly they were the ones who clearly communicated the potentials of a touch screen smart phone to the world. Thus, it was the ability of Jobs to make products out of technology and more importantly portray their benefits which the common person would not have valued otherwise, is the single biggest differentiator that makes Apple a force to reckon with.

This was augmented by the popularity of the Internet, which made it all the more easy to share content and applications. Here again, Apple was able to deliver the differentiating factor in the form of iTunes (for iPod) and iAppStore (for iPhone) whose popularity was one of the key factors for pickup of sales of these devices (Exhibit 9). After targeting the mobile music and phone segment, Apple is moving into the mobile reading industry trying to replace paperbacks with electronic content (e-books, e-newspaper, e-journals).

Here they are in direct competition with paperbacks (which are much more comfortable to most of the people, even to new generation people) and is up against ‘s Kindle and Sony’s eReader. As Amazon already has a similar pay-per-download model like iTunes and AppStore and Sony has its e-Ink technology, Apple will have to provide a unique set of benefit that is best of both the worlds. Also, positioning it as more than merely an e-book reader may be the differentiating factor that Apple must stress upon.

Preparing for the next decade: Apple has been able to successfully transform itself according to the changing needs of the customers and by offering products which not only are a perfect fit in their new lifestyle but which also stand apart because of their elegant design and unique convenience features. As long as they are able to read these trends and market direction and pounce on the opportunities that arise over time, their success can be sustained. But the major concern is that much of the current success is attributed to Steve Jobs, whose absence may leave the company back to path of chaos like in the early 90s.

What is needed is that Jobs should leadership within the organization because that only will ensure continued growth (like GE). Having a charismatic leader has its own disadvantages as it leaves little room for others to experiment and grow. Also, entry of more players (like IBM in PC industry), unsuccessful launches (like Apple TV) and complacency (like no physical QWERTY keyboard in iPad) may prove to be disastrous. Thus, it’s the ability of Apple Inc. to learn, unlearn and relearn without Jobs is what will decide its success in the next decade.

What is Apple’s Marketing Strategy

The basics of marketing strategy are:

1. Consistent brand promotion. No matter where you buy Apple products, they always have a consistently high level of quality. This is an excellent strategy for brand promotion and customer loyalty. In Cupertino, stores that were beautiful in design and interior were created and there is no doubt that you will always find a large number of people there. Apple has managed to create the feeling that consumers are buying a premium product that embodies quality and status. They are even packed beautifully – you only open the box, but already feel the joy and aesthetic pleasure of the purchase. As a result, a large group of consumers has formed that are faithful only to the products and services of the Cupertino company.
   Apple sought to satisfy existing customers
2. The basis for creating loyalty is customer satisfaction. This is a prerequisite for customers to constantly use the products and services of a company. Every savvy marketer knows that loyal customers are the main strength of the brand and the foundation of a successful business. Therefore, before looking for new customers, you need to make sure that existing customers are satisfied. This helps to work word of mouth, which, as you know, is the best advertising for any company.
   When customers are ready to take a turn and spend the night in tents before heavy rain a few days before the start of sales of a new product, this indicates that the company has reached the level of a rock star. By creating true fans, and not just satisfied customers, the company guarantees itself a stable position for many years. In today’s competitive market, this is crucial.

What to Expect From Apple in 2019

Already sunk into the summer of 2018 was rich in memorable Apple software and hardware announcements, listing which does not make much sense, since you know them by heart. Nevertheless, there were a number of promised, but not released devices, as well as a list of leaks and rumors that could be implemented this year. They will be discussed now.

iPhone

Concept by Benjamin Geskin. We all know the tradition of “new year – the new iPhone”. A number of recent leaks promise that this year, all new iPhones will receive OLED displays. The number of devices is not specified, and therefore there is an assumption that Apple may postpone the announcement of the iPhone XR successor with an IPS display for 2020.

“Proven” insiders – Evleaks and Ice Univerce – claim that the iPhone XI Max will receive a triple module of the main camera with a non-linear arrangement of sensors. Two candidates so far claim the position of the third lens: a wide-angle module or a TOF camera for compiling 3D images and improved shooting in portrait mode. Due to litigation with Qualcomm, Apple has only one potential supplier of 5G modems for future devices of the company represented by Intel. As a result, Tony Blevins, the vice president of the apple-based purchasing company, said Apple was eyeing Samsung and even MediaTek as part of the Project Antique project.

This means that Apple is already working on the release of the iPhone with support for 5G networks, but the release of such a device this year, of course, is not guaranteed. In addition to all of the above, there remains the hope that in 2019, after the rethought iPad Pros, the iPhone will abandon the Lightning port in favor of Type-C so that it can be easily connected to current MacBook models and the same 2018 iPad Pro, which can work in as a bank.

iPad

Insiders say that back in December of last year, the fifth generation iPad mini with four speakers, a Type-C port and a 3.5 mm audio output was to begin mass production. At the same time, analyst Ming-Chi Kuo spoke of the new iPad mini as a budget model. It is assumed that the cost of the basic configuration of the tablet will not exceed the mark of 350 dollars (~ 23 500 rubles).

In the summer of 2019, we are waiting for the announcement of the 13th version of iOS. If you believe the rumors, Apple will focus on the new “chips” for the iPad: updating the “Files” application, the ability to launch two windows from one application at the same time, and the like. Since the advent of the iPad Pro in 2015, Apple has tirelessly maintained that the tablet has finally replaced the computer, and we do not believe it, because iOS remains a “closed” system with many restrictions, like the lack of a normal file manager.

Mac

The latest generation iPad Pro, along with the Type-C port and TrueDepth camera, has acquired the most powerful Apple processor ever created – the A12X Bionic. As a result: we are promised professional software in the form of full-fledged Photoshop, and there are more rumors about Mac on an Apple processor. Apple updated the MacBook Pro and MacBook Air last year, leaving the 12-inch MacBook out of work. Perhaps it was he who had the honor of acquiring the A12X Bionic or another processor of its own production.

Another “deprived” model of Mac remains Mac Pro. In press appeals, Apple’s senior vice president of marketing, Phil Schiller, described the rethought Mac Pro as a modular computer capable of working with VR and serious movie production. Look forward to. With the release of macOS Mojave, several branded mobile applications appeared on Apple computers: News, Promotions, and Home. Tools for porting iOS applications to macOS promise to reach developers this year. Someone is eager to get a native Instagram client for Mac, and I would not give up banking applications.

Services

Last year, Amazon’s smart speakers with Alexa voice assistant and Android Auto platform got support for Apple Music, and the other day Sony, Samsung and LG announced the addition of AirPlay 2 support in their smart TV lineups. Later, Apple published the official list of compatible TVs, which also includes models of the American company Vizio. In addition, in the spring of this year, the model range of SmartTVs from Samsung 2018 and 2019 with exclusive rights will receive the iTunes Movies and TV Shows application, which will open native access to the movie library and TV shows of the iTunes digital store.

Thus, we observe how Apple services are slowly coming to third-party platforms. How about iTunes on consoles or Apple Music in columns with Google Assistant? In addition to porting existing services, Apple will develop new ones. According to an interview with CNBC channel CEO Tim Cook, this year we are waiting for new “apple” services. There is no specifics, it remains only to wait.

Apple marketing is always admirable. It is based on ease of perception. Perfected through tacit emotionality and mystery. Marketers managed to create the illusion of Apple style. A special way of thinking, and now life, which everyone wants to reach. Celebrities, businessmen change iPhones and Macs every year. And these products have become indispensable attributes of success. And if you don’t have a new “apple” gadget, then you are one step lower than your competitors.

Apple Marketing: 10 Lessons for Success

Elegant simple graphics, minimalistic design, unobtrusive background music are the main components of Apple’s approach to marketing. The company knows: it’s important to let the products speak for themselves. This will stand out among thousands of advertisements. And this is despite the fact that prices for “apple” products have gone far from competitive prices. Here are the tools that “styled” the style that is now called Apple’s.

1. Direct clear message. None of the ads mention how or where to buy Apple gadgets. Instead, advertising and marketing messages are very direct. They clearly show a product that speaks for itself. What to do. Remove “cheap” noise, reduce content to a minimum and show simple graphics that will translate your message.
2.  Product placement. Everyone saw Apple gadgets in movies, music videos, on TV. This is an unspoken advertisement that penetrates straight into the consumer’s brain and causes an analogy: this product is used by the most popular people on the planet. And if I have it, then I am one of them. What to do. On a micro-scale, pass on your product to the opinion leader you are interested in. He will unobtrusively post with him. It will be without direct advertising or review, but with a visual accent. Under the “sauce” of the interior or everyday style. New company leads are guaranteed. Important! In 2019, brands are increasingly working with local, local influencers. Their number of subscribers is several tens of thousands.
3. Influencer Reviews. Apple receives customer reviews. People often watch similar photos and videos before buying a new product. What to do. Distribute free trial versions or product samples to industry bloggers. Let them do a review and post it on social networks, youtube or on the site. Important! Ensure the credibility of reviewers. And also – in the activity of their audience, and not just its quantity.
4. Apple never engage in price wars. She just sticks to her pricing strategy. And this despite the fact that it is higher than that of competitors. The company attracts customers with unique values. What does it mean? Focus on cool features and great features. Apple gadgets can do a lot and are easy to use. The client is willing to pay for this value at almost any price. As practice shows, even overpriced. What to do. Find and convey to the customer the value of their product.
5. Holistic Marketing Apple. All Apple promotional messages are complete. They are talking about the same thing. Thus, the client has the feeling that the product is exactly the same as in advertising. And it is he who will ultimately receive it. What to do. Revise your entire marketing strategy. Make sure that all message channels are consistent and confirm the original idea, the message of the brand.
6. Creating a style, not just a product. Everyone can make a product. But not everyone is able to create a memorable experience, a style that will seduce the client to come back again and again. What to do. Apply storytelling to touch emotions and add sensuality to ads.
7.  Conversation in one language. Instead of using complex terms and explanations, Apple has found a way to take customers to the next level. The company speaks with the words of its customers about what they want to hear. What to do. Explore customers: how they interact on social networks. Focus on the sides and qualities of the product that are of interest to the audience. And talk about it in a language that the client understands.
8. Mysticism and magic around the product. One of Apple’s distinctive approaches is to create secrets and magic around everything they do. Products are completely closed until the official presentation. Apple always keeps intrigue. And allows others to speculate on this “secret”. What to do. Do not talk about everything you do. Say “A”, and give the opportunity to think out “B”.
9. Emotions. Apple Marketing features happy people who have a great time with their iPhone and iPad. What masterpieces are created by professionals behind their Mac’s. And this is instead of focusing on the amount of battery and memory. Watch the gorgeous Mac video. His main message: “For Mac people create grandiose things. And you can do that too. ” After all, everyone wants to do something important and grand. And he eventually becomes a client.
10. Visualization. The world was fed up with words and texts. And that explains why videos have become a popular tool. What to do. Create a high-quality video sequence with the message you need with sound. The melody should convey the mood, the state that the client will receive by buying your product.

Some facts

As of June 2018, Apple’s market capitalization reached 950 billion U.S. dollars, higher than that of competitors such as Microsoft, IBM and Google, and almost ten times more than its own capitalization in 2006. The company’s market cap topped the one trillion U.S. dollars mark on 2. August, 2018, becoming the first public company worldwide to reach that milestone. After hitting a record high of 1.12 trillion in October 2018, Apple’s market cap slowly dropped back to the sub-trillion level.

What seem to be the most important things leading to the success of this company? Apple did not come by its present success easily. Before the ipad, iphone and ipod became profitable icons of high-tech fashion, Steve Jobs do suffered a long series of failures. For many years, there were serious doubts if Apple could survive the battles it was losing to competitors like Microsoft. In contrast, Apple is now expected to sell 30million ipads in 2011, two-thirds of all tablet computers sold globally. Question is, how did a struggling company become so successful?

What seem to be the most important things that lead to the success of this company? If you take a look at the Apple’s strategies, it’s actually pretty simple and straight forward. First of all, Apple lets the others fail first, so that it can learn from the mistake. Although to be the first mover is great, but it can after be an impairment. It’s sort of like buying a new model of car the first year it’s available but you will probably have to deal with the unforeseen problems although you might think that it will be nicer if you can have it first.

Apple using this strategy to learn an experience from the failure while not wasting any times and money. Second, Steve Jobs also recognize his own team for the successful of the product. You may take a look at any major product announcement. At the end of the announcement, Steve Jobs always thanks the team leader and usually asked those who worked on the product to stand up. This may increase the employee’s loyalty to the company, and make them proud of themselves and they will be mre hardworking in helping their company to become success.

Third, Apple company focus on the few to sell to many which means that instead of trying to satisfy every fringe taste or market niche, Apple decided to focuses on just a few products in each category. With time and money, Apple strives to make each item in its relatively small stable as perfect as possible. In which help to differentiate the products and build the customer loyalty, and also help Apple to develop a better products compare to other products that trying to satisfy every fringe taste. In contrast, Apple’s success is driven less by the company’s products and more by the company’s marketing and business strategies.