Is  the  IPAD  a  Disrup/ve  Technology?  

Based  on  2010  data  and  technology  

April 2010

Kindle  

Case  contents  :  ü E-­‐Books  pla?orm  ü Publishers  ü Music  industry  ü Movies  ü TV  

Can  IPAD  success  as  IPHONE  ?  

Q1  :  PORTER’S  COMPETITIVE  FORCES  MODEL  

Compe//ve  Rivalry  between  Exis/ng  

Players  -­‐  Consider  very  low  

because  of  technology  varience  

Threats  of  new  entrance  -­‐  Low  due  to  high  investment  

-­‐  Other  industry  player  have  the  capability  &  ability    

Bargaining  power  of  customer  

-­‐  Consider  low  due  to  unavailability  of    similar  products  &  features  in  the  

market  

-­‐  IPAD  offer  various  applica/ons  

compared  to  Kindle  

Threat  of  subs/tute  -­‐  Very  low  

-­‐  Market  is  uncertain  

Bargaining  power  of  supplier  

-­‐  Consider  high  due  to  Apple  offered  higher  royalty  (developer)  -­‐  High  due  to  quality  

preferences  

+  

+  +  

-­‐   +  

Ques/on  2  

•  What  makes  IPAD  a  disrup/ve  technology?  •  Who  is  winners  and  losers  if  IPAD  becomes  a  hit?    

•  Why?  

IPAD

 SPE

CIFICA

TION  

Combina/on  of  MAC  &  Iphone  

 

WINNERS   LOSERS  eReaders    

The  iPad  could  be  the  device  that  makes  eBooks  and  eReaders  go  mainstream.  Cheap  eReaders  could  prosper  

The  iPad  makes  exis/ng  eReaders  including  the  Kindle,  Sony  eReader,  Plas/c  Logic  Que  and  B&N  Nook  look  very  ordinary  and  obsolete  

Handheld  Gaming  Devices    

It's  hard  to  see  how  iPad's  success  could  create  any  winners  in  the  gaming  hardware  industry  

Nintendo  DS  and  Sony  PSP  have  seen  sales  decline,  partly  because  of  iPod  Touch  and  iPhone.  The  iPad  could  cause  further  problems  

Personal  Video  Players    

iPad  could  kick-­‐start  this  slow-­‐burn  market  

The  portable  DVD  player  market  will  be  wiped  out  

Record  Labels,  Movies  

By  controlling  iTunes,  Apple  will  be  able  to  maintain  their  premium  pricing  

Apple  will  con/nue  to  control  the  music  distribu/on  business  and  the  industry  will  have  to  accept  what  they  do  and  say.  The  consumer  will  also  lose  because  of  the  lack  of  compe//on  

Book  Publishers    

eBooks  and  audio  books  could  go  mainstream  and  if  Apple  does  what  they  have  done  with  music  they  will  use  their  monopoly  posi/on  to  keep  prices  high  

The  book  industry  could  go  the  same  way  as  the  record  industry  and  lose  control  of  digital  distribu/on  of  their  products.    Again  the  consumer  will  pay  the  price  of  Apple  controlling  the  sale  of  books  on  all  their  devices  

WINNERS   LOSERS  Newspaper  &  Magazine  Publishers    

The  iPad  could  be  a  helping-­‐hand  to  the  struggling  newspaper  and  magazine  publishing  (prin/ng)  sector  by  providing  a  format  that  readers  will  again  pay  online  

As  with  book  publishers,  if  Apple  dominates  the  portable  reader  sector,  magazine  and  newspaper  publishers  will  become  dependent  on  them  for  their  ongoing  success.  A  weak  posi/on  for  them  in  long  run  

Apps  Market    

iPhone  Apps  have  been  an  incredible  innova/on  which  have  created  a  mul/-­‐billion  dollar  market  in  just  a  few  years.  Apps  are  here  to  stay  and  App  developers  will  con/nue  to  see  their  market  grow  

Apps  have  been  so  successful  that  compe//on  has  meant  every  niche  has  dozens  of  compe/tors  and  the  prices  are  being  squeezed  ever  lower.  This  downward  trend  is  likely  to  con/nue  

Atlas/Map  Publishers    

Maps  with  direc/ons  and  enhanced  informa/on  are  becoming  an  important  sales  driver  for  portable  devices.  Google  Maps  will  con/nue  to  extend  their  reach  

Publishers  of  printed  maps  and  road  atlases  will  con/nue  to  see  their  market  shrink  

Mobile  AdverRsing    

As  Apple  becomes  more  dominant  in  their  audience  reach  via  mobile  devices,  so  the  opportuni/es  to  generate  income  from  adver/sing  grows  exponen/ally  

The  biggest  poten/al  loser  will  be  Google  who  are  doing  everything  in  their  power  to  stay  in  the  mobile  game.  There  are  also  other  mobile  ad  companies  who  are  likely  to  be  swept  aside  or  consumed  by  the  giants  

Ques/on  3  

•  Effects  on  APPLE  business  model,  content  creators  and  distributors  

Apple  Business  Model  

Apple  Buss.  Model  

•  E-­‐book  •  E-­‐mag  •  E-­‐Newspaper  •  Paperless  •  TV  on  the  go  •  Bigger  segment  

Content  Creators  

• More  niche  contents  

•  Specific  customer  needs  and  want  

•  Personalise  • High-­‐quality  applica/on  for  various  media    

Distributors  

• Offer  more  freedom  to  publisher  

• Act  as  agent  •  30%  fees  on  sales  

•  $12-­‐14  per  e-­‐book  

•  Cheaper  e-­‐book  in  future  

IMPACT  OF  IPAD  

MIS  in  Ac/on  

IPAD vs KINDLE

IPAD  LIMITATION  

• Itunes  sync  –  cant  install  directly  • OS  Updates  • Some  websites  (Flash)  • Some  documents  • Prin/ng  (par/ally  solved)  • Backup  • No  USB  

Reading  Books  KINDLE   IPAD  

Features   For  the  purpose  of  reading  only  

Mul/purpose  

Clear  formaied  text  

Extensive  reading   Strains  eyes  easily  

Airac/ve  color   Less  airac/ve   Airac/ve  Weight   Lighter   light  E-­‐books  price   Cheaper  ($9.90)   $12-­‐14  Baiery  life   Over  a  month   10  hours  baiery  Support  applica/on  

Less  add  in   More  add  in  

Kindle  

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