Run for Market Share Increase Vs High Margins

Posted:
in General Discussion edited January 2014
Do you think its in apple's interest to make a run to improve market share and slash margins or to maintain high margins, keep a steady business and take no chances to insure profitability quarter to quarter?



They have demonstrated a desire to increase market share with the retail stores and the portable line and what do you know, their portables are outselling the desktops for the first time.



But the desktops are horribly overpriced. Do you think come January we'll see new and improved desktops PLUS price cuts?



[ 11-24-2001: Message edited by: applenut ]</p>
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Comments

  • Reply 1 of 33
    leonisleonis Posts: 3,427member
    [quote]Originally posted by applenut:

    <strong>



    But the desktops are horribly overpriced. Do you think come January we'll see new and improved desktops PLUS price cuts?</strong><hr></blockquote>





    Agree....that QuickSilver, IMO, is one of the worst ripoff (beside those PowerMac 6500 and TAM) in Apple's history. I *really* hope they can drop the price.



    I know too many people in the industry who use PC really want to go Mac...but the price of those PowerMac really stop them to make the jump
  • Reply 2 of 33
    emaneman Posts: 7,204member
    [quote]Originally posted by applenut:

    <strong>But the desktops are horribly overpriced. Do you think come January we'll see new and improved desktops PLUS price cuts?</strong><hr></blockquote>



    I doubt we'll see any price cuts.
  • Reply 3 of 33
    Yeah, I seriously don't see any price cuts in Apple's future. Especially not with the economy in it's current state.
  • Reply 4 of 33
    applenutapplenut Posts: 5,768member
    [quote]Originally posted by crawlingparanoia:

    <strong>Yeah, I seriously don't see any price cuts in Apple's future. Especially not with the economy in it's current state.</strong><hr></blockquote>



    we've seen powerbook price cuts, ibook price cut, ibook rebates. so price cuts may be apple's way of dealing with the "current state of the economy".



    Which by the way brings up my question? What exactly IS wrong with the economy? What's so bad? Seems pretty normal to me. I guess people just got used to paying 350 dollars a share for a company that never made a profit.
  • Reply 5 of 33
    sinewavesinewave Posts: 1,074member
    [quote]Originally posted by Leonis:

    <strong>





    Agree....that QuickSilver, IMO, is one of the worst ripoff (beside those PowerMac 6500 and TAM) in Apple's history. I *really* hope they can drop the price.



    I know too many people in the industry who use PC really want to go Mac...but the price of those PowerMac really stop them to make the jump </strong><hr></blockquote>



    $1699 is too much? I know people that pay MORE than that for Gateways.
  • Reply 6 of 33
    applenutapplenut Posts: 5,768member
    [quote]Originally posted by Sinewave:

    <strong>



    $1699 is too much? I know people that pay MORE than that for Gateways.</strong><hr></blockquote>



    you're joking right. you can't seriously think the quicksilvers are competitive price wise and that they are a good deal. or can you
  • Reply 7 of 33
    pscatespscates Posts: 5,847member
    I know nothing about economics and business (and I think I've proven that on at least 34 occasions on these boards over the years...), but I would be curious to see what would happen if Apple priced their stuff like it should be and lowered their margins to comparable industry levels.



    In other words, would we see iBooks at the $1000 level? Would the base model Quicksilver be about $1200 or so? A $599 iMac?



    And if so, would they sell the hell out of them? I know I'd be a more frequent buyer and could feel a lot better about recommending and touting them to my friends and family! $200 bucks is $200 bucks. And if I could get a combo-drive equipped iBook for about $1300-1400, I'd buy one TOMORROW, no ifs ands or buts.



    Sometimes Apple seems to have two uphill battles to fight. The first being their abysmal marketing (which I rant about extensively in a Future Hardware thread...check it out!). Once people DO (through no help from Apple) get to the point that they honestly consider a Mac, then BAM...the second barrier of price comes into play and is probably responsible for more people choosing NOT to go with a Mac than any other factor.



    And I can't say I blame them sometimes.



    Personally, I'm not a hardware freak in that I don't get torn up or heavily into the numbers and specs like others do. To me, more than anything it's the OS. Especially now.



    So I can forgive the lower-than-expected speeds, higher-than-desired prices, etc. because I love the Mac OS. Not to mention that for the field I make my living in, Macs are the industry standard tool. That's just true.



    But for someone raised on PCs or a complete computer newbie, they aren't hooked on the OS or the "Mac way", so they're, naturally, looking at hardware.



    And if you're looking at a PC with 900MHz-plus, big honkin' speakers, a 17" monitor, a bundled inkjet, a built-in CD-R, DVD player, modem, floppy, "multimedia keyboard", two-button mouse, nice video card, sound card, microphone, web cam, etc. all for the price of a mid-range iMac (which has a smaller screen, lower MHz, no floppy, only a CD-R drive, mediocre video card, etc.) what do you THINK this person is going to find the most attractive?



    Remember, they're not hung on any particular OS, they're just looking at their Best Buy or Circuit City catalog and googling over how much they can get for so little.



    Then they go to Apple's site or look in a Mac mail order catalog and go "WHAT?! No way! I have to spend TWICE as much to get what I'd get on a PC..." and blah, blah, blah.



    It's tough. Like I said, I would be curious to see if Apple came into line a little more, price-wise, and once the word got out and people honestly started to give them serious consideration.



    That's why these stores alone aren't going to do anything to increase Apple's marketshare. It's a nice idea, but simply opening up a store, then doing nothing to market that fact, THEN simply selling stuff that most people are going to balk at the price of...



    I just don't see how that's going to turn things around.



    The retail stores, augmented with an effective, informative and well-done marketing strategy AND pricing adjustments will go a lot further toward their stated goal.



    Doesn't take a marketing or economics guru to understand that...







    [ 11-25-2001: Message edited by: pscates ]</p>
  • Reply 8 of 33
    [quote]we've seen powerbook price cuts, ibook price cut, ibook rebates.<hr></blockquote>Then they won't be cutting those prices anytime soon...

    [quote]Which by the way brings up my question? What exactly IS wrong with the economy? What's so bad? Seems pretty normal to me.<hr></blockquote>We are now officially in a recession. Not to mention the fact that computer sales have been slowing down for all companies...
  • Reply 9 of 33
    leonisleonis Posts: 3,427member
    hey crawlingparanoia, in your signature you should change the line "open your wallet" to "bleed your wallet"
  • Reply 10 of 33
    applenutapplenut Posts: 5,768member
    [quote]Originally posted by crawlingparanoia:

    <strong>We are now officially in a recession. Not to mention the fact that computer sales have been slowing down for all companies...</strong><hr></blockquote>



    recession from what? high expectations and over speculation?



    computer sales have slowed down not because of consumers but because of the manufacturers. there is no need to change a 2 or 3 year old computer today. they offer nothing new except bigger numbers and for the first time those bigger numbers don't make much difference for the average joe.
  • Reply 11 of 33
    The price of current Macs is simply a reflection of the the maximised marginal profit. I really think it's as simple as that. An example: at current prices, Apple sells x numbers of computers at z % profit margin. If Apple would half their profit margin (note, actual price per computer would not be affected too much by this) in order to raise market share, they would have to sell twice the number of computers to reach the same total profit. Not a very attractive proposition as it would be far easier and less risky to just remain at current market share and profit margins.



    Of course, as we all now there is a downside to this argument. Higher market share means greater popular acceptance, thus potentially increasing the market share and, at a lower profit margin, increase total profits. Which is what they're in business for at the first place.



    In light of all this, I can understand the current pricing policy. They charge the highest possible price as long as they can. If market share decreases, they have a choice between lowering profit margins to sell more computers, or raising profit margins to earn more per computer.



    What Apple appears to try to do, is raise market share ("95 to go") in certain segments, remaining constant in others. I'm thinking specifically consumer/professional differences both in prices and in products. Sell more iBooks to increase market share, while keeping prices high in the prosumer/professional segment, where price elasticity of demand will typically favour Apple's current pricing.



    Remember Dell has to sell tons of boxes to make the same profit Apple does on a smallar number of boxes. And in the end, the only one really profiting from that is Microsoft <img src="graemlins/bugeye.gif" border="0" alt="[Skeptical]" /> .
  • Reply 12 of 33
    emaneman Posts: 7,204member
    [quote]Originally posted by applenut:

    <strong>



    recession from what? high expectations and over speculation?



    computer sales have slowed down not because of consumers but because of the manufacturers. there is no need to change a 2 or 3 year old computer today. they offer nothing new except bigger numbers and for the first time those bigger numbers don't make much difference for the average joe.</strong><hr></blockquote>



    He's not just talking about computers. He's talking about the whole country's economy.
  • Reply 13 of 33
    applenutapplenut Posts: 5,768member
    [quote]Originally posted by EmAn:

    <strong>



    He's not just talking about computers. He's talking about the whole country's economy.</strong><hr></blockquote>



    well he did refer to both.



    and I still don't see how this economy is so bad. you guys just got used to the late 90s. it's ridiculous.



    tell me the economy is sucking and people aren't spenidn money and then I see that Harry Potter breaks every box office record, Nintendo sells 100 million dollars worth of gamecubes in a single day and every mall is packed over the last weekend
  • Reply 14 of 33
    pscatespscates Posts: 5,847member
    You know, I was going to start a thread in AppleOutsider about this very subject.



    How much sway and pull do the TV pundits and economists have?



    I mean, do people listen to them and NOT go and spend money because they hear all this talk about "slowing economy" and "recession". I'm not making LESS of a salary than I did six months ago, and neither are any of my friends or family members.



    Do people SAYING this stuff sometimes make it so? Do you know what I mean?



    All this talk in the past year about a slowing economy and so forth, THEN the September 11 attacks that were really supposed to do a number on things and how people went about the holidays and all, but holy crap...like applenut said, you wouldn't tell by simply looking around. I went to Target and to a mall yesterday and I had to practically park in the next county! I went to see "Heist" with Gene Hackman and I couldn't get a ticket! And that's not even a "Harry Potter" level of hype movie!



    I think the average person who DOESN'T subscribe to the Journal and doesn't base their life around trends and the stock market and has a ticker machine in their bathroom, etc. don't give two flying damns about what people SAY is "supposed" to be going on.



    If things ARE bad and slow, well you could've certainly fooled me. From what I saw yesterday, people were spending and consuming just as much and enjoying the ability to do so.



    If we all listened to the "experts" and took it to heart, the majority of us would've stayed home and not spent a dime on anything...then you end up with a self-fulfilling prophecy.



    Imagine if, putting all our trust and faith in those people, we actually let what they say matter so much or get into our heads to where we THINK we shouldn't be out spending and consuming!



    NOBODY I know - friends, co-workers, family members - are crowded around CNBC or CNNfn, trying to figure out how they're supposed to act and behave. If they WERE, then nothing would be purchased and things really would indeed be rather shitty, wouldn't they?



    Just my two cents...from an admittedly ignorant economic/financial standpoint.



    But some things just require a bit of common sense too...and often, that trumps the "experts" and the degrees all to hell.
  • Reply 15 of 33
    majormattmajormatt Posts: 1,077member
    Applenut, the economy aint that great, small business owners are feeling the pinch.
  • Reply 16 of 33
    [quote]In other words, would we see iBooks at the $1000 level? Would the base model Quicksilver be about $1200 or so? A $599 iMac?<hr></blockquote>



    Whenever Apple has reduced the price of its machines, it has experienced a massive jump in sales.



    After the stock price collapse of last fall, Apple was able to clear out 11 weeks of inventory in a matter of days with lower-priced hardware. Once it was cleared out, they raised prices back to what they were and then threw another $100 on top. Result: Apple didn't make any money selling computers the quarter after the price jump.



    iBook sales went up 182% with the introduction of the lower-priced models.



    Part of the problem is the price, which is too high to justify a purchase for many people. I lost count of the people I have heard say they would buy a Mac in a second if Apple would just drop the prices.



    Another, is the unbelieveably long period of time between meaningful updates. And we're not talking about an extra 50Mhz here, we're talking 100Mhz processor speed increases, new video cards, faster bus speeds, bigger displays, etc. These come too infrequently. There is usually a year between the kind of updates that PC makers do when the hardware is availible.



    The iMac that is on the shelves now, is almost exactly the same one introduced in the fall of 1999. That is simply unacceptable. The model wasn't even cutting edge back then. Even cheapo, crap PC vendors have leaped ahead. Apple seems content to make $400 MP3 players and repackaged $1000 optical drives it's top priority while everything else languishes.



    The few weak spots of a model are usually shrugged off by most people, but with Apple products, very little changes for years on end, and those minor weaknesses become embarassing flaws.
  • Reply 17 of 33
    pscatespscates Posts: 5,847member
    You said it. That's what I've been screaming about all along!



    As cool and loved as they are now, JUST IMAGINE if Apple's stuff was a bit more reasonably priced AND this practice of using yesterday's technology in their flagship products was remedied.



    Holy crap, they would absolutely rock.



    Here's the thing: I wouldn't even MIND paying the prices they current charge, IF the video card, resolution/screen size (in particular models), etc. were up to snuff.



    As it currently stands, though, you pay A LOT extra for stuff that was cutting edge or cool 12-18 months ago. I'm starting to come to that realization and it's honestly starting to bug me.



    I swear to God, it's a shame some of US aren't in charge there!







    Nothing should be smaller than 1024x768, nothing should be without a combo drive (or at least the option), no video card should be under 16MB, no hard drives under 20GB (maybe even 30?). Instead of screwing around with expensive gadgets that NOBODY ASKED FOR and trying to perfect lame-ass pattern injection processes that, again, NOBODY ASKED FOR, why don't they hunker down and make their four existing products (and their whole reason to exist, hardware-wise) the absolute, most kick-ass stuff on the planet. Make it so outrageously powerful and bitchin' that even the most die-hard, anti-Apple PC user has to honestly stop in his tracks and go "HOLY SHIT...look at this stuff from Apple!!! I'm getting one TODAY!".



    The iMac, in its current form factor and all, is so long in the tooth that it's almost painful. This once proud and mighty symbol of all that was cool and right with Apple is now treated, and looked at, as an afterthought.



    Man, I truly hope something is waiting in the wings. They've had plenty of time to redesign one that addresses all the gripes leveled at the iMac since day one.
  • Reply 18 of 33
    [quote]Originally posted by applenut:

    <strong>

    Which by the way brings up my question? What exactly IS wrong with the economy? What's so bad? Seems pretty normal to me. I guess people just got used to paying 350 dollars a share for a company that never made a profit.</strong><hr></blockquote>



    The world economy is in the tank. In good times the overall economy grows by a few per cent per year. This year things are retracting. Tens of thousands of workers are being laid off. Companies are going bankrupt. These are hard times.



    You may not see it yet in your young life but it is happening. Partly this is because the difference between recession and growth can be relatively small. For example, if you look at the shopping mall it may seem just as crowded as ever. But if the people are spending 10% less money than last year that is a disaster for the retailers.



    Gateway was loosing money so they pulled out of Asia and are getting out of Europe as fast as the can. Their employees are now out of work.



    I know of at least three or four semiconductor fabs that have been mothballed. No production is going on. Just a skeleton crew to maintain it. Think of the huge cost to build one of these and now the owners judged it is better not to run them. I have heard that fabs in Taiwan are running far below capacity. In the paper recently they said that in Japan industry is running at the lowest utilization rate since the late 1950s. And the companies and government in Japan have run up staggering levels of debt.
  • Reply 19 of 33
    applenutapplenut Posts: 5,768member
    [quote]Originally posted by neutrino23:

    <strong>



    The world economy is in the tank. In good times the overall economy grows by a few per cent per year. This year things are retracting. Tens of thousands of workers are being laid off. Companies are going bankrupt. These are hard times..</strong><hr></blockquote>



    it's tech companies and companies related to tech. for good reason.



    [quote]

    You may not see it yet in your young life but it is happening. Partly this is because the difference between recession and growth can be relatively small. For example, if you look at the shopping mall it may seem just as crowded as ever. But if the people are spending 10% less money than last year that is a disaster for the retailers.<hr></blockquote>



    I think this is more of a correction than a recession.



    [quote]

    I know of at least three or four semiconductor fabs that have been mothballed. No production is going on. Just a skeleton crew to maintain it. Think of the huge cost to build one of these and now the owners judged it is better not to run them. I have heard that fabs in Taiwan are running far below capacity. In the paper recently they said that in Japan industry is running at the lowest utilization rate since the late 1950s. And the companies and government in Japan have run up staggering levels of debt. <hr></blockquote>



    again, tech companies.
  • Reply 20 of 33
    applenutapplenut Posts: 5,768member
    [quote]For example, if you look at the shopping mall it may seem just as crowded as ever. But if the people are spending 10% less money than last year that is a disaster for the retailers.<hr></blockquote>



    thanksgiving weekend results are in

    consumers spent 2.3 percent more money nationwide than last year

    consumers in NYC spent 2.6 percent more money than last year.



    recession?
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