Report Into the Tablet Pc Market: a Comparison of the Apple Ipad and Amazon Kindle

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Report into the Tablet PC market:
A comparison of the Apple iPad and Amazon Kindle

MNGT 574
Group B

Executive Summary

During this report we have analysed the industry structure of the tablet PC market. We have examined the current strategies adopted by the current market leaders, Apple and Amazon, and their tablet PCs, the iPad and Kindle Fire. Having highlighted issues within the strategies they are operating, through the use of a SWOT analysis, we have identified key strategic issues that are affecting the sales and growth of each of these companies. By examining the value chain of each company we are able to justify the strengths of each company and suggest ways in which they can adjust their strategy to utilize these strengths for future growth. Having identified these key issues we were then able to provide recommendations for each company for better performance in the future; the key recommendation to Apple was to focus more on the developing business and enterprise market segments. The key recommendation to Amazon was to consider a more global strategy by expanding the markets they currently sell the kindle in; this should in turn provide them with global economies of scale allowing them to operate a more sustainable long-run strategy.

Industry analysis

Although tablet hardware has been around for many years, the modern tablet PC that we know today has only recently been developed with Apple at the forefront of this; the iPad was the first innovator in this industry to truly realise the potential that tablet PC’s could have. The versatility of tablet PC’s and limited function ability makes them useful for content use only, meaning that at present they pose no immediate threat to the laptop market. Tablet PC’s are designed to be lightweight, small and convenient to use; qualities which Apple perfectly adopted in the first iPad.

At present it is possible to divide the tablet market into the following main segments, each with different requirements and specifications.

At present the consumer market is flooded with many ‘copycat’ products of similar quality and technology. This has been recently publicised in the high profile patent battles between Apple and various other tablet manufacturers, notably their case with Samsung in which they won their battle of infringement of various patents; Samsung were as a result fined millions in damages. The consumer market is still relatively new having only established and expanded properly at the end of 2010 with the success of the iPad. Both the professional and Enterprise markets provide large possible demand as many multinationals purchase tablets as mandatory office technology, the medical tablet market also provides great potential. These markets provided great potential for expansion and growth. According to recent estimates, the US tablet PC market is expected to grow at around 11% annually from 2012, with at least a 30% increase in demand driven by the business sector over the next five years; highlighting the great potential in increased demand these markets could provide.

During July-September period, the overall tablet market grew by 50 per cent to nearly 28 million. Samsung's market share comes second and grew to 18%; the number of tablets shipped almost the same as that of Apple (see graph 1). Amazon was in third with its Kindle Fire, which managed a 9% worldwide share even though the Fire was available only in the U.S. during the third quarter. Apple is still the market leader and has sold around 70 million iPads worldwide since its launch in March 2010. The third quarter of 2012 showed the company’s share of the market for the tablet pc fell to 50.4% compared with 87% and 60% market share in the same period of 2010 and 2011.

Graph1: source from mailonline <http://www.dailymail.co.uk/news/article-2228953/Apple-iPad-overtaken -market-share-Samsung-Google-devices.html>

Value Chain

The above value chain for Amazon and Apple...
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