“When I started covering the consumer electronics industry, I was struck by the fact the vast majority of players in that market make razor-thin margins, if they’re profitable at all,” Jan Dawson writes for Tech.pinions. “Even more striking is Apple, which might be described accurately, if incompletely, as a player in the consumer electronics market, makes telecom-like margins while competing with those barely profitable vendors. And just as interesting is the fact that, as players that have historically only competed indirectly in the consumer electronics business enter it, at least some of them are choosing to follow Apple’s route to the high end of the market.”
“As I mentioned, Apple is the one exception to all of this, with between 25% and 30% operating margins,” Dawson writes, “while everyone else scrambles at 5% or lower margins. How does Apple achieve this distinction? Well, it’s due to a combination of factors but it’s probably best summarized this way: Apple provides premium products at a premium price, and is able to justify the premium through differentiation based on a tightly integrated approach to hardware and software.”
MacDailyNews Take: Yup.
Apple sells premium products at premium prices to premium customers. — SteveJack, MacDailyNews, October 23, 2012
“Google and Microsoft have traditionally participated mostly by providing operating systems to hardware vendors, while Amazon has participated largely as a seller of other people’s hardware,” Dawson writes. “Each of their strategies is unique and different but, with two of them, there’s an emphasis on the high end which I find interesting.”
Read more in the full article here.
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