“Famed Silicon Valley venture capitalist Marc Andreessen believes there is one major difference between Tim Cook and Steve Jobs: a desire for market share,” Don Reisinger reports for CNET.
“Speaking last night at an event in New York City, Andreessen said that Jobs’ ‘single playbook’ was to ‘invent a new product category, start with 100 percent market share, and then every day that goes by, lose market share until some terminal outcome,'” Reisinger reports. “Andreessen argues that Steve Jobs didn’t care about that. Instead, he focused on a ‘pricing umbrella”‘ that kept Apple’s margins propped up even as market share started to fall.”
Reisinger reports, “Since taking over the CEO role at Apple last year, Cook has seemingly followed a different strategy… The VC pointed to the new iPad Mini, which reportedly comes with smaller margins than its larger counterpart, as proof that Cook is willing to reduce margins in exchange for market share.”
Read more in the full article here.
[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]
Anyone know what the margins on ipod nano’s where?
Brilliantly deduced, Mr. Andreessen, because Jobs never thought to make a smaller less expensive product before…if he had he might have even named it the “iPod mini” or the “Mac mini” or ….
“Andreessen” translated literally means “irrelevant in 21st Century.”
He seems to have to wrong on every point. Surely the iPad mini was already in development before Cook became CEO. And how many products actually fit this supposed “playbook” of Jobs? Not the iPod. Not the Mac. Not the phone. Apart from *maybe* the iPad I cant think of any that can even be stretched to fit, and yet Andreessen claims it’s his “single playbook.”
Very blind of Andreessen.
Timothy Cook acts exactly as Jobs in terms of pricing and product map.
Just two months ago he intentionally killed Apple’s chance for bigger market share in smartphones — iPhone 3Gs, which could be kept for poorer buyers.
This is what Jobs would do, too — rather have lesser marketshare, but still keep only high-margin products.
iPad mini costs $130 pricier than competing devices. While obviously it is much better product and that price is deserved, this shows that nothing in this product and its pricing is different from what Jobs would do (and, by the way, iPad mini as project was started by Jobs himself).
But the iPhone 4 replaced the 3GS as the $0 iPhone.
?????
Exactly–3GS was unable to take advantage many of the iOS advances of the last 2 yrs. Upgrading users to iphone4 keeps users buying at the former 3GS price point & still in the game app wise.
The “free” iPhone 4 is does not match the low price points of Android, because it is not actually free, it requires a long contract with higher monthly payments.
In most of the world people buy phones without subsidizing contracts, so the iPhone 4 is very expensive and Apple offers nothing cheaper.
Whether that is a good idea is another question. But Apple does not offer a low price point phone.
There is nothing “$0” about the price of any iPhone model. Outside of USA, very little quantity of smartphones are sold with contract, so buyers have to lay out an equivalent of $900 even for the cheapest iPhone 5 model.
And the cheapest iPhone 4 about $500. iPhone 3Gs, if kept for sales, could cost $350, which would do huge difference for buyers who are not that rich.
No, no it was not started by Steve Jobs. He finally relented and agreed to give it a green light. But he did not start it.
Jobs did start it. It takes half year to roll-out production of device, and definitely more than just half year to design and test new-form factor device.
So there is no other way than iPad mini being started early 2011 during Jobs.
Not to mention the FCC aproval process.
App will need a killer app, they don’t have it yet
I haven’t cared about Marc Andreessen for the past 16 years, why pray would I all of a sudden care about him today? And why, when I tune in to MacDailyNews, am I all of a sudden being subjected to AndreeessenHourlyNews?
I think he must have said something really right-wing nonsense… now they have a man-crush on him.
1
That’s exactly what happened.
http://nymag.com/daily/intelligencer/2012/12/marc-andreessen-and-the-middle-class.html
Nailed it!
The title for the article is all wrong, it should be something like, “I have lots of money therefore I know what I’m talking about.” like when Mitt Romney thought that jets should have windows that open.
No one really even knows what the profit margin on the iPad mini is except for a select few at Apple – he certainly doesn’t.
However, I have been saying for a while that Apple should lower their prices and accept a lower profit margin to make their products more competitive and improve market share.
Excellent point, as many of their products are not selling very well.
Yeah they are hardly selling any iPhones and iPads at all now being extremely unpopular. Why wouldn’t everyone want to do things the “Eric Schmidt no profit/high market share” way? Waitaminute just took a trip to the Bizarro World!
put down the ‘special’ mushrooms before you hurt yourself!
They are selling well, but so many Android Settlers would get an iPhone if they were $50-$100 cheaper. Market share does mean something – profit share does, too – but there won’t be profits if people get stuck on Android. Every person I know who has the latest Samsung Galaxy 3 (or whatever the fuck it is) loves it. Apple needs to step up their game or the iPhone will be relegated to a minority player behind Samdung.
“but so many Android Settlers would get an iPhone if they were $50-$100 cheaper. ”
And they now are… at least for the holidays. Just got an iPhone 5 for 127$…. WOW, it starts NOW.
Just a thought.
It’s absolutely amazing the number of business senior management and grad school alumni that post here. You should all get together and strategize expansion plans for your lemonade stand.
Reading the tripe posted here makes me understand why Apple eschews focus groups. You don’t know what you want, but you’re more than ready to tell someone else what they should do.
No, not quite. I’m a doctor. 14 years out from medical school. I never went to business school but I do know an asshole when I see it. And that sir, would be you. Fuck off.
And like so many doctors you think you know more than you actually do.
There’s a certain price point you don’t want to hit… were the people who are only willing to pay so much for something aren’t interested in spending anything beyond it.
The pricing of Apple’s devices attracts those that have disposable income and are willing to spend. This in turn fuels the iOS ecosystem and creates thriving markets.
Selling cheap, attracts cheapskates and you end up with Android.
“There’s a certain price point you don’t want to hit… were the people who are only willing to pay so much for something aren’t interested in spending anything beyond it.”
Apple makes $$$ from their hardware that they sell. The ecosystem they created (App store, iTunes store, iBooks, etc.) is for the benefit of consumers.
“The pricing of Apple’s devices attracts those that have disposable income and are willing to spend. This in turn fuels the iOS ecosystem and creates thriving markets.”
There’s a large population that use “pay as you go” cellular plans. Android reigns supreme there currently. It’s a thriving market.
“Selling cheap, attracts cheapskates and you end up with Android.”
I’m sure the Android device makers would love for you to believe such nonsense. Apple needs an unsubsidized iPhone with a low price point to tap into the “pay as you go” market.
The only thing missing from iPhone 5 is mobile payments and that will come w/o NFC.
You don’t need NFC for mobile payments.
Square and Bump Pay are already doing mobile payments out there on all iPhones.
Dept stores won’t use square.
They might since so far they’ve failed to convince most of the public on the wonders of NFC, which isn’t a surprise because it makes payments more complicated and requires hardware so carriers get involved.
NFC takes as long as swiping a regular card but you can’t readily pick the card you want to use. Larger payments (>$20 in most systems) still require signature or PIN. I really can’t see the big advantage.
Square is actually great since you don’t have to take the phone out, just say your name and that’s it done. With Starbucks now at the helm it might gain more traction.
It’s simply not true that Steve Jobs only had a “single playbook.” He was a genius at multiple strategies, and creating new market categories was only one of them. When he introduced the Macintosh, he never dreamed it would have 100% market share. He simply knew it was a better product and could advance the way computers were used. When he came back to Apple, and introduced the iMac, he had no illusion it would get even 25%. It was a premium product for a premium price. Same with the MacAir, etc. etc. ONE of Apple’s many plays under Steve’s book was to sell premium products (particularly from a design standpoint) at a premium price. That is a good business to be in, and was what saved Apple, not coming up with new product categories. Now, Jobs was also brilliant at creating new products that did capture 100% of a new market, like the iPad.
Other plays in Jobs “book” include moving into retail, which everyone said wouldn’t work, creating iTunes and selling music. He also created the App store, which destroyed overpriced software (hurting Microsoft), and created a movie company which churns out hit after hit. Not a bad playbook, all in all.
The Microsoft/Apple OS war is long over. No one has introduced an “open” platform for any major consumer product with success since that odd time during the beginning of the computer era. (The jury is still very out on Android.) Microsoft’s only real consumer product success has been the X-Box, which is a closed system very much in the Steven Jobs model (though done badly). The success of Microsoft was really the failure of IBM to own it’s own operating system in a market it created. That colossally stupid mistake, back when people didn’t understand the importance of software, is unlikely to be repeated. Every single computer company that has tried to profit by adopting the “open” Microsoft system has gradually been destroyed by it as Microsoft bleed them dry of profits. Starting with IBM’s PC division, then Compaq, Gateway, now Dell and HP. Microsoft has literally drained the blood out of them until there is nothing left, and increasily Microsoft has no one left health enough to feed off of. Thus it is trying to adopt the Steve Jobs strategy of creating it’s own products.
Android in all likelihood will also end in disaster for companies that rely on it. The only difference is, this time Google, (unlike Microsoft) isn’t making any money by promoting it. Steve Jobs never thought the iPhone would get 100% of the market. Odds are he would have been more than happy in the 10% range, which was highly profitable for Mac laptops. But the iPhones huge success forced other companies to do something. Their desperate rush to Android will likely be a huge mistake. Like for Compaq and Gateway and now Dell.
I agree with everything you said, except that Steve Jobs only wanted 10% marketshare for iPhone. I think he was going for 70%, like the iPod. They may still get it — via a slow grind up.
The last 25% will come when the Android civil war starts and we see massive forking.
Go back and watch the keynote intro of the very first iPhone. They were going for 1-2% (if I remember right) of the world’s mobile phone market share.
I think at the time, that was about 10 million phones.
I remember that well. That was just to keep the competition sleeping.
Microsofts 92% market share is, and always has been a myth created by fan boys for fanboys who are to dumb to tell the difference between shipped and sold. Microsoft collects their money from the Dells and HP’s and those are the people that get screwed, or the resellers like Walmart, Best Buy if they can’t sell their boxes to the end users, and they have a hard time selling the junk that is the average Microsoft box.
Andreessen seems to fundamentally misunderstand virtually every new product launch Apple has ever had.
Apple’s strategy is to provide customers with the best value, not the lowest price. When the goal is competing based on lowest price, competition will drive the price down to a point where market share is meaningless (because there is zero or even negative profit per unit sold). It took decades for it to happen in PCs, but It has already happened in tablets in less than three years.
Apple makes high profit per unit because it provides the best value. It has less to do with having a goal of high profit margin, or a pricing strategy. The high profit margin is the byproduct of customers being willing to pay more to get the best possible value for their money.
As long as Apple continues to provide the best value, profit margin will remain high.
Totally disagree. Macs have been very competitively priced for a long time, especially when software costs are factored in or, more importantly, the Total Costs of Ownership are considered. How do you think Macs has outsold the PC market for so long now? By offering excellence at great prices. Same is true of iPads. Launch prices blew away the pundits, as I recall, and makes it very difficult for competitors to get a toe- hold. It is not simply that Steve “learned” his lesson as much as conditions arose at Apple (ie, success and cash glow, as well as production acumen) that permitted aggressive pricing and a strategy of deep market penetration. Steve did this. And Tim is doing it now. Execution also requires Intellectual Property protection. Apple learned that lesson well after MS’s massive rip-off in the early days. It is why the Google rip off of iOS pissed Steve off so much. (Otherwise, I believe the iPhone market share – and iPad, too – would have looked more like the iPod; total market domination, with commensurate profits.) So no, Andreesen is wrong. Tim is walking the same trail right where Steve left it.
SJ would have told his people that their iOS 6 maps were shit and not to come back to him until they had it right. Cook just let it happen.
I’m not so sure about that. I think Apple Maps is more of a Trojan Horse ala iWorks, nice little app that forces MSFT to keep Mac Office competitive.
I’m not at all surprised at how quickly Google released its iOS Map app, AFTER Apple kicked them out of the default position and introduced their own. iOS users just benefitted a ton with Apple’s move. Any Maps advantage that Android used to enjoy is now essentially gone.
You can’t spend market share, money talks.
So, is Andreessen focusing on an “attention umbrella” that keeps Marc’s hits propped up even as credibility starts to fall?
Was it in an interview, or in the bio, where Steve talked about how the leadership at Apple that kicked him out originally made the mistake of going for profit share instead of marketshare at a key early moment for the mac?
Yes, he could be flexible in his thinking about market share.
Wait, so this is the website where Andreessen still matters? I knew he wasn’t totally gone.