Apple's Strategy In Entering The Textbook Market

Recently Apple announced its plans to enter the textbook market. See the Wall Street Journal Article “Apple Jumps Into Textbooks”. This move for Apple is a very interesting from a strategy perspective. Lets together analyze the decision.

Threat of new entrants

Probably the largest threat that Apple is facing by entering the textbook market is the ease at which new competitors can enter the marketplace. The new competitor would only need two things, (1) to build a relationship with an existing publisher, and (2) a means of distributing the e-textbooks.

Threat of substitutes

This could be a significant problem if the idea of carrying around your texts on a mobile device does not catch on because there will always be the existing paper texts.

Bargaining power of suppliers

Publishers currently have huge amounts of power in the textbook arena. Apple’s move, however, essentially reduces the cost of the publisher and also extends the reach of their products to buyers. In the long run, however, I believe that the bargaining power of publishers will fall dramatically. Publishers know that the future of print media looks grim at best, and unless they completely change with the demands of the consumers, printing companies will have a very hard time.

Bargaining power of buyers

Buyers in the near term future will be faced with a variety of options. Currently, there are very few channels to obtain e-textbooks, but as the options grow, bargaining power of the buyers will rise and the cost to the consumer will fall.

Competitive rivalry within the industry

Recently, there have been very substantial rivalries in the e-book market. The key players include Apple with their iPad, Amazon with their Kindle, Barns & Noble with their Nook, and Google with a variety of Android devices. Though this competition will eat away at potential profits, the companies that will be most successful will be the ones that can differentiate their product or distribution in a meaningful way. It will be interesting to see which strategy wins in the end.