Apple have established an awesome reputation for quality and innovation. While they have only about 18% of the personal computer market they dominate the MP3 and phone market and the iPad sets the standard in tablets.
It is very difficult to challenge Apple in these markets and as a result of this barrier to entry (brand loyalty) Apple can charge very high prices.
Amazon have a similar position in book and ebook retailing online.
The problem is that monopoly power (which any firm with a large market share gains) works against the consumer. Competition should bring down prices and raise quality and customer satisfaction, but entering the market is often difficult and does not always work as expected.
Amazon is now taking on Apple's iPad with the Kindle Fire. A combined Kindle and tablet, and it is less than half the price of an iPad.
Is is good for consumers? Only a company like Amazon could really mount a serious challenge in such a market. They are providing an alternative at a lower price. But Amazon are also trying to lock you in to their product - Kindle ebooks. Remember Apple have iBooks, and the two systems don't talk to each other.
So we could look at this as welcome competition, or we could see is as two Oligopolists fighting for bigger market shares at the expense of any other competitors. Both Amazon and Apple would settle for being the Coke and Pepsi of consumer electronics.
My Kindle Fire is ordered and expected delivery is October 25th!
Personally, I feel that this is very good news for the media market. For years Apple have destroyed competition with innovative and technologically radical ideas, iPods, iPhones and iPads primariily. But now they haven't had a brilliant idea for a while, they have just been bringing out "better, faster and slimmer" products that are emptying pockets, but what can people do. There is no doubt that Apple create the most complete tablet and phones around, and it leaves people with no choice, monopoly doesn't even begin to represent how much they own certain markets.
ReplyDeleteHaving competition like said in the article brings prices down, increases quality and is generally beneficial to most people. All these technological companies profit greatly from every product, and what harm will it do to make it that little cheaper, while at the same time find way to make an even better product. I saw online that the iPhone can cost up to £700, on its own. Thats remarkable not just to me but most people i'm sure.
So I believe not only Amazon should compete, but others should flood in to enter the market. Laptops are a great example, with so few at the beginning, it was incredibly expensive, when monopolies went away, laptops became better, cheaper, faster etc. And I hope that companies can learn from this and be hopeful in the tablet, MP3 and phone markets etc.
I think it's great that amazon have tried to compete with apple for the consumers choice. not only have they come up with a new idea (mix of the kindle and a tablet!) but the price is good too, surely giving apple a run for their money. Now amazon can target two markets, as well as their online store. I hope that other companies will see what amazon have tried to achieve and try to compete too.
ReplyDeleteIt's not fair that these big companies hold so many patents and such big majorities in brand loyalty, preventng smaller companies from competing with them. More competition would surely mean a wider choice of products and more competitive pricing.
I read an article today on bbc news by a man called Dan Lyons (link below),which is similar to what Sakshat pointed out, he was saying that apple products are becoming boring due to the similarities between generations. Perhaps a new exciting and cheaper product will make apple realize they are not the only competitors and ignite some more innovative ideas to compete.
ReplyDeletehttp://www.bbc.co.uk/news/technology-19557497
I believe this is great from a consumer’s point of view as not only will the consumer have a greater selection of tablets, but due to the extra serious competition, this may force apple to reduce prices in order to compete. The new kindle is also innovative as it has its established kindle books system integrated into it; therefore this may inspire innovation among other competitors Eg: Samsung. So, if the kindle is a success, there will be a wider selection of tablets with their own unique features at more completive and cheaper prices. This will prevent apple from exploiting their prices with their monopoly power, as well as forcing them to innovate further, hence meeting consumer demand. Therefore the kindle fire is a very good idea and, if successful, will be great for this market segment and its customers. Umar Ahmed
ReplyDeleteI'm disappointed with the new kindle fire. Admittedly they serve slightly different functions within the market but frankly The Fire's cheapness comes at the expense of its performance and hard drive capability making it no better than the iPad and other products on the market but just DIFFERENT. There have been a lot of comments saying that if it's successful it will be able to compete with apple and so bring their price down but with them being so incomparable how can it possibly have an affect upon the apple price? Amazon have come in with a cheaper product because they know they will struggle greatly with the apple standard so they are only strengthening apple's position at the top of the market with their market strategy rather than weakening it.
ReplyDeleteCompetition isn't about providing higher quality than the opposition, it is about better meeting the needs of the consumer.
ReplyDeleteIf Amazon succeed in this market it will be because they have better understood the needs of consumers.
Though Amazon can use the Ipad's high price tag as a selling point, however there are already many similar tablets on the market which have a similar price tag to the kindle fire. Samsung, Sony, Acer, Google and many other consumer electronics firms have put similar tablets recently on the market at a similar price. None of these Ipad competitors have sold anywhere near the amount of units of Apple's. Yes, the kindle was very successful and may have created a level of trust for consumers which spurs them to choose amazon products over others, however the fact that other tablets have only ever had a tiny share in the market and that the kindle fire is simple inferior regardless of its price means that the kindle will never sell anywhere near as many units as the Ipad. Apple's share of the tablet market is currently 68%, whilst Amazon's share recently fell to just 4%.
ReplyDeleteAs a firm beleiver that all technology should have a chance I think it is great that Amazon are trying to compete with Apple but the cheaper price defenitely correlates with the quality of the product. A higher quality product doesnt defenitely mean it always meets the needs of the customers but I can say from experience many can get frustrated with the slower processor and less sensitive touch screen of the Kindle Fire and would rather save up and invest in a better overall product instead of wasting money on the prior. Also I think that Apple's genuine reputation has helped it stay so high up. As Sakshat said they are running low on ideas but the sheer fact something is made by Apple makes buyers want to invest.
ReplyDeleteI think it is a great idea that firms like Amazon are challenging the force of Apple. Not only is it advantageous to the consumer as prices allow, but also to other, smaller firms who would not normally promote their products in such a dominated market. However, having said that, lower prices tend to lead to worse products. For example many say the Kindle has a less sensitive touch screen than the I-pad. If products such as the Kindle don't live up to the standards of Apple's products, then I think it is more likely that Apple will keep their prices high.
ReplyDeleteSince the iPad was released nearly two years ago, Apple have kept their prices high, despite an ever increasing diversity in the tablet market. Only this sort of undercutting of price, hopefully coupled with good quality and user friendliness, is going to be able to wear down Apple's phenomenal brand loyalty and reputation. Lets hope that products like these can keep prices down and pioneer better equipment.
ReplyDeleteThe entry of the Kindle Fire 2 into the UK market shows that Amazon believe they can challenge not only Apple’s iPad, the lynchpin of the tablet market, and also other tablets. However, although the tablet market is small and growing still, there seems to be two different markets: for a 7 inch tablet and a 10 inch tablet. Many people go for one or the other as a matter of general preference, and therefore the Kindle Fire will not change many people’s mind. Additionally, another similar tablet has been released lately, the Nexus 7, which is similar to Amazon’s offering in many ways, and more importantly is the same price. This is a good thing for the consumer, as the Nexus 7 had already brought down the price of a tablet to an affordable price, and for Amazon to follow suit means that other companies will need to either lower their prices or come up with an innovative idea. If these tablets experience phenomenal success, a bigger version may be released to challenge the iPad, and maybe Apple will have reason to worry.
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