Current Product Mix

Current Product Mix

Current Product Mix. Apple Incorporated was founded April 1, 1976 in Cupertino, CA by Steve Jobs and Steve Wozniak. They started with the Apple I, which was a computer released in 1976 and sold for $666.66. A year later Apple made improvements and debuted the Apple II in 1977, which was one of the first of its kind to provide color graphics. About 7 years later Apple released the Macintosh which ultimately secured the company’s future. Over the last decade Apple has made significant progress and succeeded with expanding their product mix and being the first to create products that are game changers in the technology industry.

Apple currently offers products such as phones, tablets, computers, music devices, and offers services such as iCloud, music, keynote, and garageband. Their product line includes the following: Mac, MacBook, MacBook Air, MacBook Pro, iMac, Mac Pro, Mac Mini; iPad Pro, iPad Air 2, iPad Mini 2, iPad Mini 4; iPhone SE, iPhone 6s, iPhone 7, iOS 10; Apple Watch Series 1 and 2, Apple Watch Nike+, Hermes, and Special Edition; Apple TV, tvOS, Apple Music, iTunes; iPod Touch, Nano and Shuffle. Recent products that have since been upgraded include the iPod classic and iPhone versions 3G, 3GS, 4, 4s, 5, 5C, 5S, 6, and 6 plus. Not only does Apple offer an array of products, but they provide options regarding the depth of each product. The iOS ranges from versions 2.0-10.0, the iPhone, iPod, and iPad all offer 8gb, 16gb, and 32gb options; the iPod offers up to 64gb, and the iPhone offers up to 128gb of storage.

Recently, Apple released an iPad accessory, the Apple Pencil for iPad Pro starting at $99. Per the Apple website, “[The] Apple Pencil expands the power of iPad Pro and opens up new creative possibilities. It’s sensitive to pressure and tilt so you can easily vary line weight, create subtle shading, and produce a wide range of artistic effects — just like with a conventional pencil, but with pixel-perfect precision.” The device is 6.92 inches long, 0.35 inches in diameter, and weighs 0.73 ounces. The pencil also has Bluetooth connection, a lightning connector, and a magnetically attached cap. It is currently compatible with only the iPad Pro. So, how can Apple go beyond what they already have successfully implemented? They can expand the Apple Pencil like they have with other products.

The Apple P.E.N. (Professional Experience Navigator) will take the pencil to a whole other level by upgrading it completely. The P.E.N. will still have the same basic capabilities as the pencil, but will be geared towards students and professionals and can be used on a variety of other products. This device will allow you to record up to 12 hours and will convert into text once plugged into a device by USB transfer. Once plugged in to a device, you can also set up automatic transfer where any items recorded or saved to the P.E.N.’s memory will automatically sync to the destination of choice through iCloud. The automatic transfer is currently only compatible with Apple products. Siri is also available with the Apple P.E.N and can be used in the same manner as if used on an iPhone device. The only difference is that there will not be a physical display, but only an audio version. Additionally, the device will include a laser pointer that can be used during presentations, and will come with removable tips that will allow you to use your P.E.N on paper and your tablet or touch screen device. The P.E.N will be offered in colors black, white, and red and the cartridge will be available in black ink. This addition to Apple’s current product mix will take their innovations to a new level and will change the way students and professionals produce work.

Microeconomic driver variables. Microeconomics in a very broad aspect is the study of individual human action and how that affects specific resources. Apple has one of the biggest portfolios of consumer goods of products in accessories. They deliver several routes that gratify an extensive range of customers that need quality stylus pens for their notes, lectures, and voice recorder. To strengthen their already firm line of accessories, Apple’s asset of previous opponents, Samsung Inc., significantly increases their market share in accessories in stylus and congeals the buying influence of the firm. The amount of income an individual has access to is one of the most important microeconomic drivers affecting the sales of technology. This also affects how we as humans’ value items that we choose to spend our money on. When it comes to technology this is defiantly a huge discretionary expenditure of our income. U.S. news says that Americans spend an average of 5.5 percent of their total discretionary spending on technology. That is more than the 4 percent of personal income that people save on average. That comparison influenced the decision to create the Apple P.E.N. Technology is huge in our time and is proven to be something that people are willing to spend their money on. Global salary is at a 3 year high and real wages are expected to raise 2.5% in the form of real pay from a study by Korn Ferry Hay Group. This per the finding above in the amount of money we spend on discretionary spending will just create more of a market for the Apple P.E.N. Global urbanization is also a huge factor in today’s world that we are trying to tap into. Interest rates are a final driver affecting our product. This factor taps into the way that people spend their money and will determine if a consumer is willing to buy, lease, or borrow. The Wall Street Journal are as they say expecting interest rates to raise relatively soon. With interest rates rising, people may decide that it is too costly to invest in major purchases, like buying houses and cars; so they go to the mid-range purchases. The Apple P.E.N will mostly like appeal to those types of consumers.

While the industry for consumer electronics and especially tablets continues to thrive, it has seen a decline in recent years as improvements have been minimal and flooded with gimmicks instead of vast functionality. With the introduction of our Apple P.E.N., we hope to offer a product that serves many purposes rather than simply one across Apple’s entire line of consumer products, considering the current Apple Pencil only allows use through the iPad Pro, which may eventually become obsolete as a product as a whole. Other companies, such as Samsung and Intuos, have released similar models of smart pen/stylus devices but have yet to fully incorporate it into their entire line to allow for seamless integration. The Apple P.E.N. has the potential to change the way we teach, write, transcribe, and store files wirelessly through NFC and wifi technology. Over the next five years we expect to see this product replace existing product compliments to become the leader in technology for these types of purposes. Apple revolutionized the MP3 market with the introduction of the iPod in 2001, and we hope to do that again with the Apple P.E.N. that will change the way we work every day in various industries.

The current outlook for our product is a very strong launch by showing exactly how it can interact with iPads, iPhones, Mac computers, etc. by offering a fresh take on stylus’. While Apple typically releases a new iteration of their products each year following a keynote presentation, we are aiming to keep the Apple P.E.N. relevant into the future by constantly updating the software to allow for better efficiency, higher siri coherency across all platforms, as well as providing ease of use through iTunes and over wifi updates. With the inclusion of the many features compared to competitors products, Apple is looking to future proof more of their product line than in the past with the start of the Apple P.E.N. next year.

Relevant product cash flows. Apple has numerous cash flows, which ranges from the expenses to manufacture their products to incoming cash flows through selling all of their different products. With the Apple P.E.N. it will cost about $85 for its production cost and it could potentially halt or decrease the cash inflow coming in from the Apple Pencil. While cash flows for the Apple Pencil decrease, in return with the Apple P.E.N. cash flows will hopefully increase with increased sales; with increased cash flow it buys time, if needed, to build assets and profits, and keeps suppliers and investors happy. Without positive cash flow from this product its shelf life will become questionable. Negative cash flow can be detrimental for the Apple P.E.N. which could cause the company to kill the product and/or suffer major losses. With advertising cost predicted to be well over two million dollars, and a brand that is extremely dominant in its industry, the Apple P.E.N. is likely to generate positive cash flows. The P.E.N. will be selling starting at $199 and will give the company $114 profit per Apple P.E.N. sold. In today’s world machines build mostly everything or it is brought overseas for cheaper labor reducing cost and increasing profits for Apple. Sales for the product are projected to be high due to the amount of Apple Pencils sold. This P.E.N. has more functions than the Pencil with more technology and a better market because it can be used universally through many different products increasing cash flow tremendously because it will be able to be marketed to a much broader audience.

Derivation of each cash flow.

Sources

http://www.slideshare.net/nb1234/apple-product-mix-and-marketing-mix

http://blog.pathmatics.com/apple-wont-disclose-its-advertising-spend-but-we-will

http://www.gurufocus.com/term/ChangeInWorkingCapital/AAPL/Change-In-Working-Capital/Appl

e-Inc

http://money.usnews.com/money/personal-finance/mutual-funds/articles/2013/10/24/are-technology-costs-killing-your-budget

https://www.fastcompany.com/3055151/the-future-of-work/employees-will-get-the-biggest-salary-increase-in-years-in-2016

https://www.imf.org/external/pubs/ft/weo/2014/01/pdf/c3.pdf

https://www.cnet.com/news/tablet-market-2016/

http://seekingalpha.com/article/4005597-much-tax-apple-pay

http://www.apple.com/apple-pencil/