IPHONE
-
SUPPLY, DEMAND AND FUTURE OUTLOOK
3
party Windows only programs which were buggy at best. Once Apple allowed its products to play nic ely with the rest of the computing world it unknowingly opened up the doors to future products, specifically the iPhone. The iPod was not Apple 's first foray into handheld devices but its success helped pave the way for the iPhone and build their digital media player and associated iTunes online digital store into market power houses.
At some point Apple must have quantified the marginal benefits and of creating the iTunes store and figured it out weighed the marginal costs of this action.
Product
Usage a nd Compliments
In 2002, Apple was beginning to realize that rather …show more content…
Current hardware devices such as iPhone 6
, 6 Plus, SE or newer device s only make up
31% of the iPhone installed base
.
This means that there is ample opportunity for Apple to sell its latest iPhones. (Sikka, 2015)
Other factors still point to a strong long term growth for the power house Apple has become. The vertical growth Apple is experienc ing has allowed them to
IPHONE
-
SUPPLY, DEMAND AND FUTURE OUTLOOK
6
command a presence with other complimentary products such as the iPad which has become the personal computer of the future, the Mac is still the high end choice for desktop computing, and the iPhone proves to be the best mobile devi ce in the business.
Demand Factors
Third degree price discrimination is predominately used by firms with extensive market power (Robins, 2015) Economic theory helps us understand Apple 's motivation and decision to decline prices of its iPhones despite hig h demand and low supply situation. Apple iPhone is an example of a product that has a short life cycle and the demand for iPhone varies …show more content…
High valuation customers however, exit the market after the first few months. Demand for iPhone at the time of introduction was relatively inelastic and became more elastic as time passed. This price strat egy is also called price skimming whereby high price is charged to low elasticity consumers initially and then lower prices to sell to the mass market. Inter
-
temporal pricing or price skimming may not maximize earnings for a company, if buyers can anticipa te a price cut in the near future. High value customers may wait to buy the product after the price cut and the pricing strategy would prove to be ineffective.
Labor Intensive Product Supply and Future Outlook
According to research firm IHS Technology, ana lyst’s claim the cost of producing a $649 iPhone was $ 211.50 and the cost of manufacturing a $749 iPhone 6s Plus was $236.
(Campbell, 2015) As time passes the cost of manufacturing iPhones has declined for Apple and they have benefited from economies of s cale. Low production costs have allowed Apple to make price cuts and offer their older technology at lower prices. Previous versions of
-
SUPPLY, DEMAND AND FUTURE OUTLOOK
3
party Windows only programs which were buggy at best. Once Apple allowed its products to play nic ely with the rest of the computing world it unknowingly opened up the doors to future products, specifically the iPhone. The iPod was not Apple 's first foray into handheld devices but its success helped pave the way for the iPhone and build their digital media player and associated iTunes online digital store into market power houses.
At some point Apple must have quantified the marginal benefits and of creating the iTunes store and figured it out weighed the marginal costs of this action.
Product
Usage a nd Compliments
In 2002, Apple was beginning to realize that rather …show more content…
Current hardware devices such as iPhone 6
, 6 Plus, SE or newer device s only make up
31% of the iPhone installed base
.
This means that there is ample opportunity for Apple to sell its latest iPhones. (Sikka, 2015)
Other factors still point to a strong long term growth for the power house Apple has become. The vertical growth Apple is experienc ing has allowed them to
IPHONE
-
SUPPLY, DEMAND AND FUTURE OUTLOOK
6
command a presence with other complimentary products such as the iPad which has become the personal computer of the future, the Mac is still the high end choice for desktop computing, and the iPhone proves to be the best mobile devi ce in the business.
Demand Factors
Third degree price discrimination is predominately used by firms with extensive market power (Robins, 2015) Economic theory helps us understand Apple 's motivation and decision to decline prices of its iPhones despite hig h demand and low supply situation. Apple iPhone is an example of a product that has a short life cycle and the demand for iPhone varies …show more content…
High valuation customers however, exit the market after the first few months. Demand for iPhone at the time of introduction was relatively inelastic and became more elastic as time passed. This price strat egy is also called price skimming whereby high price is charged to low elasticity consumers initially and then lower prices to sell to the mass market. Inter
-
temporal pricing or price skimming may not maximize earnings for a company, if buyers can anticipa te a price cut in the near future. High value customers may wait to buy the product after the price cut and the pricing strategy would prove to be ineffective.
Labor Intensive Product Supply and Future Outlook
According to research firm IHS Technology, ana lyst’s claim the cost of producing a $649 iPhone was $ 211.50 and the cost of manufacturing a $749 iPhone 6s Plus was $236.
(Campbell, 2015) As time passes the cost of manufacturing iPhones has declined for Apple and they have benefited from economies of s cale. Low production costs have allowed Apple to make price cuts and offer their older technology at lower prices. Previous versions of