“Billionaire investor Warren Buffett told CNBC on Monday it’s ‘amazing’ how Apple has resonated with consumers, and that’s why Berkshire Hathaway bought the stock,” Matthew J. Belvedere reports for CNBC. “‘I can very easily determine the competitive position of Apple now and who’s trying to chase them and how easy it is to chase them,’ Buffett said on ‘Squawk Box’ from Omaha, Nebraska, following Saturday’s Berkshire’s annual meeting. Buffett said he used Berkshire’s insights into the furniture business to figure out Apple’s worth.”
We happened to be well situated in terms of having these massive home furnishing stores. I can learn very easily how consumers react to different things there. You can’t move people by price in the smartphone market remotely like you can move them in appliances or all kinds of things. People want the product. They don’t want the cheapest product. — Warren Buffett, Berkshire Hathaway
Read more in the full article here.
MacDailyNews Take: Yup.
Newsflash: Apple sells premium products at premium prices to premium customers. – SteveJack, MacDailyNews, October 23, 2012
Nebraska Furniture Mart, if you’re not familiar with it, is a retail store on the biggest and baddest steroids. But don’t think for a second that it is limited to “furniture.” It’s also among the largest electronics stores you’ll ever visit with thousands of square feet devoted to televisions, sound systems, car audio, computers and appliances. It’s also done Apple products very, very well over the years . . . . It has an Apple store within it (mimics very closely what an actual Apple store is and does) and it’s been my go to place for Apple computers for 20 years. So I do think there’s a lot of data that Berkshire Hathaway can glean from that store if they pay attention to their own metrics. In terms of furniture, flooring, etc…. they’ve got the cheap stuff and the very high end . . . . that does lend itself to some insights into how return — and well-heeled — consumers behave with their dollars.
When Steve Jobs returned to Apple, he made comparisons with Maglite torches. You can buy a cheap torch that works for $1, but people were happy to pay $15 or more for a Maglite torch.
Jobs wanted to pitch Apple as the Maglite of the computer biz – in other words, offering similar product categories, but with more flair, better design, higher quality and at a correspondingly higher price point.
Ironically the torch business, just like the compact camera business has been negatively impacted by the iPhone business because iPhones have much of the functionality of those products built in as standard.
That’s it. People don’t want crappy tech, levied through lower prices, they want the best tech “UE” at the best price.
Apple has that neatly tied up. No one can compete in Apple’s corner.
How about a Mac Mini update and lower the price.
Remember when the Mac Mini was a great bang for the buck to help increase market share? The Mac Mini has had price creep so Apple could increase profit margins on it.
I would like to see the Mac Mini become more of a “loss leader” again to help increase hardware sales and the user base.
That’s why he’s the Oracle of Omaha – wall street can’t seem to understand that smartphones carrying the Apple imprint are not commoditized like the rest of the smartphone industry.