On January 27th Steven Jobs unveiled his company's newest creation: the iPad.
With this new product Apple is betting that there is a market for a gadget bridging the gap between application laden cell phones (including their own iPhone) and laptops.
Several years ago, Jobs returned to Apple rejuvenating the company with the iPod. The iPod offered consumers an enhanced experience with their music. Apple's technology offered more: better sound quality (as measured by bits), more memory, color screens and color shells. The company went further than their competitors by offering a platform to consumers that allowed them to download content - music, videos, pod casts, etc. This allowed consumers the opportunity to purchase individual songs without having to purchase an entire CD. It also provided a second "long tail" source of revenue apart from the devices that they manufacture.
One remarkable aspect to this is the fact that most of us forget Apple's numerous failures remembering only its recent success in transforming both how we listen to music and the cell phone industry. Remember CyberDog? This was Apple's browser intended to compete with Netscape and Windows Explorer. Apple also entered the gaming market with Pippin. Unfortunately, the product was buried by Sony's PlayStation not to mention Sega and Nintendo. Apple's Lisa and the Newton both had niche success, but never achieved the broad appeal that investors hoped for.
So, here we see one trait of an entrepreneur that is often overlooked: failures and setbacks seem to only fuel their desire to succeed and in some instances can drive innovation.
Interestingly, in this instance, Apple may be following the crowd, riding demand that has been created by others. The iPad is sure to compete against products like Amazon's Kindle. These products allow consumers to access print content (books, newspapers) whenever and wherever they wish. Sales of electronic books grew from just under $120 million in 2008 to just under $350 million in 2009. The iPad does take it a step further offering access to email and other applications.
In advance of the product's introduction, Apple floated some advance news about the product. Many were pleasantly surprised by the cost of the base model which is $499.
Questions for Students of Economics:
1) Why is it that consumers could expect the cost of this product to substantially fall after the initial product offering?
2) Do you see this as an increase in demand or a shift in the demand curve?
1 comment:
Consumers expect the cost of the product from Apple or any competitor to decrease in price in about two weeks. Because technology changes daily, consumers does not feel the need to purchase a product at a higher price when supply is great.
2. I do not see this an increase in demand. Because prices changes the demand will go down.
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