Introduction

Apple Inc.

Apple Inc., also formerly known as Apple Computer Incorporated which is named by Steve Jobs in 9 January 1977, it is a Multinational Corporation which designs, distributes and develops electronic gadgets such as computer applications, smart phones and personal computers. Apple Inc. HQ is located at the Cupertino, California in United State. Electronic gadgets like iPhone, iPad, Macbook are the well-known gadget that introduce by Apple Inc. to the world. Apple Inc. is the world’s second largest IT company with a total revenue of USD$ 156.508 billion (Wikipedia, 2013). Apple Inc. was founded on April 1, 1976. On Sept 29 2012, Apple Inc. had 408 retail stores in 14 countries as known as Apple Store and iTunes Store, 72800 of fulltime employees and 3300 temporary fulltime employees worldwide. 

Figure 1

Moreover, Apple Inc. achieved a total of USD $156 billion worldwide annual revenue in 2012. Apple Inc. has an estimated value of USD$415 billion on March 2013 and became the largest publicly traded corporation in the world by its huge market capitalization. As we can from Figure 1 it shows that Apple Inc. made into top 6 largest publicly trade corporation in the world on 1st Quarter 2010, and become the top largest pubicly traded corporation in the world on the 1st Quarter of 2012 (Upload.wikimedia.org, 2013).

IPhone has become the most sold product that created by the Apple Inc. and a totaled of 250millions of unit were sold in the history of iPhone. The iPhone generated most of the revenue of Apple and also listed as the most popular product of the company. Apple Inc  (Mcginley, 2013). Apple Inc has directly and indirectly created 307,205 U.S jobs across all 50 states in various numerous industries. These employees are included people from different places like corning employees for the glasses of Apple’s gadget, engineers which manufacture the processors. Moreover, the app company generates 291,250 jobs thus Apple Inc. generated total of 598500 jobs for US.

Demand and supply of iPhone

The economic effect of iPhone 5 launch

Figure 2

On 21 September 2012, Apple Inc. officially launches their last iPhone, as known as iPhone 5. As we know that 24 hours before the launching of the iPhone there are already approximate 600 people lined up at the retail store in Sydney waiting for it to launch. In 24 hours after the iPhone had launched in several countries like Japan and Australia are sold out. This shows that there’s a shortage occurred in the production of iPhone 5. From the figure 2, we can see that the demand is increased and shift to right but the price of iPhone 5 is remained. 

At point A, the demand and supply are at the market equilibrium but because of the over population of the new iPhone the demand curve shift to the right but the price of iPhone is remained as every series of iPhone we have seen before. Thus, when the price is at the Point B, this causes a shortage between point A and point B, which mean that the supply is no longer can satisfies the demand. Moreover, when a shortage is occurred in the production, the price of black market had risen. Therefore with a limited supply of the iPhone 5 in the market, the black market started to sell the iPhone with an unreasonable price.  For example, all the iPhone 5 in China apple retail stores are sold out, then the phone were being sold in the black markets with approximately doubled price of an iPhone 5 which is RMB9000 (RM4675). 

The elasticity of iPhone 5

                                                                        Figure 3

The price elasticity of demand of a newly launched iPhone is difference depends on the places they were being sold.  For instance, iPhone that being sold in United States is considered as an inelastic demand. Why do we say that? Most of the Smartphone are known as luxury items in people’s life but when this view compared to the view of first world country, it’s different. In compare, the average incomes in the United States are higher than most of the country, and the price of an iPhone 5 are considered affordable for everyone. Therefore, the price elasticity of demand of an iPhone 5 in high income nations is considered as inelastic. On the other hand, the price elasticity of demand of iPhone 5 in countries like us, Malaysia are considered as elastic. From the figure 3, we can see that iPhone is considered as a elastic demand in countries that average income is not that high compare to the first world countries. Thus, the price elasticity of demand is elastic, the price of an iPhone 5 are considered expensive to us but the popularity of iPhone is still remained high so if the price of an iPhone is dropped, the demand would increase higher. 

                                                              

                                                            Figure 4

Frome the figure 4, the price elasticity of supply of an iPhone 5 is considered as elastic on the early period which. The determinants of price elasticity of supply are the amount that costs rice as output rises, which mean the lesser the additional costs of producing additional output, the more the firm will produce for a given rise. For your information, there an iPhone’s hype that slowly affected the community which mean people buying iPhone is no longer a want but is a need. This causes the supply to become elastic because the demand is too high that the supply are not enough fast to catch up even though the Apple Inc. has claimed that they have already increase the production of iPhone 5 than the iPhone 4s (Wikipedia, 2013).   However, when the product growth timeline of iPhone has moved to the decline period, the elasticity of supply of iPhone has become inelastic because the demand is lowered and shift to the left.

The market structure of Apple Inc.

In my points of view, Apple Inc. can be considered stand in difference market structures such as oligopoly and monopolistic competition. Oligopoly is a market form which is controlled by a small amount of competitors known as oligopolists (Economicsonline.co.uk, 2013). The companies that dominated oligopoly and monopolistic competition are usually maintain the position in the market because it’s too costly or difficult to any potential rivals to enter the company which mean there are entry barriers. Apple Inc. is oligopoly in the smartphone’s operating systems’ firm. There are 3 mainly operating systems which is very competitive in the market are iOS, owned by Apple Inc., Android, which is owned by Google, Windows phone, owned by Microsoft. These 3 are the most competitive operating systems throughout the world, and they keep on adding new features to the operating systems to dominate the rivals. 

On the other side, Apple Inc. is known as monopolistic competition in the branded computers. Compare to oligopoly, monopolistic competition has more competitors, thus the apple’s iMac and Macbook are considered as a monopolistic competition. There are a few branded computer companies like Toshiba, Acer, Apple, Asus and Dell. These competitors shared a computers market internationally, the revenue generates by them are close enough to keep themselves stay competitive to the others brand. 

Government intervention

In some countries, there is some government intervention which involved in the Apple Inc. which included taxes, subsidies, laws and regulatory bodies. There are a few purpose for government to implant an intervention which is to correct the market failure, to achieve a more equitable distribution of income and wealth, to improve the performance of economy. For instance, on 16 Sept 2013 China Telecom Corporation Limited announced that there will be a subsidies on Apple Inc.’ iPhone 5c and iPhone 5s which will 15% cheaper than the previous model of iPhone. The purpose of this action is to ensure that the price competition is more rational, balancing between quantity and quality of new 3g subscriber development (Jain, 2013).

Moreover, Apple Inc. also did very well in their Tax practicing by creating subsidiaries in some low-taxes countries such as Ireland, Netherlands and Luxembourg. Apple was a pioneer of an accounting technique which known as "Double Irish With A Dutch Sandwich" which reduces the taxes by routing their company profits to Ireland's subsidiaries and Netherlands and then to the Carribean (Outsidethebeltway.com, 2013). 

Reference Lists

Wikipedia. 2013. List of the largest information technology companies. [online] Available at: http://en.wikipedia.org/wiki/List_of_the_largest_information_technology_companies [Accessed: 24 Oct 2013].

Wikipedia. 2013. IPhone 5. [online] Available at: http://en.wikipedia.org/wiki/IPhone_5 [Accessed: 24 Oct 2013].

Upload.wikimedia.org. 2013. Untitled. [online] Available at: http://upload.wikimedia.org/wikipedia/commons/7/7d/Top5MarketCapRanks.png [Accessed: 24 Oct 2013].

Mcginley, D. 2013. Top 5 Best Selling Apple Products Q1 2013. [online] Available at: http://www.top5bin.com/top-5-best-selling-apple-products-q1-2013/ [Accessed: 24 Oct 2013].

Economicsonline.co.uk. 2013. Monopoly. [online] Available at: http://economicsonline.co.uk/Business_economics/Oligopoly.html [Accessed: 24 Oct 2013].

Jain, A. 2013. Apple Inc. (AAPL) iPhone 5S, 5C Subsidies Lowered By China Telecom. [online] Available at: http://www.valuewalk.com/2013/09/apple-inc-aapl-iphone-5s-5c-subsidies/ [Accessed: 24 Oct 2013].

Outsidethebeltway.com. 2013. How Apple Avoids Paying Taxes. [online] Available at: http://www.outsidethebeltway.com/how-apple-avoids-paying-taxes/ [Accessed: 24 Oct 2013].