If Tim Cook’s all-hands meeting doesn’t fix Apple’s pricing, it’s pointless

“As yesterday’s surprise announcement of a significant holiday revenue shortfall made clear, Apple is in trouble — not the sort of ‘capital T’ trouble facing soon-to-be-bankrupt companies, but the nuanced dysfunction of a company that has lost more than 30 percent of its value, over $300 billion, in the past two months,” Jeremy Horwitz writes for VentureBeat. “Today, Apple CEO Tim Cook will hold an all-hands meeting to discuss the situation with employees, following his publication of a lengthy letter to investors.”

“My concern is that Cook will downplay or ignore the critical issue that has become obvious to virtually everyone outside the company: Apple’s pricing,” Horwitz writes. “It’s unclear whether Apple believes the laws of supply and demand don’t apply to its products or whether it thinks it can keep skirting those limitations by offering financing plans and milking existing customers until they’re dry.”

“There’s a finite and relatively small number of people who will pay two or four times the objectively reasonable price for a product. Even with that group as a ‘loyal’ customer base, a company that keeps raising prices will reduce the frequency of their purchases, a problem that would be reflected in declining unit sales,” Horwitz writes. “Tim Cook has two choices at today’s hands-on meeting. He can keep finding alternative ways to placate Apple’s current customers and hope they don’t leave, or he can make the difficult choice to shave down Apple’s insane 38 percent profit margin to expand the company’s user base.”

Read more in the full article here.

MacDailyNews Take: Two questions:

1. Has any other company in history ever lost over $300 billion in value in two months?

2. Do you think Apple’s iPhone and/or other product/service pricing is too high? If so, please give us some examples. We’ll start: Apple’s $39 for their clear case for iPhone XR is wildly, not-even-funny overpriced by a factor of three, at least. As we wrote when it finally debuted (late to market, naturally):

[It’s] a transparent, literally, money grab. And shameful, actually.

Do not waste $39 on a piece of plastic.

We recommend the Spigen Ultra Hybrid Crystal Clear Case for Apple iPhone XR:

SEE ALSO:
Wall Street analysts slash Apple target prices – January 3, 2019
Advisor to President Trump: Apple’s sales should pick up when U.S.-China strike trade deal – January 3, 2019
Two things Tim Cook just did that make Apple look guilty today – January 3, 2019
CEO Cook issues memo to employees after Apple slashes revenue outlook for the first time in almost two decades – January 3, 2019
Apple’s earnings warning means CEO Tim Cook now has a major credibility problem – January 3, 2019
Loup Ventures: We continue to expect AAPL to outperform the rest of FAANG in 2019 – January 3, 2019
Open thread: Does Apple need new leadership? – January 2, 2019
CEO Tim Cook on why Apple lowered first-quarter revenue forecasts – January 2, 2019
Apple CEO Tim Cook issues public letter to investors, lowers guidance – January 2, 2019

25 Comments

  1. Some of Apple’s line-up is marginally high, re the latest iPhones. You are getting industry-leading tech, but the prices do bring tears to the eyes. Thankfully, I can still buy an older model (currently iPhone SE) and still have a great iPhone.
    Some of Apple’s pricing is just confusing: $10 per month for Apple Music, $25 per year for iTunes Match, $.99, $2.99, & $9.99 per month for iCloud storage, Why not offer ONE plan that covers everything?
    $800 for a 1TB upgrade for an $800 Mac? Are you friggin’ insane?

    Still, I would wait for the quarterly report before all the doom and gloom. Apple tends to go conservative with guidance.

  2. If you’re looking for evidence how Apple lost the plot look here – just when the world was moving to smart home technology, with voice and automation, Apple introduces a smart speaker, that you can only talk to in one room and costs 10x the price of an echo dot. Madness. Yes have the premium piece but also take market share with a $50 mini version for each room – it’s supposed to control the WHOLE HOUSE you doofuses.
    And Phil Schiller stands up on stage and tries to act like Apple invented the speaker – it’s over a hundred years old …jeeez Phil!!!

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.