Tuesday 2 October 2012

STUDY CASE 2 - INTERACTIVE SESSION : TECHNOLOGY


IS THE IPAD A DISRUPTIVE TECHNOLOGY?

Tablet computers have come and gone several times before, but the iPad looks like it will be different. It has a gorgeous 10-inch color display, a persistent WiFi Internet connection, potential use of high-speed cellular network, functionality from over 250,000 applications available on Apple’s App Store, and the ability to deliver video, music , text, social networking applications, and video games. Its entry-level price is just $499. The challenge for Apple is to convince potential users that they need a new , expensive gadget with the functionality that the iPad provides. This is the same challenge faced by the iPhone was a smashing success that decimated the sales of traditional cell phones throughout the world. Will the iPad do likewise as a disruptive technology for the media and content industries? It looks like it is on its way.
The iPad has some appeal to mobile business users, but most experts believe it will not supplant laptops or netbooks. It is in the publishing and media industries where its disruptive impact will first be felt.
The iPad and silmilar devices( including the Kindle Reader) will force many existing media business to change their business models significantly. These companies may need to stop investing in their traditional delivery platform (like newsprint) and increase their investment in the new digital platform. The iPad will spur people to watch TV on the go, rather than their television set at home, and to read their books, newspapers, and magazines online rather than in print.
Publishers are increasing interested in e-book as a way to revitalize stagnant sales and attract new readers. The success of Amazon’s Kindle has spurred growth in e-book sales to over $91 million wholesale in the first quarter of 2010. Eventaully, e-books could account for 25 to 50 percent of all books sold. Amazon, the technology platform provider and the largest distributor of books in the world, has exercised its new power by forcing publisher to sell e-books at $9.95, a price too low for publisher  to profit. Publisher are now refusing to supply new books to Amazon unless it raises prices,  and Amazon is starting to comply.
The iPad entered this marketplace ready to compete with Amazon over e-book pricing and distribution. Amazon has committed itself to offering the lowest possible prices, but Apple has appealed to publisher by announcing its intention to offer tiered pricing system, giving publisher the opportunity to participate more actively in the pricing of their books. Apple has agreed with publisher charge $12 to $14 for e-book, and to act as an agent selling books (with 30% fee on all e-book sales) rather than a book distributor. Publisher s like this arrangement, but worry about long term-pricing expectations. Hoping to avoid a scenario where readers come to expect $9.99 e-books as the standard.
                Textbook publisher are also eager to establish themselves on the iPad. Many of the largest textbook publishers have struck deals with software firms like Scrollmotion, Inc. to adapt their books for e-book readers. In fact, Apple CEO Steve Jobs designed the iPad with the use in schools in mind, and interest on the part of schools in the technology like the iPad has been strong. ScrollMotion already has experience using the Apple application platform for the iPhone, so the company is uniquely qualified to convert existing files provided by publishers into a format readable  by the iPad  and to add additional features , like a dictionary, glossary, quizzes, page numbers, a search function, and high-quality images.
                Newspapers are also excited about the iPad, which represents a way for them to continue charging for all of the content that they have been forced to make available online. It the iPad becomes as popular as other hit products from Apple, consumers are more likely to pay for content using that device. The successes of the App Store on the iPhone and the iTunes music store attest to this. But the experience of the music industry with iTunes also gives all print media reason to worry. The iTunes music store changed the consumer perceptions of albums and music bundles. Music labels used to make more money selling 12 songs on a album than they did selling popular singles. Now consumers have drastically reduced their consumption of albums, preferring to purchase and download one song at a time. A similar fate may await print newspapers, which are bundles of news articles, many of which are unread.
                Apple has also approached TV networks and movie studios about offering access to some of their top shows and movies for monthly fee, but as of yet the bigger media companies have not responded to Apple’s overture. Of course, if the iPad becomes sufficiently popular, that will change, but currently media networks would prefer not to endanger their strong and lucrative partnerships with cable and satellite TV providers.
                And what about Apple’s own business model? Apple previously believed content was less important than popularity of its devices.  Now, Apple understands that it needs high-quality content from all the types of media it offers on its devices to be truly successful. The company’s new goal is to make deals with each media industry to contribute the content that users want to watch at a price agreed to by the content owners and the platform owners (Apple). The old attitudes of Apple (“Rip, burn, distribute”), which were designed to sell devices are a thing of the past. In this case of disruption technology, even the disruptors have been forced to change their behaviors.


1.       Evaluate the impact of the iPad using Porter’s competitive forces model.
a.       Traditional competitor in
Mobile industry : competitor such as Samsung which is well known for their strong financial      and R&D, and LG

Computer electronic industry :  Acer which is well known for their low price computer hardware.

Operating system industry :  Android, operating system for mobile devices that produced by Google

b.      New market entrants : there is no new entrant beside Apple itself, Apple inc. have to compete with traditional competitors.

c.       Substitute products and services : Electronic products such as Samsung Galaxy tab and Amazon Kindle which is have certain same function with the Apple iPad.  For common substitute products for the iPad are television, newspaper, book, music store, and magazine. Sales for the media printed product will decline due to the iPad impact.

d.      Customers : Customer will prefer product with lowest price, easiest to acquire and has more customer’s benefits.

e.      Supplier : numbers of suppliers is important as the company gain more control in their products especially in pricing and component selection. Apple has many suppliers and this makes their product has more values.

2.       What makes the iPad a disruptive technology? Who are likely to be the winners    and losers if the iPad becomes a hit? Why?

a.        The iPad is a disruptive technology because its tendency to replace or obsolete previous technology which as the similar function with the Apple’s iPad.

b.             Winners will be the one who support or joint venture with the Apple. These winners are  e-book publisher who agreed to make Apple as an agent selling their books, the textbook publisher who eager to establish themselves on the iPad, printed media who have convert their product into electronic products such as electronic  newspaper and electronic magazines, and  electronic music store such as itunes.
                 Loser will be the product with same function as iPad such as kindle and Amazon and also e-book publisher who sell their e-books through Amazon. The printed media  products will also be  the loser.

3.       Describe the effects that the iPad is likely to have on the business models of Apple, content creators, and distributors?

a.       Apple’s business model : Apple will start selling e-books, e-newspapers and e-magazines. Its entire product will be centered on the iPad.

b.      Content creator : they have to created more creative content in order to compete with others because thousand electronic content will be on the iPad as predicted.

c.       Distributors : distributors will have to compete more as the Apple will be a large distributor of electronic products through their iPad.


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