Competitive Forces for the Iphone

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Apple Inc. has manufactured some of the most recognizable products in America today. From the commercial success of the Apple II in the early 80’s to the worldwide embrace of the iPod as a cultural icon, Apple Inc. has established itself as one of the leaders in innovative household technologies. Apple Inc. introduced and attempted to sell its first product, the Apple I, in 1976. The Apple I was not as successful as its creators, Steven Jobs and Steven Wozniak, had hoped. As a result, Jobs and Wozniak went on to introduce the Apple II at a computer trade show in 1977. The Apple II launched Apple Inc. to the forefront of the new computer era. Although it had a bumpy road in the 1980’s, Apple continued to grow into a leading manufacturer of personal computers. Since its inception, the company has focused on products for consumers interested in advanced hardware and software for educational and creative purposes, i.e. music and video production (, 2009). Today, Apple continues to be a leader in cutting edge household technology, especially with its recent success with the iPod and the iPhone.


|Porter’s Five Forces |Dimension | |Firm Rivalry |High | |Bargaining Power of Suppliers |Low | |Bargaining Power of Buyers |Low | |Barriers to entry |Moderate | |Threat of Substitutes |Moderate |

Firm Rivalry
One of the most visible indicators of competition in the smart phone industry is the proliferation of new products all aiming to take a chunk of iPhone’s piece in the game. Since the launch of the iPhone, a new wave of smart phones arose aggressively competing to gain market share. Manufactures of similar size, market influence, and product offerings, such as LG, Samsung, Nokia, and Blackberry by RMM vigorously manufacture series of touch screens phone to compete with each other in this industry. Moreover the alliance of Apple together with AT&T, brought along a new distribution trend that is now being adopted by many cell phone providers to compete in the industry. Among many competitors, which called themselves the “iPhone Killer” are the Samsung Instinct by Sprint, Blackberry storm by Verizon, The LG Voyager by Verizon, and the most recent hit the G1 powered by Google and provided by T-mobile. Although firms compete in prices to appeal the price conscious consumers, Apple has been able to position the iPhone as a high end cell phone and is able to sell it at high prices. However, price wars have also arisen indicating the intensity of competition. New prices for the third generation of iPhones have been dropped by 50% (only for new contracts) intensifying the competence even more. Even though the battle of the smart phone is intense, it does not seem to affect Apple’s iPhone sales significantly. iPhone’s looks, utility and brand recognition have maintained in top of the industry. Furthermore, Apple’s efforts to deliver often updates in software to old and new consumers, so they may enjoy the latest innovation, maintains customers satisfied and eager for more Apple products, a strategy that still many competitor are far from reaching. Barriers to Entry

Economies of scale: Apple has experience manufacturing mass-market consumer electronics devices, and software. New entrants may not have this two combined...
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