History of Apple Apple Computers was founded In April 1976 by Steven Jobs and Steven Woozily_ The many built computers and operating systems that were revolutionary for the industry. The company has had some competition, and therefore has had some ups and downs financially. Top management in the company has changed over the years and the company had difficulty competing with other computer companies. However, in the late ass and early ZOOS the company had an Increase in profits because of innovative products. In 2001, the company Introduced the Pod. This little device was lust a small music player.
It played and stored music files that the customer could download on the Internet. Apple Inc. Roped the “computers out of its name in 2007; the same year it introduced the phone (Sanford, 2013). The first phone made by the company was a success. In the following years the company continued to improve its product; introducing the phone g, phone eggs, then the phone, phonies, and now the Phone, Phonies, and the Opponent. The Phone 5 has a new loss operating system, and 64 bit architecture. The 64 bit architecture has never been put Into a phone before so this is a very innovative step in the smart phone market (Worst, 2013).
Effect of Demand, Supply and Equilibrium Prices With the phone as, Apple is currently facing shortages. The current statistics show that the company is facing shortfalls for the new phone as and the demand for more products is continuing to grow. The factors that affect the demand of the phone as are to believe to be the Interest and preferences of the consumers. Products that quantity, if the consumers are not interested they will not make an effort to buy the product. Furthermore, the consumers’ income is a factor as well. Even though the price of the phone is quite expensive, people still want to buy it.
Consumers want he best performance and extras for their product and many are willing to pay anything for it. However, if they absolutely cannot afford it, then it wont matter. Also, expectations of consumers are a factor because it depends on what is beneficial in the future. A great example would be if the phone had a longer battery life and more memory, the consumer will wait to buy the newest upcoming version when it is available. Unfortunately, when consumers decide to wait on buying a product, they are decreasing the current demand for the phones because of their expectations for the future.
When this occurs, it is known as market equilibrium. It is the state at which the market is operating efficiently. The price of let’s say $1200 for an phone is known as the equilibrium price and the quantity amount of 4000 is the equilibrium quantity. Analysis of phone, Potential customers, and Potential buyers The phonies has some competition out there, but the biggest competitor is the Samsung Galaxy SO. The two have many of the same features, like high resolution display screens, tons of memory, and extraordinary cameras. The major differences are the operating systems, which could be a problem for Apple if no one likes the new zoos.
The potential customers for the phone as is a rather large group. The customers who have the phone as probably will be the first to want this new phone. The phone as is available to Verizon customers, AT&T customers, and Sprint, T-Mobile, and Alter customers. Potential customers also include people who may be tired of other smart phones like the Samsung Galaxy SO. The phone has new technology that could convince Android users to switch (phone Arena, 2013). Effect of Competitiveness and Long Term Profitability Apple has been producing new phones once a year to keep up with competitors f other Smartness. Apple has stuck to a once a year release on new phones because of competitors like Samsung, Motorola, ETC, LAG, Sony and others that keep popping up in stores and online every week or so” (Levy, 2013 peg. 1). Because of the competition with other carries Apple tried to re-establish the phones without radically shifting away from how successful it was in the past. With the new phone ass’s thunder they help set the platform for the new ISO-based lineup. The phone may retail for $499 this will make the cost to make an phone at $245. 83. Price Elasticity of Demand
According to Sans (2007) if it is profit maximizing, apple will set is retail price (P) so that (P-c)/P= -I/E where c is unit cost and E is the price elasticity of demand. This is saying that if Apple raised the price of the phone one percent one would lose two percent in sales. “Sans says that Apple stated that they are targeting about 1 percent of the United States market and if the phone was the same as the other phones then the relevant equation for the market elasticity of demand for phones would be (P-c)/ P= -0. 01 [E” (Sans, 2007 peg. 1).
This price would be sustainable under competition. Technological Innovation AT is banking on the phone to drive traffic to the stores. This new nanotechnology will help boost it mobile subscribers to come to AT for the phone. Want. “AT&T did a survey to find out how many people would buy the phone the survey showed that 60% of people were interested in the phone but only 10% would pay full price to purchase an phone” (Gravelling, 2007 peg. 1). So even with the new innovation of the phone and the APS they supply not many people can buy an phone for full price with a two- year contract.
It has been “five years since the first Phone has come out and went on sale in the Apple stores, they sold a million in less than three months” (The phones, 2012 peg. 1). Relationship between Labor and Capital The parts alone of the “phone cost $188 giving them a big profit if they sell the phone starting at $649” (Investigated, 2012 peg. 1). The total labor cost includes transportation, storage, and warranty expense of a total of $281 giving Apple a profit of $368 on each phone. This would mean that they are making a good profit on the phone and can keep upgrading the phones and still make a profit after manufacturing the phone.
Cost Structure When the cost structure comes into play of the Apple phone as, you must look at the new features. Dual camera flashes on the back and a redesigned home button on the front that houses a fingerprint sensor to lock and unlock the phone. The fingerprint sensor can also be used to authorize tunes and app store purchases. Internally, the new phone as features the new AAA chip which is 40 times faster than the original chip, and 50 times faster than the previous generation.
It also includes a new motion co-processor called the MM that measures the motion data continuously tit accelerometer, gyroscope, and compass support to power new generations of fitness APS. The upgraded camera features an IF. 2 aperture, with larger sensor and image stabilization that produces the best pictures ever taken on an phone. Also recording at a faster rate and allowing slow motion shots. The Apple phone as offers 10 hours of talk or web browsing and 250 hours on standby. There are more available colors as well consisting of silver, gold, and space green that replaces the familiar black and white models.
The phone as is priced at $199 for BIBB of storage and $299 for BIBB and $399 for BIBB with two year contracts. Factors Affecting Variable Costs that Change the Supply of Demand Labor “Variable costs are any cost that change as the output changes (Colander, 2010, p. 284)”. The factors that can affect variable cost are increases in wages. An increase in wages will affect the demand for labor, if the amount to pay an hourly employee increases this puts an added cost on the production. In addition to higher wages the supplies that are needed to produce a product also affect the variable cost.
The cost of supplies that are needed to produce more phone increase will affect the total cost of production. If the cost to produce a certain item becomes too expensive the demand for output is affected because of factors like higher cost in materials or energy, this will affect production by slowing down production as well as putting less demand on labor. When the cost to produce the product becomes cheaper because of a decrease in the cost of supplies and or energy it will have more demand to produce or create output therefore putting more demand on labor to help in production.
Apple will need to watch the variable cost to keep production cost down so the prices on its phone do not increase. Keeping the prices from fluctuating will keep the demand from Affecting Fixed Costs “Fixed costs are cost that are spent and cannot be changed in the period of time under consideration (Colander, 2010, p. 283)”. Apple is faced with many factors that could affect the fixed costs. One factor that affects fixed cost is the rate change on employee tax rates for salaried employees.
A change in the tax law could be beneficial to the firm if the withholding were to decrease in the contrast if the withholdings were to increase this would cost the firm added monies. Another factor could be government tariffs such as import fees. These fees could affect the fixed cost by having the import fees raised on imports for categories such as electronics (Simmons, n. D. , Para. 2)”. Purchasing the buildings that Apple occupies for its manufacturing and offices could lower the fixed cost of rents that are being paid out.
Lowering the rents paid to rent space could help lower the fixed cost but add to the fixed cost of loan payments if the buildings were not be purchased outright. Recommendations The smart phone market is a complex, fast paced environment. There is no shortage of competition and the playing field is still growing. Many PC manufacturers are also pursuing the market. From hardware like memory, high resolution screens, long battery life, and quality cameras to operating systems, user friendliness, style, and price, there are many factors that go into buying a new smart phone.
Any new phone entering this market must exhibit these qualities at a competitive rate in order to be successful and maximize profit-making potential. Marginal revenues and costs are already beginning to tighten in this field as a result of growing competition. Entering this market with our new revolutionary product at an affordable price does to come without risk, but if the price is set at the proper equilibrium there is still room for success. Conclusion Team B believes that the smart phone industry is a highly competitive and fast growing market with the phone as being the current number one top contender.
