Week6 Final Proposal
Business Proposal
Trisha Isaac
ECO/561
April 06, 2015
GENEVIEVE TURANO
Industry of smartphones The industry of smartphones has been rapidly increasing since the development of the touch screen and smarter technology for the mobile phone business. When touch screens and advanced 3G/4G technology was introduced, people trended away from flip-phones and Motorola © Razors to iPhones, Samsung Galaxies, Windows HTCs, and other substitutes. The market for smartphones is a very young one, currently in its maturing phase. Direct competitors of Apple, Inc. include Google, Samsung, Hewlett-Packard Company, BlackBerry Limited, and Microsoft (Yahoo Finance, 2015). There are a large number of firms in the smartphone industry, but not too large. Furthermore, each company sells the same quintessential product, but each is differentiated – Apple sells its iPhone with special retina screens, Samsung sells with a larger screen, etc. There are no major barriers to entry to the market, so firms that are not profitable in the smartphone business can easily leave and vice versa (McConnell et al, 2009). All of these facts point to the fact that the market structure is a monopolistic competitive environment.
Elasticity of demand Focusing only on the iPhone 6, the product is very hotly desired when it is released. The trend has shown that each year when a new iPhone is released, the people who purchase it on the first week is huge. The trend will only prove itself with the release of the iPhone 6. The trend of new iPhones also has the trend of the increasing prices. The iPhone 5S was the most expensive iPhone at a starting price of $649; the iPhone 6 will exceed this at a starting price of $749 (Magee, 2014). Judging by the trend, an increase of price will most likely not shy any loyal Apple buyer to not buy the new iPhone 6. This relates directly to the elasticity of the iPhone 6; the elasticity of demand of a product is defined as the percentage change in quantity over the
Trisha Isaac
ECO/561
April 06, 2015
GENEVIEVE TURANO
Industry of smartphones The industry of smartphones has been rapidly increasing since the development of the touch screen and smarter technology for the mobile phone business. When touch screens and advanced 3G/4G technology was introduced, people trended away from flip-phones and Motorola © Razors to iPhones, Samsung Galaxies, Windows HTCs, and other substitutes. The market for smartphones is a very young one, currently in its maturing phase. Direct competitors of Apple, Inc. include Google, Samsung, Hewlett-Packard Company, BlackBerry Limited, and Microsoft (Yahoo Finance, 2015). There are a large number of firms in the smartphone industry, but not too large. Furthermore, each company sells the same quintessential product, but each is differentiated – Apple sells its iPhone with special retina screens, Samsung sells with a larger screen, etc. There are no major barriers to entry to the market, so firms that are not profitable in the smartphone business can easily leave and vice versa (McConnell et al, 2009). All of these facts point to the fact that the market structure is a monopolistic competitive environment.
Elasticity of demand Focusing only on the iPhone 6, the product is very hotly desired when it is released. The trend has shown that each year when a new iPhone is released, the people who purchase it on the first week is huge. The trend will only prove itself with the release of the iPhone 6. The trend of new iPhones also has the trend of the increasing prices. The iPhone 5S was the most expensive iPhone at a starting price of $649; the iPhone 6 will exceed this at a starting price of $749 (Magee, 2014). Judging by the trend, an increase of price will most likely not shy any loyal Apple buyer to not buy the new iPhone 6. This relates directly to the elasticity of the iPhone 6; the elasticity of demand of a product is defined as the percentage change in quantity over the
References: APPL Competitors. (2015, April 20). Retrieved April 20, 2015, from http://finance.yahoo.com/q/co?s=AAPL Competitors Apple - Press Info - Apple More than Doubles Capital Return Program. (n.d.). Retrieved April 20, 2015, from http://www.apple.com/pr/library/2013/04/23Apple-More-than-Doubles-Capital-Return-Program.html GDP per capita (current US$). (2015). Retrieved April 20, 2015, from http://data.worldbank.org/indicator/NY.GDP.PCAP.CD IPhone 6 release date 2014: Features, price, pre-orders and more…. (2015, April 20). Retrieved April 20, 2015, from http://www.al.com/business/index.ssf/2014/09/talking_iphone_6_release_date.html McConnell, C. R., Brue, S. L. & Flynn, S. M. (2009). Economics: Principles, problems, and policies (18th ed.). Boston, MA: McGraw-Hill Irwin.