Apple Computer Inc
Apple Computer Inc- indeed one of the successful companies producing software and hardware products that are being distributed locally and internationally has recently come up with new line of product that, according to Apple’s management, would revitalized their products lines and change the mainstream of digital music industry, see Appendix 1. The one that we are referring here is none other than their new music player- iPod.
There are a lot of computer hardware and software products that comprises the “product line” of Apple, there is their OS X operating system, the iLife, Mac Mini, iMac, Power Mac G5, Mac Book, Mac Book Pro, Xserve G5 and a lot more, but only iPod is the sole product of Apple that seems to deviate to their traditional product line since it belongs to the digital music player industry. One of the key features of iPod is its size and memory capacity. Despite of its small size, it can offer memory size to at least 1GB or to a hundred of songs (Hormby & Knight 1).
Moreover, with the stylish design of iPod, it surely fits to the mainstream that modern consumers currently have (Hesseldahl 1). Apple’s iPod compatibility to Windows as well as its other strengths contributed on its successful penetration on its target consumers which are already Windows users, see Appendix 2. Even if Microsoft and Apple are rivals in the production of software products in the market, still, Apple did reconsider the situation and put into their priority the success of iPod in the market. With the said characteristics of iPod, there is way of expecting for the said product to dominate the digital music industry.
There are only available few numbers of firms that produces music players in the market and this left consumers with less “music player” brand to choose from. From this market condition, it is clear that Apple is operating in a oligopoly type of market. One of the conditions of being under the monopolistic type of market is that there exist a large number of producers and consumers in the market just like restaurants as well as shoes and other “regular” goods in the market and this has not been experienced by Apple for its past operation in providing iPod in the market.
Aside from this, another condition in order to say that a firm is operating under a monopolistic competition would be, consumers thinks that there is a no difference in the prices of firms that produces a certain product in the market. As for the case of iPod, there is a big gap between the prices of iPod as compared to other music players since iPod is more expensive as compared to others.
On the other hand, the main reason why Apple must be considered to operate under the oligopoly type of market would be the fact there are a few number of music player producers that currently operates in the market, including Microsoft and Apple, which cater to a large number of consumers. Moreover, aside from the size of the number of firms that operates under the digital music industry, another factor that made Apple to be considered operating on oligopoly would be the concept of product differentiation.
It is obvious that in terms of design and internal features, there is a big difference between iPod and other media player provider in the market. In this regard, it is justifiable to say that there is a product differentiation in the digital mobile industry since certain product features and characteristics also serves as the identity of the producer. Aside from the distinct characteristics of iPod as compared to its rival music players, another contributor for its successful penetration in the market would be the existence of iTunes to complement iPod.
It is like more of a source of songs and videos that are to be down loaded for iPod. With the aid of iTunes, any iPod user could easily download and organize their songs and videos according to their preferences. ITunes helps iPod to maximize its potential use and upgrade the convenience that the latter is already provides to its users. In this regard, it is clear that iTunes can really be considered as the perfect compliment for iPod. With the type of “service” that Zune offer to digital audio player users, one could say that it mimics the iPod and iTunes of Apple.
Zune is capable of displaying pictures, play music and videos as well as receives FM radio. The first Zune player was released in 2006 and recently Zune 4, 8 and 80 were already announced in public and are capable of offering touchpad-style input device and a lot of other brand new features. Zune players are also small in size and offers large memory capacities just like the iPod of Apple. With this features of Zune, it is clear that Microsoft is a fringe firm in this scenario.
The fact that there are some parallelisms when the two product’s internal and external attributes, of iPod and Zune, when compared despite of the fact that Zune plays a minor role in the digital music industry since it was just introduced recently, then, Microsoft serves as a fringe in this scenario. Based from the market performance of Zune and iPod as well as on how the consumers behave and make decisions on what to buy between the said two media players, there is a basis for stating that the Bertrand/Cournot game cannot be played between iPod and Zune.
One of the premises for Bertrand/Cournot game to possibly exist in a market place would be the idea that consumers would always buy the cheapest goods available in the market (“Cournot Games” 1). It was already mentioned earlier in this paper that iPod is more expensive as compared to the rest of the media players available in the market and despite of its expensive price consumers still prefer to buy iPod than with other media players in the market maybe for the reason that Apple pioneered the development of small yet high memory capacity media players not to mention the stylish design and innovative features of iPod.
At this point in time, it is cleat from the above statement that consumers, as far as media players is concerned, price only accounts for a small portion of the total degree of factors that might influence its consumption behavior. Thus, the said premise in order for Bertrand/Cournot game to be used between Zune and iPod is debunked by the current market performance of the two firms, Microsoft and Apple, as well as the consumption behavior of the consumers. Appendix 1 Appendix 2 iPod Sales
“Cournot Games,” 2007. About. com. 6 January 2008 http://economics.about.com/library/glossary/bldef-cournot-game.htm