Marketing 4th Edition by Dhruv Grewal,Michael Levy

Exercise 4

APPLE FURTHER TRANSFORMS THE USER EXPERIENCE WITH IPAD 2 AND 3
Skeptics yawned a bit when Apple rolled out its iPad 2. Reviewers acknowledged that Apple's updated tablet did have two cameras and a gyroscope. But the prelaunch prediction was that the new version was basically the same as the iPad, only thinner, lighter, and twice as fast. Then people began using it, and they discovered once again that Apple had further transformed the digital experience.
WHAT THE IPAD 2 OFFERS
A tablet is meant to be held, not set on your lap or atop a desk. Apple's new iPad-15 percent lighter, just.34 inches thick, with rounded edges, and speedier than ever-is a pleasure to hold. The Motorola Xoom, considered the best Android competitor, felt massive by comparison. And despite the iPad 2's lighter, slimmer dimensions, its battery still held a charge for 10 hours. Like competing tablets, Apple's new iPad featured a camera on the back to record high-definition video, along with a low-resolution front camera for video phone calls. The more expensive models offered online capability, with either AT T's or Verizon's cellular networks. With a simple $40 adapter, the iPad 2 could be connected to a high-definition television too, making it a great platform for viewing slideshows, presentations, or movies.
But one of the simplest innovations was the one reviewers hailed as "magic." Apple's new SmartCover, a rigid, hinged sheet of polyurethane (or for $70, leather), could be used to prop up the iPad, so the user could watch movies or freely use the on-screen keyboard with both hands. Opening and closing the cover turned the iPad on or offalmost instantaneously, saving the average user six minutes a week, according to one reviewer. Given modern consumers' expectations that digital devices will keep getting faster, that time-saver was bound to please.
These descriptions involve the physical aspects. Apple also transformed the overall user experience. With the new speed and ease of iPad 2, Apple had finally made using a digital tablet more like reading a book. No buttons to press, no menus to scroll through. Ratcheting up its competition with other e-readers, Apple had delivered "the swiftness of print." Users could just open the iPad 2 and start reading. E-mail, the news, a novel for their subway ride-everything was instantly available. In terms of Apple's other advantages in the tablet market, users could immediately turn to the 65,000 apps already available for the iPad, not to mention the 290,000 iPhone applications that could also be used on the iPad.
A stable price tag was perhaps its biggest competitive edge. The starting price for the iPad 2 was the same as that for the original iPad: $499, and much less than Samsung's Galaxy Tab or Motorola's Xoom, two tough Android competitors. Within nine months of the iPad 2 launch, Apple had sold 15 million devices, generating $9.5 billion in revenue.
Apple's financial efficiency remains tough to duplicate. Enormous cash reserves, estimated at $60 billion, enable the company to form strategic partnerships with component manufacturers and secure volume discounts. It avoids licensing fees for some high-cost items by having them designed in-house by a company it bought. Revenue from its successful App Store helps subsidize the price of the iPad. And Apple's global network of retail stores eliminates mark-ups by thirdparty sellers, like Best Buy.
WHAT'S HAPPENING IN THE MARKET
The digital tablet market appears on the verge of an explosion. Forrester Research predicts the market will generate $35 billion in revenue, from the one-third of U.S. adults who will own tablets by 2015. Critics had once questioned whether consumers really would spring for yet one more digital device, but the numbers have proved those skeptics wrong.
User habits also are changing. The digital tablet offers a popular online shopping venue, especially for affluent consumers. Retailers such as Macy's, Abercrombie Fitch, and The Gap report that their customers who browse their Internet sites with a digital tablet are more likely to complete the purchase than are online shoppers who use computers or smartphones. In addition, those consumers using the new digital tablets to shop tend to buy high-end, high-priced items, typically spending 10 to 20 percent more than other online shoppers. Market research confirms these findings by developing a matching profile of tablet owners: They tend to be wealthier, so the new online format helps retailers tap into a higher-spending market niche.
Thus advertisers began shifting their behavior. Shopping networks and individual retailers now feature videos, slideshows, and "how-to" demonstrations in their catalogs, as they seek to exploit the digital capabilities of the new tablets.
WHAT OTHERS ARE DOING, AND HOW APPLE WILL RESPOND
In almost no time, Apple's iPad 2 faced nearly 100 competitors, vying for a place in the tablet market. Some offered customers a benefit or two that could not be found on the iPad 2, such as the Flash capability provided by the Androids for viewing videos and animation on the Web. Others offer the ability to dictate text, using a program that sends the information into any box that accepts typing. Another popular option is a navigation application that displays turn-by-turn travel directions on GPS-generated maps.
Amazon jumped into the market too with its Kindle Fire, an updated e-reader with digital tablet capabilities, priced at only $199. With competition mounting, observers predicted that Apple would make key changes in its next iPad release. Dedicated forums have been full of discussion about the possible inclusion of Siri, Apple's sophisticated vocal interface, on the iPad 3 (a feature available on iPhone4).
But Apple's biggest move amid these prerelease rumors has been its announcement that it has added digital textbooks to its next iPad-access that Amazon's Kindle and the Nook from Barnes Noble already offer. Apple's entry into the digital textbook market is fueled by its partnerships with a number of textbook publishers. Apple offers these publishing partners three key capabilities: its iBooks2, an e-book reading application for the iPad; an e-book authoring tool for the iPad, called iBooks Author; and iTunes U, an expanded online commerce platform for digital textbooks. The first slated release would include a trio of high school textbooks: biology, algebra 1, and environmental science.
Proponents suggest that digital textbooks offer students a wealth of benefits, including interactive connections with the information, access to constantly updated study material, lighter backpacks, and lower prices than paperbound textbooks. But some opponents doubt that the promised savings on individual texts will ever fully materialize, because the major cost for traditional publishing has always been taken up by research and writing, not printing and production.
Still, considering that the textbook industry inevitably is undergoing a digital transformation, Apple's collaboration with two of the largest textbook publishers in the United States likely represents a major coup. The maker of the MacBook, the iPhone, the iPod, and the iPad has moved once again to secure a competitive edge.
How will the iPad stack up against the e-textbook options on other digital tablets