Econs Holiday Homework

1. Econs Holiday Homework Team Leader: Shirong Tai Ming Shayne Mingkhim Tee Nur Hafizah

2. Project A

3. Project A • It was announced on January 27, 2010 by Apple and released in April. • The price of the iPad is determined by how much memory is present and whether it is Wifi or 3G. The bigger the memory space and with 3G available, the price of iPad will definitely be higher compared to an iPad with lower memory space and only has Wifi available, because Wifi is free whereas consumer have to pay in order to use the 3G function. • Some of the related/associated products for ipad are complements like , iPad casing , charger , headphones/earpiece , camera connection kit .These products are complements which are related to iPads . They get affected when market of iPad is affected. Complements are goods that are jointly together to satisfy some particular wants. A fall in price of ipad will lead to more quantity demanded and hence cause an increase in the demand for complements since they need to be used jointly. The closer the two goods are as complements , the greater will be the increase in the demand for complements, given a fall in the price of iPad. • Another type of products related / associated to iPads are substitutes such as , Kindle , Notion Ink , Microsoft Courier , Hewlett Packard ,ICD Ultra. These are alternatives. The range of substitutes can be narrow or broad .A fall in price of ipads will lead to a rise in quantity demanded for Ipad but a fall in the demand for the substitutes ( Kindle, ICD Ultra ) . The closer two goods are as substitutes , the greater will be the fall in demand for Kindle, ICD Ultra. • http://en.wikipedia.org/wiki/IPad • http://www.compareappleipad.com/buy-ipad/ipad-buying-guide/ • http://www.ipad-answers.com/is-there-any-substitute-for-the-ipad/

4. Project B

5. Project B • Price Of Substitutes – View Point of Supplier • The basic price of iPad is $499 up, while the top four substitutes of iPad and their prices are as follow – Notion Ink($399), Microsoft Courier ($600), Hewlett Packard ($499) and ICD Ultra ($249). The prices of substitutes all all roughly the same price of iPad with variations of $100-$200 above/below the iPad. However, competition is almost non-existent. All the other ‘supposedly’ iPad competitors/substitutes will have their tablets shipping ‘end of the year’, and many of the more formidable iPad competitors will be only out at 2011. Thus with this said, iPad have almost the whole market to itself, with its huge customer target – where its usable for ages as low as 7 to any age. By having literally no substitutes along the tablets market and having almost no age target, the price of iPad is inelastic and any price along $499-$699 would not change the demand of iPad much.

6. Project B • Expectations – View Point of Consumer • The general expectation of price of iPad among the customers is that iPad price WILL not change. This point is very heavily discussed by Steve Jobs himself that the price of iPad would not change. It is a market strategy that Apple Inc. uses that it does not drop it price of it products as it wants to assure all it customers that their products do not have any defaults or Apple have made a mistake in price setting. A change in price would also anger a lot of Apple customers as many would feel shortchanged or find troublesome if a refund was made. The Apple customers know this that Apple Inc. would insure their ‘customer expectations’ and thus with this expectation that prices would not change, customers would not have the ‘wait and decide’ mindset towards getting an iPad. Thus this is beneficial to the demand of iPad as less customers would wait, which often results in changing over to other tablets.

7. Project B • Taste • On March 2nd 2011, iPad 2 was officially introduced to the world. iPad 2 promised a new features and technology. New features and technology will lead to a decrease in the demand for iPad as consumers feel that iPad 2 will be better. Based on economics tools, the demand curve will shift to the left. With lesser demand for iPad due to the introduction of iPad 2, it would be rational to lower to price of iPad so as to bring quantity demanded to an equilibrium level. Therefore, Apple may decide to decrease the price of iPad. However, iPad is normal good. A decrease in the demand for iPad will not necessarily affect the price of iPad to fall. In this case, with iPad’s price staying constant, the only way to respond to declining demands is through marketing. Marketing increases the cost of production of the iPad. Hence, Apple may decide to reduce the marketing for iPad so that they can reduce production cost.

8. Project B • Price of the product • There are many iPad rivals which are known as substitutes due to recent developments in the tablet industry. Such substitutes can affect the demand of the iPad. One main factor that will affect the demand of the iPad is the prices of substitutes. • For example: The Motorola Xoom will cost $800. The HTC Flyer will cost around $700 and it’s only a 7-inch tablet (compared to the 10-inch iPad). The Hewlett-Packard TouchPad based on Palm’s webOS looks like an excellent alternative, but will also cost $700. However, the iPad starts at $500 for the 16GB Wi-Fi model. • The huge difference of around $200 between the iPad and its substitutes is the main reason why the demand for iPad remains high. This will also not cause the price of iPad to fall as it is already the cheapest alternative out of all the tablets that is in the market.  Credits: http://www.apple.com/ipad/features/ http://www.techrepublic.com/blog/hiner/the-one-big-reason-why-ipad-rivals-cant-compete-on-price/7724?tag=discussion-thread

9. Recent Developments impacting the market for Ipad • HP webOS Tablet Not only do the renders physically look like the current iPad — sans the home button at least — but the specs line up with what most assume are going to be on the next iPad build. There’s a set of speakers, front-facing camera, and a micro-USB port, which will no doubt handle the charging and file transfer duties. But the one place where this tablet sets itself apart is where it counts most: The OS. http://www.crunchgear.com/2011/01/18/hp-webos-tablet-leaks-looks-like-an-hp-ifed-ipad/

10. Recent Developments impacting the market for Ipad • Android Tablets Google Inc.’s Android software boosted its share of tablet computers almost 10-fold in the fourth quarter, narrowing the lead of Apple Inc.’s iPad, market researcher Strategy Analytics said. Android devices captured 22 percent of global tablet shipments in the three months to Dec. 31, up from 2.3 percent in the preceding quarter, the Boston-based researcher said in a statement today. The iPad accounted for 75 percent of shipments in the period, down from about 95 percent, it said. http://www.bloomberg.com/news/2011-01-31/android-tablets-gain-on-ipad-in-fourth-quarter-researcher-says.html

11. Recent Developments impacting the market for Ipad • Blackberry Playbook • The Canadian company behind the BlackBerry is branching out with a tablet computer meant to compete with Apple's popular iPad.Research in Motion Ltd. unveiled its PlayBook tablet on Monday, pledging to launch the device in early 2011, less than a year after Apple Inc. kickstarted the tablet market with the iPad.