Apple TV and Monopolistic Competition

Introduction

Monopolistic competition for smart TV and other electronic devices is a common trend in capitalist states. Joan Robinson and Edward Chamberlin were the first economists to come up with the term monopolistic competition in the 1930s. According to the economists, businesses strive to come up with unique products and services in order to win consumers’ goodwill in order to command the market. Arguably, provision of certain products or services only gave credit to a single company while other companies faced overshadowing. When competition arose following the rise of capitalism, it became obvious that companies have to work on the 4Ps of marketing in order to increase brand awareness, as well as promote sales. The two most market dominant companies dealing with internet and electronic services include Apple Inc., and Google. After launching the Macintosh in the 1990s, the society developed expectance towards other products and services that Apple Inc. would offer including the latest Cable TV that keeps improving since 2006 (Helft 2010). Apple TV is not new in the competitive electronics industry since Philips, Samsung, and LG among others strive to attain dominance. However, instead of being a complete TV set, Apple TV is a gadget that interlinks different electronics while providing them with internet connectivity at the same time. Apple Inc. mostly depends on cross selling following an establishment of mutually beneficial relationships with clients through its tablets, iPhone, and iPad among other devices (Ireland, Hoskisson, and Hitt 2008, p. 13).

Industry analysis

When electronic companies came up with video consoles and digital media players, few later incorporated similar concepts into their smart TVs. The electronic device connects different devices to provide entertainment services between audiovisual equipment at the same time. Ability to stream information across different devices at the same time makes the Apple TV unique from other products in the market. The competitive market incorporates transferrable smart TV sets from Samsung, Phillips, Sony, Sharp, Vizio, and Roku that incorporate the HDMI mode of transmission and data transfer. After its first generation in 2006, Apple Inc. decided to unveil its third set of Apple TV in 2012 with HDMI compliance and high standards of video and data streaming (Russell 2010). With the use of a remote control from Apple Inc., an individual can control TV sets, iPhone, and iPad from Apple Inc. Through connection to a TV device, a viewer can easily coordinate different activities at the same time while watching normal programming. With a resolution of 1080 pixels, and use of iOS technology on other Apple devices, consumers have the opportunity to watch high definition programs. Arguably, it is impossible to ignore the relevance of WI-FI connectivity during streaming because communication is only possible through internet linkage (Patel 2009).

Apple strives to meet the needs of customers by incorporating bits of services offered by competitors. Customers from Apple identify with its products even though the cost of acquisition of Apple TV almost doubles the cost of acquiring Now TV. Amazon Fire TV, Roku, WD TV, Google Chromecast, and Android TV are just few competitors striving to fulfill consumer needs in the same market as Apple TV (Cambron 2013, p. 9). Different services offered by Apple including a 24-month warranty period and free installation create a loyal consumer base for Apple TV. With a PlayStation, Nintendo Wii capability, and the ability to enjoy different versions of XBOX, Apple TV consumers have a high advantage over rivals in the same industry. In-Built smart TV capabilities including TiVo DVR structures increase the speed of streaming while providing consumers with the ability to download many games, music, and other forms of entertainment. Uniqueness is very important for Apple; otherwise, the overly costly products and services might not find a long-term market in the future since many alternatives keep emerging in the industry.

Product Differentiation and Competition

Companies use the 4Ps of marketing to reach out to clients. Apple TV already enjoys proximity to clients because it does most marketing activities through electronic media. The company also ships products to distant markets in order to cover for place as an important marketing element. However, its main marketing strategy is the use of quality assurance instead of price. Apple TV costs more as opposed to the Google and Android TV that offer equally excellent resolutions. Connectivity to several Apple devices, quality assurance, 24-month warranty, and after-sale services are attractive packages. When it comes to Apple TV and other products, the company enjoys monopoly because customers can trust that they have long battery lives, and long life spans in general. Quality assurance might not be one of the strongest points of sale for Google TV, but Apple mastered the art of creating quality products from the previous company CEO, Steve Jobs.

Known for his strict and indifferent leadership styles, the leader had set an environment in which consumers could only buy quality products at a high cost even when Apple did not spend much on marketing (Ireland et al. 2008, p. 14). Market differentiation signified by the incorporation of iOS technology and creation of a unique website increased mutual trust between customers and product developers at Apple. Another aspect of quality assurance is the ability to develop an Apple Store that consumers can access throughout the world because the company enjoys excellent coverage and reduced downtimes on internet access. As such, people in remote places can still use Apple TV without the fear of disconnection unless they do not purchase data bundles. Apple sets competitive prices for its products and services, which might be costly in comparison to cable and satellite TV, but price is a link to quality for Apple Inc. consumers (McEachern 2012, p. 41).

Barriers to entry and exit

Hardware or functionality limitations and the price strategy

Google TV, Roku, and Android TV including all Samsung and LG smart TVs have digital TV turners including the capability to record voices and events. Third generation Apple TV lacks such capabilities, which might be one of the reasons it could exit the market soon for purposes of upgrading. Considering the costs incurred to purchase Apple TV, few middle income earners would opt for the HDMI-enabled devices. Everyone wants value for their money, and the inability to record through playback sounds and PVR-enabled capabilities tires various consumers who would opt for products from competitors (Cambron 2013, p. 57). Notably, entering a middle-income economy market might be very difficult; it calls for vigilance before coming up with the 2nd or 3rd generation gadgets.

Multiple competitors and complexity in operation

Apple TV has an excellent package that adds aesthetic value to the company brand. Good photos, movie streaming, ability to listen to iTunes, and excellent internet connectivity are good market entry strategies. Contrarily, the services come at additional costs while competitors on cable and satellite TV try to reduce the prices of their packages to match smart TV. Customers at Google, Samsung, Sony, and LG only have to purchase data bundles to enjoy different channels. Apple TV has to reduce the complex nature of its operations since simplicity encourages the less learned consumers to purchase the products from competitors, which could encourage Apple’s premature exit from the market.

Influence of product development

When Apple first came up with the Macintosh in the 1990s, the only strategy was to increase market access and improve on productivity. The executives disagreed on the company’s leadership, which saw Steve Jobs exit to the Pepsi Company and later Disney World. In 1997, the company required the attention of the technology guru, and is mostly accredited for Apple Inc.’s innovations. Besides innovation, economic stability also influences product development at Apple Inc. The company sets its own prices for products and services while consumers purchase them because they focus on complete quality assurance. Apple TV also sought to break the monopoly enjoyed by satellite and cable TV owners for the past three decades (Ireland et al. 2008, p. 13). According to the company, using Apple TV on several devices within the house reduces the cost of internet while encouraging multitasking. The society is fast changing and the need for efficiency and effectiveness are obvious in the way electronic gadgets keep reducing in size. Since people do not have to repurchase smart TVs, they can use the Apple TV for tablets and other devices for purposes of cost effectiveness. The generations of Apple TV keep improving and the capabilities become user friendly with time. The intention of the company is to eliminate the subscription fee paid for cable and satellite TV from rival companies throughout the world.

Influence of advertising and branding

The reason why Apple TV advertises its products is to promote the products that is still at its infancy at the firm. The company made tremendous progress after initiating social media campaigns on Apple TV that has since gained interest from many parts of the world. Through direct and indirect distribution channels, customers are capable of using Apple TV’s capabilities including iTunes from Mac OS X, BBC iPlayer, Hulu Plus, YouTube, Netflix, Vevo, and Windows-enabled computers. Increased demand for Apple TV from photographers, homes, and event planners across the world testifies the immense impact the company has on people (Helft 2010). Apple has limited adverts, and only uses ad agencies when launching a completely new product. Tim Cook, the current CEO, mentioned that the company sold about 2 million third generation Apple TVs in 2013 in comparison to the 2.7 million sold in 2012. Apple can redeem itself through adverts as Google Chromecast extensively does on social media, print, and electronic components. The use of humor and celebrities in advertisements enables Google to increase the sale of its affordable TV gadgets while Apple TV strives to increase the market share to above 20% in the UK. Advertising might have a positive impact on the target audiences, and Apple Inc. should generally review its marketing strategy (Patel 2009).

Conclusion

In sum, Apple TV was a game changer for the company commonly linked with smartphone and iTunes. A quality-based approach for the Apple TV might not be the best move in a market that already struggles to reduce the costs of subscription linked to cable and satellite powered TVs.

References

Cambron, G. K 2012, Global networks: Their design, engineering, and operation, John Wiley & Sons, Inc., Hoboken, NJ.

Helft, M 2010, From Apple, a Step into Social Media for Music, Web.

Ireland, R. D., Hoskisson, R. E., and Hitt, M. A 2008, Understanding business strategy: Concepts and cases, South-Western Cengage Learning, Mason, OH.

McEachern, W. A 2012, Economics: A contemporary introduction, South-Western Cengage Learning, Mason, OH.

Patel, N 2009, Apple adds HD video purchases to the iTunes Store, Web.

Russell, F. K 2010, Apple’s iTunes and Peer-to-Peer File Sharing, Web.