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Q5 iPod
a. The industry life cycle consists of three stages: Growth – product commercialization, where the entry rate of new firms exceeds the exit rate (MCS p. 90-91); Shakeout – exit rate of firms exceeds entry rate of new firms and dominant competitors exist (MCS p. 103); Maturity – entry and exit rates become almost equal (MCS p. 106). The iPod is approaching the end of the growth stage and entering into the shakedown stage of the life cycle.
iPod is without a doubt the market leader. Apple has seen an increase in profits from the growing customer base and the number of competitors who have entered the market. Product innovation has been Apple’s primary focus, despite the fact that they outsourced the manufacturing of the original iPod. Apple outsourced the iPod’s processing unit, hard drive and memory chip and assembly to multiple thurd parties, while focusing their efforts on marketing. It’s cool design and size was more attractive towards consumer, and features such as its signature click wheel made it more user-friendly than its competitors (MCS p. 5).
As iPod’s growth ensued, more customers began using the technology. As a result Apple began introducing product innovations and product line expansions. In addition, other companies began developing complement products to support the iPod such as “docking stations for cars, hookups with home audio systems, holders for bicycles, etc” (MCS p. 5).
By 2007, iPod has begun entering the shakeout phase. Because iPod has a substantially large customer base, competitors begin moving into the industry with copycat products like the iRiver and Rio. As a result Apple b ...