“Apple and Xiaomi’s successes reflect the world’s growing income inequality,” Christopher Mims writes for The Wall Street Journal. “By maintaining its own walled garden of services, with a huge selection of apps that are often better-implemented than on Android, Apple has sufficiently differentiated itself from the mass of Android phones to charge consumers on average two to three times as much as they would pay for a comparable Android device. In China, Apple has become the luxury brand most frequently given as a gift, ahead of Louis Vuitton, Gucci and Chanel, according to a survey released last week by Hurun Report, which tracks luxury goods in China.”
“A recent piece in The Wall Street Journal on America’s ‘two tier’ economy outlined the way that makers of everything from homes to groceries are responding to the hollowing out of America’s middle class: They are moving either to the high or the low end of their respective markets. The same thing is happening to phones,” Mims reports. “The twist here is that smartphones are sold all over the world, and this split market is hardly just a product of what’s happening in the US. Indeed, Xiaomi doesn’t even sell its wares outside of Asia. But just as a growing class of global rich is creating a demand for the highest-end phones—made by Apple—so, too, is a growing middle class creating demand for phones made by Xiaomi and its ilk. ‘Middle class’ is by nature a relative term. To be part of the world’s richest 1%, you need make just $34,000 a year, Foreign Policy noted in 2012.”
“The commoditization of smartphones has led to price trends which highlight the fact that there have always been two distinct markets for smartphones: A luxury market, and everyone else,” Mims reports. “Predictably, distribution of profits between these two markets mirrors the distribution of wealth between the buyers of these goods. Analyst Horace Dediu estimates that in the past quarter, Apple captured about 90% of all profits in the mobile market. The world’s top 10% control 87% of the world’s wealth, according to economist Justin Wolfers.”
Read more in the full article here.
MacDailyNews Take: And Apple stands alone as the world’s most aspirational brand.
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