Manon's Econ Blog

The iPod and the iPhone markets

Posted on: September 29, 2009

img_86661_ipods-new

The iPod market is mostly a monopoly: it occupies more than 80 per cent of the market (the 20 other percents being owned by Sony, Creative and Samsung), but with the iPhone, the Apple company was scared that this new product (that combines a phone, an iPod, an internet access, and other useful functions) will replace the iPod, and therefore reduce its market. This could have happened if the two products were appealing to the same market, but they do not. The iPod, which was revolutionary when it first came out, created a new market, and the iPhone did the same. By creating a market rather than taking buyers away from the iPod market, Apple could have a bigger profit: the two independents markets both make profit on their own without interacting with each other. Not everyone who was willing and able to buy an iPod will be to buy an iPhone, and vice versa. Some people even have both; so the iPod market will not be disturbed with the iPhone. Also, adding new functions to the iPod increases its market but, such as explained before, does not take consumers from the iPhone market. As a result of consequence, Apple makes profit on both markets, and the iPod will not be replaced by the iPhone.

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