The study on the market share and the research is vital as the market is now a giant “market” where stocks buy and sell in countless ways and by various vendors. There are numerous companies operating on the iPod and the iTunes market. The companies concentrate mainly on profits, and as the profits reaped by the company increases, the stock price also has an increment. So to analyse the performance of the different companies, involving in the business, the market share has to be understood, and the factors affecting the market and the behaviour of the market have to be tackled. The main aim of the study is to analyse the different ratios and the behaviour of the market and to make a thorough market study in measuring the performance.
The Concentration Ratio measures the total output that is produced in an industry by a given number of firms in the industry. Thus in terms of market control, CR measures trends towards monopolistic or oligopolistic trends in the industry.
Now coming to the iPod industry, we shall study such trends through 4 Firm CR and 10 Firm CR as follows:
The Four Firm Concentration Ratio is as follows:
- Apple –iPods = 73.8%
- Sandisk = 7.2%
- Microsoft = 1.1%
- Others = 17. 9%
From the above, it is seen that Apple has a major chunk of this market, and it could be seen as an oligopolistic trend.
Coming to the Ten-Firm Concentration Ratio, it could be seen as follows:
From the above, it is evident that Apple iPod has the major share in the market with Sandisk behind them. It is believed that the once top-ranking Apple now has to split the market with lesser-known rivals like Sandisk and Rio. “On 1 January, Apple had zero percent share of the market for Flash-based players. By the end of June, according to the NPD Group, it had a 46.3 percent share of the US Flash-player market. Only Sandisk came close, with 10.8 percent – and even that was less than 1GB iPod Shuffle, which had 11.9 percent of the market.” (Arthur 2005).
Herfindahl-Hirschman Index (HHI)
The objective of the HHI is to consider the percentage market shares of each constituent of the industry (each firm) and find out their total market share.
HHI is the measure of market share concentration in any firm. “The higher the HHI value, the more concentrative the market.” (Hooks 2003, p.71). It is necessary to now calculate the HHI index of the ipod market. It may be gained as follows:
- (0.34)² +(0.12)² + (0.5)² +(0.4)² + ((0.2)² + (0.3)² + (0.2)² + (0.1)² + (0.1)² +(0.1)²= 0.132 or 13%
Thus under the HHI index, the concentration of firms is just 13% of the total and is thus not consequential.
Consistency of results from the above measures
It does appear that there is good consistency in the measures.
What do the measures reveal about the structure of the market for your product?
The main revelation that it brings forth is that the product Apple iPod is a dominant player which has a good market share leads ahead of its competitors, and barring unforeseen circumstances, it would retain its leadership status in the iPod industry. Discuss any change, or the absence of change, in the degree of concentration in the market between 2000 and 2008.
Between 2000 and 2008, Apple’s position as the brand leader has remained consistent, although some smaller players have come and gone. Since there are many development and innovative plans in the anvil for Apple and ready acceptance of its range of products, there is no real fear of business downturns in this industry in the near future. However, Apple must keep a vigilant eye on new competitors who, with greater sophistication and innovatively designed products, may try to erode Apple’s market share.
Competitive behaviours of Apple Inc
The impact of a company’s tactical promotion mix options on productivity can be assessed by way of accepting the impact of a person’s options on consumers’ requirements for the company’s products and on the companies expenses. The requirement and expenses can also be influenced by the competitor company’s tactical options. So the competitive behaviour of the Apple i-pod is also affected by the rival’s firms. The clients of the Apple iPod are a community who wish to take joy in the benefits of the latest and up-to-date know-how in digital song players. Apple Inc. has three divergent types but exclusive and essential profit stream that is mainly coming from three types of products such as cellular devices, Personal computers, and iPod. The iPod Apple has discovered an entirely new group of digital song companies. “Apple Inc. has stepped into various different markets including the cellular and portable MP3 device markets to open up new opportunities and gain a competitive advantage on many of its competitors.” (Schiluchbba 2009). Apple has started to alter the calculations and after that generation music device firm, and it can maintain this growth if they can carry on making use of the efficient, innovative strategy. Apple iPod is a tool and technology-based firm. Apple Inc. has good customer loyalty so that it will help to a competitive advantage over other firms. “Apple has been in business since 1976 and as-built a number of competitive advantages along the way. Four such differentiations are brand loyalty, innovative hardware design, dedicated market shares, and ease of use.” (Tyson 2005).
The novelty mechanism Apple broadcasted the apple i-phone. The novelty supervision is the outcome of not only a union of various know-how but also in a union of businesses that frequently crash with every other intended for the first time as rivals in the novel cellular phone novelty grounds. The brand constancy and commitment of Apple Inc. are very powerful. A key competitive advantage of Apple Inc is the ease and simplicity of usage. Taking the benefit of Apple Inc rather than go for the inelastic need curve based on preferences.
The competitive advantages of Apple Inc. among other competitors are its strategic positioning around the world. Merging above four competitive advantages such as brand loyalty, innovative hardware design, dedicated market shares, and ease of use, the organization strongly competes for and captures marketplace share with elan. Apple seems to be an organization that takes pain in learning about the society around it and knowing its needs and requirements.
Compare and contrast the competitive behaviour with that of other companies in the market
The competitive behaviours of the Apple i-pod and other companies are based on the customers the advantage of rivalries, such as lesser cost, better options, and technical expansion. On the whole, strategies entitle Apple Inc. to focus on the capabilities and stay away from incompetent performances of the past. Apple iPod is a Classic reproduction; it accumulates medium on the inside hard drive, but other models are using the flash recall system to facilitate their lesser size. Sony, Kenwood are the main competitors for Apple iPod. Apple iPod offers exterior information storage mechanisms. It can play the various audio folders like ACC, MP3, etc., and can also show the various image set-ups. “The iPod Nano has a gorgeous, superslim design with a bright, photo-friendly screen. It is easy to operate and works seamlessly with iTunes and the iTunes Music Store, which has the world’s largest selection of music. It boasts a nimble processor and system performance with no skipping, thanks to flash memory.” (Kimon 2005).
As compared with the other business establishments, Apple iPod uses very diverse approaches in conveying even a sole, precise novel product. The market control of a sole invention or a product can be very much improved when incorporated into a set of products on a proposal. This will generate extra worth for the users and is the main ground why the new era departed towards Windows. There is a vast difference between the iPod and other MP3 players in the market. The ideas behind the MP3 player were good, but there are various differences between the iPod and MP3 players. “First of all, an MP3 player is a general term for a portable device that digitally plays music, whether from hard disk or flash memory. (No CDs or tapes are required for playback) It might also be referred to as a portable media player, provided the devices can playback video or view images. IPods are a type of MP3 player, or portable media player that is produced and marketed by the Apple Corporation.” (Apples & oranges: Difference between iPods and other mp3 players, n.d.).
Some music lovers prefer other brands too to satisfy their music needs, for instance, brands such as Sony, Samsung and all. The consumers of the music product must try to understand the basic differences among them before adopting the product. Like any other product iPod also has its own disadvantages too. The main among them is that Apple iPod is not consumer friendly. “Apple has been giving away the $300 iPod touch to students buying a laptop; that looks like an effort to broaden the iPhone platform. Left to their own devices, most kids would buy the old hard drive iPod Classic because they think they need to walk around with their entire torrent library of stolen music.” (Earn Dilger 2008).
A mix of competitive behaviours’ changed between 2000 and 2008
Yes, the changes in the competitive mix behaviours reflect changes in the degree of concentration in the market. Due to the impact of changes in the Political, Monetary, Communal, Technical, Environmental, and Lawful issues disturbing Apple business and Porter’s five forces examination of Apple business which is investigating the negotiating control of consumers and dealers, the danger of new entry in the market, the danger of alternate goods and force of competition distressing Apple Corporation. Due to the technological innovation in the field of communication, it is necessary to observe the relationship between innovation and market concert of iPod novelty.
The strategic performance measurements of an organisation are supported by the management. Management systems boost up the business activities of the organisation and permit the parallel of the business activities with a competitive strategy. The performance measures are vital tools for scrutinising the performance of the company in achieving the goals and objectives. The company Apple Inc includes the key performance indicators in measuring the performance and analysing the progress with respect to the goals and targets that are set.
Company profile of Apple Inc
Apple Inc. is a US-based multinational firm that is involved in the manufacturing, designing and selling of electronics and software products. The company was founded by Mr Steve Wozniak and Steve Jobs in 1976, headquartered in California. The variety of products from Apple Inc is hardware stuff known as Macintosh computers, iPods, iPads and iPhones. To add to the innovative line, the latest product from the company is the iPad which was introduced in January 2010. It is a multimedia formatted tablet that includes photos, videos and books.
Apple Inc. presently possesses a market share above 87.3% worldwide for its iPods and iPhones in comparison with the Mp3 and personal computers. “The Company sells its products worldwide through its online stores, its retail stores, its direct sales force, third-party wholesalers, and resellers.” (AAPL: US Apple Inc: Profile 2010)
Identifying performance indicators of an organisation
The performance indicators are vital tools in the analysis of the performance and in measuring the progress of the organisation. The performance tool differs from business to business and from organisation to organisation. It is essential to identify the key performance indicators of a firm in achieving the desired targets and objectives. As the KPI’s of the organisation differ from each other, the indicators that are to be analysed change depending on the market conditions like the demography analysis of the market, customer attrition, profitability index, turnover of customers, increased revenue and decreased bad debts.
Performance Analysis indicators
The performance analysis of the company Apple Inc can be understood by analysing the financial statements of the company, which include the analysing of three parameters of performance like liquidity, profitability and solvency in the ratio analysis.
The usefulness and relevance of the indicators
The liquidity ratios are important ratios in identifying the financial health of any organisation. The liquidity ratio consists of four various other ratios used by the analysts. The liquidity gives a vivid idea on the receivables, inventory, working capital, and about the assets and liabilities and manipulation on the future of the company. Liquidity is an important tool for analysts to determine the short term solvency of the operating business. The liquidity ratios are useful in determining the organizations’ ability in meeting future needs. The liquidity ratio is considered as the judgment ratio, as they are the ratio with limitations that include violations from the predictions that the sales can be affected by different prevailing market conditions and business prosperity.
The main aim of any business is profitability; the profitability ratio is the key tool in determining the performance of the firm. The profitability ratios measure the performance and the profit that is generated right from the bottom level of the company. This is the essential tool that is used by the managers. This ratio gives the indication of effectiveness, efficiency and the performance of the company. This ratio is helpful in measuring the returns to the shareholders.
The solvency ratios are those which determine the solvency of the firm and which provide the organisation with the ability to meet long term obligations. The solvency includes the volume of the company subsequent to taxes and depreciation. The range of the solvency ratios differs from company to company, and the solvency ratio percentage of 20 and above indicates a healthy financial organisation in terms of long-term and short-term obligations.
Comparison of the performance among the competitors
Any performing company has a lot of competitors associated with them; the company Apple Inc has its major competitor as Dell. Apple and Dell compete in numerous ways and methods in the same markets. The companies are highly reputed and well-diversified in the area of design and production. The performance of the company in the market is dependent on numerous factors, and they include the present market situation, recession, globalisation issues and economic traits and internal performance of the business. The performances of the company are compared with different identified performance indicators. The main performance indicators of the company can be analysed by the financial performance indicators, and the main financial performance indicators are the financial statements, business ratios and the profit/volume analysis. The financial statement makes use of the financial ratio, which is helpful in the understanding of the profit and the volume of the business and the future of the business.
Dell Co: The competitor
Dell Co is a US-based company with 25 years of expertise in the field of technology and innovation. The company has its headquarters in Texas, USA. The operations in Dell include the designing and developing of its software and electronic systems. “The company also provides third-party software products, such as operating systems, business and office applications, anti-virus and related security software, and entertainment software; and peripheral products, such as printers, televisions, notebook accessories. The company sells its products and services through its sales representatives, telephone-based sales, and online at dell.com, as well as through indirect sales channels.” (Santosh Sengunthar’s summary, 2009).
The liquid ratio of the company consists of the liquid asset, which are active assets possessed by the company and that is able to translate into cash at any point in time. The liquid analysis of the company includes the understanding of the cash, budgetary reforms and the current assets and the liabilities of the firm.
“The Current Ratio (CUR) method is a model for measuring the liquidity of a company by calculating the ratio between all current assets and all current liabilities. It is an indicator of a company’s ability to pay short-term obligations.” (Current ratio method – model for measuring liquidity, 2010).
Apple (Millions) Dell (millions)
Current Assets 10,300 16,897
Current liability 3,484 14,136
Current Ratio 2.96 1.20
By the analysis of the current ratio, Apple shows the sound ratio as three times to compensate with liabilities of short term. It is evident that Apple didn’t avail the loans to support the expansion of the company and in payment of debts. Dell has a ratio of 1.2, which is much less, which shows that the company Apple is financially sound than Dell.
“A ratio is that measures a company’s ability to meet its current liabilities with its liquid assets. It’s a good rule of thumb that a healthy company should have at least a ratio of 1.0.” (Teen analyst advice, 2009).
The inventories form the lesser liquidity to the firm, and they can be considered as the loss faced by a company with current assets which can lead to bankruptcy. This ratio is much useful in determining the liquidity position of the business.
Apple (million) Dell(million)
Cash equivalent: 3491 4,747
Cash receivable: 895 4,414
Investments (short): 4770 5,060
Current liabilities: 3484 14,136
Quick ratio: 2.63 1.01
As a result of the analysis of the quick ratio, it is found that the current assets can be transformed into cash with ease. With regard to the efficiency in operations, the accounts that are payable can be analysed, and the expenses are found less in contrast to the current assets. Dell has a dissatisfying quick ratio, which shows the transformation of the assets to cash is not at a faster rate, and the result of them disappoints the shareholders.
Asset management ratio
The asset management ratio is used in measuring the effectiveness and the efficiency possessed by the organisation in marinating the assets. They also contribute to the sales if the company has sound assets; it leads to good assets in operations and to increased working capital of the firm. “Asset Management ratios help analyse how quickly a company’s resources can be converted to cash or sales. These tutorials define the ratios and walk you through the calculations, including where on the financial statements the numbers can be found.” (Lopes 2009).
Apple (millions) Dell (millions)
Net sales: 13,931 49,205
Beginning assets: 8,050 19,311
Ending Asets: 11,551 23,215
Asset turnover ratio: 1.42 2.31
It is evident that the turnover is less for Apple, and the profit margin is high with fewer turnovers in assets. The assets turnover ratio may include the price strategy and the values in the efficiency of operations. Apple has a good price strategy and a high profit. The business of Dell is volume-based, and it has high efficiency in operations that provide high turnover in assets.
Debt ratio: Apple (millions) Dell (millions)
Total liabilities: 4,085 16,730
Total liabilities and owners equity: 11,551 23,215
Debt ratio: 0.35 0.72
The debt ratio shows the company has paid all its long term debts, and it has no long term debt for its operations. The debt ratio is derived as a result of the payable amount and accumulated expenses. Both companies show a good debt ratio and a huge portion of liabilities that have come up while measuring the ratio.
Debt Equity Ratio
Apple (million) Dell(Million)
Total liability: 4.085 16,730
Total owners equity: 7,466 6,485
Debt equity ratio: 0.55 2.58
The Apple inc ratio of debt-equity has a very good ratio which depicts that the company can manage the equity very efficiently and is capable of paying the short term and the long term commitment. The debt-equity ratio of Dell is very disappointing with 2.58 but looks good on the balance sheet, and they may provide an unhealthy situation that offers a descriptive study of the ratio. Both companies seem to be good at managing debt and equity in the market.
Return on Equity
The ROE is a very important accounting ratio, and it is the ratio of the net income to the equity.
Apple (million) Dell (million)
Net income: 1,335 3,043
Operating income: 1,650 4,254
Beginning owners equity: 5,076 6,280
Ending owners equity: 7,466 6,485
ROE on net income: 21.29% 47.68%
ROE on operating income: 26.31% 66.65%
The data depicted above shows the good performance in terms of return on the equity, and the stockholders receive a return of more than 20%. Any Company providing a good return to the stakeholders are found to be a good performance company. Dell has a ratio that is mainly due to the buyback of the stock. The ratio shows a good return to the stakeholders to both the companies. The financial statement of Apple Inc is much strong than Dell. Dell has much intent in manipulating the ROE and in minimising the number of shares.
From the above study, it is found out that Apple Inc. is a company with good performance and high efficiency in operations. The analysis of ratios depicts that it is rich in cash flows and has lease obligations in the long term and short term. The investors find a better opportunity in investing in the same.
Market share of Apple
As per Apple media result, the company try to sell 30,000,000 iPhones. Totally 75,000 apps are available. Out of that, 1.8 billion apps are normally downloaded. 9.100 million accounts with credit cards are available for iTunes. And almost 8.5 billion songs are available. The market share of Apple’s iPod has of the MP3 market. According to Apple, they have 7.38 per cent of the market share, 18 per cent held by others, 7.2 per cent held by SanDisk, and only 1.1 per cent is held by Microsoft. Fifty per cent of the iPod is bought by new customers. iPod Touch is a rapidly moving model, which sold over 20 million units within the two years by the company. That is in the case of Touch 20 million sales and iPhone it is 30 million. A recent study reveals that Apple iPhones have a smaller market share, even though sales have gone up 18%. “The data collected from ABI Research reveals that the market share of Apple’s smartphone has dropped from 18.1 % in the 3rd quarter of 2009 to 16.6% in the 4th quarter. This data has arrived in spite of the fact that 8.7 million iPhones were sold by Apple in the 4th quarter, which was 18% more as compared to the previous quarter and even the best quarter in terms of total sales.” (Mobile Specs 2010).
The survey found that Apple iTunes has an enormous 90% of music downloads online. Today, instead of sharing music, especially students are directly downloading iTunes to get music. “Apple’s iTunes was the seminal part of the iPod and iPhone universe that allowed Apple hardware and software to combine into a seamless experience, and one that has not been enjoyed nearly as fully by any company other than Apple. But, a 25% market share for all music sold in the U.S.? Apple has never produced a CD, ever. Its entire sales catalogue is digital. So, with that in mind, the 25% share becomes even more impressive.” (White 2009).
According to new reports on internet connected computers, the Microsoft share of the operating system is declining while the Apple market has gained 10% for the first time in the market. For net application, the company provides a variety of sites, and according to a computer world analysis, windows users are declining day by day. In the hardware industry, people are looking at Apple as an “innovator” because they only popularised the USB and FireWire and created the software to edit and create digital movies. Due to defection from the windows operating system, the consumers are doubtful about Microsoft; meanwhile, Apple made its market share double. People are looking for brand identity, quality, performance and, of course, the price of the product also. The brand trust is more towards Apple when compared to other companies. Sony, Dell and HP gain the highest mark, but Microsoft and LG rank the lowest. Consumers are dissatisfied with the Microsoft product. “Microsoft faces big consumer defection risk: One measure of consumers’ dissatisfaction with Microsoft is seen in the 5.4 million households that gave it a brand trust of 1 (distrust a lot) or 2 (distrust a bit),” the report said. “Compared with all Microsoft users, these at-risk users have higher income, are much more likely to be male and are bigger online spenders.” (Dalrymple & Central 2006).
The market performance of Apple Inc is compared with its competitor the Dell co. By analysing the ratios and the market behaviour, the study shows that Apple Inc is an outstanding performer in the market, and it provides an excellent platform for investors in terms of cash flow and benefits. The study has shown that the operational efficiency of Apple Inc is the important factor for making the company a success in flying colours.
|Period End Date||09/26/2009||09/27/2008||09/29/2007||09/30/2006|
|Period Length||52 Weeks||52 Weeks||52 Weeks||53 Weeks|
|Stmt Source Date||01/25/2010||01/25/2010||01/25/2010||12/29/2006|
|Stmt Update Type||Updated||Restated||Reclassified||Updated|
|Cost of Revenue, Total||25,683.0||24,294.0||16,426.0||13,717.0|
|Selling/General/Administrative Expenses, Total||4,149.0||3,761.0||2,963.0||2,433.0|
|Research & Development||1,333.0||1,109.0||782.0||712.0|
|Interest Expense (Income), Net Operating||0.0||0.0||0.0||0.0|
|Unusual Expense (Income)||0.0||0.0||0.0||0.0|
|Other Operating Expenses, Total||0.0||0.0||0.0||0.0|
|Interest Income (Expense), Net Non-Operating||0.0||0.0||0.0||0.0|
|Gain (Loss) on Sale of Assets||0.0||0.0||0.0||0.0|
|Income Before Tax||12,066.0||8,947.0||5,006.0||2,818.0|
|Income Tax – Total||3,831.0||2,828.0||1,511.0||829.0|
|Income After Tax||8,235.0||6,119.0||3,495.0||1,989.0|
|Equity In Affiliates||0.0||0.0||0.0||0.0|
|U.S. GAAP Adjustment||0.0||0.0||0.0||0.0|
|Net Income Before Extra. Items||8,235.0||6,119.0||3,495.0||1,989.0|
|Total Extraordinary Items||0.0||0.0||0.0||0.0|
|Total Adjustments to Net Income||0.0||0.0||0.0||0.0|
|Basic Weighted Average Shares||893.02||881.59||864.6||844.06|
|Basic EPS Excluding Extraordinary Items||9.22||6.94||4.04||2.36|
|Basic EPS Including Extraordinary Items||9.22||6.94||4.04||2.36|
|Diluted Weighted Average Shares||907.01||902.14||889.29||877.53|
|Diluted EPS Excluding Extraordinary Items||9.08||6.78||3.93||2.27|
|Diluted EPS Including Extraordinary Items||9.08||6.78||3.93||2.27|
|Dividends per Share – Common Stock Primary Issue||0.0||0.0||0.0||0.0|
|Gross Dividends – Common Stock||0.0||0.0||0.0||0.0|
|Normalized Income Before Tax||12,066.0||8,947.0||5,006.0||2,818.0|
|Normalized Income After Taxes||8,235.0||6,119.0||3,495.0||1,989.0|
|Normalized Income Available to Common||8,235.0||6,119.0||3,495.0||1,989.0|
|Basic Normalized EPS||9.22||6.94||4.04||2.36|
|Diluted Normalized EPS||9.08||6.78||3.93||2.27|
|Amortization of Intangibles||78.0||73.0||48.0||12.0|
- Data providers
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- Quotes supplied by Interactive Data Real-Time Services. (Balance sheet of Dell Co., n.d.).
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