Porter’s 5 forces

DEGREE OF RIVALRY  3/5 :

As we have seen previously, Apple has different types of competitors - Amazon, Google, Real Networks, Sony and Hewlett Packard, with their strong investment in content; and Nokia, HTC, LG, Samsung for the hardware. Apple is the leader as to the technologies and customers’ affection for the style. But digital technologies are developing really fast, Apple’s competitors invest a lot in research and development, which means that the degree of rivalry is high.   

THREAT OF NEW ENTRANTS 3/5:

Technological and financial barriers are very high. Huge investments to be done in R&D by new entrants. It is already a concentrated market, so the room for new brands is not really existing. But, it is certain that new entrants will be numerous shortly. In fact, new projects are being developed by Samsung and HP. Those competitors are strong,  and we may see that price factor is almost absent for the ultimate choice for such types of technologies. Customers pay the brand and the tendency. That is why for instance Apple is top of mind, but other strong brands are on their way, creating similar innovative products.

THREATS OF SUBSTITUTES 2/5:

Lots of associations lobbying that point at superfluous Apple’s Ipad aspect. Their argument is : if we take away the sensory touch screen part - standard netbook will be enough to face it.  Nevertheless, the fact is that Ipad is still the leader on the market and Apple keeps going on innovating its products, which means that competitors should invest a lot in research and development and in their brand’s promotion. While the Apple brand has already gained the confidents of its loyal customers. 

SUPPLIER POWER 3/5 :

If we talk about the suppliers in the content (and not about the suppliers of the raw materials), we may say that products such as Ipad or Iphone depend a lot on the content proposed on the platform. We should observe the developers’ positioning and effects on Ipad in order to judge the strength of the force. We shouldn’t forget that Applestrore is the leader on this market, that is profitable for Apple.

If we talk about suppliers of materials for hardware, the power is quite high because of the price of raw materials and digital elements. But as Apple is a powerful company, suppliers are in competition to deliver and to sign contracts with Apple.

BUYER POWER 3/5:

Today’s demand on such trendy products is constantly growing. On one hand Apple brand has to adapt its design and to be more and more innovative in order to please the targeted consumers. On the other hand, as there is no “real” competition for Apple brand, with such a stylish design and innovative combination of software and hardware, consumers will not prefer to switch if the price fits their estimations. Customers are attracted to the brand, thanks to the buzz generated by the brand. In general, the brand is in a strong position, due to its good client relations and controls viral marketing very well. Thus all in all buyers’ strength is limited.