Cook has stated, in answer to the phone pricing question, that Apple has nothing against cheaper phones, and if they figure out how to make one that gives the Apple experience in a cheaper phone, they will make one. I agree.
I agree, too.
But they could do it immediately by reducing margins from an insane (relative to the rest of the industry) 40+%.
Yet doing so would not only lessen their profit per device, it would also reduce the perceived value of the product by pricing it into a different market.
But they could do it immediately by reducing margins from an insane (relative to the rest of the industry) 40+%.
Yet doing so would not only lessen their profit per device, it would also reduce the perceived value of the product by pricing it into a different market.
So they don't.
Understand margins. Are you talking about gross margins, operating margins, or net margins, which is actual profit? It's not likely that Apple makes a 40% net on their phones. I was an electronics manufacturer, and Apple's pricing seems right to me. Ignore the things you read from iSupply and others. What they say is nonsense. Even assuming that their parts pricing is correct, and I can pretty much guarantee it's not, selling prices for products are normally from between 2.5 to 3.5 times the price of parts.
In reality, if Apple were to cut prices and maintain good net margins, they couldn't go much below a 5% cut globally. Samsung, the only other large phone manufacturer to make a profit, has the same margins on its higher level models. Everyone else is losing money. Is that what you want?
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For both of you guys:
Cook has stated, in answer to the phone pricing question, that Apple has nothing against cheaper phones, and if they figure out how to make one that gives the Apple experience in a cheaper phone, they will make one. I agree.
I agree, too.
But they could do it immediately by reducing margins from an insane (relative to the rest of the industry) 40+%.
Yet doing so would not only lessen their profit per device, it would also reduce the perceived value of the product by pricing it into a different market.
So they don't.
Understand margins. Are you talking about gross margins, operating margins, or net margins, which is actual profit? It's not likely that Apple makes a 40% net on their phones. I was an electronics manufacturer, and Apple's pricing seems right to me. Ignore the things you read from iSupply and others. What they say is nonsense. Even assuming that their parts pricing is correct, and I can pretty much guarantee it's not, selling prices for products are normally from between 2.5 to 3.5 times the price of parts.
In reality, if Apple were to cut prices and maintain good net margins, they couldn't go much below a 5% cut globally. Samsung, the only other large phone manufacturer to make a profit, has the same margins on its higher level models. Everyone else is losing money. Is that what you want?
In fact, the first thing I wrote in the reply you just quoted is that I agree with you.