The point is the competition is only able to sell at -50$ of Apple prices with comparable specs. The ipad is still doing well because at similar prices people go with Apple. The competition cant compete because with tablets they MUST have a good design, somethiing they are not used to do.
The same applies to the ultraportable, those require a good design. Apple should be able to offer something at similar prices. If competition figured out a way to beat Apple prices by more than 10%, then customers are going to go for windows machine in volume, just like the PC market. Apple need to be aggressive on prices if they want to keep that market.
Apple may have R&D expenses, but they also have so much cash flow the interest alone can pay for R&D and some. And Apple also have better prices for components because of there high volume. they should be able to still turn a profit when others are selling at cost.
With few exceptions, Apple does not lower their prices to meet the competition.
Rather, Apple establishes a top-quality solution at a strategic price-point and lets the others try to compete. Sometimes, Apple will trade-off (defer) some initial profits (margin points) to set the minimum bar and gain market acceptance -- recovering sacrificed early profits by gaining increased sales and economies of scale.
The most recent example of this was the 2010 iPad 1. Everyone expected Apple to announce a $1,000 tablet that was a ho-hum version of existing tablets. Supposedly, the competitors all had plans (frothing at their respective mouths) for their own ho-hum offerings at 10%-30% less than Apple's price. Instead, Apple defined a new category solution at a price that others could not even approach -- for almost 2 years now.
Today, Apple owns the tablet market, has high margins (read that as pricing flexibility) and follow-on product in the pipeline... with competition just beginning to emerge (if we believe what read rather than what we see).
The way Apple will match prices is to change the rules again! I suspect that they will introduce an iPad 3 at initially reduced prices (margin-points) and continue to offer the iPad 2 at a new lower price (to pre-empt competition).
The competition will have no product to challenge the iPad 3...and their just-emerging iPad 2 competitors will not be able to compete with the new iPad 2 price-point offered by Apple.
You see, Apple has a long-term strategy which allows them flexibility (features, pricing, timing, supply chain) in attaining their objectives.
Said in plain language, Apple has an iPad 3 that they can introduce any time they choose -- and they can choose to offer the iPad 2 at a [very profitable] new, lower, price if it serves their long-term strategy.
I believe the same strategy applies to other Apple products (Air, iPhone, iPod, AppleTV, Mac) as they are all part of the whole.
I believe that Tim has a market simulation (bigger than a Numbers spreadsheet) that has Apple's plans mapped out for the next 5 years in detail -- and the next 10 years in general. As part of that simulation, Apple models the effect of competition, disasters, world economy, unforeseen innovation, etc.
Apple needs not and does not make knee-jerk reactions to temporary conditions -- rather they incorporate the changes and refine their plans.
Oh, puh-leeezzze!!! I cannot believe how deluded Mr. Wang is!!! I just don't understand how he can possibly believe that!
I guess I could sort of see how ultrabooks might have an effect if they reach the $699 price point he mentioned. But that would be a game of numbers (quantity sold) instead of actual profits. Unless his company has some miracle up their sleeve I assume the low price point is going to come at the expense of quality. And then it starts all over again: the commoditization of this new segment of the market and the "race-to-the-bottom" with razor thin margins that these manufacturers all seem to be blindly pursuing.
I don't get it. Don't they see the pattern? There's a saying that insanity is doing the same thing over and over again and expecting a different result.
It's built into the whole Wintel industry - and is an institutional problem for them. PC makers control neither their OS nor - except some to some extent - their basic hardware design. If you're selling the same Windows 8 next year as every other PC maker, it's hard to add enough value via hardware alone - and again, nearly all are buying component subassemblies from most of the same suppliers - so difficult to sell Win machines for hundreds more than your PC competitors.
Especially when you change designs more often to keep up in the spec wars as well. So their design and manufacturing processes are sloppier and designed to slap more configs in in less time.
They also have less control over channels. That is, they're constrained by what Best Buy and Wal-Mart, etc. will buy from them - and they're competing against each other selling the same brands by and large..... ...whereas Best Buy, Radio Shack and Wal-Mart by and large take what Apple deigns to offer them.
And no world-wide networks of retail stores.
So there's enormous pressure for price (and quality regression) to the same lowest cut-throat common denominator.
They created this system - and it worked until a viable competitor with a better model finally emerged and stole all their profits. And it's hard to see their way out of the box canyon they've driven themselves into.
Meaning it's an endless dogfight over a declining commodity and companies like Acer really can't do much to alter all the variables in that arc.
Quote:
Originally Posted by thompr
The difference is this: Tim knows what he is, and is not, good at. And he knows who to look to on the Apple bench for what he's not. He knows that the Apple DNA requires innovation and that he is not the creative genius.
Tim is not going to F up. He's a 100 times smarter than Ballmer, and unlike Ballmer, he knows where his weaknesses are. Perfect.
If I can't have Steve Jobs, I would take Tim Cook as CEO over anybody else in America.
Thompson
Sounds good. Hope you're right!
Quote:
Originally Posted by spiced
And one more thingy about INTEL aren't they price fixing by telling every grandfather grandmother PeeCee manufacturer "to stick" to this price for Ultrabook? Is any USofA politician looking into their books? I might be totally wrong so don't stick a barrel to my head ....
No barrel but you're wrong-o from the get. Intel is setting a MAXIMUM "suggested" selling price, not a minimum one or a floor of any kind. Making stuff cheaper is NOT against anti-trust law - except in the case of "dumping" product below cost to drive a smaller competitor out of business.
Quote:
The chairman said while he expects the "fever" for tablet PCs receding and notebooks regaining consumer interest, Acer will still see a loss in the third quarter, though it would be better than the second quarter.
Somebody has a fever here - because the net predictions are hallucinatory in nature. As long as Apple keeps its lines fresh, innovative and unique - and maintains quality and world-best support - Wintel can stay alive (tho' many companies may fall or merge) - but they'll at least maintain their relative position in the industry.
You know, some days I simply thank the Divine I don't have to tell lies just to put food on the table. Like, lying for a living. That's just bad karma, man. I don't believe in "burning in hell for eternity" and all that, but karma... it's a b*tch, and generally tends to come back and bite you in the butt.
Basically the lowest-end "branded" laptop/desktop company. A few people I know that bought Acer laptops tell me they're never going to again, ever.
If Asia doesn't implode because of Western economic woes, Apple will be what most white-collar workers in Asia will want. Apple is to Asians what "Bling" is to rappers.
Comments
The point is the competition is only able to sell at -50$ of Apple prices with comparable specs. The ipad is still doing well because at similar prices people go with Apple. The competition cant compete because with tablets they MUST have a good design, somethiing they are not used to do.
The same applies to the ultraportable, those require a good design. Apple should be able to offer something at similar prices. If competition figured out a way to beat Apple prices by more than 10%, then customers are going to go for windows machine in volume, just like the PC market. Apple need to be aggressive on prices if they want to keep that market.
Apple may have R&D expenses, but they also have so much cash flow the interest alone can pay for R&D and some. And Apple also have better prices for components because of there high volume. they should be able to still turn a profit when others are selling at cost.
With few exceptions, Apple does not lower their prices to meet the competition.
Rather, Apple establishes a top-quality solution at a strategic price-point and lets the others try to compete. Sometimes, Apple will trade-off (defer) some initial profits (margin points) to set the minimum bar and gain market acceptance -- recovering sacrificed early profits by gaining increased sales and economies of scale.
The most recent example of this was the 2010 iPad 1. Everyone expected Apple to announce a $1,000 tablet that was a ho-hum version of existing tablets. Supposedly, the competitors all had plans (frothing at their respective mouths) for their own ho-hum offerings at 10%-30% less than Apple's price. Instead, Apple defined a new category solution at a price that others could not even approach -- for almost 2 years now.
Today, Apple owns the tablet market, has high margins (read that as pricing flexibility) and follow-on product in the pipeline... with competition just beginning to emerge (if we believe what read rather than what we see).
The way Apple will match prices is to change the rules again! I suspect that they will introduce an iPad 3 at initially reduced prices (margin-points) and continue to offer the iPad 2 at a new lower price (to pre-empt competition).
The competition will have no product to challenge the iPad 3...and their just-emerging iPad 2 competitors will not be able to compete with the new iPad 2 price-point offered by Apple.
You see, Apple has a long-term strategy which allows them flexibility (features, pricing, timing, supply chain) in attaining their objectives.
Said in plain language, Apple has an iPad 3 that they can introduce any time they choose -- and they can choose to offer the iPad 2 at a [very profitable] new, lower, price if it serves their long-term strategy.
I believe the same strategy applies to other Apple products (Air, iPhone, iPod, AppleTV, Mac) as they are all part of the whole.
I believe that Tim has a market simulation (bigger than a Numbers spreadsheet) that has Apple's plans mapped out for the next 5 years in detail -- and the next 10 years in general. As part of that simulation, Apple models the effect of competition, disasters, world economy, unforeseen innovation, etc.
Apple needs not and does not make knee-jerk reactions to temporary conditions -- rather they incorporate the changes and refine their plans.
You're absolutely right of course, the rest of the industry in three or four years will have caught up to where apple is in 2011.
Wang by name. Wang by nature.
ROTFLMAO....that was a good one.
Mr Wang speaks.
Acer suffered a humbling first-ever quarterly loss earlier this year in part because of competition from stiff Apple's iPad
[ View this article at AppleInsider.com ]
When did Apple become stiff?
In the 1970s-1980s there was a specialty Word Processor computer named Wang (there were several models).
I can remember a talk by Guy Kawasaki where he described the typical business computer user...
Guy said that this user sits around with his Apple in one hand and his Wang in the other...
True story!
Oh, puh-leeezzze!!! I cannot believe how deluded Mr. Wang is!!! I just don't understand how he can possibly believe that!
I guess I could sort of see how ultrabooks might have an effect if they reach the $699 price point he mentioned. But that would be a game of numbers (quantity sold) instead of actual profits. Unless his company has some miracle up their sleeve I assume the low price point is going to come at the expense of quality. And then it starts all over again: the commoditization of this new segment of the market and the "race-to-the-bottom" with razor thin margins that these manufacturers all seem to be blindly pursuing.
I don't get it. Don't they see the pattern? There's a saying that insanity is doing the same thing over and over again and expecting a different result.
It's built into the whole Wintel industry - and is an institutional problem for them. PC makers control neither their OS nor - except some to some extent - their basic hardware design. If you're selling the same Windows 8 next year as every other PC maker, it's hard to add enough value via hardware alone - and again, nearly all are buying component subassemblies from most of the same suppliers - so difficult to sell Win machines for hundreds more than your PC competitors.
Especially when you change designs more often to keep up in the spec wars as well. So their design and manufacturing processes are sloppier and designed to slap more configs in in less time.
They also have less control over channels. That is, they're constrained by what Best Buy and Wal-Mart, etc. will buy from them - and they're competing against each other selling the same brands by and large..... ...whereas Best Buy, Radio Shack and Wal-Mart by and large take what Apple deigns to offer them.
And no world-wide networks of retail stores.
So there's enormous pressure for price (and quality regression) to the same lowest cut-throat common denominator.
They created this system - and it worked until a viable competitor with a better model finally emerged and stole all their profits. And it's hard to see their way out of the box canyon they've driven themselves into.
Meaning it's an endless dogfight over a declining commodity and companies like Acer really can't do much to alter all the variables in that arc.
The difference is this: Tim knows what he is, and is not, good at. And he knows who to look to on the Apple bench for what he's not. He knows that the Apple DNA requires innovation and that he is not the creative genius.
Tim is not going to F up. He's a 100 times smarter than Ballmer, and unlike Ballmer, he knows where his weaknesses are. Perfect.
If I can't have Steve Jobs, I would take Tim Cook as CEO over anybody else in America.
Thompson
Sounds good. Hope you're right!
And one more thingy about INTEL aren't they price fixing by telling every grandfather grandmother PeeCee manufacturer "to stick" to this price for Ultrabook? Is any USofA politician looking into their books? I might be totally wrong so don't stick a barrel to my head ....
No barrel but you're wrong-o from the get. Intel is setting a MAXIMUM "suggested" selling price, not a minimum one or a floor of any kind. Making stuff cheaper is NOT against anti-trust law - except in the case of "dumping" product below cost to drive a smaller competitor out of business.
The chairman said while he expects the "fever" for tablet PCs receding and notebooks regaining consumer interest, Acer will still see a loss in the third quarter, though it would be better than the second quarter.
Somebody has a fever here - because the net predictions are hallucinatory in nature. As long as Apple keeps its lines fresh, innovative and unique - and maintains quality and world-best support - Wintel can stay alive (tho' many companies may fall or merge) - but they'll at least maintain their relative position in the industry.
What is Acer?
Basically the lowest-end "branded" laptop/desktop company. A few people I know that bought Acer laptops tell me they're never going to again, ever.
If Asia doesn't implode because of Western economic woes, Apple will be what most white-collar workers in Asia will want. Apple is to Asians what "Bling" is to rappers.