Quite true but Android is gaining more market share (worldwide) year over year and and Apple needs to react. You can already see it as they are speeding up their release cycle for their phones/tablets because they will not be able to keep up if they only release a new product ever 12 months. They also realize that they are ignoring a pretty big (but not as profitable) segment of the market. The mid-low end. Granted, they take care of the mid range with their 4 and 4S offerings but those phones are quite small and while it appears there are quite a few people on this site that think the 3.5" screens are perfect (or were until they got their hands on a 4" screen), there are a lot of people who have been enjoying 4" + screens for over 3 years now.
Apple needs to go after the lower end market because someday, the people who are buying the lower end phones are going to graduate into something bigger and if that person likes the eco-system that they were brought up on, chances are they may not change.
I see a lot of purists on here who want Apple to remain the true to their roots in that they only make top notch products but I think that dream is over. We've seen a pretty big decline in the quality of their hardware/software as the company has grown into the titan it is today and to think it will go back to the way it was before is a bit naive I think. When you get that big, things falls through the cracks. It is inevitable. I'm not Apple's biggest fan but I think they are making a good move here from a long term business perspective albeit they are going to p*ss off their oldest and most supportive customers (a lot of you on this forum) with some of their decisions.
yup. but it's just not about market share per se. "pundits" that focus on that are simpletons. everyone hung up on that just doesn't get business. it's about Apple generating as much revenue from its iOS phone line as it can. and keeping its high profit margin at the same time. that combination = the optimal "bottom line" profit total.
(and in most businesses, btw, market share is measured by total revenues generated, not by unit sales. because revenues are obviously more important. do movie studios report movie box office revenues, or tickets sold? how does the smartphone market stack up when measured by revenues? don't ask the "pundits," 'cause they can't figure that out.)
so chasing unit market share by reducing margins is dumb for Apple. that is the famous "race to the bottom" where you lose fatally if you win it.
but offering just one model (plus discounted older models) doesn't maximize revenues either. because there are other cell phone market segments Apple can target with different models while retaining its high margins. the "lite" iPhone makes sense that way. and maybe so does a 5"+ maxi too, we'll see.
the other incentive for Apple to offer several models of the iPhone is to expand its overall total iOS installed base - its ecosystem users. that is a solid long term strategy to "cross sell" new iPhone users with other Apple products, and it clearly is working in real life too.
The larger form factor will definitely make the cost to produce less, especially considering the manufacturing difficulties I have read about with the iPhone 5.
I think it's right for Apple to increase the variations, they've kept their precious exclusive high end offering for as long as they can get away with it but because of the relatively vast amount of Android products available iOS dominance is a thing of the past. I firmly believe that most people that I know would definitely rather be able to say "I have an iPhone/iPad" so all Apple need to do is increase the product options so the Apple brand is accessible to more people.
It's all very well offering older models as the discount option but in people's minds they're still buying something old Vs. something new, regardless of how good it is or isn't.
are you kidding? the future of small device iOS is plainly 16:9. the 2012 iPhone 5 and iPod touch made that move already. it's a done deal. it's plainly irrevocable. all new apps are being optimized for that screen aspect, and old ones updated for it. (while the iPads remain at 4:3).
and the whole point of a new iPhone lite or whatever it's called would be Apple would cease selling the older iPhones entirely. instead it would always have a "brand new" product to offer at that lower price tier (but same profit margin). that obviously is a stronger market position than offering "last year's model at a discount"
I agree with most of everything you said but I don't think they're going to give this low end phone the same 4 inch screen that's on the iPhone 5.
If they did then who would buy an iPhone 5 for twice the price when the iPhone lite you speak of is pretty much the same thing for cheaper.
Although you may not agree, screen size could be a differentiating factor between the cheaper iPhone and the iPhone 5.
Mind you most cheap androids sold in Asia that analyst want Apple to compete against have 3 inch screens and specs barely better than the 2008 iPhone 3G...
Apple already has a better 3.5 inch screen and 700,000 apps that "just work" with it.
Agreed. The screen is probably the most expensive component. So how could it be a larger screen AND a cheaper price? Makes no sense.
And why would anyone even want a 5" screen. Apple's already made a big deal about how they purposely didn't increase the width of the screen so it still could be easily held.
Actually 5" is pretty handy and people seem to like them as the Samsung Galaxy Note 2 is a very popular phone now. HTC, Sony, Huawei, so, well pretty much everyone will have a 5" by end of the year . I'm sure if Apple released one as well the lines would be around the block to purchase one. Just because you might not think it a viable solution doesn't mean there aren't those who do, I remember not to long ago a bunch of you were screaming how big 4" was.
To be fair... the iPad mini is a product on its own... with its own prices and margins. And we don't know yet how the iPad mini has affected sales of the bigger iPads.
A product on its own certainly but it is rather already clear that it do cannibalizes the bigger iPad sales, which is logical when you diversify your product line. My point was that they did lowered their product profit margin for market share, launching an iPad mini -against initial claimed wishes/"dogma" ^^p- to counter what was seen as the rising threat of part of the tablet market share left to the nexus 7 and other kindle fire.
I don't know but I keep hearing about how the Asian markets love the size of the Galaxy Note and other such devices because they can have a decent tablet that is still easy to travel with and doubles as a phone.
Asian markets love the price of the Galaxy Note which can be had for around $500 USD. iP5 starts around $649 and goes up to $849 for more memory (no the carriers in China don't subsidize, the Chinese have to pay full bulk). I don't have the facts, but generally prices in China are a little more than in U.S. so take that into consideration. It was like that for electronics I was looking for when I was in China in 08, generally about 10% more expensive.
I don't have any info on the Apple App store in China. U.S. devs focus on the U.S. market. How many Angry Birds games have been translated into Chinese? Yes there are 700k+apps in the App Store but they are all in english.
A product on its own certainly but it is rather already clear that it do cannibalizes the bigger iPad sales, which is logical when you diversify your product line. My point was that they did lowered their product profit margin for market share, launching an iPad mini -against initial claimed wishes/"dogma" ^^p- to counter what was seen as the rising threat of part of the tablet market share left to the nexus 7 and other kindle fire.
I've never seen Apple come out with a product to counter a threat. When Apple came out with the Mac in 1983 it wasn't in response to a competitor. When Apple came out with iPod it wasn't because someone else was threatening their turf. When Apple came out with iPhone in 2007 it wasn't because their market share in the mobile space was being threatened. When Apple came out with iPad in 2010 it wasn't because of a competitor. I hope you can guess what I have to say about iPad Mini.
People don't understand Apple. They do what they do because they want to do it. They don't price their product according to what competitors charge. Why do you think they priced the mini at $329? Does $329 sound competitive to the $199 Kindle? Does $329 sound competive with the $199 Nexus 7?
Apple didn't come out with the Mini to compete with competitors. They came out with the Mini because they thought it as a good idea to offer a smaller tablet, and they gave it a premium price like they do all their products. People can't fathom this. An average company will kowtow to competitors, to shareholders, and become slaves to these entities. They will offer competing products at competing prices and work hard to maintain share price. Apple doesn't work this way.
It seems to me that a mini iPhone is much more likely.
In this way Apple adds a useful new product category no one has at the moment (remember small and ultra small was all the craze just before the start of the smartphone) and is able to reduce the price.
It will make the extra large sPhones look extremely ridiculous, like the walkie-talkie phones of the '70s.
Mind you most cheap androids sold in Asia that analyst want Apple to compete against have 3 inch screens and specs barely better than the 2008 iPhone 3G...
Those low end models are also far more affordable by being in the ~ $125 range.
Quote:
Originally Posted by White Lotus
Asian markets love the price of the Galaxy Note which can be had for around $500 USD. iP5 starts around $649 and goes up to $849 for more memory ...
Good point. Apple charges a huge premium for more storage. With other phones, the user can often pop in an additional 32GB for under $30.
I'll believe this if/when I see it. As others have pointed out Apple doesn't do things because they feel threatened by others. If they did we'd have a 5" iPhone and a $199 plastic mini. I don't think Cook and Co. can completely ignore market share, especially in emerging markets. But I don't think building a cheap plastic phone is the way to do it. That's basically throwing Apple's brand right out the window.
I don't think it's Cuppertino freaking out about Samsung or anyone else. I think it's the nervous nellies on Wall Street that are. They're the ones pushing this idea that Apple has to do a cheap iPhone. But lets not forget they're also the ones who said Apple had to do a cheap tablet and thought the mini was too expensive. My guess is in two weeks they'll have to est their words on the one.
Again I'll believe this if/when I see it. This isn't the first time the WJS has pushed this rumor.
I don't understand this. We have the iPhone 5 as the current generation, and Apple sells the iPhone 4S and iPhone 4 if you want cheaper alternatives. It seems to work well.
Why reinvent the wheel?
Because the high end market has saturated. Growth is in the low to mid range now. Of course of you dont care about Apple growth you wont understand. And 450$ for a 8g iphone 4 is very very expensive.
Personnaly i hate that Apple only has one phone. With 70% of its profit coming out of the iphone, if they mess up an upgrade it could cut the sotck price in half in s heartbeat. And Apple is losing its shine, its not adapting to new market needs.
I've never seen Apple come out with a product to counter a threat. When Apple came out with the Mac in 1983 it wasn't in response to a competitor. When Apple came out with iPod it wasn't because someone else was threatening their turf. When Apple came out with iPhone in 2007 it wasn't because their market share in the mobile space was being threatened. When Apple came out with iPad in 2010 it wasn't because of a competitor. I hope you can guess what I have to say about iPad Mini.
People don't understand Apple. They do what they do because they want to do it. They don't price their product according to what competitors charge. Why do you think they priced the mini at $329? Does $329 sound competitive to the $199 Kindle? Does $329 sound competive with the $199 Nexus 7?
Apple didn't come out with the Mini to compete with competitors. They came out with the Mini because they thought it as a good idea to offer a smaller tablet, and they gave it a premium price like they do all their products. People can't fathom this. An average company will kowtow to competitors, to shareholders, and become slaves to these entities. They will offer competing products at competing prices and work hard to maintain share price. Apple doesn't work this way.
Nonsense. In the absence of any 7 inch tablet competition there is no way that Apple would have introduced a 7 inch tablet. They reacted to competition there. Clearly. They don't have to match prices initially, but they will fall over time.
Its a platform war. Forget present day profits. Apple wants to win, or maintain, its market share.
Quite true but Android is gaining more market share (worldwide) year over year and and Apple needs to react. You can already see it as they are speeding up their release cycle for their phones/tablets because they will not be able to keep up if they only release a new product ever 12 months. They also realize that they are ignoring a pretty big (but not as profitable) segment of the market. The mid-low end. Granted, they take care of the mid range with their 4 and 4S offerings but those phones are quite small and while it appears there are quite a few people on this site that think the 3.5" screens are perfect (or were until they got their hands on a 4" screen), there are a lot of people who have been enjoying 4" + screens for over 3 years now.
Apple needs to go after the lower end market because someday, the people who are buying the lower end phones are going to graduate into something bigger and if that person likes the eco-system that they were brought up on, chances are they may not change.
I see a lot of purists on here who want Apple to remain the true to their roots in that they only make top notch products but I think that dream is over. We've seen a pretty big decline in the quality of their hardware/software as the company has grown into the titan it is today and to think it will go back to the way it was before is a bit naive I think. When you get that big, things falls through the cracks. It is inevitable. I'm not Apple's biggest fan but I think they are making a good move here from a long term business perspective albeit they are going to p*ss off their oldest and most supportive customers (a lot of you on this forum) with some of their decisions.
Android is certainly gaining market share worldwide. But that could be the result of those crappy $100 unlocked phones in developing countries... phones that make little to no money for the manufacturer. (and don't forget... the total market itself is growing too)
Some of those customers don't buy a lot of apps or even use their phone as a smartphone... so they aren't getting used to the Android ecosystem. They just need "a phone" and Android is there.
I've seen plenty of people in the US who started with a "Droid" a couple years ago and who eventually graduated to an iPhone today. And these are mid to upper class people.
You can't tell me that all those people in poor countries are so in love with their crappy Android phone that they'll never consider switching to a competing platform.
I understand what you're saying... hook 'em early. But i don't think Android (especially on garbage phones) is very sticky.
And there's one more thing. Android is a platform... but Apple sells phones. Apple is, and has always been, a hardware company. They make their money on the hardware itself.
So... should Apple release a cheaper iPhone for developing countries that has a tiny margin... with the hopes that someday a customer will graduate to the $600 iPhone?
Android is certainly gaining market share worldwide. But that could be the result of those crappy $100 unlocked phones in developing countries... phones that make little to no money for the manufacturer. (and don't forget... the total market itself is growing too)
Some of those customers don't buy a lot of apps or even use their phone as a smartphone... so they aren't getting used to the Android ecosystem. They just need "a phone" and Android is there.
I've seen plenty of people in the US who started with a "Droid" a couple years ago and who eventually graduated to an iPhone today. And these are mid to upper class people.
You can't tell me that all those people in poor countries are so in love with their crappy Android phone that they'll never consider switching to a competing platform.
I understand what you're saying... hook 'em early. But i don't think Android (especially on garbage phones) is very sticky.
And there's one more thing. Android is a platform... but Apple sells phones. Apple is, and has always been, a hardware company. They make their money on the hardware itself.
So... should Apple release a cheaper iPhone for developing countries that has a tiny margin... with the hopes that someday a customer will graduate to the $600 iPhone?
I dunno. That seems like a bad gamble.
It isn't. Lets forensically analyze this:
Disadvantages of cheap iPhone:
1) It reduces margins.
Advantages of cheaper iPhones
1) It probably won't reduce over all profit as volume will compensate for margins.
2) It increases the market share of what is in fact a platform - iOS.
3) Multiple product upgrades a year allows Apple to compete with new Android models more rapidly.
4) It reduces the impact of bad quarters - those two quarters prior to the Big Launch of a new iPhone.
5) It reduces the risk of a bad, or mediocre, upgrade to the high end phone causing a collapse in revenue. ( think manufacturing snafus etc.)
Since the disadvantage is in fact eliminated by the first advantage, there are really no dis-advantages.
[1] An important aspect of this user experience, at least for AAPL's economics, is that it extends over multiple products. The chart below, from a Goldman Sachs survey in May 2012, show the lift to loyalty if customers own multiple devices. Of the customers owning a single device, 62% say they are highly likely to purchase another AAPL device; this figure increases to 75% for customers who already own 2 or more devices.
[2] This huge number suggests that Apple is making considerable amount of money ($3 billion) by hosting these 775,000+ growing applications at its app store. This clearly shows a trend towards applications becoming the mainstay of Apple's flexing power. Though many of these apps are free, they feature advertisements, which generate revenue for both Apple and its developers. ( Thats just apps though, they also make money from videos, music, TV and Movies)
I see a lot of purists on here who want Apple to remain the true to their roots in that they only make top notch products but I think that dream is over. We've seen a pretty big decline in the quality of their hardware/software as the company has grown into the titan it is today and to think it will go back to the way it was before is a bit naive I think. When you get that big, things falls through the cracks. It is inevitable. I'm not Apple's biggest fan but I think they are making a good move here from a long term business perspective albeit they are going to p*ss off their oldest and most supportive customers (a lot of you on this forum) with some of their decisions.
The people on here - myself included - are generally All Apple. My phone, tablet and every computer I ever owned is Apple. Its a small market, and we don't matter. You can see comments on here about how Apple did fine selling computers with small market share - that's wanting to be a niche player. Apple, as it happens, nearly died out in the late 90's. Had it not purchased NEXT it would have died out, although the brand might have survived, probably producing Windows devices.
But the subset of people on here who liked that small market are a tiny fraction of Apple's existing market, and a tinier percentage of their potential market.
We have previous versions of the iphone for $99. How cheap do you want? It's the phone plans that are killing us, not the cost of the phone. (Curious what the Tmobile plan will be with their unsubsidized iphone plans...)
You can't tell me that all those people in poor countries are so in love with their crappy Android phone that they'll never consider switching to a competing platform.
You know there are some of us who don't live in a third world country that find Android to be the better platform. I realize this is an Apple forum and a certain militant attitude towards the competition is warranted but the negative adjectives get old after a while.
Its a platform war. Forget present day profits. Apple wants to win, or maintain, its market share.
I think Apple has already proven that you can have a tiny percentage of market share... and still make crazy profits.
Why? Because Apple sells hardware. And for the time being... rather expensive hardware. That's where profits come from.
Android has 75% smartphone market share right now... but I have yet to see much good come from that.
There are so many Android phones out in the world. With all that market share... developers should be making more money from Android than iOS. And the Google music store should be selling more songs than iTunes. And Google should be making more money from ads on Android.
But they're not.
Again... I haven't seen the result of Android having all that market share. The platform isn't doing as well as you think it is... other than having that larger number on the market share chart. (which is really a false trophy)
Some say Android is "winning" the platform war.... but I have yet to see it.
Comments
Quote:
Originally Posted by zippy2shoes
Quite true but Android is gaining more market share (worldwide) year over year and and Apple needs to react. You can already see it as they are speeding up their release cycle for their phones/tablets because they will not be able to keep up if they only release a new product ever 12 months. They also realize that they are ignoring a pretty big (but not as profitable) segment of the market. The mid-low end. Granted, they take care of the mid range with their 4 and 4S offerings but those phones are quite small and while it appears there are quite a few people on this site that think the 3.5" screens are perfect (or were until they got their hands on a 4" screen), there are a lot of people who have been enjoying 4" + screens for over 3 years now.
Apple needs to go after the lower end market because someday, the people who are buying the lower end phones are going to graduate into something bigger and if that person likes the eco-system that they were brought up on, chances are they may not change.
I see a lot of purists on here who want Apple to remain the true to their roots in that they only make top notch products but I think that dream is over. We've seen a pretty big decline in the quality of their hardware/software as the company has grown into the titan it is today and to think it will go back to the way it was before is a bit naive I think. When you get that big, things falls through the cracks. It is inevitable. I'm not Apple's biggest fan but I think they are making a good move here from a long term business perspective albeit they are going to p*ss off their oldest and most supportive customers (a lot of you on this forum) with some of their decisions.
yup. but it's just not about market share per se. "pundits" that focus on that are simpletons. everyone hung up on that just doesn't get business. it's about Apple generating as much revenue from its iOS phone line as it can. and keeping its high profit margin at the same time. that combination = the optimal "bottom line" profit total.
(and in most businesses, btw, market share is measured by total revenues generated, not by unit sales. because revenues are obviously more important. do movie studios report movie box office revenues, or tickets sold? how does the smartphone market stack up when measured by revenues? don't ask the "pundits," 'cause they can't figure that out.)
so chasing unit market share by reducing margins is dumb for Apple. that is the famous "race to the bottom" where you lose fatally if you win it.
but offering just one model (plus discounted older models) doesn't maximize revenues either. because there are other cell phone market segments Apple can target with different models while retaining its high margins. the "lite" iPhone makes sense that way. and maybe so does a 5"+ maxi too, we'll see.
the other incentive for Apple to offer several models of the iPhone is to expand its overall total iOS installed base - its ecosystem users. that is a solid long term strategy to "cross sell" new iPhone users with other Apple products, and it clearly is working in real life too.
The larger form factor will definitely make the cost to produce less, especially considering the manufacturing difficulties I have read about with the iPhone 5.
I think it's right for Apple to increase the variations, they've kept their precious exclusive high end offering for as long as they can get away with it but because of the relatively vast amount of Android products available iOS dominance is a thing of the past. I firmly believe that most people that I know would definitely rather be able to say "I have an iPhone/iPad" so all Apple need to do is increase the product options so the Apple brand is accessible to more people.
It's all very well offering older models as the discount option but in people's minds they're still buying something old Vs. something new, regardless of how good it is or isn't.
I agree with most of everything you said but I don't think they're going to give this low end phone the same 4 inch screen that's on the iPhone 5.
If they did then who would buy an iPhone 5 for twice the price when the iPhone lite you speak of is pretty much the same thing for cheaper.
Although you may not agree, screen size could be a differentiating factor between the cheaper iPhone and the iPhone 5.
Mind you most cheap androids sold in Asia that analyst want Apple to compete against have 3 inch screens and specs barely better than the 2008 iPhone 3G...
Apple already has a better 3.5 inch screen and 700,000 apps that "just work" with it.
Quote:
Originally Posted by zoetmb
Agreed. The screen is probably the most expensive component. So how could it be a larger screen AND a cheaper price? Makes no sense.
And why would anyone even want a 5" screen. Apple's already made a big deal about how they purposely didn't increase the width of the screen so it still could be easily held.
Actually 5" is pretty handy and people seem to like them as the Samsung Galaxy Note 2 is a very popular phone now. HTC, Sony, Huawei, so, well pretty much everyone will have a 5" by end of the year . I'm sure if Apple released one as well the lines would be around the block to purchase one. Just because you might not think it a viable solution doesn't mean there aren't those who do, I remember not to long ago a bunch of you were screaming how big 4" was.
Quote:
Originally Posted by SolipsismX
I don't know but I keep hearing about how the Asian markets love the size of the Galaxy Note and other such devices because they can have a decent tablet that is still easy to travel with and doubles as a phone.
Asian markets love the price of the Galaxy Note which can be had for around $500 USD. iP5 starts around $649 and goes up to $849 for more memory (no the carriers in China don't subsidize, the Chinese have to pay full bulk). I don't have the facts, but generally prices in China are a little more than in U.S. so take that into consideration. It was like that for electronics I was looking for when I was in China in 08, generally about 10% more expensive.
I don't have any info on the Apple App store in China. U.S. devs focus on the U.S. market. How many Angry Birds games have been translated into Chinese? Yes there are 700k+apps in the App Store but they are all in english.
Quote:
Originally Posted by Sensi
A product on its own certainly but it is rather already clear that it do cannibalizes the bigger iPad sales, which is logical when you diversify your product line. My point was that they did lowered their product profit margin for market share, launching an iPad mini -against initial claimed wishes/"dogma" ^^p- to counter what was seen as the rising threat of part of the tablet market share left to the nexus 7 and other kindle fire.
I've never seen Apple come out with a product to counter a threat. When Apple came out with the Mac in 1983 it wasn't in response to a competitor. When Apple came out with iPod it wasn't because someone else was threatening their turf. When Apple came out with iPhone in 2007 it wasn't because their market share in the mobile space was being threatened. When Apple came out with iPad in 2010 it wasn't because of a competitor. I hope you can guess what I have to say about iPad Mini.
People don't understand Apple. They do what they do because they want to do it. They don't price their product according to what competitors charge. Why do you think they priced the mini at $329? Does $329 sound competitive to the $199 Kindle? Does $329 sound competive with the $199 Nexus 7?
Apple didn't come out with the Mini to compete with competitors. They came out with the Mini because they thought it as a good idea to offer a smaller tablet, and they gave it a premium price like they do all their products. People can't fathom this. An average company will kowtow to competitors, to shareholders, and become slaves to these entities. They will offer competing products at competing prices and work hard to maintain share price. Apple doesn't work this way.
It seems to me that a mini iPhone is much more likely.
In this way Apple adds a useful new product category no one has at the moment (remember small and ultra small was all the craze just before the start of the smartphone) and is able to reduce the price.
It will make the extra large sPhones look extremely ridiculous, like the walkie-talkie phones of the '70s.
J.
Quote:
Originally Posted by blackbook
Mind you most cheap androids sold in Asia that analyst want Apple to compete against have 3 inch screens and specs barely better than the 2008 iPhone 3G...
Those low end models are also far more affordable by being in the ~ $125 range.
Quote:
Originally Posted by White Lotus
Asian markets love the price of the Galaxy Note which can be had for around $500 USD. iP5 starts around $649 and goes up to $849 for more memory ...
Good point. Apple charges a huge premium for more storage. With other phones, the user can often pop in an additional 32GB for under $30.
I don't think it's Cuppertino freaking out about Samsung or anyone else. I think it's the nervous nellies on Wall Street that are. They're the ones pushing this idea that Apple has to do a cheap iPhone. But lets not forget they're also the ones who said Apple had to do a cheap tablet and thought the mini was too expensive. My guess is in two weeks they'll have to est their words on the one.
Again I'll believe this if/when I see it. This isn't the first time the WJS has pushed this rumor.
Because the high end market has saturated. Growth is in the low to mid range now. Of course of you dont care about Apple growth you wont understand. And 450$ for a 8g iphone 4 is very very expensive.
Personnaly i hate that Apple only has one phone. With 70% of its profit coming out of the iphone, if they mess up an upgrade it could cut the sotck price in half in s heartbeat. And Apple is losing its shine, its not adapting to new market needs.
Quote:
Originally Posted by White Lotus
I've never seen Apple come out with a product to counter a threat. When Apple came out with the Mac in 1983 it wasn't in response to a competitor. When Apple came out with iPod it wasn't because someone else was threatening their turf. When Apple came out with iPhone in 2007 it wasn't because their market share in the mobile space was being threatened. When Apple came out with iPad in 2010 it wasn't because of a competitor. I hope you can guess what I have to say about iPad Mini.
People don't understand Apple. They do what they do because they want to do it. They don't price their product according to what competitors charge. Why do you think they priced the mini at $329? Does $329 sound competitive to the $199 Kindle? Does $329 sound competive with the $199 Nexus 7?
Apple didn't come out with the Mini to compete with competitors. They came out with the Mini because they thought it as a good idea to offer a smaller tablet, and they gave it a premium price like they do all their products. People can't fathom this. An average company will kowtow to competitors, to shareholders, and become slaves to these entities. They will offer competing products at competing prices and work hard to maintain share price. Apple doesn't work this way.
Nonsense. In the absence of any 7 inch tablet competition there is no way that Apple would have introduced a 7 inch tablet. They reacted to competition there. Clearly. They don't have to match prices initially, but they will fall over time.
Its a platform war. Forget present day profits. Apple wants to win, or maintain, its market share.
Android is certainly gaining market share worldwide. But that could be the result of those crappy $100 unlocked phones in developing countries... phones that make little to no money for the manufacturer. (and don't forget... the total market itself is growing too)
Some of those customers don't buy a lot of apps or even use their phone as a smartphone... so they aren't getting used to the Android ecosystem. They just need "a phone" and Android is there.
I've seen plenty of people in the US who started with a "Droid" a couple years ago and who eventually graduated to an iPhone today. And these are mid to upper class people.
You can't tell me that all those people in poor countries are so in love with their crappy Android phone that they'll never consider switching to a competing platform.
I understand what you're saying... hook 'em early. But i don't think Android (especially on garbage phones) is very sticky.
And there's one more thing. Android is a platform... but Apple sells phones. Apple is, and has always been, a hardware company. They make their money on the hardware itself.
So... should Apple release a cheaper iPhone for developing countries that has a tiny margin... with the hopes that someday a customer will graduate to the $600 iPhone?
I dunno. That seems like a bad gamble.
Quote:
Originally Posted by Michael Scrip
Android is certainly gaining market share worldwide. But that could be the result of those crappy $100 unlocked phones in developing countries... phones that make little to no money for the manufacturer. (and don't forget... the total market itself is growing too)
Some of those customers don't buy a lot of apps or even use their phone as a smartphone... so they aren't getting used to the Android ecosystem. They just need "a phone" and Android is there.
I've seen plenty of people in the US who started with a "Droid" a couple years ago and who eventually graduated to an iPhone today. And these are mid to upper class people.
You can't tell me that all those people in poor countries are so in love with their crappy Android phone that they'll never consider switching to a competing platform.
I understand what you're saying... hook 'em early. But i don't think Android (especially on garbage phones) is very sticky.
And there's one more thing. Android is a platform... but Apple sells phones. Apple is, and has always been, a hardware company. They make their money on the hardware itself.
So... should Apple release a cheaper iPhone for developing countries that has a tiny margin... with the hopes that someday a customer will graduate to the $600 iPhone?
I dunno. That seems like a bad gamble.
It isn't. Lets forensically analyze this:
Disadvantages of cheap iPhone:
1) It reduces margins.
Advantages of cheaper iPhones
1) It probably won't reduce over all profit as volume will compensate for margins.
2) It increases the market share of what is in fact a platform - iOS.
3) Multiple product upgrades a year allows Apple to compete with new Android models more rapidly.
4) It reduces the impact of bad quarters - those two quarters prior to the Big Launch of a new iPhone.
5) It reduces the risk of a bad, or mediocre, upgrade to the high end phone causing a collapse in revenue. ( think manufacturing snafus etc.)
6) It increases the number of people with 2 or more devices - which makes them much stickier see Seeking Alpha here. ( http://seekingalpha.com/article/1099961-apple-margin-pricing-and-product-strategy) [1]
7) It locks people into the system early and gets them for life ( at the cost of reduced margins now) - increasing Apples monetization of apps, videos and music over time, which is a growing component of Apple's business model ( see here: http://seekingalpha.com/article/1102111-app-monetization-drives-revenue-growth-for-apple).[2]
Since the disadvantage is in fact eliminated by the first advantage, there are really no dis-advantages.
[1] An important aspect of this user experience, at least for AAPL's economics, is that it extends over multiple products. The chart below, from a Goldman Sachs survey in May 2012, show the lift to loyalty if customers own multiple devices. Of the customers owning a single device, 62% say they are highly likely to purchase another AAPL device; this figure increases to 75% for customers who already own 2 or more devices.
[2] This huge number suggests that Apple is making considerable amount of money ($3 billion) by hosting these 775,000+ growing applications at its app store. This clearly shows a trend towards applications becoming the mainstay of Apple's flexing power. Though many of these apps are free, they feature advertisements, which generate revenue for both Apple and its developers. ( Thats just apps though, they also make money from videos, music, TV and Movies)
Quote:
Originally Posted by zippy2shoes
I see a lot of purists on here who want Apple to remain the true to their roots in that they only make top notch products but I think that dream is over. We've seen a pretty big decline in the quality of their hardware/software as the company has grown into the titan it is today and to think it will go back to the way it was before is a bit naive I think. When you get that big, things falls through the cracks. It is inevitable. I'm not Apple's biggest fan but I think they are making a good move here from a long term business perspective albeit they are going to p*ss off their oldest and most supportive customers (a lot of you on this forum) with some of their decisions.
The people on here - myself included - are generally All Apple. My phone, tablet and every computer I ever owned is Apple. Its a small market, and we don't matter. You can see comments on here about how Apple did fine selling computers with small market share - that's wanting to be a niche player. Apple, as it happens, nearly died out in the late 90's. Had it not purchased NEXT it would have died out, although the brand might have survived, probably producing Windows devices.
But the subset of people on here who liked that small market are a tiny fraction of Apple's existing market, and a tinier percentage of their potential market.
Quote:
Originally Posted by Michael Scrip
You can't tell me that all those people in poor countries are so in love with their crappy Android phone that they'll never consider switching to a competing platform.
You know there are some of us who don't live in a third world country that find Android to be the better platform. I realize this is an Apple forum and a certain militant attitude towards the competition is warranted but the negative adjectives get old after a while.
I think Apple has already proven that you can have a tiny percentage of market share... and still make crazy profits.
Why? Because Apple sells hardware. And for the time being... rather expensive hardware. That's where profits come from.
Android has 75% smartphone market share right now... but I have yet to see much good come from that.
There are so many Android phones out in the world. With all that market share... developers should be making more money from Android than iOS. And the Google music store should be selling more songs than iTunes. And Google should be making more money from ads on Android.
But they're not.
Again... I haven't seen the result of Android having all that market share. The platform isn't doing as well as you think it is... other than having that larger number on the market share chart. (which is really a false trophy)
Some say Android is "winning" the platform war.... but I have yet to see it.