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Comment by saejox | Hacker News Reader

Apple devices are ridiculously expensive. iPhone5 is $900 here.

Apple devices are quite expensive, but when the iPhone 3G came out, I was happy to spend a lot, since the phone was light years ahead of the competition. Two years later, when the iPhone 4 was released, I bought it. It wasn't light years ahead anymore, since it had very solid hardware and a beautiful retina display. Apple was still ahead of the pack.

The last time I renewed my subscription, I didn't get the iPhone 5. It's only a marginal improvement over my iPhone 4, iOS was mostly frozen (until now), but it still has a premium price. So, I got a Lumia 820 instead. It was around half the price of an iPhone 5, has a nice display, a fresh and innovative OS (with its own limitations), and is a solid device. I am still primarily using my iPhone 4, but taking the competition into account, the iPhone 5 not worth the ~650 Euro to me. Apple should get ahead of the pack again or lower its prices.

Some people will say that with Apple you only pay for the brand, but I still believe they make better products in some categories (e.g. the MacBook Air and MacBook Pro Retina).

Apple's prices are fine here (the US) but it's hard to compete when everyone else is selling competing products at a loss (Barnes and Noble is selling off its Nook HD+ inventory at $129, Google has spent billions on Android and more buying Motorola for little apparent income, Amazon's business model is to sell razor blade handles at a loss so it can sell blades at break even, and Microsoft is paying Nokia to make Windows phones almost no-one buys — how can anyone compete with that on price?)

Apple still has huge profit margins, and so far made the mistake (IMO) of holding on to those margins instead of trading them down a bit to increase market share. They've done a lot of damage to themselves with this strategy but they still have a lot of room to maneuver.

Don't you think they might have damaged their brand by "trading them down a bit to increase market share"? Why don't BMW or Mercedes go trade down their margins to sell more cars?

I know engineers don't understand marketing very well, but they should at least understand the very simple principle of brand building.

This is where the car analogy breaks down: we can reasonably expect that a BMW or Mercedes can use the same roads as a Dacia. But once Apple doesn't have a significant share of the smartphone market anymore, Google and others could easily lock them out further by making services that are Android-only. It's hard to ignore a 40% audience, it's attractive to bully a 10% audience, that is willing to pay huge margins, into switching to Android.

Exactly. You'd think there would be people left in Cupertino getting an uneasy sense of deja vu right now.

Car analogies don't really work because cars don't have the same powerful network effects that hardware + software ecosystems do. Once you're down to < %20 market share you lose a lot of your ability to drive tech your way. The analogy also fails because the public increasingly perceives the premium Android handsets to be equal to or better than the iPhone.

This is particularly serious when, like Apple, you refuse to make your key services cross-platform. For example, I can't really use iMessage because at this point very few of the people I correspond with use iPhones.

So at exactly what point should Apple start to worry enough about being relegated to niche status to start addressing the middle segment of the market more seriously?

So you mean, the android app ecosystem is so much healthier than apple's given their larger market share? Does reality mean anything here?

What's with the rudeness?

"Reality" is that indie devs are struggling on both platforms, big game makers are doing well on both platforms, and the apps that matter the most on both platforms are increasingly those made by Google itself. Apple's sliding market share means their proprietary ecosystem is increasingly irrelevant to even iOS users.

You made some big claims that network effects should be hurting iOS already, when its obvious opposite is still true (iOS is a healthier ecosystem than Android in spite of its lower marketshare). According to your explanation, given how phones are not like cars, the iPhone ecosystem should already be in decay. Whether its tough for indies or not is irrelevant; there is much more money to be made for app developers in iOS than Android.

It is not obvious that Apple could win, or even survive, by going after the low end, or by being more general. Apple is great as a premium brand, but as a shoddy value brand like Samsung? Their attempt at getting a majority of phone profit share would wind up killing their brand and destroy the money they make in non-phone products. This is especially true in Asian countries like China where the iPhone is still a must have for the high end; where Google also happens to be less relevant (for better or worse).

How many iOS users even bother with iMessage? Just install WeChat and forget about it.

You made some big claims that network effects should be hurting iOS already, when its obvious opposite is still true (iOS is a healthier ecosystem than Android in spite of its lower marketshare).

I've made no such claim. My claim is that the network effects which have previously helped Apple (iTunes, iCloud, iMessage, exclusive apps etc) depend on a non-niche market share and inter-product synergy. They're approaching a dangerous tipping point here, IMO. How many iPhone users no longer sync to iTunes, for example?

It is not obvious that Apple could win, or even survive, by going after the low end, or by being more general. Apple is great as a premium brand, but as a shoddy value brand like Samsung?

They've done nothing but lose ground since Jobs died. The time to try alternative strategies is now. Plus, there's a lot of livable room between a premium brand and junk brand. Apple can continue to charge a premium over Android, IMO, but not the extreme premium they've enjoyed since 2007.

How many iOS users even bother with iMessage? Just install WeChat and forget about it.

Apple should care about this because it's one fewer thing keeping people from easily switching to another brand. More and more the apps people care about are available on other platforms and that shifts the debate to cost and/or other features like screen size, stylus support etc.

How many iOS users even bother with iMessage?

Over 250 million. 2 billion iMessages are sent per day.

WeChat is much bigger than that.

WeChat has 300 million users according to Wikipedia.

That and those huge margins can only be sustained if (1) people at the very least believe that the product is much better than the competition, (2) it is a fashionable brand.

GM: loss of $2k on every car they sell in the EU. They have about 20% market share. Porsche: profit of about $20k on every car sold in the EU. May not even have 1% market share.

So what you are telling me follow GM path?

Other phones are commodities and it's their nmanufacturers issue, not Apple's. I have S3 and can't wait to switch back to iPhone. It's like Mac vs. PC again. The thing frozes on me, is too complicated, has weak support, weak warranty, hey even looks cheap. I'd rather pay more for a product that's pure pleaseure to use vs. have frustrating experience with something that's just assembled without giving a second thought to the added value department.

What part of the news that Samsung is now making more profit than Apple did you not read?

Samsung looks a lot more like Kia or Hyundai than GM.

Obviously Apple should use your strategy which has failed for pretty much all of their competitors and nearly destroyed them in the early 90s, and not their own, which has made them the most profitable tech company in the world.

Trading margins for marketshare is a very dangerous strategy; there's a long history of companies doing this, only to find one day that the margins have gone negative.

Places where iPhone 5s are more expensive are generally places where Android phones are also more expensive (just a lower base). It generally means your country has high import tariffs or taxes, not that Apple is intent on screwing your market (they are pretty good about pricing in non-US markets, I've done the math for China and it works out given a 20% tax).

Actually they are quite inexpensive as far a high-end model goes.

What do you compare them with? Cheap plastic crap?

I shopped around for high end Android models a couple of months ago, and they are just as expensive as the iPhone (but with worse build quality (plastic vs metal to begin with)).

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