Competition inside the MP3 Player Market
How will Apple fare after its excellent success together with the iPod?
The Apple iPod is promoting the face in the portable music player industry during the last few years. It has been so effective that it is considered to be as important as the Sony Cascos was in the 1980's. you In fact , more than one-hundred eight million iPods (110, 000, 000) had been sold during the last six years. 2 The highly well-liked digital music store and library, iTunes, also plays a big position in iPod's success by making digital music cheap and easy-to-access. The top question is usually: How will Apple continue to be a market leader in the increasingly competitive MP3 player industry? In this conventional paper we will analyze Apple's financial position, current strategies, talents, weaknesses, and competition inside the MP3 player sector. We will likely then use this research to recommend a strategic cover Apple to follow for the next five to ten years.
We will be looking at financial ratios for Apple as a business to charge their general financial well being. First, nevertheless , let's take a look at how much ipod touch sales accounted for total revenue at Apple. In 2006, the iPod accounted for thirty-two. 3% ($4. 5 billion) of Apple's total sales. 3 About October twenty-two, 2007, Apple reported quarterly earnings of $6. 22 billion, of which 26% ($1. 61 billion) came from iPod sales. In comparison, big-name competitors Dell and Sony just receive about 5-8% of their total sales by MP3 players. This has a great deal to do with Apple's market share in the MP3 industry too. iPod makes up a whopping 70% market share in the MP3 player market, while its closest competitor, Microsoft's Zune, hovers around 8-10%. 4 ipod touch has placed this ordering market share business lead for almost your five years today. Figure you below displays iPod sales per money quarter the past 5 years.
Figure one particular
iPod Sales per Money Quarter
You can see a very constant upward craze in the volume of iPods sold, with 2 quarters standing out, going on in the vacation seasons of 2006 and 2007.
In Number 2 beneath we assess some of the essential financial proportions of Apple with the ones from their top competitors inside the MP3 player industry. Though every 4 of such companies produce MP3 players, we must remember that the majority of every company's sales come from different products, such as computers and comsumer electronic devices. The overall monetary health of a company is a strong signal of how they could fare inside the MP3 player market, however.
Key Financial Ratios (June 07' end of quarter)5
Gross Profit Margin38. 1%81. 9%41. 9%37. 1%
Current Ratio2. 71. 76. 41. several
Quick Ratio2. 21. fifty-five. 10. 6th
Inventory Turnover64. 17. 18. 55. you
Debt-to-Equity Ratio0. 000. 000. 250. 70
Price/Earnings Ratio47. 321. 2147. 335. a few
EBIT Margin18. 7%39. 3%7. 3%4. 6%
Return in Equity26. 1%45. 2%1. 6%4. 7%
Go back on Assets16. 2%22. 3%1. 1%1. 4%
Net Profit Margin (5-yr avg)10%28%11. 8%1. 6%
Current Stock Price (10/27/07)$184. 70$35. 03$41. 02$49. 22
(Industry Best in Bold)
In comparison to Fiat, Microsoft and Sandisk, Apple seems to be in the upper-tier in the industry as far as overall economic health goes. They have not any debt, which can be always ideal for a business, and the stock price are leaps and bounds greater than those of all their competitors. Apple is also dominating the competition in inventory turnover, selling all their whole inventory 64 instances a fiscal year, whereas all their competitors only manage to sell their arrays 4-7 moments a year! The iPod's domination of the MP3 FORMAT market is a huge reason for this kind of large products on hand turnover rate. Also they have healthy quick and current ratios, that means they have lots of assets to protect their financial obligations. The go back on fairness and come back on resources percentages are usually healthy when compared with other companies in the marketplace, particularly Sandisk and Fiat. Apple is getting a...
References: (1), (3) Strickland and Thompson, Composing and Carrying out Strategy, 06\, p. C-119
(2) Revenue, http://en.wikipedia.org/wiki/IPod, 2007
(4) Apple Says Buy An additional iPod, http://www.forbes.com/personaltech/2007/03/30/apple-ipod-store-tech_personal_cx_rr_0330ipod.html
(5) Financial Ratios taken from http://www.finapps.forbes.com, 2007
(6) Apple Reports 4th Quarter 2007 Results, Apple Inc., 2007-10-22
(7) AAPL Q4 profits announced, $1. 01 every share http://www.tuaw.com/2007/10/22/aapl-q4-earnings-announced-1-01-per-share/ 10-22-07
(10) iTunes Store, http://en.wikipedia.org/wiki/Ipod, 2007
(11) Corporate Affairs, http://en.wikipedia.org/wiki/Ipod, 2007
(12) iTunes Store, http://en.wikipedia.org/wiki/ITunes_Store, 2007
(13) Strickland and Thompson, Crafting and Executing Strategy, 2006, s
(14) The Ny Times, The spring 25, 2004. Oh, Yeah, He Likewise Sells Computers. Markoff, Ruben.