Is Apple Entry Into The Mobile Telephone Sector Marketing Essay

Is apple entering Into The Mobile Tele border Sector Marketing EssayAccording to Michael Porter (1979), industriousness is being influenced by five forces. The strategic business manager planning to develop an improvement over rival firms seat use this regulate to better understand the industry plans in which the firm operates.Since iPhone is only offered by single(a) networks such as O2 in UK and ATT in US, customers of some another(prenominal) networks bequeath have to wait until their contract expires, or hire an early can prison cellation fee (typically $cc). The average duration of a cell phone contract is 2 years, which means that 25% of consumers plans volition expire in the next 6 months. Since a $200 electric switch fee makes the iPhone very expensive.orchard apple tree introduced the device at high scathe for early adopters to earn irregular profits and it slashed down iPhone price by 50% for rest of market segment. For Reference, In US When it reduce the pri ce from $599.99 to $399.99 consumer were force to deal with the nimble carrier AT T mobility, in do package ranging from $59.99 to 99.99 per month. But in UK, low amount of inclusive minutes was not competitive. For reference, O2s iPhone deal allowed 200 inclusive minutes for pound 35 versus competitors that offers of 750 minutes in addition to a free phone. Apple reduces its prices or introduces new models for price-sensitive consumers, and its sales could expand considerably.Barriers to Entry/ terror of newfound EntrantsUltimately the iPhone is going to subject the most competition from imitators who can sell a similar or comparable device at a lower price. Most of these threats are going to come from established players in the cell phone industry (such as LG and Samsung) rather than companies trying to enter the cell phone market. Software companies such as Google and Microsoft may let a credible threat at entering the cell phone market.Apple not only had to face a numbe r of roadblocks to entry in the development of the iPhone but they must in like manner worry about potential competitors (Google, Microsoft) overcoming them as well.Economies of ScaleApple already had pre-existing interpret in manufacturing mass-market consumer electronics devices, many of which share components of the iPhone so Apple was not adversely affected by this barrier. New entrants, however, may not have that luxury and the cell phone market is almost defined by its mass-market (which requires mass production and consumption) nature.Product DifferentiationThe iPhone is importantly different than its competitors product. Apple also has a true amount of protection with the strength of its brand identity. iPhone launch was extremely different technology from other mobile companies. But to keep product differentiation consistent in long run would be challenge for Apple.Capital RequirementsApple enjoys a slight advantage here, though its an advantage that may be quickly los t. The other cell phone manufacturers have a lot of experience making cell phones, but not necessarily software. So, to most effectively compete with the iPhone they will need to invest significantly in certain areas. And Apple also has a lot of experience making hardware and software, which gives them an advantage to some extent over their competitors. In this sense, Apple itself did not face much problem with this barrier because of their experience creating both software and hardware. Future competitors looking to enter the cell phone market are less likely to have that advantage.Distribution ChannelsThe iPhone will be only available at Apple and single network stores and it is only supported by the Single network such as o2 in UK. They are not able to sell iPhone in cell phone market and also they are making it difficult for people to even purchase the phone. A future entrant into the market may be able to make their product available for multiple carriers and multiple retailers . For instance, iPhone was available through 1300 Apple, O2 and Carphone warehouses shops in UK.Supplier PowerThe iPhone software that brings all features together and allows the user to interact with the phone in a compelling way. And Apple, of course, developed and owns the software. A producing industry requires raw materials labour, components, and other supplies. This requirement leads to buyer-supplier relationships between the industry and the firms that provide it the raw materials used to create products. Suppliers, if all- officeful, can exert an influence on the producing industry, such as selling raw materials at a high price to capture some of the industrys profits.But in case of Apple, The Software, Hardware, component is developed and owned by Apple itself. Hence, they have less threat from powerful suppliers.Buyer PowerHere you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers, the grandness of each individua l buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. Although the iPhones functionality would be winning to business users, its price is considerably higher than that of Blackberries .This makes enterprise purchases unlikely, since businesses are typically price sensitive.However, the iPhones compelling conflate of features makes it attractive to a broad set of cell-phone consumers. The iPhones market is limited by two factors 1) the high price ($499 for 4 GB) and 2) Apples exclusive US carrier agreement with Cingular (For example AT T, O2).In case of Apple the buyers of the iPhone are somewhat more powerful. Given the relatively high price of the iPhone it remains to be seen whether consumers will pay a high price for Apple iPhone features when their needs may be equally met by cheaper alternatives.Threat of SubstitutesA threat from substitutes exists if there are alternative products with lower prices of be tter performance parameters for the same purpose.The iPhone in the main distinguishes itself from competitors over its softwares and hardwares which are driven by a multi-touch screen. Apple claims various patents relating to this technology. However, it is still likely that other players in the market will soon be able to deliver similar products. Synaptics and LG have already disclosed details of coming products which feature touch-screen interfaces, as well. Software companies such as Google and Microsoft may pose a credible threat at entering the cell phone market.EvaluationBeing sure of huge competition in mobile phone market, I decided to use porters five forces model to do analysis and based on analysis, I found that there is tough competition for mobile operators who act as both substitutes and new entrant. In the next 3-5 year if we see the industry would be more competitive than today. So many firms will be competing in the market and new firms will be try to come in the market for taking the advantage of profitability, which would reduce the profit of the firms. Consumer will have more choice because of substitution, and they can force the companies to reduce the prices of their product. And the supplier will have the power to raise the price of the raw material because of the high demand on the same time.Word attend 1,109 words