“An interesting little piece of data that highlights Apple‘s basic business conundrum,” Tim Worstall writes for Forbes. “Should they be going for market share or should they instead be looking at maintaining profit margins? Obviously, either strategy would be aimed at maximising long term shareholder value. But what actually is the right answer to the question?”
Worstall writes, “Why it’s important is here: ‘In a research note released today, Nielsen examines the potential for smartphone growth in the BRIC region (Brazil, Russia, India, China), where, in many cases, feature phones still dominate. According to the firm’s findings, only in China are smartphones predominant, where they’re now owned by two-thirds of mobile subscribers, as of the first half of 2012. However, in India, Russia and Brazil, users are only beginning to transition away from feature phones to newer, app-capable devices.'”
“I have no idea which way they’ll go: and I’m rather wondering what the past experience of the company will lead them to do as well. The 80s and 90s saw them stick with Macs as being the premium product at a premium price to Windows based machines,” Worstall writes. “And Boy Oh Boy did market share collapse! As did the company, nearly. Will they think that this time it will be different or will they do something different this time around? There’s quite a lot riding on which way they go really.”
Read more in the full article here.
MacDailyNews Take: Since Steve Jobs returned, Apple has never “cheaped out” in a quest to gain market share. From the iPod shuffle to the Mac mini to the iPad mini, Apple has created full-featured, quality, premium-priced products (in relation to rivals’ junk) that may be considered “entry-level” only in comparison to Apple’s other products. With history as our guide, we have no absolutely reason to believe it will be any different with iPhone.
Again, you can bet that if Apple enters the pre-paid phone market in emerging markets, they most certainly will have margins and they will make a profit on each device sold.
Apple doesn’t sell hardware at cost or low margins. And, by the way, Tim Worstall, the Mac won. 20+ million units per year to the worlds’ best and most loyal customers and every one of them sold for a profit. The Mac has outgrown the Windows PC market for 27 consecutive quarters – and counting. See, in his blind race to the bottom, even Mikey Dell couldn’t make it up in volume.
Please see the related articles below.
[Thanks to MacDailyNews Reader “Rainy Day” for the heads up.]
Phil Schiller: ‘Apple has always focused on providing the best products, we’ve never blindly chased market share’ – January 11, 2013
Newsflash: Apple sells premium products at premium prices to premium customers – October 23, 2012