Wall Street Journal Article, Essay Example

An article in Wall Street Journalmentions that Apple has been losing market share in the tablet devices market even though it is still the market leader. In the third quarter of 2012, Apple’s market share dropped from 65.4 percent to 50.4 percent. The competition is coming from Android-based tablet devices especially Samsung as well as Amazon. Samsung has been introducing tablet models in wide range of sizes, colors, and technological specifications. Apple’s pricing strategy has been criticized because Apple targets high profit margins (Osawa).

This article is relevant to the course because it shows that profit opportunities attract competition. We also learn that competitors use different strategies. While Apple focuses on profit margins and product perceptions, Samsung uses competitive prices and wide range of products to grab market share.

I believe Apple’s strategy is correct even though it does result in loss of market share. Apple has premium image and if it get involved in price-based competition, it may gain market share but at the cost of lower profitability. The loss of market share by Apple is not surprising because tablet devices are replacing personal computers so the entry of new players was just a matter of time.

The implications of this article are that profit margins will continue to decline as competition increases. Apple may also be forced to take non-price actions such as offering more choices to consumers so that it can cater to greater number of market segments. It has already demonstrated it with the introduction of iPad mini.

I chose this article because it is a great lesson on the dynamics of competition and how product markets evolve over time. It also confirms the economic concepts that profit opportunities continue to attract more market players which drives down profit margins.

Reference

Osawa, Juro. Is Apple’s Tablet Dominance Coming to an End? 5 November 2012. 6 November 2012 <http://blogs.wsj.com/digits/2012/11/05/is-apples-tablet-dominance-coming-to-an-end/>.