Apple Case Study - from the ipod to the iPad - Product Life Cycles and growth potential Millions Music Player Market Apple ipod Sales 000s 60.0 50,000 50.0 A 50.000 40.0 40 900 30.0 30 000 20.0 20 000 10.0 10.00 0 1983 1984 1985 1989 1990 1997 1995 2000 2003 2004 2006 2008 2010 2032 2003 2004 2095 2006 2007 2008 2009 2010 201 80,000 Apple Product Life Cycles 000s 80500 Apple Product Life Cycles 000s 70,000 20:00 60.000 60600 50.000 50300 40.000 10300 30,000 3080 20,000 20300 10,090 10600 2002 2003 2004 2005 2006 2007 2004 2009 2010 2011 1 2 3 10 11The Apple product life cycles indicates just how big the iPhone and the iPad will be over the next few years. It took the iPod five years to break the thirty million imits per anmnn mark. The iPhone got there in four and the iPad will make it in year two of launch. As for the Sony Walkman it never made it, it took over ten years to top out, the iPod topped out within eight years of launch. Apple product Life Cycles are moving faster and higher sooner than ever before. iPod sales may have peaked in ones at just under 55 million units and may fall to around 45 million units this year but the iPhone is set to sell just under "til million units and the iPad is chasing fast behind. It all adds up to an exciting phase of growth for Apple over the next four years with revenues set to rise over $10!? billion in Zll. Shidents of corporate strategy and business theory are familiar with the concept of the Product Life Cycle. Generally the life cycle is perceived to have four specic stages. introduction, growth, maturity and decline generally plotted with volumes a function of time. In the introdnoti on phase, costs are high, Sales volumes are slow, there may he little or no competition and customers have to be stimulated to action. Prots are limited and the product is cash extensive as marketing costs are substantial. In the growth phase, unit costs are reduced as volumes increase, advertising is amortized over greater volume, market awareness increases, competition increases with more competitors entering the market and. price levels may begin to fall. Prots increase but the product remains cash extensive as greater investment in marketing or working capital is required. In the maturityr stage. costs are lowered further as volumes have increased. the market becomes more competitive and alternative products begin to date the initial product offering. The precinct remains protable and begins to Ecuerate cash. In the saturation and decline phase, sales volumes decline, prots margins are maintained and the . -- = 've. The laggards and Either way for Apple, four years of strong grown: are evident from products already in the line up, both the iPhone and the iPad are set to hit the one hundred million units per annum mark in 21312 and NH. Despite the march of the Androids, the Apple growi story will contirme. actions: 1) One critical factor that a'ects the success of a product innovation is the ability to offer a diemnated product that delivers unique and superior value to customers. Discuss the extend to which apple successfully accomplished this with the iphone and the ipad. 2) How would you classify the Ipsd, Iphone: and iPad today in terms of each product's stage in the product life cycle? Why? 3) Do you think the Earl will continue to be a success? 1What factors support your position? 4) Apple has introduced several winning products over the last few years iPoD, [phone, and iPad in markets where the company was a newcomer that successfully challenged market leaders. How would you describe apple's product development strategy in the mobile devices market? Based on your analysis. what do you think apple's next winning innovation might be?' What are some of the barriers it may need to consider