Question

How did Apple succeed in the music retail business? Use five forces to analyze that business. Are there any lessons Apple can take from that and apply to its watch business? What are they

Answer 1

Apple had started iTunes, a digital music store prior to any other company in 2003. This was revolutionary those times when people were still spending lots on record labels.

Five forces of business analysis:

Threats from new players - When they had started there was not a single competitor, since it was new in the market. It was also difficult those days to create such platform for any other companies which requires tremendous technical resources and risk investements.

Supplier power - iTunes could have demanded any price since people found it to be easier to store rather than stacking up CD's. Also they were much cheaper to record labels. There was lesser suppliers back then so supplier potential was higher. But apple had its Apple stores to sell iTues which was an advantage.

Buyers power - Since this was unique platform and was cheaper than its substitutes people were willing to buy with the price that was quoted. It received a huge welcome among people.

Substitues - Back then it was digital substiute for record lables. Their substitue was records which was heavier and costlier, so there was no threats from the alternatives. Only threat was from some music labels unwilling to give the permission to sell their music through iTunes since artists royaly will be lesser when lesser record labels were sold. Since there were digital cannot keep track of downloads. But this issue was also tackled by Apple through settling the disputes with lables.

Competitor rival - There was less number of competitors for iTunes. Apple had always comeup with new innovative products, which was big hi,t since in the begning there could be no competition.

Apple watches : The idea of being unique product should be taken to its watch business inorder to sustain in the market. Apple watches are only a mini version of phones which lets you to see notificatons, attend calls, alarms so there is nothing unique about it ither than its easier to use. Also there are other smart watches available in the market for cheaper rates. They have to comeup with some unique feature in the watches to make it successful.