“Apple just can’t seem to keep Wall Street happy,” Cadie Thompson reports for CNBC. “The tech giant’s stock was down by about 5 percent on Wednesday afternoon after disappointing the street in two big ways this week. First, Apple didn’t meet pricing expectations with its iPhone 5C and second, the company failed to announce a deal with China Mobile.”
“Investors and analysts anticipated the iPhone 5C would price in the midtier market at about $350 unsubsidized. However, the smartphone costs over $500 without a contract and about $100 with a two-year contract, a price that is still too high for Apple to sell the device in emerging markets, industry experts said. In China, for example, an unsubsidized iPhone 5C will cost 4,488 renminbi, the equivalent to $733.,” Thompson reports. “‘Just how far behind is Apple trying to fall? I do not get Tuesday’s release and product launches. Something is just wrong,’ Doug Kass of Seabreeze Partners Management said in a note Wednesday… Customers in emerging markets are price-sensitive and want a lower-priced phone, but the iPhone 5C—or “iPhone dud,” as Kass describes it—won’t be cheap enough to drive market share gains that could lead to earnings growth.”
Thompson reports, “Kass said that Apple is making a mistake when it comes to trying to maintain high margins because growing market share is actually more valuable. ‘I fully recognize that Apple must somehow walk a tightrope between sustaining (elevated) profit margins and growing market share, but it did neither with yesterday’s announcements. Rather, it slipped badly,’ Kass said Wednesday. ‘From my perch, market share now is so valuable, not current gross margins — it remains my view that Apple is making a strategic mistake. Is Apple trying to lose as much market share as possible in a world where the value of the market share is immense given the ecosystem that goes along with it?'”
Read more in the full article here.
MacDailyNews Take: Entry point construction attempt or just a fundamental lack of understanding on Kass’ part?
Apple is an aspirational brand.
Tim Cook knows exactly what he’s doing, even if Dougie can’t figure it out.
The Story of the Cadillac Cimarron
The most important part of any luxury brand is its image and one bad model can ruin it. In the early 1980s, Cadillac joined other luxury brands in trying to attract more entry-level buyers with a smaller, more fuel-efficient car. Instead of coming out with a truly new product, GM added the Cadillac crest to what was, in all important respects, a Chevrolet Cavalier. It also added thousands to the price tag.
In all, it was neither a good Cadillac nor a good value. Even GM executives will readily admit today that this was a really bad idea. – CNNMoney
[Thanks to MacDailyNews Reader “First 2014, Then 2016” for the heads up on the Cadillac brand debacle.]
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