Apple Chiefs Discuss Strategy, Market Share, and the New iPhones
businessweek.com
businessweek.com
And please let's not have any Mercedes analogies. It doesn't matter to me what car my friends drive but the network effects of mobile ecosystems are very real.
The corollary of this is that Apple knows there is a large 'junk' end of the market, and they don't care who captures it. Android, Windows Phone, Blackberry, Symbian? It doesn't matter. There's not enough profit there to be worth it. It happens to be that Android has captured the lion's share of that end of the market, and therefore dominates sales numbers. Doesn't matter. Whether one OS dominates the low end, or a dozen OSes split it between them makes no difference to Apple as long as they keep producing consistently high quality products that sell well.
Just look at the PC industry. Apple makes as much or more profit than all the Windows licensees put together. Windows market share domination has actually played into Apple's hands by forcing Windows Licensees in a race to the bottom against each other, leaving Apple the only high quality premium PC hardware vendor outside the server market. Selling lower priced Macs would just undercut their own high end sales and margins, and the same goes for phones.
The problem with dismissing the low end of the market as "junk" is that this segment of the market is increasingly made up of reasonably capable phones with Android 4.x, which is good enough to serve most people's needs. We've already hit the point of diminishing returns on increasingly powerful mobile chips.
Apple isn't afraid to use form factors, feature sets, and multiple SKUs to partition the market it is just that they focus on partitioning the upper-end of the market and not the entire market.
I wonder if Apple could ever manage multiple brands to partition the market even further in the way that Gap Inc, partitions the clothing retail market via its Banana Republic, Gap, and Old Navy brands.
My point is that the iPad mini is neither premium nor junk, but somewhere in the middle. It expands Apple's user base and makes them a tidy per-unit profit. Like a lot of people, I was hoping the iPhone 5C would be a similarly mid-tier priced device that would open up new markets for them but unfortunately (IMO) a premium-priced phone.
As for 'good enough', you're absolutely correct, but Windows has been good enough for over a decade. That doesn't seem to have helped the windows PC vendors all that much. I fully understand why you think the way you do, but for you're not actually engaging with my points. You're just try to rationalise why Apple can't possible get away with doing what they have actually been doing very successfully for decades.
Maturing markets are fundamentally different from emerging markets. Historically Apple's been very good at inventing new product categories and terrible at competing in mature markets. The strategy they're pursuing now looks an awful lot like the one that eventually lost them the desktop market.
The iPhone 5C actually increases Apple's profit margin over the 5. They could instead shave $100 off the price and bring a lot of new users into the iOS fold and still maintain a healthy profit margin.
And still with this 'lost them the desktop market'. If Apple's market defining desktop business, which dictate the shape of the computer market by denying the profitable high ground for $1,000+ systems to their competitors, count as losing then you and I have very different ideas of what that word means.
If the iPhone's sales numbers last year and the year before that were high enough to sustain a highly profitable premium business, then bearing in mind their sales are still skyrocketing I just don't see where the risk is. Why is having a minority market share in desktop PCs a problem for Apple? What harm has it done them? How has it hindered their ability to prosper over the last 15 years? If it's not been a problem for them in PCs, why should it be a problem for them in mobile? bear in mind that their minority stake in the mobile market is a region thing. In the single most valuable market, the US, they have more market share than Android.
> The iPhone 5C actually increases Apple's profit margin over the 5. ...
I know, I don't know what the Andorid camp are going to do about it. I mean how can they compete when.... oh... hold on a minute. You're saying that's a problems for _Apple_. Er. Ok.
True, very true. But so far is very healthy and I suppose Tim Cook will eat these words if their ecosystem was in danger of being neglected by developers.
What he is saying is that he only wants to serve the richest 10% of the market. That's his choice. But I think it will ultimately be their demise.
The rest of the world needs phones too. Is an iPhone 4 class phone really so out of date that someone in India can't use it?
I think they could. I think it'd be orders of magnitude better than what they currently use.
What I think is this: He is worried that nobody would buy the 5S if there was a cheap 4 because the 4 is what 90% of us need (not want) and is at the price point that the 90% of us need it to be at.
The flaw in your logic manifests itself in many places, including app store revenues (comparing iOS to Android)
I think this is what so many people ignore when trying to compare ecosystems. People who have a major focus on what they spend on their phone are also going to have a major focus on what they spend on phones.
The last figures I heard: Android lead iOS by 10% on app downloads, but the iOS App Store generated over 2x revenue.
It's funny how people have been saying that since the first iPod came out and yet here we are.
For example, a lot of times I hear Lumia this and that, only to find out that it's about a certain version.
The world is pretty large so even 1x%-2x% is huge.
People in 3rd-world countries use these "junk" phones to improve their lives.
Even here in the US, some of the poor doesn't own a PC but own a cheap Android phone.
That's the money quote to me.
For some reason everyone continues to think Apple should try to be the Toyota or Kia of the computer world, but in reality, it's perfectly acceptable to be BMW or Mercedes.
<< Android’s growth has far more important implications than just bragging rights. Developers tend to make apps for iOS before coming up with a version for Android. If Android continues to show up on more devices, the order could flip. As of 2013’s second quarter, Apple’s App Store generated 2.3 times more revenue than Google’s app store, Google Play, according to App Annie, an analytics firm. But Google Play had 10 percent more downloads overall. It’s one thing to cede a portion of the market because it’s racing toward the lowest possible price, but what if that market becomes the center of gravity for the entire industry? >>
I personally think it's as important today as it was back then, and people need to be reminded of it.
Actual Title: Apple Chiefs Discuss Strategy, Market Share—and the New iPhones