Originally Posted by SolipsismX
18% profit margin? Not only is that halfing the profit margin it's almost getting 1/4 of the profit.
While you want that as a customer you need to look at this from Apple's PoV as a seller. They have no competition. They have no loss of sales. There is no reason for them to make less profit in the tablet market. Yes, I mean less because if you're selling as many as you can make selling them with cheaper won't increase unit sales.
I am looking at this from Apple's POV.
To say that they have no competition, forgive me, is a little short-sighted and a lot "head in the sand". Steve Jobs said it best, "If we are going to be cannibalized I want us to be the one doing it."
Microsoft will be releasing their Windows 8 tablets within the year. From the reports and reviews it will be a decent tablet and will offer some features that Apple doesn't offer at this time, if ever, in their iPads. Taking a page from Microsoft's playbook, the best defense against this very real, upcoming competitor is to grab as much market share as possible before its release and entice customers into investing in the iOS ecosystem. If the rumors of the release of Office for the iPad are also true, which I believe then it is paramount that Apple makes their move sooner rather than later to cement their position in industry (which I know they haven't cared about in the past, but looking at what they have done with iOS over the last few years they obviously care about now).
I am going to lump Samsung, Motorola, and every other pretender out there into one category of Google Stooge. The Google Stooges out there might not have done so hot up to this point, but don't think for a second that they have given up. And with backing coming from Google and Intel to prove that they can make something just as good or better than Apple those are some deep pockets gunning for Apple in the tablet market.
Amazon isn't going anywhere and if rumors are to be believed, and I see no reason not to believe them, they will be releasing a large screened Kindle Fire soon to more directly compete against Apple. Honestly, I think that Amazon is actually a bigger threat to Apple than any of the previously mentioned competitors because, unlike the others Amazon has an already flourishing digital ecosystem and a well known, and respected brand-name by the general public. Say what you want to about the Kindle Fire (I will agree that it is nowhere near as good as an iPad), but it was a first try at the tablet game. They will
get better, if for no other reason than that it is always easier to follow than to lead. Apple has already shown the others the path that they need to take, and Amazon is doing a better job than any others in following it. Then there is the fact that Amazon makes their money on the content and thus can afford to compete on the price of the hardware. So, I don't think that Apple should try to compete on the price point with Amazon, that is a losing game, but they should strive very hard to get it in the ballpark and not more than twice as much.
As for making less money. Yeah, they are going to make less money by doing what I am proposing, but it is like my CEO is fond of saying, "Sometimes you have to go underwater for a bit to come up ahead in the race." Apple would still make a profit, not as larger, but still a profit, and they have the cash to handle some lower profits for a year.
In exchange for this year of slightly lower profits they would maneuver themselves into a much better position for the future by grabbing some market segments and stabilizing their market share base. And don't think for a second that market share isn't important. iOS is doing as well as it is because of its excellent developer base. That base will only stick around as long as it is best for them. If Apple loses the market share to a competitor than many developers will move to the more profitable platform. And that is not good for Apple.
So, I am thinking from Apple's POV. We may not like it as long time Apple fans, but the Steve Job's era is over. This is Tim Cook's time and he is a supply chain genius. So, I say playing to his strengths is in Apple's best interest and moving now to leverage their advantage in buying quantity to pressure the coming tide of competitors is what needs to happen now.