Competition is shifting to the high end

“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.

A single quarter of iPad Pro sales will exceed the total of all Microsoft Surface tablets ever sold – November 24, 2015


    1. The important distinction is that all manufacturers like to portray their products as being of a very high quality and they would like to make the greatest possible profit from selling them, however Apple has consistently occupied that high ground and has been able to command enviable profit margins by delivering products that delight their customers.

      Most of us have been fooled at one time or another into paying a premium price for something that didn’t deliver on it’s promise. The usual reaction is to avoid that company in the future. On the other hand when a company consistently delights it’s customers, those customers tend to stay loyal.

      It’s not rocket science. You set the bar very high, you have to be genuinely critical of your work and you sweat the details so that what you deliver exceeds the customer’s expectations. The principle is very straightforward and every company talks about doing that, but making it happen in a genuine way is a very much much bigger challenge than it appears to be. There are only a small number of companies in the world who have achieved that for a prolonged period.

      Talking the talk is considerably easier than walking the walk. We’ve heard all the bullshit before and some of it occasionally works for a while, but the only thing that matters is what you actually deliver and how well it matches your customer’s expectations. If your talk has raised your customer’s expectation in excess of what the product can deliver, then you have set yourself up to fail. We all know that Apple’s secret sauce is to under-promise and over-deliver.

  1. LOL except that none of the comptetitors to Apple’s premium products can hold a candle to them, your Apple Watch comment is the most glaring place you give yourself away chump

    1. You’re the fangirl with a guy face and pom-poms cheering on incompetent Tim Cook… and I’m the chump?

      If your only response to watching Apple’s reputation sink to the bottom of the ocean is “the competition is worse”, then woe is Apple.

      And your full-time job as a Tim Cook apologist has great security, because the ONLY thing Cook does consistently well is f*ck up!

      1. You are amusing, deluded but amusing. Virtually all those dramatic claims have little to no evidence to back them up out side of your mind, some are decidedly comical that would embarrass even a kindergarten child and any number of playground insults does even less to establish any credibility to you argument.

      2. Cook Is Destroying Apple:
        The second you resort to ad hominem you lose the argument.
        ‘researchteacher’ is wrong, but that does not matter.
        If you stay above his playground tactics you win the moral victory even if you’re not entirely correct.

        I agree that Cook has to go, but that is not going to happen.
        The end.

      1. IBM.

        IBM was a highly profitable company, with extremely high margins, which was more closed than Apple ever thought about being. It was the king of the computer world which started in the 60s. It slowly came to an end as the PC world began to bloom.

  2. Hahaha…the usual Apple criticisms. They said the same thing about the Macbook Air as they are saying about the Macbook. And it’s a great machine and very capable. Pulitzer prize winning photographer/videographer Vincent Laforet notes on his blog that he uses it as his travel computer, and that it runs Lightroom and Photoshop very competently.

    The rest of your criticisms we’ve all heard before…yawn.

    1. Like so many other products this clown rages against it is doing remarkedly well by all accounts outside of the Disney World he inhabits. Not sure where all these hordes of rampaging and dissolutioned former Apple fans are hiding but again no evidence is provided at all as to their whereabouts. The only remote sense escaping from the madness in the rant is that as the product range and the company grows along with it Apple has to double up on quality control so those products that do fall below expected standards remain the exception and are corrected in a timely fashion. The difference is that Apples are highlighted while for example Microsoft’s appalling record, most recently with the Surface, just seems to fly over people’s heads.

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