Second, and more likely, the battery replacement issue suggests that many people are no longer upgrading iPhones because they’re now “good enough” and everyone is more than happy to just pay a bit more for a better battery.
This is what I've been saying for a while. This combined with higher prices simply aggravates the problem.
Time to hit it again, this time with a shorter, simpler, and more focused (less chatty) story. The gross margin has not changed significantly since the iPhone/iPad-based Big Apple appeared. Prices go up because the components and technology increase in cost. Period.
Repeat the story until people here stop slavishly repeating that Apple is getting greedier in its pricing. Also repeat the Dilger-ish angle that Apple earns that 38% margin legitimately by investing massively in new silicon, hardware and software; it deserves the high 38% margin (but too high) by producing the finest mass consumer devices ever produced anywhere by any company. Period again.
Edit: And they need to hold on the the hard-earned cash they amass for times like this, and to move into new monster markets like wearable 3D displays, AI, AR, and the biggest market of all, intelligence-augmented mobility, e.g., self-driving cars.
If component costs are going up and thus increasing the price of the product that’s an issue is it not? The fact that Apple was pushing the trade-in program hard is all the proof we need that they weren’t seeing the upgrades they expected. Tim Cook even admitted this in his letter:
While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be. While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements.
That sentence can be boiled down to some people are balking at the price of new iPhones. What Apple’s gross margins are doesn’t matter if the end price is too high for some consumers and they end up not upgrading.
I’m only addressing the “Apple is greedy for raising prices” meme. Their margins remain about the same year after year, and they seem to be locked in to the need for that margin. I don’t see the greed.
Whether people will buy or be able to buy the better technology for a higher price is a separate issue. Apple may decide to make more more-affordable devices in the future to adjust to a new damaged economy, if that’s what we have. But probably at similar margins.
Second, and more likely, the battery replacement issue suggests that many people are no longer upgrading iPhones because they’re now “good enough” and everyone is more than happy to just pay a bit more for a better battery.
This is what I've been saying for a while. This combined with higher prices simply aggravates the problem.
Time to hit it again, this time with a shorter, simpler, and more focused (less chatty) story. The gross margin has not changed significantly since the iPhone/iPad-based Big Apple appeared. Prices go up because the components and technology increase in cost. Period.
Repeat the story until people here stop slavishly repeating that Apple is getting greedier in its pricing. Also repeat the Dilger-ish angle that Apple earns that 38% margin legitimately by investing massively in new silicon, hardware and software; it deserves the high 38% margin (but too high) by producing the finest mass consumer devices ever produced anywhere by any company. Period again.
Edit: And they need to hold on the the hard-earned cash they amass for times like this, and to move into new monster markets like wearable 3D displays, AI, AR, and the biggest market of all, intelligence-augmented mobility, e.g., self-driving cars.
If component costs are going up and thus increasing the price of the product that’s an issue is it not? The fact that Apple was pushing the trade-in program hard is all the proof we need that they weren’t seeing the upgrades they expected. Tim Cook even admitted this in his letter:
While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be. While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements.
That sentence can be boiled down to some people are balking at the price of new iPhones. What Apple’s gross margins are doesn’t matter if the end price is too high for some consumers and they end up not upgrading.
I’m only addressing the “Apple is greedy for raising prices” meme. Their margins remain about the same year after year, and they seem to be locked in to the need for that margin. I don’t see the greed.
Whether people will buy or be able to buy the better technology for a higher price is a separate issue. Apple may decide to make more more-affordable devices in the future to adjust to a new damaged economy, if that’s what we have. But probably at similar margins.
But the average consumer doesn’t (and shouldn’t have to) know anything about Apple’s margins. All they see is the newest iPhone used to start at $649 now it’s $999 and $749. Someone sees a price increase of $350 and to them that’s greed. Maybe that’s unfair and I’m not sure how Apple would communicate as I doubt any Apple exec wants to be talking about prices.
Second, and more likely, the battery replacement issue suggests that many people are no longer upgrading iPhones because they’re now “good enough” and everyone is more than happy to just pay a bit more for a better battery.
This is what I've been saying for a while. This combined with higher prices simply aggravates the problem.
Time to hit it again, this time with a shorter, simpler, and more focused (less chatty) story. The gross margin has not changed significantly since the iPhone/iPad-based Big Apple appeared. Prices go up because the components and technology increase in cost. Period.
Repeat the story until people here stop slavishly repeating that Apple is getting greedier in its pricing. Also repeat the Dilger-ish angle that Apple earns that 38% margin legitimately by investing massively in new silicon, hardware and software; it deserves the high 38% margin (but too high) by producing the finest mass consumer devices ever produced anywhere by any company. Period again.
Edit: And they need to hold on the the hard-earned cash they amass for times like this, and to move into new monster markets like wearable 3D displays, AI, AR, and the biggest market of all, intelligence-augmented mobility, e.g., self-driving cars.
If component costs are going up and thus increasing the price of the product that’s an issue is it not? The fact that Apple was pushing the trade-in program hard is all the proof we need that they weren’t seeing the upgrades they expected. Tim Cook even admitted this in his letter:
While Greater China and other emerging markets accounted for the vast majority of the year-over-year iPhone revenue decline, in some developed markets, iPhone upgrades also were not as strong as we thought they would be. While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements.
That sentence can be boiled down to some people are balking at the price of new iPhones. What Apple’s gross margins are doesn’t matter if the end price is too high for some consumers and they end up not upgrading.
I’m only addressing the “Apple is greedy for raising prices” meme. Their margins remain about the same year after year, and they seem to be locked in to the need for that margin. I don’t see the greed.
Whether people will buy or be able to buy the better technology for a higher price is a separate issue. Apple may decide to make more more-affordable devices in the future to adjust to a new damaged economy, if that’s what we have. But probably at similar margins.
But the average consumer doesn’t (and shouldn’t have to) know anything about Apple’s margins. All they see is the newest iPhone used to start at $649 now it’s $999 and $749. Someone sees a price increase of $350 and to them that’s greed. Maybe that’s unfair and I’m not sure how Apple would communicate as I doubt any Apple exec wants to be talking about prices.
Again, I’m not talking about average consumers. It’s the clowns on this and in other tech threads who throw around the greed nonsense about Apple’s pricing.
Yes, there should be a common understanding that we are paying for R&D on materials, software, production engineering, etc., along with higher priced components, while Apple’s margins remain the same or are actually lower on the latest generation of products. I’m surprised that it’s taken this long for Gruber and that guy on Twitter to start talking about profit margin consistency.
Comments
Whether people will buy or be able to buy the better technology for a higher price is a separate issue. Apple may decide to make more more-affordable devices in the future to adjust to a new damaged economy, if that’s what we have. But probably at similar margins.
Yes, there should be a common understanding that we are paying for R&D on materials, software, production engineering, etc., along with higher priced components, while Apple’s margins remain the same or are actually lower on the latest generation of products. I’m surprised that it’s taken this long for Gruber and that guy on Twitter to start talking about profit margin consistency.