Group Discussion-A Case Study of iWatch

Group Member:

CHAI, Siyu
LI, Wei
LI, Yinting
LI, Shuangyi
ZHANG, Zhixin

A case study of iWatch-COMM5980 from Yinting Li

SWOT Analysis

Internal

1. Strength:
1. Branding & Existing loyal customers.
2. Easy to use.
3. It uses iOS system connecting with iPhone directly. Such supportive system facilitates UX of Apple users.
4. Aesthetic product appearance and hardware/ software design.
5. Stable supply chain.
2. Weaknesses:
1. High Price
2. Battery capacity limit

External

1. Opportunities:
1. High brand awareness / brand loyalty
2. The increasing popularization of smart wearable devices
3. Bandwagon/ conformity
4. Rising consumption level
5. Profitable watch market

     2.    Threats

6. Strong Competitors (Xiaomi, Fitbit, Samsung, Moto-360)
7. Customers are fickle
8. Differentiation
9. Public concern over privacy issues of smart watch
10. Lack of necessity

Business Model Canvas

Porter’s Five Forces

1. Threat of New Entry--relatively low
1. Time and cost of entry: long develop period & high cost
2. Specialist knowledge: need both developer & designer
3. Economic of scale: hardware
4. Technology protection: copyright
5. Barriers to entry: relatively high

2. Threat of Substitution--high

1. Substitute performance:
1. Substitution within the industry. e.g. Xiaomi, Fitbit, Samsung Gear,  Moto-360
2. Substitution from other industries which provides similar function as iWatch. e.g. further developed smart phone; other wearable smart device like ring, necklace.
2. Cost performance: Customers will consider more about cost performance of the product instead of performance itself
3. Cost of change: relatively high

3. Supplier Power--low
1. Numbers of suppliers: around 15
2. Size of suppliers: large
3. Uniqueness of service: low labor fee; low technique content e.g. Foxconn
4. Ability to substitute: Those suppliers offer non-substitutable service so that it’s kind of hard to switch to other suppliers
5. Products are differentiated or there are built-up switching costs
4. Buyer Power--low
1. Number of customers: large
2. Differences between competitors: large
3. Price sensitivity: low; demand will still increase because of brand loyalty
4. Ability to substitute

5. Competitive Rivalry-- fierce

1. Number of competitors: more than 10 competitors
2. Quality differences: relatively large
3. Other differences: feature/performance; design; price; homogeneous functionality
4. Switching costs: relatively high
5. Customer loyalty: high

Blue Ocean Strategy

ERRC Grid

Eliminate Diversity/ richness of the appearance design	Raise Battery Resolution (retina) Gravity sensor Software
Reduce N/A	Create Voice recognition Payment system (Apple pay)

Conclusion: iwatch is not a Blue Ocean Strategy but it wins in the Red Ocean. iwatch keeps creating new features to beat other competitors in the same industry market.