Market Model Patterns of Change (Apple) - Assignment Example

MARKET MODEL PATTERNS OF CHANGE Whether Apple possesses sufficient of a dominant position in the market to maintain competitors out, and whether it is wielding "anticompetitive pressures on value."Apple possesses a firm control over a particular market for regulators to even ask whether its activities have been suspicious. Such criticism depends on how you define the market. One shows Apple with a 73.4 percent allocation of the MP3 software market. Another shows iTunes with 83 percent of online tracks sales.

Apple has had 99.4 percent of mobile applications and 99 percent of TV show downloads. As of last fall, the iPads allocation of the tablet computer market was 95 percent. A song streaming service that gives a free application on Apples iTunes Store is clear. The company issued a statement describing Apples demand for a 30 percent cut of the 20 percent it gets from each sale as "economically untenable," adding that it would be collaborating with our market peers in determining an appropriate legal and business response to this latest development.

The point is, Apple is no longer the no-hoper it was during the Mac-vs.-Windows wars of the 80s and 90s.In fact, in many markets -- particularly those supported by the iTunes/iOS ecosystem -- Apple is more powerful than Microsoft ever was, since it controls the hardware, the OS, the online store, and the terms by which third parties can do business in its space.Apple, in turn, might define the market to comprise all digital and print media, and counter that any issuer not happy with Apples terms is free to still reach its customers through many other print and digital outlets.

IOS applications cannot be distributed anywhere other than the Application Store. Mac applications, can be bought via the Application Store or online or in a store. Ever wonder if maybe this is a good idea? Look at what is happening with Windows viruses; they get installed on your computer through the internet in a shady manner. While we have gotten used to having and living with this risk on a PC, I absolutely do not want someone or their software to take over my cell phone (directing me to the wrong place on a map, calling 911 on its own, calling some guy in Kazakhstan, sending text messages, tracking me in real time, sending e-mails to my boss and taking all my stored passwords)!!!

What a fantastic target it could be while it roams around with you, seeing different access points and other users on the network at Starbucks or your college campus or even simply on the carrier’s data network. In my non-expert opinion, Apple is doing this for that reason almost entirely (I guess 75 percent), and it costs Apple money to review Applications for malicious code and then to host it on the Application Store, collect payment from end users, process it and pay the developers their share.

They sell a product and service in a manner they deem fit, just like the company you work for, and they make a profit on it. “If you do not like it, do not buy it. If your item cannot compete, build a better product.” (Ankerl, 1978, p. 117). If it took Apple 30 years to really, truly succeed, it just might take you that long too, but someone will eventually beat them out. When that happens, it should be by innovating and building, not suing them so a Judge tells them to lighten up so other products that arent as good can compete.

Apple has become dominant in many areas. For instance MP3 applications, the iPod, or music downloads, the iTunes Store, or Smartphone-iPhone. Each one of these product categories was there before Apple came along, and each fallen under the influence - if not the control - of Apple.I cannot say that Apple likes having competition. But Apple mostly pays no attention to its competitors and uses other means to dominate a product category. They use the following tactics: (Michaels, 2011, p.236)Design ExcellenceI have written about Apples design excellence several times.

For example, Apple merges hardware and software design to make a better creation. At the same time, its designs are not just intuitive; they make them "idiot-proof" to keep the novice user from making big mistakes.Design excellence helps a monopoly, because at the start it gets people attracted in the product. The look, feel, and simplicity of use are great for getting people comfortable with a new product. Later, as the product is established, it gives the brand credit that people are attracted to.

Design is also able to be used to fend off imitator competitors by filing trade dress suits when they try to imitate your designs.Superior MarketingMarketing is a tool for elevating sales. For a monopoly, marketing is used to distinguish a company apart from the crowd. It is a tool to educate people about what you have to offer. We can see that Apple is much better at getting out the news about its new products by looking at Apples launch of the MacBook Air. Apple can label a product category that has been in existence for years and make it seem like they just created something new.

Buying PowerKey to the modern monopoly is buying muscle. The reason companies merge and grow is to gain the advantage of buying power. Buying power works in two manners for business. One can afford to buy bigger, faster, and better production gear to crush your competition, or you can buy in huge quantities to destroy them based on lower cost of goods (Michaels, 2011 p246-250). Since Apple does not make computers anymore, it only profits by using its billions for shopping.Apple has many times bought out the available flash memory provision to be used in iPod and iPhone.

Its purchasing habits have generated the ire of Korean flash memory manufacturers. In addition to this, Apple has definitely gotten the lowest price attainable in the market.This technique provides many purposes for the monopoly. It saves money. It forces up costs for the competition. And most significantly, it limits a resource for others that you have in abundance. (Friedman, 2002, P 208)By calculating growth, Apple has made the most of its profits. Apple charged $599 per phone on the day it was unveiled.

Later it plummet the price to spur growth. Finally, it toggled to a subsidized price below $200 to gain even more growth. Apple built up demand as supply grew. Apple has sold phones as fast as it could make them. Apple applies pricing decoys as well as reference prices, bundling and obscurity to make you perceive its products as a good deal like the popular iPod Touch media player has been refurbished at three price points - $229, $299, and $399.The current iPad costs $499 in its least-feature configuration versus the Archos 7 Home Tablet ($189) or the Dell Streak ($299 with a two-year AT&T contract).

The subsequent data is some revenue data of the apple company:Market Capital (intraday):$390.73 Billion and an Enterprise Value of $364.78 Billion (January 25, 2012).Operating Cash Flow (trailing twelve months):37.53Billion dollars and Levered Free Cash Flow (trailing twelve months): 20.92Billion dollars.Revenue (trailing twelve months):108.25Billion dollars: Revenue per Share (trailing twelve months): $117.12Period EndingSeptember 24, 2011September 25, 2010September 26, 2009 Total Revenue108,249,000   65,225,000  42,905,000  Cost of Revenue64,431,000  39,541,000  25,683,000Gross Profit43,818,000   25,684,000  17,222,000  Net Income 25,922,00014,013,000  8,235,000Net Income Applicable To Common Shares25,922,000   14,013,000  8,235,000  ReferencesAnkerl, G. (1978). Beyond monopoly capitalism and monopoly socialism.

Cambridge, Massachusetts: Schenkman Publishers. Friedman, M. (2002). VIII: Monopoly and the Social Responsibility of Business and Labor. Capitalism and Freedom (40th anniversary Ed.). Chicago: The University of Chicago Press. p. 208 Michaels, R. J. (2011). Transactions and strategies: Economics for management (1st Ed.). Upper Saddle River, NJ: Cengage.