Although Apple Inc. has had success with the distribution of its products it does face issues with this barrier due to the limited retailers of the iPhone and the fact that there is currently only one service provider. The iPhone is only available through a limited number of distribution channels those being Apple Inc. and AT&T stores and auction websites, like eBay, and it is only supported by the AT&T network. A future entrant to the market could create an advantage by make their product more available for multiple carriers and multiple retailers. 3. Product Differentiation In general this trait is favorable for Apple Inc. because the iPhone is significantly different than most of its competitors. First and foremost, the iPhone 3G is a revolutionary phone with a high call quality as its main point of parity. A list of the iPhone’s highlighted features includes the iPod, Internet tool (Wi-Fi, 3G and EDGE network). Apple Inc. also has a certain amount of protection through the strength of its brand identity. The problem with cell phones is product differentiation can be emulated, to a certain extent. Cell phones are pretty uniform in functionality and use and not overly differentiated between each other. However, recently LG with Verizon have just release the Dare, an iPhone like product, in hopes of attacking some of Apple’s market share. Not to mention companies like, Samsung and Nokia, have released designs and plans to develop their own versions of an iPhone. 4. Capital Requirements Since Apple Inc. had already been successful with their computers and the iPod they had an advantage with having the capital required to start mass production of a new product. Apple Inc. also has experience with developing software and hardware, which gives them another advantage as they do not need to spend as much time and money in the research and Page | 60
development stages as a new phone manufacturer would. So, to most effectively compete with the iPhone they will need to invest significantly in certain areas. Apple Inc. itself did not face much resistance with this barrier because of their experience creating both software and hardware. Companies looking to enter this market with have difficult barriers to overcome in order to compete at the same level as Apple Inc. and unless a company has experience in developing consumer electronics it seems very unlikely that they can experience similar success. 5. Government Policy Any company looking to enter this market has two governmental factors they must consider before entering the market: 1) the strength of current manufactures patents and 2) the regulatory obligations and approval requirements of the FCC (Apple Insider, 2007), which governs communication technologies in the United States. Apple has gained another advantage by acquiring a patent and FCC approval for the IPhone. This will make it more difficult for competitors to copy the iPhone but we are sure will not stop companies from developing their own versions of this successful product.
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- Fall '19
- 1984, Apple Computer Inc.