Skip to main content



Apple finally hitting a wall?

Apple is known is the hottest tech giant right now. Even with the passing of Steve Jobs, the company has continued to push out successful and profitable products. However, even though Apple products, like the iPad and iPhone, are still extremely popular, the upcoming holiday season is worrying investors more than last year. Just last week the stock slid down 3.8%. It currently has a market value of $525 billion, making Apple the largest corporation. While there are a myriad of possible causes for the trend of decline in Apple stock, one interesting question is: can Apple get any bigger?

We can see that the tech giant may have reached a wall as its sales numbers declined and its smart phone market share fell by 8% since 2011. Using what we learned about network effects, we can come up with a possible explanation to the company’s slow down in growth. Since consumer preferences do not seem to have changed by a significant amount, it may be that Apple has reached all the consumers with reservation prices r(x) greater than price P. The direct benefit factor f(z) for Apple products are not as significant since the choice of smartphones (e.g. Apple vs. Samsung) do not create barriers between users of different brands. Basically, anyone who wants an iPhone or iPad already has one.

The increasing sales of Samsung tablets shows that the market for tablets as a whole has not cleared yet. This further gives evidence that consumers with Apple preferences and high enough reservation prices have already bought the product. If Apple studied these figures more closely, they can draw a better estimate of consumer preferences for their products. They can then better predict if the potential sales volume of new products (e.g. iPad mini) would be high enough to generate profits.

http://www.nytimes.com/2012/11/08/technology/apples-stock-sinks-as-profits-and-products-are-questioned.html?_r=0

http://www.onlinemarketing-trends.com/2012/11/apples-iphone-hit-samsung-wall-as-sales.html

Comments

Leave a Reply

Blogging Calendar

November 2012
M T W T F S S
 1234
567891011
12131415161718
19202122232425
2627282930  

Archives