Differentiating Between Market Structures

Market Structures

Simulation Table

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Open Source Software

Microsoft

Apple

Health Care Insurance

Goods/services

Linux (O/S)

Operating System

O/S, Devices

Insurance

Barriers to Entry

Medium

Number of Organizations

Few

Few

Medium

Few

Price Elasticity

Limited

Medium

Economic Profit

Limited

Apple Inc. -- Market Structure

There are different perspectives in which to view Apple's market structure since they operate in so many different markets. One perspective could be from an internal approach, in which the organization could be perceived as somewhat monopolistic since their hardware and software is "closed" sourced. Apple protects its proprietary hardware and software and does not willingly provide their source code to unapproved developers. Therefore, it could be said that Apple has monopoly control over the goods, services, and software that will work with its products. This allows the organization to charge a considerable premium for many of its products; especially the accessories that work with main products.

However, when considering the perspective that includes the entire market and the range of substitute products that exists, Apple faces considerable competition. In the pc segment for example, Apple's competes with household names such as Microsoft, IBM, Dell, HP, and Toshiba (Wildstrom, 2009). Additionally, even with revolutionary products like the iPhone, Apple must compete with other innovative companies such as HTC, Palm, Blackberry, and Motorola (Wortham, 2011). Therefore Apple is subject to a healthy amount of competition in the market place. The switching costs to switch platforms are relatively low for most consumers and people can move from product to product with relative ease.

Apple is involved in a multitude of different market segments, even though many of the market segments are directly interrelated. For example, the cellular phone industry is dominated by a few large players who have substantial power in this niche. However, since most of the production capabilities utilized by high-tech companies are being outsourced, and then there may be an opportunity for smaller firms to compete in this industry.

Apple has a dynamic pricing strategy is completely dependent on the product and the market niche which the product is marketed. One pricing strategy that Apple uses as a model to price is dependent on the possibility of future revenue streams. Two prime examples of this strategy are the iPod and iTunes as well as the newer Apple TV and the movies and content that can be purchased with this hardware platform (Bui, 2012). Apple can price these hardware units relatively low because they are basically ensured an ongoing revenue stream through the purchase of content made available to run on these systems.