“It was reported towards the end of last week that the iPhone 5C may not have been selling at the rate that investors and Apple longs had hoped for,” Quoth the Raven writes for Seeking Alpha. “Before we could start to worry about these metrics, it was released this weekend that even though the 5C orders were cut up to 35%, the iPhone 5S has apparently increased production by 75%.”
“Depending on the margins that Apple is yielding from each of these phones, this may not even be any type of bad news for the company,” The Raven writes. “The general analyst sentiment was that because the 5C was an inherently cheaper product to make, the margins would be significantly better on the top-tier 5S. In that case, Apple continues to hum right along in mobile.”
The Raven writes, “This does well to prove a couple of arguments that Apple can use to tailor their business plan: 1. It shows that the average Apple consumer has the means to purchase the higher end equipment from Apple; 2. It shows that consumers want the best/higher end product, as the iPhone 5S is better made with the new top of the line A7 processor and fingerprint ID scanner; 3. Gaudy (everyone flipped out about the ‘gold’ when it was released) might be right up the Apple consumer’s alley – the same way Lexus sells cars with gold trim.”
MacDailyNews Take: The writer doesn’t own the iPhone 5s in gold and has likely never seen one in person. Unlike us. The iPhone 5s units in our pockets are champagne gold. In some lighting conditions they even look like light copper. It’s not the least bit gaudy. It’s nothing like this. (He’s right about one thing, though: those Lexus cars with gold trim are gaudy.)
The Raven writes, “As long as Apple continues to find sects of success within iPhone, the company’s ‘ecosystem’ of products will continue to prove a good investment vehicle; as Apple still has considerable market share to gain in Mac, and as Apple will likely continue to dominate music sales/streaming radio. With 10 coming catalysts and a continued push in mobile, Apple continues to be a threat to competitors like Samsung and Pandora – and Apple remains, to this investor, a continued rock solid investment going forward.”
Read more in the full article here.
MacDailyNews Take: The writer is in the ballpark with his first two points, but it’s more accurate to say that the well-heeled customer chooses Apple and those users gravitate to Apple’s higher-end products.
These are the desirable customers. These are the customers that pay for substantive R&D. These are the customers that matter. This is why they get the world’s first and only 64-bit smartphone. This is, in fact, why they get the world’s modern smartphone in 2007, years before anyone else gets a serviceable knockoff.
These are the customers that pay for not only the best devices, but also for the best apps and services. This is why market share doesn’t matter for Apple and why Apple doesn’t really care about general market (unit) share. This is why the Mac lived while all the others’ PC businesses slowly died during Microsoft’s dreadful Dark Age of Personal Computing. This is why the Mac continues to thrive today. All of the smart and rich people have Macs. Intelligent developers understand this.
In each market in which it competes, Apple owns the only part of market that matters: Consumers with taste, the ability to discern value, and who possess disposable income and the will to spend it. Google, Samsung et al. can have all of the leftovers. They’re more trouble than they’re worth, which isn’t much, not even en masse.
If you have a billion users who settled for your product because it was part of a Buy One Get One freebie, how content (music, movies, apps, books, etc.) are they going to buy and to how many paid services are they going to subscribe and how much are they worth to advertisers? Pretty much bupkis on all three counts.
We’d rather have the 400+ million (and rapidly growing) customers with the taste, the intelligence to recognize incredible value, and the money and the will to spend it. Wouldn’t you?
As long as you corner the market on the best customers, and there are enough of them to support a healthy business (very healthy in Apple’s case), market share doesn’t matter.
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