Apple Inc FINAL Paper

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Apple Inc. - iPhone
Laura L Boudreau
Southern New Hampshire University

Laura L Boudreau
Instructor: Dr. Connie Ostwald
Microeconomics
June 4, 2015
Apple Inc. - iPhone
The purpose of this research paper is to explore the supply and demand conditions of Apple Inc. I will also examine the price elasticity of demand, cost of productions, and overall market. This analysis will help me evaluate trends as well as availability in an ever changing market such as technology. Try to imagine a world with no computers, cell phones, or tablets, literally zero technology. Surprisingly the computer was not created for emailing, gaming, or surfing the Internet, but simply to solve a number crunching issue that occurred when the U.S. population had grown so large that it took more than seven years to tabulate the U.S. Census results. It was decided that a faster way to do this would be to develop a punch card, which was based on the use of computers (Zimmermann 2012). Who would have ever imagined that five years after Steve Jobs and Steve Wozniak meet in 1971 through a mutual friend, Apple Computers Inc. would be founded with the debut of the Apple I? In June 1977, only one year after being founded, Apple II, the first personal computer for a mass market was released to the public (Apple Fast Facts). As most companies face struggles, Apple Computers Inc. was no different as Steve Jobs was ousted from the company in 1985. For more than three decades, Apple Computer mostly manufactured personal computers, including the Apple II, Macintosh, and Power Mac lines, but they saw unstable sales and low market share during the 1990s. Steve Jobs returned to Apple in 1996 after his company NeXT was bought by Apple (History of Apple Inc). Fast-forward to today, this multibillion-dollar corporation, Apple Inc. (Apple) designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and sells a variety of related software, services, networking and solutions. Products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and OS X operating systems, iCloud, and a variety of accessory, service and support offerings (Apple Inc.). There are many items Apple Inc (Apple), sells to consumers today, so I will focus on the iPhone. The iPhone is Apple’s line of smartphones that combines a phone, music player and internet device into one product. The iPhone has an integrated photo and video camera, photo library application and works with many stores such as the iTunes Store, the App Store and iBooks Store. These stores are used to purchase, organize and play music, movies, TV shows, podcasts, and books. The iPhone is compatible with both Mac and Windows personal computers and Apple’s iCloud services which provide synchronization of mail, contacts, calendars, apps, music, photos, documents and more across users’ devices (Apple Inc – Annual Report). Apple uses custom components that are often obtained from a single source and not used by their competitors, therefore when new products are introduced they need to make sure their source is available. If Apple’s iPhone supply for a new or existing product were delayed, or if shipment of completed iPhones to Apple was delayed, their financial condition and operating results could be materially adversely affected (Apple Inc – Annual Report). Historically, Apple experiences higher net sales in their first quarters, so continued availability of iPhones at acceptable prices may be affected if their suppliers are not concentrating on the production of their iPhones to meet their requirements. There can also be a significant impact on net sales, product costs, and operating expenses when new products are introduced (Apple Inc – Annual Report). Katy Huberty of Morgan Stanley states that, “year-over-year iPhone growth in the United States is "tracking...