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1. Executive Summary
The assignment is about the proposal for the company to manufacture new products and stay in the competitive market. The proposal is for the company Nokia and the proposal is to start manufacturing of media player/IPods as they are only manufacturing mobile phones. So the main purpose of the assignment is to give proposal to Nokia to start manufacturing its own media player. Nokia is one of the leading Mobile manufacturing companies in the world. A lot of brands are selling and manufacturing cell phones and mobiles in the market but Nokia cell phones are the leaders in the race. With over a dozen varieties and models lining up every day the customer is left in confusion as to what they should buy. With the market gearing up with new companies Nokia manufactures have accepted the challenge.
From the research done on the media player business it shows that 80% of the market is cover by Apple IPod in media player industry and other 20% is shared by the other companies like Sony, Creative, Microsoft and Samsung. The profit of Apple IPod is around the revenue of $10.17 billion and record net quarterly profit of $1.61 billion, or $1.78 per diluted share and the profit are increasing continuously. The combined Portable Media Player (PMP) and MP3 player market represent one of the fastest-growing segments of the consumer electronics industry today, according to market research iSuppli, whose data estimates that unit shipments will more than double between 2005 and 2011.
So from all this research done on media player/IPod industry, it shows that the industry is growing day by day and the business is one of the profitable businesses in the world. So for Nokia it would be a good opportunity to enter the media player industry and to compete with the other companies in the world. So the proposal is beneficial for the company and they can invest in this business as it is one of the growing business.
The proposal of the product is carried out for the company Nokia. The proposal is to manufacture media player or MP3 player for the company. As Apple is the leading company in manufacturing of iPods and as it covers the 80% of the market share so the basis of the proposal is to enter in this booming market and Nokia should enter this booming market and compete with the market leaders.
2.1 Company profile
Nokia is one of the leading Mobile manufacturing companies in the world. A lot of brands are selling and manufacturing cell phones and mobiles in the market but Nokia cell phones are the leaders in the race. With over a dozen varieties and models lining up every day the customer is left in confusion as to what they should buy. With the market gearing up with new companies Nokia manufactures have accepted the challenge. They are coming up with latest technologies being put to test. The company believes in customer satisfaction and that is the success of their being the leaders in cell phones. Nokia was founded by Fredrik Idestam in Tampere, Finland which is in Europe in the year 1865 and incorporated into Nokia in 1871 (Nokia, 2010)
The head quarters of Nokia are in Espoo, Finland. Jorma Ollila is the Chairman and Olli-pekka kallasvuo is the president and CEO and Timo ihamuotilais the Chief Financial Officer of the company. They have industries like Telecommunications, Internet, and Software Solutions. Their products are Mobile phones, Smart phones, Mobile computer, and networks. Revenue generated by the company in the year 2009 is EURO 4.99 billion. Their operating income is EURO 1.197 billion, and net income is EURO 891 million. Total assets of the company are EURO 35.74 billion. No of employees working in the company is 123,171. Their Subsidiaries are Nokia Siemens networks, navteq, symbian, vertu, and qt development frameworks.
3. Product Proposal
The proposal which is referred to the company is for the manufacturing of iPods or media player. As the company is only manufacturing Mobile phones and not any other products, so the suggestion for the company is to start manufacturing their own media player and by doing this they can improve a lot on their revenues. As media players are very famous in the world and every generation wants to have a media player with them there is great chance to get success in this market. So the purpose of this proposal is to draw attention of the company in another product like media player as it has one of the booming markets in the world.
3.1 Media player/iPods
It a pocket-sized device used to play music files. It is a brand of portable media player designed and marketed by Apple and launched in October 2001. Initially the iPod played only compressed audio files (known as MP3's), but has quickly evolved to play video and access the internet (wifi is only available with certain model iPods). All current Apple mp3 players come with a display which allows them to double as a portable digital text readers. With their vast and ever increasing storage capacities, and click wheel navigation, one could store more text based information on a single device then a person could ever read in their life time (Wisegeek, 2010).
The original iPod came with a body of white Lucite and chrome. Two years later Apple released the iPod Mini, approximately one-third the size of the original iPod and encased in a variety of shiny metallic colors. The smallest member of the iPod family, the Shuffle, reduced the size down to that of a package of stick gum and looked very much like the original. All iPods came with distinctive white headphones.
3.2 How it works
An iPod or MP3 player comes with the unheard-of storage capacity of 5 gigabytes. Six iPod generations released later which can play songs, movies, games and photo slideshows, and you can store up to 160 GB of any type of file you want. The evolution has been a lesson in consumer electronics marketing and development. Millions of people are so hooked on the iPod, they continue to buy it. In 2007 iPod release, the sixth-generation iPod classic is a digital audio player, video player, photo viewer and portable hard drive, making it a full-fledged portable media center. It's available in 80-GB and 160-GB capacities and has a color LCD screen. In addition to the iPod classic, there are several other devices in the current generation of iPod players (Howstuffworks, 2010).
One of the benefits of having an Apple iPod is the most obvious and that is you are carrying a portable music player outside. However, today, an Apple iPod is more than that, it has now become a multimedia player that can not only play music, videos and podcasts but do slideshows of photos as well. It is a great form of entertainment for the user whether they are on the move or in the house - in fact, it is suitable for just about anywhere (Iollo, 2010).
Certain Apple iPods can consist of games to keep their user busy, podcasts to get the latest news onto the channel you have subscribed to and audio books to listen to music while on the train heading to work, catching up on your favorite novels. The Apple iPods are very light, small and compact and this is why they are known as portable media players. All of the newer Apple iPods are smaller than bulky CD players and this is why it is a favoured option. Some of the designs are such types that they can fit anywhere and everywhere whether in your pocket, on your belt or even on your arm.
Apple's iPod was launched in 2001 and in that time Apple has sold more than 180 million units. Quarterly sales worldwide continue to nudge between 9 and 10 million. Despite the entry of Microsoft's Zune digital media player (launched in 2006, manufactured by Japan's Toshiba and pictured below) and existing players produced by the likes of Sony, Creative and Samsung, the Apple iPod continues to enjoy a market shareof more than eighty percent. In this sense, the iPod can be said to have a monopoly positionin the market and well established market dominance (Tutor2u, 2010).
One of the important point is that the early generations of the iPod largely created a new market rather than displacing an existing one. And Apple's strategy since then has been too innovating and they continue to deliver new products to the market that appeal to a new group of consumers.
4.1 Market Leader
IPod is currently in the growth stage, where more and more people are aware and purchasing the product and thus increasing product demand. Sales are growing rapidly and profits are rising quickly, however competition is increasing as competitors are more aware of the tactics of Apple IPod i.e. using new features to market their product. During this stage there are also opportunities for wider distribution which will result in higher sales of the company so it is the profitable product for the company.
IPods are the popular music player in the world with over 100 million sold since launch. That accounts for almost half of all the 220 million iPods sold worldwide and this has boosted Apple's share of the market to nearly 75 per cent. So Apple is the Market leader in the Media Player market.
The Company posted record revenue of $10.17 billion and record net quarterly profit of $1.61 billion, or $1.78 per diluted share. These results compare to revenue of $9.6 billion and net quarterly profit of $1.58 billion, or $1.76 per diluted share, in the year-ago quarter. Gross margin was 34.7 percent, equal to the year-ago quarter. International sales accounted for 46 percent of the quarter's revenue (MarketWatch, 2010).
The results beat the estimates of analysts surveyed by Thomson First Call, who expected Apple to earn 78 cents a share on revenue of $6.42 billion.
Leading the charge for Apple was its line of iPods, with the company shipping 21 million of the market-leading devices during the quarter, a 50% jump from a year ago. Sales of the device accounted for $3.43 billion of the company's revenue, or nearly half the total.
The combined Portable Media Player (PMP) and MP3 player market represent one of the fastest-growing segments of the consumer electronics industry today, according to market research iSuppli, whose data estimates that unit shipments will more than double between 2005 and 2011. The firm sees worldwide units climbing to 268.6 million in 2011, expanding at a Compound Annual Growth Rate of 13 percent from 128.7 million units in 2005. In total, player shipments for the current calendar year are expected to rise to 216.9 million units, up 21.8 percent from 178.1 million in 2006.
For its part, Apple in 2006 sold over 46.4 million iPods, which would give it an approximate 26 percent global share of the global digital media player market based on iSuppli's unit shipment totals. That's the same share reported for the Cupertino-based company back in 2005 by another market research firm, IDC. Should Apple maintain its share going forward, it would stand to sell more than 56 million players in 2007 and nearly 70 million in 2011(Appleinsider, 2010).
At the same time, manufacturing revenue from digital media player production will reportedly rise to $21.5 billion by 2011. Senior analyst for consumer electronic sat iSuppli Chris Crotty said that "A major driving factor behind this growth is the fact that PMP/MP3 players take advantage of the Internet more than other consumer electronic devices, giving users the ability to quickly and easily sample, acquire and share media,” The graph below shows the increasing market of the media player.
The analyst estimates that total number of Internet households and broadband subscribers worldwide will grow to 883 million and 507 million respectively by 2011. Because of this, he expects shipments of PMPs like iPhone and video iPods will grow faster than those of music-only MP3 players during the coming years -- likely to account for more than 66 percent of PMP/MP3 unit shipments by 2011, up from a mere 4 percent in 2005. Crotty noted that other catalysts for market expansion include growing catalogs of available content and component cost reductions that are making the players more affordable for consumers. "In parallel with the rise in PMP/MP3 shipments is the expansion of the market for paid digital content used on these and other platforms," he said. "The worldwide broadband digital paid video market will expand to $4.5 billion in 2010, up from a meager $300 million in 2006." iSuppli also forecasts the broadband music market to grow to $5 billion in revenue by 2010, up from $1.6 billion in 2006.
The table shows Market shares of the companies which produces media players/Mp3 players.
This chart shows the sales of the company which states that Apple has highest sales in comparison to all the companies manufacturing media players/IPods.
It is a process of investigation in which you can educate yourself and also hunt for the truth. It is done by using Library, Materials, and Internet. In other word it also means gathering of information. Research is done by two methods one is Primary research and the other is Secondary research (Usg, 2010).
5.1 Primary Research
Data collected or observed from the first hand experience is known as primary data. Primary data is important for all areas of research because it is totally new information about the results of an experiment or observation. It is like the eye witness testimony at a trial which is used as evidence. No one has tarnished it or spun it by adding their own opinion or bias so it can form the basis of objective conclusions.
It is also known as the original data that is gathered and evaluated. For example If we are doing a survey for any new product and collecting information from the people and by doing such type survey the information which is collected can be used as Primary data (Businessdictionary, 2010).
Primary Research is conducted by
For doing Primary research Questionnaire is prepared for the survey. The Questionnaire is attached in appendix.
5.2 Secondary Research
The Date which is already published or used in the past then such type of data is known as Secondary data. Data already gathered for one use then ii is utilized for another purpose is also known as Secondary data. For example, a person researches income distribution using data collected by the Department of Commerce (Blurtit, 2010).
Secondary data research is the research which is based on gathering the information from the findings of other researchers. There are two sources of secondary research including external or internal research. The internal secondary research is conducted within the organization while the external secondary research is obtained from the outside sources. Some secondary data research sources includeSales and marketing reports, Accounting and financial records, Miscellaneous reports, Federal governmentand statistics agencies etc. Therefore, unlike primary data, the secondary data is not taken with many efforts and it is based on the findings of others.
Secondary Research is conducted by
After having full knowledge of both the methods used for research it is found out that primary research is very time consuming process and it is very expensive but the research is up-to-date and is related to your research. But secondary research is more easily done so my chosen method for the research is also Secondary research
The advantages of this method (Knowthis, 2010)
- Secondary data is readily available at cheap rates and is usually quite inexpensive.
- Collecting secondary data and analysing it saves time and effort.
- It is easily available and the researcher can get it without much struggle.
- Secondary data avoids data collection problems and it provides a basis for comparison.
- This data type may allow the researcher to cover a wider geographic or temporal range.
- Secondary data can allow for larger scale studies on a small budget.
- Secondary data provides an opportunity for longitudinal analysis based on the previous waves of survey.
- Secondary data is a good indicator for analyzing the social change overtime.
- This type of data also provides an opportunity for cross-cultural analysis with fewer limits of time, cost and language.
- Collecting secondary data leaves more time for making in depth data analysis.
From all the researches and studies done above we can conclude that investing in media player project is beneficial for Nokia, as Media player industry has a booming market in the world. Also the industry is a profitable industry as there are not many competitors in the market. Numbers of people using media player is increasing day by day so the company will not have any chances of failure it they invest in this project. So the proposal for the company to manufacture Media player is very good proposal and the company should look forward to it as soon as possible.
8. Reference lists
Nokia, (2010), “Company Profile of Nokia”, [Internet], Available from: www.nokia.com [Accessed on: 06 March 2010]
ConnectMobiles, (2010), “History of Nokia”, [Internet], Available from: www.connectmobiles.com [Accessed on: 06 March 2010]
Wisegeek, (2010), “Media player/IPod”, [Internet], Available from: www.wisegeek.com [Accessed on: 06 March 2010]
Howstuffworks, (2010), “How Media player works”, [Internet], Available from: www.howstuffworks.com [Accessed on: 06 March 2010]
Iollo, (2010), “Benefits of Media player”, [Internet], Available from: www.iollo.com [Accessed on: 06 March 2010]
Tutor2u, (2010), “Market of Media player”, [Internet], Available from: www.tutor2u.com [Accessed on: 07 March 2010]
Telegraph, (2010), “Market Leader in Media player”, [Internet], Available from: www.telegraph.co.uk [Accessed on: 07 March 2010]
Marketwatch, (2010), “Revenue of Media player”, [Internet], Available from: www.marketwatch.com [Accessed on: 07 March 2010]
Appleinsider, (2010), “Growth of Media player industry”, [Internet], Available from: www.appleinsider.com [Accessed on: 07 March 2010]
Macnn, (2010), “Growing Market”, [Internet], Available from: www.macnn.com [Accessed on: 07 March 2010]
Apple, (2010), “Revenues of Apple IPods”, [Internet], Available from: www.apple.com [Accessed on: 07 March 2010]
Marketwatch, (2010), “Profits of Media players”, [Internet], Available from: www.marketwatch.com [Accessed on: 07 March 2010]
Usg, (2010), “Definition of Research”, [Internet], Available from: www.usg.edu [Accessed on: 07 March 2010]
Businessdictionary, (2010), “Primary research”, [Internet], Available from: www.businessdictionary.com [Accessed on: 07 March 2010]
Blurtit, (2010), “Secondary research”, [Internet], Available from: www.blurtit.com [Accessed on: 08 March 2010]
Knowthis, (2010), “Advantages of Secondary Research”, [Internet], Available from: www.knowthis.com [Accessed on: 08 March 2010]