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MARKETING ANALYSIS OF IPAD
Submitted By | Mr Suren
This report aims to present the marketing analysis of Apple iPad. The company sold 1 million units in 1 month and in last one year they have sold nearly 19 million units which made it a huge success. There are 5 business models which have been used to present a detailed understanding of the product followed by discussion, conclusion and suggested recommendations. The product no doubt is getting support of Apple¶s brand image but the iPad has changed the way to consumer media. They have started a new consumer segment and provided a platform for media industry to develop and publish news and magazine content complimented with advertisement of brand at the same time. iPad is well received by L¶Oreal, South Part Hotel, GE where they are using innovative apps to fulfil their customised requirement. The product has is operating under premium pricing and hybrid distribution strategy and gained 80% market share in since 2010. Though the rivalry is getting tougher but Apple iPad has used his innovative and expensive marketing strategy to reach out to young and now adult consumers. The product is also had µhalo effect¶ on iPhone resulting in greater sales. The company have also used eco-friendly raw material and packaging to take care of the environment as part of their green strategy initiative. (Apple Reports, 2010; Apple Environment Report, 2010;MacNN, 2011)
.............................................................................................. .............................. 12 3................................................... ..................................2 PESTEL Analysis...................................................3 Porters 5 forces Analysis ..... 6.. ....................... .................................... .......................................................................................................... .............. ......................... ................. .... 5 3................................ ........................... ......... ..............................................................4 SWOT Analysis .............................5 Ansoff Matrix Analysis .................................................. ........................ ..................... 4 Situational Analysis ........... Discussion ... .. 5...................................................................... 8 3.......... .. .............. ..................................................................................................................... ........ 5 3... .............. ..... 22 References ... .. 4 Product Profile . .. 2............................... .................. ................ 15 3....... Introduction ................................ ............. 24 .......... ........... 18 4...................... ......... 20 Conclusion .. ................................................. .......................................... ................Table of Contents Executive Summary .. .... 21 Recommendations................... 2 1.......... ......... 3.................... ........1 Marketing Mix 4P Analysis .............. .. .........
OS X operating system which is the backbone of their hardware products along with the famous iTunes which is used to transfer data in Apple iPhone. Apple has given details of their sales. The company was formed in 1977 and they have developed Mac Computers to start with followed by iPod. iPad or iPod. Introduction Apple Inc. (MacNN Staff. iPhone 4 and now the recently launched iPad in the tablet PC section. 2010) In a recent lawsuit against Samsung. (Apple Annual Reports.1. 2011) So this gives a good idea how wanted the products are although they have lot of . Not only in hardware but the company has gained a competitive edge in the software industry with the development of Mac iOS. Product Profile Figure 1 Apple iPad (Apple Annual reports. The company has sold 19 Million iPads in 1 yr and 108 ml iPhones & 60 million iPod Touch. is based in USA and been the pioneer in the development & marketing of innovative products by using innovative business methods. 2010) 2.
Ansoff Matrix followed by discussion on the basis of the secondary research conducted on the product. 2010) . 3. no wide screen or no multitasking. (Kotler. Situational Analysis This section will make efforts to analyse the present market situation of Apple iPad using recommended business models like 4P. 2010) As discussed during lecture hours 7P is applied on Services and 4P on products so this report is using 4P for Apple iPad analysis. Price. Porters 5 P model. PEST.practical issues like problem with internet. iPad components (Wong. Figure 1. the next section will review those aspects in the SWOT analysis. 3.1 Marketing Mix 4P Analysis The product market mix consists of 4P¶s (Product. Place & Promotion) and it helps the marketing managers to get maximum response from the buyers by blending the 4 P¶s. SWOT.
Wong. It has Wi-Fi and Bluetooth (limited to keyboard & headphone use) . There are various components which are taken from different companies shown in figure 1 which reflects the management of strategic supply chain and integration of suppliers which has contributed the success of Apple iPad.5 inches. Spain. 2010) 2. (Wong. (Raphael. Product: Ipad is using iOS operating system with weight between 680-730 grams and size of 9.4 x 0. The company is very sensitive and adopted the same pricing strategy as they had done for iPhone. The company made strict policy to buy contract from AT &T with 2 contract options (unlimited data plan and 250MB per month). 2010) 3. Price: The company started selling iPad at $499 onwards and it was $638 (£399) in UK.1. Wal-Mart outlets as show in Figure 2. Even the company decided to reduce the price by $100 when the sales were low. Amazon. Their best fit strategy is focused on price insensitive consumers who want to use the latest product and ready to pay expensive prices.5 x 7. Israel denied the selling as they were concerned about the Wi-Fi issues. Singapore during July 23 2010. Thus products are sold using skimming and versioning pricing strategy. The company sold nearly 1 million units in one month and 19 million in one year (MacAnn reporters. Place: The company started selling the iPad only from their retail outlets and then Apple Stores but soon they also joined hands with AT & T. 2011) Although the product costs around $260 according to a report from iSuppli but it doesn't include the taxes or R &D costs. none the less the company made good profits by launching the products after 1-2 months interval. They started selling in Europe (UK. The main parts are assembled by Foxconn in China which is also planning to change location to Brazil. It is available at stores in India and require 3G . 2010. The company started taking orders for iPad from 12th Mar 2010 and there was a gap between Wi-Fi & Wi-fi + 3G versions. Switzerland) by May 28 2010 and in the south east Asia like HK.
theipadfan. The company is also signing up members through the site to send newsletters as seen www. 2011) in Figure 3.com. 2011. 2011) y The company has launched number of TV and Social Media campaigns. Promotion: The company has been promoting the products with the help of social media campaigns and multi channel media strategy. business analysis reports.000 li es and on Twitt r. 2010) 4. retail outlets along with www.com site to discuss the updates and new happening.servi es available from few major servi e provi ers li e M 2010) Vodaphone. There are few strategic campaigns designed by the company which his given below: Figure 3 Newsletter for Ipad lovers (www.com. (Milwani Fi re 2 Distribution Locations (Apple Annual reports.ipadfan.facebook.theipadfan. Currently Apple i ad has gathered nearly 207. . (www. The company is using the e Apple Store site.com.
Users who have iPad but not iPhone have decided to buy iPhone as their next Smartphone according to a survey. The adverts are designed to sell iPads on the basis of functional attributes and the users are shown to use the various features which can be used by the consumers like email. 2010) 1.2 PESTEL Analysis This section will study the PESTEL forces which are affecting iPad. Political: The Company has adopted monopolistic development behaviour and the operating system works only with special programs developed specifically for them. 2010)The company also organise special events like MacWorldExpo & Apple Expo to announce the launching of iPad.y Faster thinner and Lighter were the most keywords that were reflected in the adverts. (keizer. (Daniel. Similar to their old marketing campaign for Newton the company is using keywords like Magical to entice the viewers. . (Re. (Apple Annual reports. nearly 15% of iPad users are above 56 yrs and above.(Kotler. 2010) y The iPad¶s marketing is helping to sell iPhones as well. 2010) 3. photo sharing etc. Also Apple is marketing that the users can reduce the cost of their investment as they can use the same apps for their iPad and iPhone. The company is also targeting old users and quite successful in that with the help of their easy life adverts. 2010) The company has used the famous song There Goes my Love from The Blue Van whcih was also aired at the Academy Award in Hollywood. due to short product life cycle (6 to 12 months) the managers need to know the factors which are and which can affect their strategy so it is important that every company should make contingency plans before they get affected drastically.
Microsoft and Google ar still fighting to get their share but now iPad is most wanted product . 2011) The company has started their marketing operations in politically stable countries to start with like USA. The company already has over 140k apps which is the highest in the tablet category. sharing of videos and even Call Congress which connect to the local congress representative. Europe and now in India . Because of Apple has higher bargaining power so they can take monopolistic actions although this is another threat for iPad. Apple iPad have been used in the political arena and they have been used by the USA President Mr Obama during June 2010 campaigns and they are planned to use iPad apps to interact with the voters like updates on local events. This pricing strategy is also been condemned by the customers as there is sudden decrease in prices after they are launched as happened with iPhone and now with iPad. LG. 2010) 2. (Mukherji. This also helped Apple to give upper hand with other competitors especially Android features. election news.com. China.This has also started a new era of Apple apps which is an innovative business idea and have created a new niche target market.apple. Toshiba. The company is enforcing customers to buy contracts if they want at good price and in UK the prices are quite high and similarly in Asia as well as seen in Figure 4. (Wagner. 2010) Figure 4 Price comparison of iPad (www. Technology: iPad is built on iOS operating system and is challenged by Android from Google along with other companies like Samsung.
2011) 3. 4. (NAT Reports. (Mearian.0 is rather unstable and the tablet makers like HTC. The users are in touch using social . This is expected to be a new platform for health care development & research and this is just the starting. iPad has provided new platform in the health care industry where the data from electrocardiograph (ECG) will sent directly to the iPad using the new app called Airstrip Cardiology and AirStrip Cardiology is available as screenshot. The loyal customers mostly don¶t get exclusive treatment and still have to face the tough pricing decisions of the company. 2011) Apple on the other had being proactive and gave upfront cash for the key components as opposed to other manufacturers who are affected by Tsunami in Japan which limited their capability to supply. 2010) In other new reports. Asustek Computers are forced to delay the production after the bad review of Motorola Xoom with only 100k sales (Marshal. Economic factors: Apple is facing tough controversy for exploiting the consumers with their excessive pricing strategy in the tough economic conditions. Android 3. Social: iPad is changing the way people have thought about the product. The price of iPad started at $499 but in developing countries like India its $544. This is a premium product and du e to increasing purchasing power the company is targeting the high end users but the company is still facing tough challenge of low 3G service in the country which has drastically impacted the sales. The limitation of Bluetooth to transfer data is a major limitation along with no multitasking capability as iPad was expected to replace Laptops however it has drastically affected the sales during April 2010 and it is estimated that the sales will be over 60 million by 2011.although report says that people are quite less aware of the main features. with the help of over 19 million iPad users the company is providing new opportunity for making changes in the life of the people around it.
2011. It is well received by media and publishing companies where Change Management can be facilitated by iPads.media sites is just a start but the product is well suited for the consuming media and there are many opportunities for the brands where features like iP adverts give high appeal visual & imagery presence for the users with the help of sound. 2010) 5. (Shvartsman. Still no issues have been noticed with iPad but time will tell if they will face legal consequences. 2010) 6. Also feature like ebook reading by Amazon Kindle faced lawsuit as they are not paying the author for reading his book. 2011) So Apple has provided a new platform apart from web where the marketers can get targeted consumers. This is a good strategy which is attract lot of publishers than even before.1) and have used environment management methods during the design and develop life cycle including the material to be used for manufacturing and significant efforts were done to reduce the energy consumption of . The users can interact with the banners which are on the side of the editorial. The CEO have been using the iPad for corporate presentations Companies like Lexus have created a virtual tour of the car which reflects the level of portability which is brought by Apple. Legal: Fujitsu is claiming that they have launched and used the name iPad before Apple similar to iPhone controversy with Cisco. touch and motion. (Yo ung. The application is widespread even in hospitality industry where hotel like The Plaza Part South Hotel is using the iPads for their rooms and they can order the drinks or food at their convenience or can request wakeup calls or look at the city guides & even airlines schedules. Another company like L'Oreal is using it to show the application and usage (after and before affects) which is helping the brands and the consumers easy access & enhancement of brand building. Environmental Factors: Apple has taken great care and done full environmental impact analysis (as in figure 4. Sullivan. (Larrson.
The company is not using Arsenic.1 Environmentally friendly iPad (Apple Environment report. 2010) Figure 4. 2010) 3.3 Porters 5 forces Analysis This section will evaluate the industry factors which shape the strategy of Apple. The company has also stared recycling programs at majority of the places where Apple iPad is sold. Presently Apple due to its strong position can govern the tablet market but still there are many factors which have needs to be analysed before iPad can become a true market leader. Mercury as the company has started following Environmental friendly European directive and restrict the use of harmful chemicals. Power of Suppliers: Apple has high power over consumers as they have partnered with big brands and therefore using monopolistic price policies. iPad is made of recyclable glass and Aluminium and the packaging material is recyclable & the packing is efficiently done so more iPad's can go in one container. PVC. Their product is standard and can't be customised by others.iPad by 80%. The company is taking products from so many other companies and assembling it which has helped them to decide the prices y . (Apple Environment Report.
2010) y Power of Buyers: The buyers have no control over iPad and they are at the mercy of the company. The buyers want to get products as soon as possible but mostly the company says 3-4 weeks for iPad to reach the consumers. Due to strong ties with the network providers the buyers have to take the products under contract otherwise they have to pay huge money to get the iPad alone.and high brand image is helping them to cash the price of advertising from the consumers. 2010) Figure 5. The products in this category is quite high and so the switching cost is also quite high. The company has changed the product and launched iPad 2 from March 2. 2011 but still there are lot of buyers who haven't used iPad first generation yet. 2011) . (Shin. Apple Annual Reports. (Apple Annual Reports.Shin. The price is $499 in US but its $ 544 in Asia but the buyers can¶t do anything due to low power over the supplier. 2010. 2010. iPad 5 forces Model (Kotler.
RIM. Acer and other local brands are entering the market and what to have their share of consumer markets. Toshiba. Although the growth of Apple is 61% and it is expected that they be the dominant player but still the competition is quite high especially due to high inflation in the countries and the products are quite expensive for normal users. The switching cost is high and the company is spending nearly 3% of the budget on R &D which is around $464 ml compared to their rival $1. apart from R &D division they also need stores worldwide which is time consuming and require lot of money. (Apple Annual Reports.9 billion still Nokia is taking time to launch their products. 2010) y Threat of Substitutes: The threat is moderate but according to the Garter reports the Tablet market will significantly affect the sale of laptop and PC (10. Samsung. They are also earning good profit and utilizing China for assembling the iPad. (Garter. The initial investment is quite high and building the infrastructure is not everyone¶s cup of tea. will affect the sales of Apple sales. Apple had 80% market share last year and it is expected that LG. LG. Motorola. HP etc. 2011) y Competitive Rivalry: The rivalry is quite high in the Tablet industry and IT giants like Google. The company has stopped the production of iPad and now iPad 2 is in place. But time will tell who will be the leader. Pringle. 2010.5 % only) and the tablets is expected growth of 100% amounting the figure to reach 54 million in 2011 alone. Another challenge is the compulsion to use only Apple apps from Apple stores in a consumer world where everyone is getting . Apple is deciding the price of the product and consumers are ready to pay & place pre -orders by online which shows that Apple has high bargaining power.y Threat of New Entrants: The Company has maintained a good brand image and its difficult to imitate their strategy due to high financial demand.
The company has used innovative marketing skills to sell iPads with lot of halo effect. 2011) y y The product has good battery life and when its locked it can stay for longer periods. (Shin. 2010. its light and portable & has changed the Document manipulations unlike Smart phones with multi-touch features. (MacNN Staff. The product is small and easy to handle.use to freeware or low price preference due to software piracy. indianic.4 SWOT Analysis This section will focus on the strength of the iPad which is helping them to gain competitive advantage along with the weakness which needs to be taken care of by Apple to gain better market share. 2011. (Bapun. 2010) 3. iPhones and other Mac loyal customers who want to try new Apple products.com. The concluding section focuses on new threats which will affect the sales of the product but there are many opportunities which Apple is still utilizing and can gain more revenue. The product . 2011) y The iPad software developers can embed the advertising content in the applications and it has provided a new market for software developers. Over 30000 iPhone apps can be installed on Apple iPad which give lot of choices for the users. The brand is getting leverage from iPods. This light weight device is making the Book Publishing easy like Amazon's Kindle as the company is managing the publishing value chain & presented a new way to consume content. Strength: The company has excellent brand awareness which is helping the iPad's to sell quickly like in just 1 year the company sold 19 ml iPads. Kotler.
(Bapun. www. so two applications can't run in the product so the users can't download the music if they are working. incompatible Flash support makes it difficult to open Flash sites. (Apple Annual Reports 2010) y The product is eco-friendly and the company has studied environmental impacts while developing the product which is more likely to attract environmental conscious buyers. 2010. 2010) y The product is small but the price is high and with limited distribution channels its tough to get the product and if ordered from website it takes at least 2-3 weeks before they ship the product. (Apple Annual reports.has the first mover advantage and has made a strong presence.com. Without screen protector the product is quite delicate. 2011) Opportunities: . (Apple Annual Reports. 2010) Weakness: The product is facing lot of limitations which makes it difficult to sell in markets like India or China where 3G is still in the developing phase. The maximum storage size is 64GB as compared to normal PC's or Laptops where 300+GB is normal. 2010) y y The product can only run on iOS operating system and so widespread Window/Linux programs can't run on the system. The iPad is not having any camera and there is no multitasking.apple. The product is not so much suitable for business professionals although the company is marketing the product for business presentations. (Bapun. The internet is only for data usage and no VOIP service like Skype can be used. Only the apps from Apple Store can run on the system which further limits the usability. Like in iPhone there is no USB port and so no external DVD drive can be used so it¶s a challenge to transfer data.
y The company can The trend of online book publishing is picking up which has given rise to new iPad publishers and developers. But a recent review from Morgan Stanley research shows that iPad/Tablets has impacted the PC and laptop sales and its quite low during March & April 2010. 2010) Threats: The company is facing huge competition from Windows Table t. 2010) Figure 6 PC Sales in 2010 (Blodget. Kindle. With millions of iPhone and iPad users. Blackberry has launched Storm and so there are lot of competitors. It can¶t be considered that Apple has cannibalize the PC segment as the tablet market is still underserved and has been in existence since and the product has new market of its own. (Blodget. The company can sell their iTunes content more widely which will help them to sell future products to them. the company can earn lot of money as they always charge when the apps are downloaded and share it with the developer company.000 units in one month). Google Nexus One (sold nearly 80. Lot of users are using Windows operating system and Window 7 is a new brand competitor which is a dominant operating system and y .
Acer has also launched Iconia Tab A500 with 2 cameras.com. which is discrimination and not much appreciated by consumers. Toshiba has got SD card slots and removable battery & 2 cameras. Selling of Old iPad (www. (Shin. (Stern. 2011) 3. 2010) y The company is offering products at a higher price in Asia and Europe compared to USA. LG is another big challenger and has launched G-Slate with HDMI out port while Samsung Galaxy is quite cheap ($249 with contract) and has Bluetooth features and 2 cameras and lastly Motorola Xoom is expensive but is compatible with 3G & 4G technology with 2 cameras.000) compares to millions of other software¶s which can run on Windows.5 Ansoff Matrix Analysis Figure 7.gazelle. y Other products like HTC Flyer is coming with camera while Black Berry Playbook has got two cameras Other competitors include Dell Steak 10.lot of applications already exist in the market which are also free compared to iPad apps (140. 2011) .
This is a good strategy to finish the old inventory and a way to promote the new product in the existing market according to Ansoff Matrix. After large number of consumer (2000 in few hours) decided to give back the product the company lowered the bid to 50%. (Kotler. Companies like reCommerce Gazelle have offered to give money equivalent to 70% of the original price of the product on the "like-new" conditions as in Figure 7. Sellers can gain $300-$375 for 16GB and $595 for 64GB Wi-Fi. iPad and have attracted the secondary market consumers who still want to buy the original iPad in under $400. Recently by using the buyback strategy the company is increasing the sale of iPad 2 and also attracting the low purchasing power customers. 2010) As far as iPad is concerned the company has been adopting Market Penetration and Product Development strategy at the same time. which is minimum risk strategy. (Jones. 2011) .As discussed during the lecture hours by Mr _____ Ansoff Matrix can be quite helpful for the business managers to decide their product or market strategy. Apple decided to drop the price of the original gadget i. There are basically four types of strategies where Market Penetration and Market Development is used for existing products and Product Development and Diversification is used for new products. Diversification has been considered to be the most risky as it is a new product for a new market. which is a new product for the existing markets and the company knows very well to ignite the selling of iPad 2.e. The company has launched iPad 2.
Apple also has enough money to give upfront to get products at good price due to high bargaining power as a buyer with . This has created a dual win status for both firms.Figure 8. However the company is also getting revenue as the consumers have to take contract to get a good price on iPads. iPad Ansoff Matrix (Adapted from Kotler. Discussion The company is using hybrid distribution strategy (as in figure 9 below) and using the stores of their partners to sell their product which is helping them to sell with low cost.(Warren. 2011) 4. From Transaction Cost Economy theory it is costing quite cheaper if they had done the same in USA due to high labour cost similarly from Resource Based View the company is focusing on their core competency (design & development) while there is no risk for the firm to outsource the assembly. 2010. Jones. 2010) The company has adopted business processes outsourcing similar to Nike where the manufacturing is done in China and the company is focusing on design and architecture of the product. The strategic partners are quite strong like Cingular has database of 58 million customers with 18ml already tried iPod.
Conclu ion Apple i ad is a new product which has made a dent in the history of tablet business domain and the first successful product after previous failures of Apple and Micr osoft. Distribution channel of i ad (Apple Annual Reports. Despite with many shortcomings i ad is providing a new platform similar to web and created a new segment of consumers who are loyal to Apple and also want to try new innovative products.enough funds and low switching cost to buy i ad components. This has also ignited the demand for new and improved tablets from Apple and other rivals. 2010) 5. This consumer segment will also be consumers for new apps that will be developed for i hone and i ad & this first generation i ad is the first step as the tablet market is just in the introductory phase of its product life cycle and there is lot more potential for the new products but i ad has given a new thrust to the company and fuelled the balance sheet of Apple and motivated them to develop more products. Figure 9. i ad has gained competitive advantage due to first mover approach and the company has benefitted from globalisation which has helped them to maintain better p rofits by getting it assembled in China. The buyers have low bargaining power which helped Apple toregulate monopolistic prices but due to brand image the company is able to get back what they have invested and .
2010) y Price: The price is quite high and the company can earn more from economy of scale and the company has earned enough they can lower the price so they can also attract middle class consumer segment. (Rhiain. 2010) . They have also proved that iOS is better than Android which is still at the development stage but is also a big threat for Apple in future which demands more innovative products and the company still need to adapt to expected changes in iPad which they have already started in their new iPad 2. but the company can penetrate the mass market by making regional dealers which is not in place now. The company is using channel partners to sell the product like they have done in iPhone and they have used the same pricing and marketing strategy as they have done with iPhone making it difficult to be imitated by the rivals. Recommendations y Product: Although Apple iPad is still a huge success but the company can take more steps to make it better like the introduction of multi-tasking which limits the usage of the iPads. 6. (Bapun. This will help them to gain better sales. Also Bluetooth for file transfer can be quite helpful.more. Every country is facing tough financial situation which should not be ignored. They can use good screen guard because iPads are delicate and can be quite expensive investment on behalf of the users. Company can invest in the infrastructural development as they have enough budgets which they mostly spend in marketing. Internet can only be used if the user has 3G or Wi-Fi which restricts the sale in the developing countries where 3G has just started and not affordable by all consumers. (Researcher) y Place: The products are sold only by websites and retail stores or big companies.
Sri Lanka.y Promotion: The adverts are always made in English but with the growing internet users in countries like India. the company should use regional languages in TV and news papers which has never started so far. (Researcher) . Bangladesh.
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