Keywords: nokia apple competition, nokia apple analysis, nokia apple strategy
The Board of Apple iTunes has requested a written report that seeks to examine the main element macro and micro environmental factors within the music download industry and provide significant information about the current risk of Nokia coming into the music download market. Also, recent tendencies should be viewed and a strategy must be developed that will limit Nokia's impact and protect Apple's market show within Europe. To carry out so, we used significant tools to analyse the marketplace and we created a strategy consequently.
Apple is focused on getting the best personal computing experience to scholar, educators, creative pros and condumers arounf the world through its innovative hardware, software and iternet offerings. Apple continious to lead the industry in innovation with its award-winning computers, OS X operating-system and iLife and professional applications. Apple is also spearheading the digital marketing revolution using its iPod lightweight music and video recording players and iTunes online store, and has inserted the online mobile phone market this season with its revolutionary iPhone.
Apple inc. is a vertically integrated company, creation and offering all hardware and software as well as its operating systems. Apple Inc. chose this strategy so they could retain income and ensure profit is not lost by funding other company's income. The practice behind this theory is to seriously funding research and development and also have have the necessary means of development to cover every area of the business. Marketing and advertising are also an essential component in Apple Inc. 's technique to have a much better market position.
To exactly explain Apples market is almost impossible as the business participates the multimedia download market by offering an array of services like music, ringtones, video games, Podcasts and films (most popular is their iTunes service) as well as having lately entered the mobile phone market using its new iPhone. The multimedia download market is described by Mintel as "whatever can be copied from the Internet to a Computer, other lightweight devices (mobile phones, PDA), game consoles or multi-media devices" (Mintel, 2007). This includes music, video tutorial/television programmes, games, wallpapers, icons and ringtones. For our article we will give attention to the music part which is of special interest to the Plank of Apple iTunes although some consideration about the whole multimedia system download market should be done, as Apple offers a variety of multi-media services and a reduction of the marketplace to the music download market might be to thin sometimes.
Apple is not yet area of the mobile download market (unlike Nokia that has moved into this market with its new Ovi service and the kick off of its N-Series devices) as this market is strictly identified by Mintel as "products that are downloaded to a cellular phone, including ongoing membership purchases or sole one-off downloads. These products include icons, wallpaper, ringtones, music, information or videos, jokes and video games. These services are for mobile phones only and similar items downloaded to a PC are excluded" (Mintel, 2005).
The cell phones market is being defined by Mintel as "handset manufacturers and network providers" (Mintel, 2007).
This summary has been generated on the bottom of the Mintel record about uploading and downloading in the united kingdom in 2007 and the characters provided only show the UK market. Because it can be assumed that the UK market does not differ considerably from the Europeen market since network providers, alternative party providers and mobile manufacturers getting involved in this market are reached through the world wide web and therfore are also being used from Europeen customers, the facts given can be altered to the Europeen market.
The multimedia download market and especially the music download market is an easy changing and fast growing emergent market that is characterised by high fragmentation as more and more players such as cellular phone manufacturers, network- and third party providers enter the market.
Market Size and Segmentation:
The UK value for the download market in 2006 has increased 179% above 2002 to 343 million and especially the expansion of music downloads is performing as a primary driver for the market which is overtaking mobile phone downloads that contain been the greatest segment of the marketplace in the past. Mintel forecasts further development of the marketplace between 2007 and 2009.
The multimedia download market is a highly fragmented market numerous players, that is being dominated by Apple iTunes with practically 80% market share. Third-party providers like Napster, MonsterMob, iTouch and Zed are also an imporant source of the market, although regarding mobile downloads network providers are significant too.
Key Items of the Internal Market Environment:
An increasing desire of consumers to reap the benefits of new technology can obviously be known and especially in the music download market, consumer interest has increased anticipated to impressive product launches, such as the Apple ipod touch. Also, which tendency for technology devices to combine functions that have been associated with only one product, as recent cases like the Apple iPhone or the newly announced Google Gphone show.
Key Points of the Exterior Market Environment:
The current lack of legislation regarding copyright issues, stimulates people away from legal download services. A development being identified by Mintel is the fact that ad-supported content gets more and more accepted from customers as they are more ready to download from standard sources if this content is free.
Mintel predicts that somewhat as an "add-on" downloading will become an activity carried out on most devices. Because of this mobile Internet surfing will increasingly become mass market!
- The company's wide and always up-to-date range of downloadable documents.
- The companies fresh and exiting demonstration of services and devices that delivers the frame of mind towards the customer that downloading is fun.
- Design and fashion have turned out very important for the company, as their products are being regarded as "hip" and "stylish".
- The ease of use because of its products and services.
- The company's impressive solutions.
- Strong branding that attracts new customers, keeps older ones and creates additional value.
- Highly effective advertising
- Many formal and casual cooperations with big multinational firms
Economical aspects: Consumers presently feel very safe about their financial situation and about their prosper life. As a result to that, they are willing to put in more in fast paced goods and luxury. However, costs evole to be the most important factor for customers when it comes to purchasing a mobile phone and extra services as well as downloads.
Socio-cultural aspects: Which craze in the mulimedia download market towards focusing on younger consumer communities, since these groupings show higher curiosity about downloading and are less strict towards new technology. Despite this style Apple have to consider that old consumer groupings are usually wealthier than more youthful people and also have more income to spent which is also important for the furture to meditate that the overall population is growing older.
Technical aspects: The extensive range of fast changing high-tech/high-quality download possibilities, induces consumers to download but it also sets more pressure on competing firms, as they have to stay up-to-date with the latest technologies. Considerable advancements in the cellular phone market (3G handsets becoming certainty and extended features open to the client) will thrust the media download market into new spheres and will open up great opportunities for Apple.
Still, since Apple is taking part in a highly competitive market with new solutions arising and changing in a very fast rate product-life-cycles are short and companies have to get highly in R&D to be able to remain competitive and fullfil the market demand.
Legal aspects: Issues of copyrights and against the law downloads greatly influence the music download industry and are a major problem for lively legal providers. A past insufficient legislation in this area has encouraged consumers from commercial downloading services so when a response to the, new solutions have been presented that protect the copyright of owners and prevent customers to download and show data files illegaly. Digital Rights Managment (DRM) was made to controll the amount of copies that can be created from a download and even though for the music industry there a wide range of strengths to DRM, there are surely as much negative for the buyer. Therefore, some companies have already planned to open big portals on DRM-Free paths, that will legitimately enable the consumer to download data without being limited by a certain volume of computers, portable digital devices and CD melts away for a reaonable price. Additionally DRM-Free songs can be played out on any MP3 in a position device! Although Apple has already modified its offer with DRM-Free tracks, the decision for customers is still very limited, as Apple could only affect deals with EMI that permit them to provide DRM-Free tracks. Also, Apple's DRM-Free songs are more expensive than those of its competitiors which could become a significant problem in the foreseeable future, if the company doesn't modify its pricing to the marketplace.
Substitute products: A substitute product is not a direct option to the product a company is selling. For example, the new Sony Walkman multimedia player is not a substitute for the ipod itouch, this can be a competitor. However, an individual Compact disc player or MP3 player could be if certain areas of the market were to improve, e. g. price and there was a higher elasticity of demand. In the case of iTunes, with music there is a variety of options for buying music and they are many substitutes within the music industry, for example tapes, CDs, vinyl fabric and DVDs. Many of these are easily accessible and just as convenient as downloading from the web. The benefit which iTunes has is that you don't have to buy whole albums; you can download sounds individually with a fraction of the price of a single music on another format. Also you are able to buy movies, TV shows, audio books and Podcasts, all available 24 hours a day, 7 days a week. Reviews by Mintel show that deal price and the quantity of sales is falling for non digital marketing, consequently because of this of internet downloading. Record sales are in dramatic decline; largely anticipated to a lift in single downloads. Hi-def video games and music stations also have deflected consumers away from buying in to the music industry. However, for future years, it is likely that know-how will replace popular digital mediums and forms but we asume that is not really a very big menace for Apple, as the business has proved to be up-to-date with the latest technologie and will do this in the future.
The Threat of new Entrants: Already, there are a huge selection of media getting sites open to use on the internet. Some are legal plus some are not. It is more challenging to prevent and put obstacles up for against the law entrants in to the market because they're not abiding by regulations and therefore do not have patents, licences or the protection under the law to distribute marketing, but nonetheless do. With authentic set up companies, there are capital requirements, possible patents & licences to obtain and ultimately the chance of fighting with already more developed and reputable companies such as iTunes. Mintel predicts that there will be an influx of new companies inclined to invest in the online downloading industry. An enormous danger for Apple constitutes the access of Amazon in to the market. The company announced the introduction of a fresh music download website that offers a wide range of DRM-Free paths to a reasonable price. Since there a wide range of benefits to DRM-Free paths, like the fact that users can legaly duplicate the files without being limited to a certain quantity of copies, consumers are expected to highly welcome the new download store. Apple must be aware of the fact, that it could loose both new and old customers by restricting those to Digital Privileges Management tracks that can only be played out on Apple's ipod touch and not on any MP3 capable device, as it's the case with Amazon. Another risk of new entrants Apple must face is, that the download industry is likely to change towards add-driven downloads, meaning customers won't have to cover their downloads if they agree to observing adds. Yahoo will launch its own mobile phone, the G-Phone. Google's strategy is to provide its services free of charge to customers and than sell adds to purchase them. After that, Nokia's kick off of the new Ovi Store as well as its new N-Series would be the greates risk of new access as it'll allow customers to straight download files with their mobile which Apples iPhone currently doesn't do.
Bargaining Electricity Of Customers: Because of the vast range of direct alternatives and substitutes, iTunes needs to price competitively as well as retaining reputation and range & supply. Individuals are easily swayed to substitute products, especially the easiness and free use of illegal downloading sites and for that reason need to be used to using legal downloading sites like iTunes. Consumers have great power because of their ability to obtain any one competition in the music industry and can therefore possibly determine prices by constantly buying from the least expensive company, thus forcing opponents to reduce prices. Certainly one customer wouldn't normally change lives, but collectively customers are strong. As for the Iphone, it should be considered that network providers have great ability over the company, as they could decide not to sell the iPhone or put pressure on the company that makes these to pay a certain amount of their profits to the provider. At the moment, Apple has restricted itself to one provider, O2, and therefore greatly depends on them retailing the iPhone but this will surely change as time passes.
Bargaining Electricity of Suppliers: Much like bargaining power of customers, you have the bargaining ability of suppliers. iTunes have to send to certain requirements of the consumer market to be competitive, but on the other hand have the ability to bargain with their suppliers because of the size and trustworthiness of the business, thus they may be a distributor and a person. Due to the volume of sales that iTunes have, it might be foolish for companies such as SonyBMG, Universal, Warner and EMI never to compromise on the expenses and protection under the law to deliver their music, as their success in the music download market highly is determined by the successful syndication of the music, mainly through Apple. This reality clearly restricts the bargaining electricity of suppliers to a certain level, although Apple has to consider that without their music iTunes could not function as successfully as the marketplace requirements. Therefore a bargain must happen that suits both companies, a possible agreement could be original fees plus percentage of sales.
Intensity of Rivalry: Although the quantity of companies working in the music download market is rather high, Apple is the clear market innovator. Still the media download market is a market in its progress phase with fast changing solutions and many new companies joining the market. At this time, it seems very unlikely that a company could seriously threaten Apple's market position but the company must be aware of the actual fact that there are other big multinational companies aiming to enter the market with new systems and means of offering their services.
The multi-media download market is market in its expansion phase that has been stimulated by an increasing desire of customers to benefit from multimedia system technology and services. Techie innovations are leading to an increasing quantity of consumers seeking to interact through the internet also to down load their music. The market value of the music download market has shown very strong and is going to climb even more in the foreseeable future as customers familiarise themselves more and more with the internet and are significantly aware of progressive technology. Especially the youth segment compensates great interest to the digital download of music and keeps out good leads for long-term development. At the same time increasingly more firms are coming into the music download market and charges for technology and services are anticipated to fall. Add-driven content services and the access of firms offering download services from online portals right to the mobile provides new perspectives in to the market and constitute a hazard and a opportunity at the same time.
Informal co-operative links:
Google: There are several casual ties that form the alliance between Google and iTunes. The reasoning for the alliance is definitely speculated and many believe that it is to overthrow the prominent leader in the market; Microsoft. With Yahoo expanding an Office type package deal and Apple inc. already having an operating system well established, an alliance could be the key to outsmarting Microsoft and lower their market share. The primary features that form the alliance are as follows: Google currently have a video application that has been made available for users to browse freely but cannot download from. Therefore a web link to the iTunes website where consumers can download the video can be produced available. The hyperlink is perfect because customers can take on Google Video recording and then download from iTunes if indeed they wish. iTunes can be built-into the Google toolbar or software pack. Also, Google have a sponsored search for the iTunes website where users are aimed to the iTunes website and a small fee is provided to Yahoo from the company for the service. CEO of Google Eric Schmidt is currently seated on the mother board of Directors for Apple inc. due to the former possible development of the Google iPhone, but this development hardly ever really took off. However, he has said just lately that Apple and Google are "doing increasingly more things along" and there is a possible tablet style personal computer coming. "We have similar goals and similar opponents. " Though there is no formal arrangement or alliance yet.
Starbucks: Currently only available in the USA, when in a Starbucks RESTAURANT, any ipod itouch, iPhone or Computer with iTunes on can hook up to the iTunes website free of charge. There is a Starbucks option on the web site that can allow you to start to see the current music that is participating in as well as the last 10 paths played. Melodies can be previewed and downloaded and can automatically synchronize to your personal computer when next linked. This is convenient for the client and benefits both Starbucks and Apple.
Formal co-operative links:
Nike: Bringing activities and music together, Apple and Nike have produced the Nike+ipod device which was created to supply the ultimate work out experience. In order to benefit from this, the client must own a pair of Nike+ instructors (Nike+Air Zoom Moire), an ipod touch and the Nike+ipod touch sport kit which is what connects the trainers to the ipod touch. It is connected via wireless receivers. The idea was realised when Apple CEO Steve Careers conducted research that showed 50% of the 50 million who bought iPods last year used them during a work out. "Both companies define their core marketplaces by lifestyle, " (Kraft, 2006). Nike's target audience a activities culture and for Apple's target audience it is the creativity culture. Both have come together to make a new profile, thus being the approach to life and technology that has founded the collaboration. The two huge brands attended together to make a fusion brand that will draw in massive attention.
Coca-Cola: Coca-Cola and iTunes teamed up to market the release of a coke brand music website that acquired iTunes services built-into the website. The website would be accessible across Europe and invite viewers to start to see the latest becoming more popular artists and also to download podcasts from iTunes. "We're fired up to declare this collaboration with Apple. . . Alongside one another our company is creating a distinctive and exciting platform that gives young people a voice and allows these to renew their music experience every day. " (Dominique Reiniche, president of Coca-Cola EU Group, 2006) 70 million free songs would be downloaded from iTunes in the promotion anticipated to special rules published on coke containers. The strategic decision was created by Coca-Cola to become listed on with iTunes as a result of failure of its digital downloading website 'MyCokeMusic', which lost out to iTunes quite badly. The alliance means that Coca-Cola can sell music but it is merely iPod compatible scheduled to DRM restrictive procedures.
Network Providers:Apple's strategy was possibly to try out the network providers off one another to ensure they got the best package possible. Apple decided to go for the biggest operators in each one of the country's that these were supplying the phone in: UK - O2; France - Orange; Germany - T-Mobile. O2 guaranteed their offer by offering 40% of any income made from the iPhone and possibly more in fee and other areas. The tactics hired have gone Apple highly unfavourable with other Network providers. (Wray, 2007)
It is the complementors who add the worthiness to a corporation without there actually being agreements or strict negotiations. Companies such as SonyBMG, EMI, Universal and Warner all advantage iTunes because clearly if it wasn't for these businesses iTunes wouldn't normally function as well as it can and would not generate anywhere near to the sum of money that it currently does. Finally, Steve Jobs listened to the concerns that music companies had regarding unlawful downloading, piracy etc. He came up with the idea for iTunes and this was essentially an external source for music companies to generate profits in the digital downloading industry with minimal work. It wasn't purely a way of how it could help Apple, but how it would help the music providers and the industry. Therefore the cooperation of iTunes with the best players in the music industry complemented one another.
Strengths: Apple is the clear market leader in the music downloadand dependable financial performance. Income have grown from $5, 742 million in 2002 to $19, 315 million in 2006 and the business's net earnings has increased from $65 million in 2002 to $1, 989 million in 2006 (Datamonitor, 2007). Regular financial growth shows the nice financial state of the company and builds the base for future expansion and growth. Also, the company has a very strong branding and likes a high degree of brand acceptance and brand awarness that allows the company to distinguish its offers and stimulate sales. Another strengths of the company is defined by its successful distribution of the ipod device and its software iTunes. With every iPod sold, the consumer automaticaly installs iTunes on his pc, as it is merely possible to download music from Apple's original software to a iPod. Furthermore, Apple procucts are being regarded as "hip", "stylish" and "fashionable" which is becoming increasingly very important to consumers. Furthermore, Apple devices and software attract customers because of their convinience, their simplicity and then for always being up-to-date with the newest technology. Apple has also collaborated with large brand companies like Nike, Starbucks, CocaCola and Google, which has had beneficial effects on both Apple and their lovers and has created a new account, e. g. linking sports activities and music culture.
Weaknesses: First off all there is to say that however the interconnection between your iPod/iPhone and iTunes is a main factor to Apple's success this limitation could turn into a problem in the future, as more and more customers want for devices and online portals that allow them to download MP3s to any MP3 ready device. Furthermore, Apple has only an extremely limited offer of DRM-Free monitors on iTunes, which is often defined as a solid weakness since an increasing volume of customers pretty DRM-Free downloads. Another weakness for Apple lies in its pricing, specifically for its iPhone. A Mintel research about the mobile phone market in the UK identified "pricing and costs to be the most crucial factor when it comes to investing in a cellphone (Mintel, 2007). Also, the iPhone currently doesn't allow the costumer to immediately download data to the mobile, which, compared to the new Nokia N-Series, is a enormous weakness, since it might prevent customers to buy the Apple device and go for the Nokia handset instead. This could lead to a loss of Apple's market talk about to its rival Nokia. Also, officially, the iPhone isn't tranquil as effective as its competitor the Nokia N95, as it runs on a slower mobile data service and comes only with a 2 Megapixel camera. Another weakness for Apple is, that they've only chosen one operator in each country where in fact the iPhone can be found and so has restricted the consumers selection of network operators.
Threats: The comany's biggest danger probably constitutes the access of Nokia in to the digital download market. By providing the opportunity to directly download documents to a handset device, Nokia could gain some of Apple's a market talk about in the digital download market, since customers are progressively fancying mobile downloads that don't limit them to a bulky personal computer or laptop. The mobile download market is "one of the very most opportunity-rich markets the planet has ever seen", as Nokia's Chief Executive Olli-Pekka Kallasvuo claims (Halper, 2007), in case Apple doesn't capture up fast on this opportunity it is operating risk to loose its superiour market position to Nokia. Another menace for Apple constitutes the kick off of online portals that are specialized in marketing DRM-Free monitors. More and more customers are looking for music it doesn't restrict them to a certain quantity of copies or even to a special device as it is the case with iTunes and the iPod. Although Apple happens to be trying to improve its selection of DRM-Free songs, it still lacks the greater choice and cheap of companies such as Amazon that could lead to custmers turning over from Apple to people in terms of DRM more convinincing sites. Also the threat of illegitimate download sites could have an negative impact, due to the option of free digital content that can sway customers away from Apple's iTunes.
Opportunities: Although currently especially the young ones customer segment sometimes appears as the major focus on group for downloading, as these customers appear to be less restrictive towards new systems, providing bigger and complex products and services for older and wealthier people could proof very profitable for Apple. While using start of its iPhone Apple has recently done an important transfer to the cellular phone market that may allow the company to challenge its biggest danger Nokia on their home market. As more and more customers are becoming increasingly aware of innovative techologies and of the huge benefits arising out of Internet downloading Apple should now take benefit of the fantastic opportunities arising from the fast growing mobile phone download market by causing its services straight downloadable to its iPhone as its rival Nokia has recently done. Also, the approaching change in the digital download industry towards ad-supported content could be a chance for Apple, if the company manages to hit advertising deals with companies that allow Apple to provide services free of charge to customers who consent to watching ads. This could bring a complete new couple of customers to the company. Although these customers won't have to pay for the add-supported services, they will probably buy an iPod or an iPhone or another Apple hardware device.
Although featuring its origins in the wood-pulp industry the finnish handset manufacturer Nokia has become a global innovator in the manufacturing of mobiles and mobile sites and is now the market leader in the mobile phone market with 36% of the world's market talk about. In 2006 the business sold 290 million systems and for that reason it sells more devices than its three nearest competition combined. More recently the business has made a move into the mobile download market, that was considered by Nokia's leader and chief executive Olli-Pekka Kallasvuo to be "one of the opportunity- wealthy markets ever" (Fildes, 2007), by starting its new multimedia system online portal Ovi, which consists of the three components Nokia Music Store, N-Gage Service and Nokia Maps and acts as gateway for consumers to Nokia services. The company did this as a remedy to the announcement of Apple that it would launch a fresh iphone and for that reason enter the cellular phone market, which constitutes a serious hazard to the finnish handset producer in its market. Nokia is currently going from a solely hardware-driven company to the service sector and is now a new player in the multi-media solutions market.
Nokia focuses on bringing people mutually by giving consumers with individual technology that fulfills people's need to communicate and show. Nokia aims to provide technology that is intuitive, beautiful and a pleasure to use. The business's strategy depends on growing, changing and building its business to ensure its future success and it considers the internet as its main search, because of the continously changing marketing communications industry with the internet at the center of this transformation. The company's eyesight is a world where everyone can get in touch.
Nokia has launched its new N-Series which consists of the totally new N81 device and an upgrated version of its flagship N95. The N81 is a music-orienated handset which enabels the buyer to immediately download tunes from the Nokia Music Store to the mobile. This opportunity makes the handset more advanced than Apples new Iphone as consumers no more rely on a PC or iPod but can immediately download their documents to the mobile. The N81 has a 8GB memory with the capacity to store 6000 music tracks, which is about the same as the new Iphone, and it runs on the 3G connectivity. The Iphone uses a poor mobile data service called EDGE and that makes it about four times slower than the N81. The new N81 will definitely cost about EUR 360 and is therefore just a little cheaper than the Iphone which happens EUR 399. The upgrated version of Nokia's flagship N95 has been promoted as a multi-media device and may undertake the highly praised iPhone. It comes with 8 GB of storage space, a 2. 8 inch screen and 3G connectivity and will feature a 5 Megapixel camera, which is a lot, set alongside the rather dissapointing 2 Megapixel camera of the iPhone. The N95 costs about EUR 419 which is therefor sligthly more costly than the iPhone. Technically the Nokia N-series is apparently much better than the Apple iPhone since it includes a faster connection and a much better camera but why is it really superior to the iPhone is the actual fact, that the buyer can download files from the Nokia Music Store directly to the mobile. Still the highly anticipated iPhone appears more fashionable and it's really got the greater consumer attention because so many costumers already are familiar with the Apple iPod and Apple iTunes and can't wait for the new mobile phone to enter into the shops.
Nokia has launched a new multimedia program, called Ovi, that enables consumers to easily gain access to their existing communal network and that functions as a gateway to Nokia services. The new interface consists of the Nokia Music Store, Nokia Maps and N-Gage Video games and will allow customers to straight download their data files to a suitable Nokia device. By releasing this website the business could reposition itself as an "Internet powered experience", as Nokia leader Olli-Pekka Kallasvuo told reporters on the news event in London (Thomas, 2007). The fact that the firm is moving from a hardware-driven company into the service sector sets it apart from rivals of its key-business, which continues to be the mobile phone market, and may make Nokia handsets more "stickier", which means that customers will be less likely to turn to a rival device manufacturer, as CCS Insight analyst Ben Wood pointed out (Thomas, 2007). Although this step of the world's most significant mobile phone manufacturer to struggle Apple's dominance in the music downloading market by releasing Ovi is being viewed as "a logical next thing" for Nokia (Fildes, 2007), some critiques have previously occured. Paul Jackson, a main analyst with Forrester Research, advised that the business should have used its strong industry position to force the envelope and provide something more radical (Fildes, 2007). Also, some observers feel that the service is not significantly different to what's available from other providers (Fildes, 2007) and is also therefore not considered "to produce a major impact in terms of convincing consumers to either begin using legal download services or ween them from Apple's service and dedicated music devices", as Paul Jackson and Charles S. Golvin, experts of Forrester Research, said (Blakely, 2007). Additionally Nokia acquired some negative press on its unveiling of the Nokia Music Store that is part of Ovi, as network specialist Orange threatend to "de-range" the new N81 Nokia device unless Nokia decided to trial the service with its network partner (Fildes, 2007). In general, network providers are scared with Nokia launching a internet service that permits consumers to immediately download files to their mobile, the finnish mobile company could get to their business of selling services like ringtones, music and mobile games to customers. In order never to loose its customers, Nokia must share just a little part of its revenues via their new media portal with its network providers. Still, the finnish mobile manufacturer has big desires for Ovi against iTunes as well as the music industry welcomed the Nokia music store since it might be "good for music and best for designers that consumers can certainly find and buy the songs they want, when they need", as General GROUP International chairmen Lucian Grainge assumed.
After having done a benchmarking for Apple and its own most serious competitor Nokia predicated on the Industry Key Success Factors Innovativeness of Technology, Brand Awarness & Reputation, Financial Strenght, Charges and Effectivness of Advertising we discovered that Apple is superiour to Nokia as it pertains to Brand Popularity & Recognition and Performance of Advertising. Apple and Nokia are both having a huge Financial Strenghts, but Nokia is doing a bit better in Innovativeness of Solutions which is a good little bit better in its Pricing, since it provides cheaper soft-and hardware. (See Appendix 1)
Apple happens to be the clear market leader in the music download market but the company is subjected to some serious risks, the most severe probably being the entry of Nokia in the music download market. Still, Apple has some competetive advanges that might be very difficult for Nokia or other opponents to accomplish, e. g. its strong branding, its constant financial performance, its heavy investment in R&D that results in innovative and innovative technolog and its own collaboration with multinational companies such as Nike, Starbuck's or CocaCola. However, there are also internal weaknesses within the company and its own products, including the limited offer of DRM-Free tracks or the lack of direct dowloading likelihood of iTunes tracks to the iPhone/iPod. Still, we assume that by conquering these weaknesses Apple could change its threats into opportunities, since the multimedia download market continues to be in its growths period and retains unique long term potential customers for companies that take the challenge to be up-to-date with the newest technology and that behave fast on changes within the marketplace and its customers. .
a. ) Maximizing talents to maximize opportunities:
1. Enlarging the client platform: Apple is firmly recommended to make use of its advantages of great financial resources for research and developement activities in order to produce built in and custom-made products and services for the old and wealthier customer segment. This has currently not been a major focus on group, but there may be great potential and opportunity in wedding caterers to this portion. Apple already has a reputation for the simplicity their products have and for that reason can certainly provide functionality for many who are less familiar with the latest technology. This strenghts of the business providing easy to use products and services may help to target the elderly and therefore increase Apple's customer bottom part. Also, Apple could use its advantages in existing collaborations with Starbuck's to appeal to older and even more advanced people. Starbuck's customers are usually elderly and more superior which performs into Apple's aim of targeting a fresh segment. Potentially clients can get demonstrations on how to utilize iTunes either by representitives of Apple or trained Starbucks employees.
2. Improvement of Technology: Apple should use its strengths in financial resoursec to aid R&D to create the required technology that allows immediate downloads from iTunes to the iPod/iPhone. This would create additional value to the product and allow customers to download 24/7 which would cause higher sales for the company.
3. Change towards ad-driven content: Apple's strenghts in brand recognition & awareness coupled with its 80% market share can be used to attract companies who'll funding and sponsor services that might be free to the client.
Due to Apple's talents in high innovativeness it'll be easy for the company to have the technology available to support the ad-driven content.
b. ) Maximizing strenghts to minimize threats:
1. Defend market share: Apple might use its brand reputation and effective and strong advertising campaigns to keep up market talk about and brand commitment preventing customers from turning to competition. Because of its strong money, Apple can invest closely in R&D and create impressive and ground-breaking technology that is hard for other companies to imitate. This will prevent them from getting into the market due to their inability to remain competitive.
c. ) Minimizing weaknesses to increase opportunities:
1. Improvement of Technology: Apple should make technology available or create the technology to be able to offer customers the ability to download from iTunes directly onto their iPod/iPhone.
2. Enlarging the customer basic: To increase the existing demographic customer foundation it would be important to improve the availability of DRM-Free monitors, so that non iPod users have the choice of using iTunes and moreover to download to the lightweight device of their choice.
3. Change towards ad-driven content: Sponsorship and advertising fees can be used to offer free services to the client via ad-driven content. Therefore, this would reduce the weakness of expensive pricing as the hardware would be bought with unrestricted after-sale downloadable content in its extreme form and therefore offering less expensive for the money.
d. ) Minimizing weaknesses to reduce threats:
Apple will not use a strategy that in the end is a success strategy. With Apple being the market leader and not being in a position where they have got major interior weaknesses that prevent them from overcoming external threats it could not be an acceptable strategy.
From the four different strategic options made by the TOWS Matrix, we extracted an umbrella strategy which aims to guard Apple's market talk about. This strategy involves three underlying strategies that could help Apple to keep or even improve its leading market position!
a. ) Enlarging the costumer foundation: In order to attract clients, Apple is highly adviced to focus on the enhancement of its offer for DRM-Free content, since customers are increasingly looking for download alternatives that don't restrict these to a certain quantity of copies or to special portable devices. Also, Apple is firmly recommended to target not only youthful consumer communities but also the more mature and wealthier costumer segment. Apple should therefore invest in R&D specially centered on the unique needs and requirements of the elderly. Furthermore Apple is adviced to continue relationships and cooperations with other big companies, as this will help to increase brand awarness and appeal to new customers, e. g. Starbuck's and the aged customer section!
b. ) Improvement of Technology: In order to maintain its leading position in the music downloading industry it will be highly important for Apple to provide consumers the possibility to directly download data to their ipod touch/iPhone. The continuing future of the music downloading industry sometimes appears by many research workers as highly dependend on mobile internet, thus providing this technology will be needed for Apple's future success. Also, by doing so, Apple would reduce the threat of loosing prospective customers to Nokia, which already offers this service on their mobile device.
c. ) Business into ad-driven content:
Apple is highly recommanded to move towards offering ad-driven content, as this has clearly been determined as a great chance for the company. The market is likely to change in the near future towards this kind of service as customers have a tendency to download more if the service is free. Apple might use its position as the marke head to work out with and draw in companies that will probably sponsor download services that might be offered for free to the client. Apple is therefore being encouraged to make use of its ground breaking technology to check the intro of ad-driven content. This will mean that customers can buy a device understanding that they can download digital content for free and for that reason provide less expensive for the money. This will certainly reduce the notion that customers consider Apple's charges is too much, credited to offering more for the same price.
There is data to support the fact that Nokia constitutes a serious danger for Apple in the digital downloading industry. However, Apple has the features and resources to not only protect its market innovator position in the music download market but can also establish itself in other markets such as the mobile phone market or mobile download market. By pursuing our recommended strategies, Apple can accomplish its most important aim of safeguarding its market talk about and neutralizing the hazard that Nokia poses.
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