This is the second part of the post “PCs and iPad: How did Apple address the competitive landscape” where you can read about Apple’s background, market overview and trends, and competition. That is an important introduction to this strategy analysis.
I have added some additional information to make it more complete from what the original report was, assuming that the reader for which is written this time could use more explanations than the previous one. All the added parts are marked with **.
I hope you enjoy it!
4. Analysis of Apple-iPad Strategy
Since iPad is a complete new product, there have not been yet many specific studies about Apple’s strategy regarding the launch of the iPad. The objective of this section is to apply existing strategy frameworks to analyse Apple-iPad competition, innovation opportunities, proposition, competitive advantage, product portfolio, etc, with the aim of understanding how Apple addressed the competitive landscape with the launch of iPad and what were the results.
Radar Screen analysis shows the direct and indirect competitors for iPad. The iPad concept is a mainstream communications and entertainment package that includes web browsing, email, music, videos, games, books and applications. Because of its broad range of tools, its competition is also bigger and comprises many industries and sectors. It is important to see that iPad will compete directly with Tablet PCs, however, since iPad is part of a solutions ecosystem, Apple will also suffer from competition from other applications platforms such as Google-Android among others.
*In figure 1 the Strategy Radar that was solved for the iPad and its competition can be fond. There is more information about the Strategy Radar in the post “Facebook Messages Strategy Radar” where the concept is better explained. The general idea is to identify competition for a product or service from the most general or indirect to the more specific and direct. In the case of the iPad the sector is that of “Entertainment and leisure”, you might prefer to read a novel in your iPad instead of buying a common book, or use it to watch a movie or listen to music instead of going to the theatre or using a CD. It may not be the principal reason why someone would buy an iPad, but still a substitute in some way. Moving forward (clockwise) towards more specific classification, the same analysis can be made for the arena and industry getting into the most specific classification which is market. In the market, the iPad competes directly to other tablets with different operating systems and content offer.*
Strategic Environment Matrix
Besides analysing the competition, it is important to classify iPad’s market environment depending on its strategic characteristics. As mentioned before, Apple is a “Specialized” firm that offers premium products and maintains high profitability. The kind of war in which it embarks is driven by differentiation and innovation on its products.
*There are four principal strategic environments to do business. The two in which the iPad is moving are specialisation and volume. The former is a niche product for which a premium is charged because of its special features, and the latter a product from which the profit is made through selling many units even where the unit profit margin is not that high. Now, here is where a millionaire business takes form: The iPad is a specialised product for which the consumer pays a higher price for what he is buying. We all agree in that iPad does not have the best offer in terms of hardware, but it is valued because of image, brand, services behind, etc. Having that big profit margin in addition to high volume revenue… we can imagine how good such a business must be!*
Observing the Strategic Environments Matrix (figure 2), an important question arises: Can Apple target “Volume” markets and still maintain price, profitability and growth?
The answer to that question will be in the next post together with:
- Analysis of Apple-iPad Strategy (part III, part IV)
- Results (part IV)
- Long-term impact and Recommendations (part V)
- Managerial Agenda (part V)
- References (part V)