Essay about Economic analysis of Apple Inc.

2614 Words Nov 30th, 2013 11 Pages
Economic Analysis of Apple Inc
ECO320-65: CAPSTONE
Economic Analysis of Apple Inc.
Introduction 3
Industry analysis 4
Personal computers 4
Computer software 5 iPod and iTunes 5
Company analysis 7
Apple Computers Inc 7
Apple Inc 8
Innovation 9
Profitability 9
Recommendations 11
Personal computing 11
Conclusions 12
References 13
Appendix 14
Introduction
The primary purpose of this report is to execute an economic analysis on Apple Inc. We will review the impacts that the competitive market has had on Apple, since it was founded in 1976. This report will detail how Apple Inc. is both a dire example of the adverse effects of monopolistic competition on a company as other companies into the
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Apple simply lacks the relative size and market share to threaten the near monopoly created by Microsoft (the near-monopoly is evident when you see that Microsoft consistently has a 20 to 30% net profit margin annually). Secondly, Apple software is limited to its own personal computers. Thereby, its lack of market share in the personal computer market as detailed above limits much of its software sales. That being said, Apple has a distinct niche market when it comes to multimedia software. Typically, individuals working in the multimedia industry (or in education) or having a hobby pertaining to multimedia specifically seek out Apple's software (even if it requires the procurement of an Apple personal computer). This demand is fundamental to the current and ongoing success in computer software market. iPod and iTunes
Since its launch in 2001, the iPod has dominated the personal music market internationally. Regular updates have driven continued demand for the product line. This innovation has made consumers with adequate cash unwilling to seek substitutes. Nonetheless, due to growing market demand more companies are entering the personal music device market - they simply tend to vie more with each other than with Apple. The typical iPod consumer replaces their iPod with another iPod. This shows how relatively inelastic the demand for iPod is; after all, all the competitors entering the market of bringing the equilibrium markets price of these

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