Scribd
Upload
465 views3 pages

Assignment Apple'S Iphone in India Ringing in New Fortunes

Apple had monopoly power in the global smartphone market from 2007-2010 as the sole producer of smartphones. However, from 2014-2016, Apple began losing its monopoly power globally and in India due to market saturation, increased competition from other smartphone makers offering similar features at lower prices, and lower brand awareness in India. Apple's market share and revenues declined over this period as a result.

Uploaded by

Aditya Shetty
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
465 views3 pages

Assignment Apple'S Iphone in India Ringing in New Fortunes

Apple had monopoly power in the global smartphone market from 2007-2010 as the sole producer of smartphones. However, from 2014-2016, Apple began losing its monopoly power globally and in India due to market saturation, increased competition from other smartphone makers offering similar features at lower prices, and lower brand awareness in India. Apple's market share and revenues declined over this period as a result.

Uploaded by

Aditya Shetty
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

ASSIGNMENT

Apple's iPhone in India ringing in new fortunes

Group - A1
21F104 MS. ADIRA NAIR
21F105 MR. ADITYA SHETTY
21F118 MR. BITAN ROY
21F142 MR. ROHAN KORALHALLI
21F152 MS. SHTAKSHI GUPTA
What is Apple’s monopoly power in the global smartphone market? How has Apple’s
monopoly power changed between 2014 and 2016?

When Apple entered the smartphone market as the first capacitive touch phone, they were
unique in the market and had the liberty to employ price skimming method to earn high
profits before new competition entered the market. Apple had leapfrogged to become the
market leader in the smartphone market during the fourth quarter of 2014 with the launch of
the iPhone 6 and 6 Plus.

The closest competitors of Apple were Samsung, Sony, and Microsoft. The first Samsung
came out in 2009 and the subsequent competitors launched their products in 2010 and 2012,
hence Apple had enjoyed the first mover advantage with respect to smartphones and their
unique OS and app store along with the pre-existing iPod fame allowed them to sell the
iPhones faster as they were able to leverage the brand value and create a brand portfolio
extensions of sort which helped them exercise great monopoly power especially in the US
Markets. The US Market was quality sensitive and hence they had a good pricing power.
With the entry of the 3 new competitors the market turned from Monopoly to Monopolistic
competition.

Why was Apple able to achieve this Monopoly?

1. From 2007 since the Apple was the sole producer of smartphones in the market till
2010, the firms demand curve was the market demand curve. So, coupled with
novelty purchase and shift of the market towards smartphones, Apple was able to gain
significant monopoly power in the market and it made the demand price elastic. In
many global markets like USA, Europe which are developed countries and the
consumers are quality sensitive and hence they were able to price their products at a
premium point and still sell.

2. The number of firms in the market until 2012 was only 4 to 5 and they were not
attempting compete aggressively and undercut each other due to which the
monopolistic competition was maintained in the smartphone market.

Why did Apple begin to lose its Monopoly power globally and in India?

Apple by 2016 had reached market saturation in global markets like North America, Asia,
Europe, and Japan. This was due to low replacement demand where consumers were looking
to extend the product life above 2.5 years and there was no new iPhone launch except the
intermediate 6S. Also, Apple had achieved penetration of 90% in these markets.
With the advent of new smartphone companies like BBK electronics, Gionee, Micromax,
OnePlus the market had newer offerings with lower price points and same features as that of
iPhones offered at lower prices which caused them to lose their monopoly power. Android
OS had higher cross platform compatibility and was much more open compared to the iPhone
OS which allowed freer use and was preferred more by the consumers. In 2016 there was
only 2.4% of iPhone IOS users in the market compared to 90% Android users in the market.

In this case, Apple was way behind Samsung’s 20.5% market share. In 2016 with the rise in
the combined share of Oppo and Vivo to 31.6% in China Apple’s share in the country (its
fastest-growing market) reduced tore about 9.6% compared to 13.6% in 2015. Consequently,
iPhone revenues declined by about 26%.
India was predicted to be the next China for iPhone but in 2016 Samsung was the top player
in the Indian market with a 29% market share. Brand awareness for Apple was low, it was
ranked at around 10th in the brand awareness survey conducted by Morgan Stanley.

This affected the purchase intentions of smartphone users. Additionally, Apple’s global
advertising expenditure increased by 50% to 1.8 billion in 2015. Apple’s R&D costs were
also very high, they were expected to increase to 12 billion dollars in 2017 from 10.39 billion
dollars in 2016. Apple seemingly had monopoly power in the global smartphone market as
they were price makers, with a differential pricing strategy for different geographies.
Consumers in most countries had to pay extra as compared to the consumers in the United
States.

Another barrier that Apple faced in India was that of the Aadhar identification system in
India which was looking for smartphone devices that had inbuilt iris sensor which would help
in the iris identification for the UID system coming up, Apple did not capitalize on this move
and as a result lost out on the advantage that Samsung gained by introducing the iris scanner
in their galaxy note series of phones.

We will now have a look at the lerner’s index from 2014 to 2016 that will give us a further
idea of the monopoly power lost by Apple:

We can observe from the above table that for the iPhone 6 16 GB model the lerner’s index
from the 6 model to the 6s model dropped from 0.69 to 0.66, for the iPhone 6 plus to iPhone
6s plus dropped from 0.706 to 0.684.

This clearly indicates a significant drop in the monopoly power that Apple enjoyed in the
market. This was mainly due to Apple attempting to price the iPhone 7 at a relatively high
price point whereas there were multitude of options in the market which offered the same
features for a lower price. Like the OnePlus model which had almost the same features and
was priced 20,000 lower than the iPhone model. As, a result they lost their monopoly
privilege.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy