PC Low - Economies of Scale: R&D is especially a big part of the cost of producing (R&D cost in computers hovers at 12%

of sales by the U.S. industry) i. - Product Differentiation: Apple¶s PC has its own operating system and the unique design. - Cost Advantage: High demand particularly in proprietary technology.

MP3 player/online music services Low - Since iPod nano launched, some competitors such as Rio and Olympus had preferred to stop. - Economies of Scale: iPod has 80% of market share and Apple contracted with Samsung to buy 40% of its flash memory production which is two times more expensive than a hard driveii. - Product Differentiation: iPod has its own music store like iTunes which allows customers download music conveniently. The complete set of iPod, iTunes and the accessories for iPod. - Cost Advantage: High demand in proprietary technology. Apple has several patents for iPod and favorable access to raw materials by the contract with Samsung.

Mobile Products Low - Economies of Scale: High demand in R&D and marketing (today¶s cell phones come with a lot of add-ons like camera, voice recorder, speakerphone, MP3 player and FM receiver. They also have built in memories to record and retain voice and pictures and facility to download them to a computer). - Product Differentiation: iPhone has add-on functions with technology from their own PC and MP3 player. - Cost Advantage: High proprietary technology and favorable access to raw materials. High - There are relatively large number of competing firms such as Samsung, LG, Motorola, etc., but the latest market data from analyst firm Canalys estimates that Apple took 28% share of US smart phone market in 4th quarter of 2007iii. Low - Mobile phones can be substituted by home phones, internet messengers, etc., but the main convenience of mobile phones which is the portability cannot be easily substituted.

Threat of Entry

High - There are relatively few competing firms compared to other industries, but Microsoft has most of the market share. - Lower priced PC makers like Dell have been growing in the market. Low Threat of Substitutes - Many types of products such as PDA, DVD player, and calculator can exist as a substitute for PC, but these can substitute only one or two functions of PC.

Moderate - There are various competing firms such as Samsung, Sony, i-River, etc., but iPod has almost 80% of the market share. - But if it does not keep the products innovative, the other company¶s products which are lower in price than iPod can be a significant threat in anytime.

Threat of Rivalry

Moderate - The substitutes for MP3 player can be a CD player, MD player, radio, etc.; but cheaper and easier access to MP3 files has been making customers leave from the other music players.

Moderate - The major suppliers are of raw materials and the labor which is highly proprietary in technology and has the power to impact price.

High - The suppliers for raw materials and labor can be the threat, but the supplier who holds the main profitability is the song writers, singers and players. - Another big threat is the illegal free

Low - Today¶s phone has a lot of functions in addition to calling/receiving so there are many kinds of suppliers for the camera, MP3 players, Video

Threat of Suppliers

pg. Also the buyers keep increasing with the new market of other developing countries. . . Harold. ii Sangan. memories.happle. . Low . iii Apple Took 28% Share of US Smart Phone Market and is 3rd in Worldwide Market Share.. Easy and cheap access to MP3 files can encourage the MP3 player market. or HP differentiate by lower price marketing. 1988. ³Creating the Computer: Government.com/techwebsite/node/393 in Mar 3. Kenneth.The internet speed and the music file providers are developing and these environments encourage the MP3 buyers. 2008.The number of buyers is huge and growing as new technologies are introduced at a fast pace. i Flamm.Besides the threat of the labor which includes the technicians. Brookings Institution Press. but other companies like Dell music download websites or P2P file.techztalk.Apple which is already in the industry of PC and MP3 mostly deals with internal mediates and suppliers. players.The number of buyers is continually increasing and they keep demanding new and updated products. this can be the threat to iTunes. ³Apple and MP3 Player Market´ Extracted from http://www.Apple differentiated by creating its own operating system and unique design. 210-211.org/etudes/happleanglais_ipod. Low . . . etc.sharing sources. and High Technology´.pdf in Mar 3. 2008. there are relatively various suppliers for the raw materials. Industry. but on the other hand.The number of buyers Threat of buyers is even huger than the PCs.iPod has relatively loyal customers. Extracted from http://www. Moderate .

20 0.30 0. E-Commerce Prod.08 0.45 0.15 0.83 Org.30 0.01 0.06 0.30 2.05 0.30 0.02 0. Apple Rating Weight Score 2 2 3 4 3 2 1 4 3 2 3 3 2 0.24 0.60 0.30 0.15 1. Capacity Global Experience Total . Structure Customer Serv.12 0.16 0.30 0.06 0.49 0.47 Dell Rating Weighted Score 4 4 3 3 4 3 3 2 3 4 3 3 4 0.10 0.30 0.15 0.15 0.02 0.02 0.30 0.10 0.15 0.Gateway CSF¶s Weight Rating Weighted Score Market Share Inventory System Financial Position Product Quality Consumer Loyalty Sales Distribution Price Competitive Management Exp.20 0.10 0.00 3 2 2 3 3 3 4 2 3 3 3 3 3 0.08 0.32 0.24 0.08 0.40 0.06 0.02 0.30 0.04 0.60 3.32 0.45 2.12 0.16 0.30 0.02 0.04 0.10 0.08 0.20 0.12 0.

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