the business model of Apples itunes

the blood line standard of orchard apple trees itunesEvaluate the business model of orchard apple trees itunes. In particular you should address-1. To what extent can the itunes business model be nominated as an ecosystem and what is the role of IT in enable the collaboration amid orchard apple tree, its economic partners and consumers?2. How does itunes comp ar with competitors?3. What new technologies could disrupt the current market by enabling a new form of business model?IntroductionBusiness model in a basic sense deals with the method of doing business in order to generate revenues by which a company sustains itself in the competitive market place ( (Rappa, 2009).According to (Amberg Manuela) analysis on medication industries, there are lots of media websites and companies following different business models f exclusivelyen prey to file sharing tools and peer-peer networks which throw overboard consumers to illeg onlyy copy and share the content for free. As a consequenc e , companies like orchard apple tree iTunes and Sony Connect gift come up with internet register business models based on pay-per-d letload and dep eradicateent on the engineering of the provider for whom long-term customer relations are very crucial and customers are allowed to use the digital media content particularly with regard to engine room of the supplier thus getting advantage and benefitting from selling ironware components be courtship the offer of digital media content advances it. These business models replace the traditional business models which are generally based on selling physical media.This paper shows the fair understanding of orchard apple tree iTunes business model for its dominance over the current medication market and tries to describe the business model with respect to ecosystem and compares iTunes with its key competitors in the market. The biological term ecosystem in this paper refers to the IT ecosystem. (Iansiti Richards, 2005) describes IT eco system as network of organizations that drives the creation, groundwork and delivery of In formation technology returns and emoluments. According to (Cusumano, 2008) the term Platform, is defined as Foundation product or key technology in a system like the PC or a web enabled cell phone and should have relatively surface technical interfaces and easily licensing terms in order to encourage other firms to alter complementary product and services. So this can be accounted to an ecosystem around the platform and the platform becomes more valuable when the external entities creative more innovations around it. This should cause more users to adopt the platform and more complementors to join the network.iTunes as an ecosystemOnline music hit a new milestone after Apple estimator,Inc.(Apple) launched the iTunes application in January 2001 follwed by launch of 1st generation iPod and 2 years later online music cut in in April of 2003.The two businesses, the production of MP3 playe rs and the online music shops were initially considered as different units and after the invention of new hardware iPod these two businesses were merged. iTunes is a parcel designed with an intuitive and user friendly interface and iPod is an hardware designed with an eye on fashion. These two together helped Apple to enter and succeed in the music player market infact actually cross promoting the iPod hardware device. Because of their service and innovation Apple retained to grow in the online music field in a better way when compared to its key competitors like Dell, Sony and Samsung( (Li Chang). According to (Schonfeld, 2009) statistics, iTunes have now sold 6 billion songs and 10 million different tracks are now available on iTunes. iTunes is software and iPod is hardware as give tongue to by (Li Chang) are two different business units and Apple conjucts these two different products into one new business model. Using ecology to analyze this model(iPod and iTunes) it has stu pefy a nice example for ecotone between two species to drive the music pains into new ecosystem. A strong platform is apparent from the combination of twain(prenominal) the software and the hardware. The below shows the evolution of new ecosystem with combination of two stand-alone ecosystems.Most companies today inhabit ecosystemsloose networks of suppliers, distributors, and outsourcers makers of related products or services providers of relevant technology and other organizations that affect, and are affected by, the creation and delivery of a companys own offering.. as said by (Iansiti Levien, 2004) shows how business industry can be closely compared to biological ecosystem. Like every indivi forked in the biological ecosystem every organization in the business ecosystem shares the fate of the network as a whole regardless of that members apparent strengths. Comparing this with the Apple business, iPod is non really an innovative technology by itself but the company create s a new ecotone for digital music where all the hardware(iPods) and software(iTunes) are related to it enhances its platform. According to (Koster, 2007) There is a continuous decline in the traditional sale of music sources like sell music stores and the on-going music industries are restructuring themselves by merging with other partners to face the loss of revenues and to adopt with the new business strategies and models in the music industry to repugn with the counterparts. Even in the digital music world today, legitimate music downloading is continuously changing. Initial music sites have very strong limitations on price of admission catalogs of music, on what could be through with the downloaded music, number of copies, time limits, where to copy. Though Apple iTunes works on this model, it is in(predicate) in negotiating a very large music catalog from the four labels from its music site. He says that one large advantage and success for Apple is because of its hardware d evice iPod where normally music is stored and playback. The revenues from iPods sales fall out to grow after the introduction of iTunes. Though Apple had gotten permission from four majors to store their music on its website for consumers to download by promising the procure protective cover authority DRM, it is now planning to get away with DRM because they make the downloaded or recorded music very cumbersome for the consumer. This is evident from (Johnson, 2009) article on web which says By the end of the quarter all 10 million songs will be DRM free in iTunes and iTunes plus, said Phil Schiller, Apples senior vice professorship of worldwide product marketing. The blog witten by (Vitalari, 2009) clearly examines at the 21st century business model adopted by Apple to become successful in the market. He believes that business platforms are the root cause for cumulative business performance. Apples competitive business platforms is the main drive for innovations like community f ormation, circumstances collaboration, social networking, ecosystems, real time analytics, transparency etc. The iPhone App store was launched in July 2008 and today iTunes store is a total set of all forms of the digital media including music, games, software application, podcasts and video assets . As his explanation, the driving factors for Apple success and points out that the effective business platforms have few key ingredients iPods, iphones are not just products alternatively they represent individual business platforms and they create an ecosystem surrounding the product which means they create a common understanding for business transactions, technical specifications, interface standards and requirements. With the iPhone this includes all of the sub-contracted manufacturers, but more importantly it includes iTunes, the app store and app developers.This results in creating a transparency which enables and facilitates hundreds of participants to collaborate asynchronously a nd independently. This leads directly to the fleck point, which is that the business platform then helps to generate untold business analytics for the platforms owner.This is because of the elements of the business platform are networked and generates valuable information about the product, ecosystem and participants. Apple used this analytics to fix, improve and enhance the product and finally delighting the customers. This in convolute creates a community of practice surrounding the business platform, as the collaborators learn how to make better things.IT in enabling collaboration with partners and consumersAs a cofounder of Apple, Steve Jobss slew was to create new and different products to consumers and his notion of one person-one computer became visionary responsible for Apples reputation for innovation and mission became changing the world by pitch the computers to masses (Richard D Vohr, 1998).Apple came back with reinvention of personal computer with macintosh in 198 0 after igniting the computer industry revolution with inventing Apple II and it is commited to bring the shell computing experience to all the fields starting from students, educators, professionals and consumers all around the globe with its innovative software hardware and internet offerings. This Apples mission statements indicates it focuses on innovation and personal computing experience( (Pearlson Saunders, 2009). Apple From 1987-1997 the company suffered due to some major internal problems which affected the strategic leadership and its operations but after Steve Jobss second turn as CEO, company fixed operational problems and regains its innovative leadership dramatically. Few multifariousnesss like manufacturing outsourcing and improving inventory became straight forward matching Dell, the industry leader.It fired to open industry standards rather than copyrighted hardware interfaces that it had maintained for 15 years and thus in a minor way Apples product schema be came more open( (West Mace, 2007).As per ( (Apple Computer, 2006) Apple derives its competitive advantage once again by its innovation giving iPod as an example. Apple entered the market with iPod in 2001and by end of fourth quarter of fiscal year 2005, iPods sales gained 33% of the total revenues. The factors which are accountable to their success and uniqueness are its computers based on its own operating system, which enabled further area of innovation.Its Mac OS operating system focuses on more simplicity and seen as graphically sophisticated. (West Mace, 2007)Recent trends have seen increasing strategy convergence between Apple and Microsoft .For its video game business, similar to its rivals Sony and Nintendo Microsoft buys the processor but designs its own hardware and software without licensing them to others.Meanwhile Zune, Microsofts music players try to compete successfully to attain equality with Apples iPod. This shows Apple pursued a vertically integrated strategy i n its music business. Vertical strategy is single firms controlling the sinless platform. Apple leveraging its Macintosh installed base to establish iTunes music store and building iPod business on top of that and now iPhone business shows its expansion into conterminous markets and this loyal installed base makes any company easier to branch into a related market and this becomes a lesson for the other companies and Apple aims at satisfying the costumer not just upgrading the costumers what they have today like the other companies do. When ATT decided to make offer to iTunes many other mobile industries criticized it for making too many concessions to Apple. collectable to this offer ATT gets benefit from Apple in two ways , one is Apple increases the average monthly bills for the customers who switch from ATT to iPhone and the second one is it causes existing populate to switch from existing carriers to ATT as its the exclusive carrier for iPhone( (The Apple iPhoneSuccesses an d Challenges for the Mobile Industry, 2008). Digital Record Management systems are uses to encrypt the selective information does not allow illegal or non authorization download of music and currently there are two main formats used for protect downloading of music. One is fairplay and the other is WMA. Fairplay is Apples proprietary technology where it secure the data encrypted in AAC( Advanced Audi Coding) format. WMA is Microsofts Windows media audio video encoding platform. iPods can play only those stuff which are secured through fairplay format and Apple has refuse to lincense this fairplay to other retailers and so it is difficult for iPod users to download music from other retailers other than iTunes music store. But recently Realnetworks in US came up with a package which allows iPod users resident in US to play secures music from Realnetworkss music store Rhapsody. Apple got furious with this and accused Realnetworks of Hacker tactics and ethical motive and reported to inv estigating on that for violating the intellectual rights. If apple is capable of putting an end to such violations then the indispensability of fairplay could be established( (The iTunes music store does challenger law hold the key to unlikable shop?, 2004)According to insights into IDCs lifesciences by (Swenson Golden, 2005) Apple products are getting attracted by the life science researchers who actually migrated from linux and unix platforms because of the dual nature of Mac OS and its estimated historically that the life scientists have been twice or thrice more likely than the average computer user to Apples Mac platform as client computer thus representing attractive market for Apple. It has announced about its collaboration with airlines which includes Air France, Continental, Delta, United and KLM to integrate the in escape valve entertainment systems with iPod and taking the current entertainment provided in these airlines to a next level for better travel experience( ( Apple_Partners_with_Airlines_for_iPod_Integration, 2006). Sets Apple as an interesting example for not being an open source model in its business strategies but is thought b of being a highly proprietary company from its preceding years. Now it has jumped into open source and have started projects both inside and outside its corporate firewalls. Apples OS X was a open source because it was based on Darwin. Its developer website said that Apples open source projects let key developers to customize and enhance Apple software and through this open source models it allows Apple engineers to collaborate with open source community to come up with better and more reliable products (Goldman Gabriel, 2005). On September 2007, Apple and Starbucks announced their collaboration on Apple allow costumers at Starbucks wirelessly browsing, previewing, buying and downloading music from iTunes music stores at Starbucks on their iPods enhancing Starbucks retail coffee experience by helping customer s with discovering new music instantly (Rothman, 2007). These examples shows how Apple is spreading the digital media revolution with its technologically profound products. Apple believes in fully integrated and completely digital learning environment which makes contents to move from from application to another and easy to collaborate and share ideas. Integration even reduces the burden of technology challenge. So Apples IT team rather than spending time and property on how to get things working feels it worthwhile to dedicate the same on providing capabilities, innovations and resources for its institution (Everything Apple means everything just works).iTunes and CompetitorsThe majors competitors for Apple are Google and Microsoft gage and other competitors include Dell, Hewlett-Packard, Fujitsu, Samsung Electronics, Sony and Toshiba. Apple is designing software and hardware systems that delivers a greater user experience. Google is giving away operating systems to companies tha t license windows mobile today. Microsoft take to think about their business models to compete in such a race where it probably has to decide whether it wants to compete in devices or operating systems and doing both is again at a risk which requires business models that are outside its core competencies( (The Apple iPhoneSuccesses and Challenges for the Mobile Industry, 2008). There is a partial collision between Apple and RIM in smartphone business in which Apples device is a entertainment centric whereas RIMs product is a communication centric.Though each company is increment into each others space Apple is got the advantage because infrastructure establishment would be too large for RIM and beside that RIMs image is all wrong for that instead it is a good deal better to defend and grow its market by adding more features and types of business communications to Blackberry. Comparing it with Nokia, Nokias challenges are more about challenges. They sell hundred of millions handse ts every year at low costs. But without it, Nokia will be really hard pressed to match with the iPhones user experiences. Competitors such as Diamond multimedia, with its Rio make portable media players were successful in the market until Apple displaced them and all the credits for such a domination goes to the business model of the company by offerings users a seamless music experience by combining its iPod devices with iTunes and online iTunes store. Users were taken away by its value proposition and Apple had to negotiate deals with the major record companies to establish the worlds largest online music library, there giving the twist for the company to earn most of its revenues by selling iPods while using the integration with the on online music store to protect itself from the competitors( (Osterwalder Yves, 2009).Smartphone users are going to increase in number in the next few years increasing in the PC functionalities supporting data services and voice and this is going t o drive smartphone markets and Apple launching the iPhone which meets most of the required functionalities made it to third position in the global smartphone market in the third quarter of 2008. As there is rapid change in the technology there is introduction of new products with competitive prices, features and performance characteristics by all the competitors and out of all, mobile communication industry highly competitive with well funded and experienced competitors. For example in 2009, Nokia launched a new online media store in disputation to Apple and this has resulted in price erosion which is now threatening to lessen the market share of the company( (DATAMONITOR, 2009).What new technologies could disrupt the current market by enabling a new form of business model.Apple has become the leader in the music world revolution and it justifies for its closed source system, keeping its digital music platform proprietary making it incompatible by other system by saying that it was the main reason in convincing its music labels and artists allowing them to sell their songs through iTunes assuring that those would not be pirated. But many analysts claim that that closed system was the reason for its previous failure in the computer business and Microsoft gained the masses with their open systems and now that is being seen as a gamble in this highly cometetive technology world (Williard, 2005). According to survey done by Rubicon Consulting Inc on the Apple iPhone users shows that about 43 portion of the iPhone users feels that the device would be more elegant if there is a physical change to the iPhone by adding adding a keyboard or a keypad either by making the device smaller or larger and about 40 percent of the users complain about the browser problems and the notably with those using Adobe flash and this shows that mobile data devices has always been segmented and its impossible for any single hardware design to please everyone. This could be an opportuni ty to Apple to increase its share by serving those customers by giving more importance to value propositions for their products which is again a part of business model and at the same time its an opportunity for its competitors to steal that share by addressing segments Apple failed in( (The Apple iPhoneSuccesses and Challenges for the Mobile Industry, 2008). Apple corporation itself has many problems but loss of competitive differentiation due to its Enterprise sytem is not counted in that because of its strong brand and its distinct operating system. For many of the other computer manufacturers cost and service are more vital for their differentiation than their products but for Apple this seems to be a unusual case says (Davenport, 1998). disruptive Business Models are emblematic of our generation. Yet they remain poorly understood, even as they transform competitive landscapes across industries (Osterwalder Yves, 2009). ConclusionAccording to Sankar Dhinu, Apples senior doubl e-decker of Emerging applied science, to be competitive in worlds high tech industry, one should make use of the facilities like available economic advantage of the manufacturing and distribution and Apple success goes with its interaction with dozens of trading partners , starting from resellers to distributors and OEM manufacturers which in turn helped it to form a global supply chain. Due to increased competition Apple is also facing many pressures and already working towards less limitation and freer access of digital music. Thus majors themselves are getting involved in those changes and Apples CEO Steve Jobs has called for an end to DRM because they make use of downloaded and recorded music very inconvenient and cumbersome for the consumer.( (Koster, 2007)BiblographyAmberg, M., Manuela, S. ANALYSIS OF E- demarcation MODELS FOR DIGITAL MEDIA .(2006). Apple Computer. 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