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The Competitive Environment of the iPod Jonna Heliskoski and Charlie Driver December 2006.

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Presentation on theme: "The Competitive Environment of the iPod Jonna Heliskoski and Charlie Driver December 2006."— Presentation transcript:

1 The Competitive Environment of the iPod Jonna Heliskoski and Charlie Driver December 2006

2 Foreword The value of the competitive intelligence depends on the ability to identify and analyse: 1) current and potential new competitors and 2) current and potential changes in customer needs. Competitive intelligence is 1) future oriented 2) used to identify threats and opportunities

3 The Competitive Environment of the iPod The Table of Contents PART 1 – The Introduction Introduction History and development What is an iPod? Competition PART 2 – The Analysis Competitive Environment Industry & Market Customer Needs Technology & Society Market Network PART 3 – The Conclusions Future Predictions Recommendations

4 The Competitive Environment of the iPod The Table of Contents PART 1 – The Introduction Introduction History and development What is an iPod? Competition PART 2 – The Analysis Competitive Environment Industry & Market Customer Needs Technology & Society Market Network PART 3 – The Conclusions Future Predictions Recommendations

5 Sales The Introduction History Of Portable Music

6 Million units The Introduction iPod And MP3 Phones

7 It makes me one hell of a cool human being The Introduction What Is an iPod?

8

9 Product form Product category Generic competition Budget competition The Introduction Competition

10 Microsoft Zune Product form Portable media device The Introduction Competition

11 Sandisk Sansa Sony Walkman Creative Zen Archos Cowon iAudio iRiver Clix Meizu miniplayer Mobiblu MPIO Q-BE Samsung Yepp Toshiba Gigabeat Dell Product category Digital audio player The Introduction Competition

12 MP3 phones Motorola E398 Nokia 6230 Nokia N series Sony Ericsson K700i LG U8110 LG Chocolate Siemens SX1 Sharp GX15 Samsung E800 Motorola RAZR Home stereos Portable stereos Desktop computers Generic competition Home stereo, music playing devices, mobile phones or desktop computers The Introduction Competition

13 Luxury goods Entertainment Holidays Gifts Hobbies Budget competition Entertainment, holidays, luxury goods, hobbies The Introduction Competition

14 The Competitive Environment of the iPod The Table of Contents PART 1 – The Introduction Introduction History and development What is an iPod? Competition PART 2 – The Analysis Competitive Environment Industry & Market Customer Needs Technology & Society Market Network PART 3 – The Conclusions Future Predictions Recommendations

15 INDUSTRY Structure Trends Attractiveness CUSTOMERS Behaviours Needs Trends SOCIETY & TECHNOLOGY Innovations Values Trends Competitive Intelligence PRODUCT DEVELOPMENT OPPORTUNITIES NEW ENTRANTS NEW SUBSTITUTES The Analysis Competitive Environment

16 Intensity of rivalry is moderate. Market is growing fast but is concentrated with one dominant player. Due to the attractiveness of the industry, it is likely that we will see new players entering the market. The threat of substitutes is increasing. The key drivers are 1) increasing amount of consumer usage, 2) diversity of usage and 3) fast changing technology. The threat of substitutes is increasing. The key drivers are 1) increasing amount of consumer usage, 2) diversity of usage and 3) fast changing technology. Entry barriers to the industry are relatively low and mainly related to intellectual property. But the cost of entry has decreased due to availability and use of technology. Entry barriers to the industry are relatively low and mainly related to intellectual property. But the cost of entry has decreased due to availability and use of technology. The bargaining power of the suppliers is low. The componentry is simple and therefore there are many suppliers. The bargaining power of the suppliers is low. The componentry is simple and therefore there are many suppliers. The bargaining power of the buyers is very low. In this consumer market the price sensitivity is low. Also the brand loyalty and the switching costs are high. The bargaining power of the buyers is very low. In this consumer market the price sensitivity is low. Also the brand loyalty and the switching costs are high. Industry Competitors Intensity of rivalry Potential Entrants Suppliers Buyers Substitutes Threat of new entrants Threat of substitutes Bargaining power of buyers Bargaining power of suppliers The Analysis Industry & Market

17 17 iPod80% 20% 10 million The stand-alone MP3/MP4s players The Analysis Industry & Market

18 18 48 million Mobile Phones with MP3/MP4 players iPod80% 20% 10 million The stand-alone MP3/MP4s players The Mobile Phone Industry The MP3s Industry The Market The Analysis Industry & Market

19 Basic need Music for commuting and during exercise Also encompasses all of the services that are offered – a total entertainment package Common theme - stylish Complaints about the battery life, durability Changes In Customer Behaviour Not loyal to Apple 50% of all music is downloaded onto phones Like to have one device for phone and music If we look at the wider scope can we find another way to meet these needs? The Analysis Customer Needs

20 20 Changes In Technology Mobile & wireless technologies Multimedia Convergence Social software Sharing & downloading Changes In Society Sociality & communication Speed of adaptation IP Rights The Analysis Technology & Society

21 The PhonesThe EntertainmentThe Data Management entertainment entertainment, entertainment The Analysis Market Network

22 The Competitive Environment of the iPod The Table of Contents PART 1 – The Introduction Introduction History and development What is an iPod? Competition PART 2 – The Analysis Competitive Environment Industry & Market Customer Needs Technology & Society Market Network PART 3 – The Conclusions Future Predictions Recommendations

23 The Conclusions Future Predictions Wednesday, November 22, 2006 Palm CEO brushes off Apple cell phone threat By AppleInsider Staff Palm chief executive Ed Colligan doesn't plan on losing any sleep over rumors that iPod maker Apple Computer is on the verge of breaching the cell phone market with a new handset device. Responding to questions at a Churchill Club breakfast gathering last Thursday, Colligan reportedly laughed off the idea" that the Cupertino, California based company would experience any immediate success in delivering a device to the fastidious smart phone market. "We've learned and struggled for a few years here figuring out how to make a decent phone,'' he said. "PC guys are not going to just figure this out. They're not going to just walk in.'' Asked what to expect if Apple indeed were to deliver an iPod phone to market, Colligan theorized the device would likely employ WiFi and be sold through the company's retail chain rather than carriers like Verizon or Cingular. Over the course of the last month, Apple is reported to have released its first mobile handset to contract manufacturers while it continues to work feverishly on a second device with additional collaborative capabilities.

24 entertainment, entertainment entertainment The Conclusions Future Predictions Predictions: There are going to be three markets, created around different customer needs. iPod and Zune are going to enter the mobile phone market, forcing the mobile phone industry to revise their strategies. The convergence will continue, increasing the influence of the content providers.

25 The Conclusions Recommendations Apple should Create a blue ocean by combining 1.their core competence of integrating the mobile device (iPod) with high quality content services (iTunes) with 2.the key features of the mobile phones - the communication and connectivity (3G) Lifestyle of unlimited entertainment & communication Look out for Microsoft, Palm etc. who could threaten their position by creating a new market around the need of data management & device synergy. Implement Competitive intelligence

26 Thank You For Your Attention

27 Industry Competitors Intensity of rivalry Potential Entrants Suppliers Buyers Substitutes Threat of new entrants Threat of substitutes Bargaining power of buyers Bargaining power of suppliers Determinants of Supplier Power Differentiation of inputs – Low Switching costs of suppliers - Low Presence of substitute inputs - Low Supplier concentration - Low Importance of volume to supplier - High Impact of inputs on cost or differentiation - High Threat of forward integration relative to threat of backward integr. by firms in the industry - High Entry Barriers Economies of scale – Moderate Initial investments and fixed cost - High Brand loyalty of customers - Moderate Switching costs - Low Access to distribution - High Cost advantage due - access to inputs – High - proprietary learning curve - High Protected intellectual property - High Expected retaliation - Low Rivalry Determinants Industry growth – Moderate Fixed costs / value added - Low Product differences - High Brand identity - Low Switching costs- Low Concentration and balance - High Diversity of competitors – High Corporate stakes – Moderate Exit barriers - Low Determinants of Buyer Power Bargaining Leverage Buyer concentration – Low Buyer volume - Low Buyer switching costs relative to firm switching costs - Low Buyer information - High Ability to backward integrate - Low Substitute products – High Price Sensitivity Price sensitivity - Low Product differences – High Brand loyalty – Low Determinants of Substitution Threat Brand loyalty – High Close customer relationship - Low Switching costs- Low Buyer propensity to substitute - Moderate Current trends – High Relative price performance of substitutes - High iPOD Market Today Analysis Using Five Competitive Forces – Evaluation Of Determinants Determinant strengthens the force Determinant weakens the force: Determinant has neutral effect on the force: The Core Product Samsung: media processor, NAND flash memory chips Audible: Technology for downloading audible versions of books etc. Synaptics: makes the click wheel SigmaTel, PortalPlayer: Chips and processors The Accessories Digital Lifestyle Outfitters: accessories XtremeMac: accessories Griffin Technology: accessories over 3,000 iPod accessories available This slide will not be shown


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