Mobile phone MarketIn 2007 iPhone was launched

Major competitors

BlackBerry HTC Microsoft mobiles Nokia Motorola

Your Life in your pocket

specifications

iPhone iPhone 3G

iPhone 3G S

iPhone 4

OS iPhone OS 1.0

iPhone OS 2.0

iPhone OS 3.0

iPhone OS 4

Display

3.5 in, 3:2 aspect ratio, 265 k colors, 480 x 320px (HGVA)

960 x 640px, 800:1 contrast ratio

Storage/memory

4,8 & 16 GB/ 128MB DRAM

8 & 16 GB/ 128MB DRAM

8GB/ 256MB DRAM

16 & 32GB/ 512MB DRAM

Processor620 MHz Samsung 32-bit RISC ARM

833 MHz 1.2 GHz

Software and design Apple USA

Assembly Foxconn Taiwan

TFT-LCD Screen Sanyo Epson, Sharp, TMD Japan

Video processor chip Samsung Korea

Touch screen overlay Balda Germany

Bluetooth chip Cambridge Silicon Radio UK

Chip manufacture TSMC, UMC Taiwan

Baseband IC Infineon Technology Germany

WIFI Chip  Marvell USA

Touch screen control chip Broadcom USA

CMOS chip Micron USA

NOR Flash ICs Intel, SST USA

Display Driver chip National Semi, Novatek US, TW

Case, Mechanical parts Catcher, Foxconn Tech Taiwan

Camera lens Largan Precision Taiwan

Camera module Altus-Tech, Primax, Lite On Taiwan

Battery Charger Delta Electronics Taiwan

Timing Crystal TXC Taiwan

Passive components Cyntec Taiwan

Connector and cables Cheng Uei, Entery Taiwan

iPhone Primary Contractors 

Technology

• The Touch screen• The sensors• The Internet• Mac OS X

Objectives

• I year objectives - aiming for 2%market share of US & UK - unit sales volume 4,45000

• II year objectives - achieve 10% market share - unit sales volume 12,45000

Target Market

Distribution• AT&T and major cellular providers like

Verizon• Apple online & Apple stores• Major third party online retailers like

Amazon.com• All major electronics retailers - wall mart - Best Buy - Circuit city

• Distributors in INDIA - Bharti Airtel - Vodafone

Carriers

No. Date Country Carrier Flag

1 29 June 2007 United States AT&T A-1-1

2 9 Nov 2007 Germany T-Mobile A-2-1

3 9 Nov 2007 UK O2 A-3-1

4 29 Nov 2007 France Orange A-4-1

5 14 Mar 2008 Ireland O2 A-5-1

6 14 Mar 2008 Austria T-Mobile B-1-1

Communication

• Emphasize on brand prominently• Associate iPhone with iPod’s

groundbreaking lineage• Massive TV campaign in June• Newspapers • Social Networking sites• Apple sites

Marketing Mix• June: Major market rollout at AT&T and

Apple stores• August: Availability will expand to mass

vendors• November: New Ad campaign for holidays• Early 2008: Build buzz for next

generation iPhone• 2009: Major technical upgrades, e.g. 3D

ability• 2010: Goal of at least 50% market share

Market Penetration Pricing strategy

Market skimming

- Release new product at high premium - Skim the greatest possible margin - Once sales volume begins to decrease at the original price - Incrementally lower the price to increase sales - Repeat this until stable price with acceptable margin is determined

What happened

In September’ 2007, barely 10 weeks after the launch of iPhone, Apple announced a steep price cut for the product.

The 4GB version was made inoperable while the 8GB version was available at US $ 399 and a 16 GB version was to be introduced at US $ 499.

The early adopters who had waited in queues to buy the product at a much greater price were discontented and annoyed and they therefore took a legal action against Apple and AT&T for the price cut.

This issue had a negative effect on Apple’s share prices.

SWOT Analysis• First mover advantage 

• Ownership of technological patents

• Apple is one of the most established brand

• Customers loyalty

• Cultural, fashion identity

Strengths

• Dependence on third party provider: 

• AT&T, Content Provider, Application provider

• Less appeal to corporate customers 

• Technological complication

• Gorilla arm

Weaknesses

• Sharp rise in consumer demand• 56% of smart-phone buyers prefer

iPhone

• New target market –• price reduction attract • more customers

• High Potential Software –upgradable; can add new features

• 3G Apple iPhones to captivate business demand worldwide

Opportunities

• New powerful entrant – Google

• Many similar or substitute products

• Intense competition with major rivals

• Increasing bargaining power of buyers

Threats

CORE COMPETENCY --- USER

EXPERIENCE

Organizational Hierarchy

Key Success factors

Consumer-oriented Factors

Technology

-------------------- Internet driven

force

- Replacing communication tools

- Next generation experience

Marketing

-------------------- Well-know and

well-respected brand name

- Market segmentation

- Targeting and Pricing effectiveness

Skill and Capability

-------------------- Value added

(cheaper, faster, more convenient

than the alternatives)

- Design and innovation expertise

Distribution

--------------------- A strong network of

wholesale distributors/ dealers

- Fast introduction and application of

services

Financials• First year sales revenue : $ 2.5 billion avg.• Wholesale price $500 per unit, Variable

cost $250• Total volume: 10 million• $50 million fixed cost• Break even at 200,000 units

• After Break even Apple will make profit of $1.25 billion minus $50 million fixed cost

OS used in smart phones in 2005

OS used in smart phones in 2010

ComparisonModel OS Size Weight Screen resolution Keyboard Camera Other

Apple iPhone Mac OS X 81cc 135g 320x480 Soft 2mp Accelerometer

HTC P3300 Windows Mobile 105cc 130g 240x320 Soft 2mp GPS

Motorola RIZR Z8 Symbian OS 77cc 112g 240x320 Numeric with T9 2mp

Nokia 5500 Sport Symbian OS 87cc 103g 208x208 Numeric with T9 2mpAccelerometer, heart rate features

Nokia E61i Symbian OS 114cc 150g 320x240 Full Qwerty 2mp

Nokia E90 Communicator

Symbian OS 150cc 210g 800x352 & 240x320Full Qwerty and Numeric with T9

3.2mp GPS

Nokia N95 Symbian OS 110cc 120g 240x320Numeric with T9, Multimedia

5mp GPS

Palm Treo 700p Palm OS 5 151cc 180g 320x320 Full Qwerty 1.3mp

RIM BlackBerry Pearl

Blackberry OS 77cc 90g 240x260Numeric with SureType

1.3mp

RIM BlackBerry 8700c

Blackberry OS 149cc 134g Full Qwerty No

RIM BlackBerry 8800

Blackberry OS 105cc 134g Full Qwerty No

Samsung SGH-i607 BlackJack

Windows Mobile 76cc 106g 320x240 Full Qwerty 1.3mp

Sony Ericsson P990

Symbian OS 162cc 150g 240x320Full Qwerty, Numeric with T9, Soft

2mp

Sony Ericsson W950i

Symbian OS 86cc 112g 240x320Numeric with T9, Soft

No