Obviously, the COVID-19 coronavirus pandemic will really hurt consumer spending this year. Apple’s management teams should look at opportunities to lower prices in order to increase market share in segments in which the company competes as large enough sales volume can overcome potential margin issues, Bill Maurer writes for Seeking Alpha.
Apple’s current entry-level iPhone 8 starts at $449Consumers around the globe are likely to tighten their purse strings even after the coronavirus panic subsidies, so this obviously isn’t going as bright of a year as we hoped for with Apple. The analyst notion of sales delayed versus being lost is evaporating, with estimates starting to decline meaningfully for the back half of this year. Perhaps, this unfortunate situation provides an opportunity, however, assuming management is willing to make a change regarding its product strategy.
Today, I am wondering if this year is the time for Apple management to think a little differently. If we assume a new entry-level iPad comes later this year, along with some other devices, why not keep around an extra older generation? The next entry-level iPad will likely have a better chipset and cameras, so why not keep the 7th generation around? Here, you would just cut the price like we normally see Apple do, to perhaps $229, so consumers not wanting the absolute newest tech but a lower price point can take advantage.
I’m not here today saying that Apple should do what many were calling for a few years ago, and that is launch “cheap” products, which would be like a $99 iPad or a $199 phone. What I am saying today is that it might be wise to keep an older generation around a little longer, providing more affordable options for those who want to buy. These older models also won’t be as expensive to manufacture, which helps at lower selling prices.
MacDailyNews Take: Of course, if Apple were to do this, margins would take a slight hit, but Apple Services would have an even larger pool of potential customers to subscribe to Apple Arcade, Apple Music, Apple TV+, iCloud storage, etc. Not only might it be time to keep older models around a bit longer in a recessionary economy, but it’s also a great time to launch “Apple Prime” to make subscribing to multiple Apple services more palatable.
Gregory, how do you figure that? Apple can increase its market share by quite a bit without approaching a monopoly. There will always be cheaper devices and customers that prefer Android.
We’re not living in 1929 joker, allow people back to work and the economy skyrockets again. Supply masks, gloves and new safety protocols until there is a widespread treatment/vaccine available.
“You get what you pay for” is a fine maxim and Apple has done well to confirm long-term ROI…even with premium pricing. Imo, Apple could do better with this maxim in respect to memory/storage.
The high prices either cause an exasperated sigh and, or going elsewhere to bring to needed levels with 3rd party additions. Why the continued tone-deafness in this realm and what’s the actual advantage?
For the customer, this has been nothing but a cringe-worthy moment when buying an Apple machine. I get the need for profit and healthy margins, but when it’s an overriding notion in the customer’s mind, “I’m getting taken,” hasn’t the decades-long line been crossed long enough?
I’d emphatically say, “yes.” On the same table for discussion, I’d throw iCloud storage and ATV (device). In comparison to competitors, they’re both cringe-worthy too. Lowering prices in these low unit & profit sectors would allow margins to be relatively undisturbed.
The ecosystem is healthy and well designed. Make the entry more welcoming.
If you don’t want Apple, don’t buy it get a Korean or a Chinese knock-off, this is just the same old Apple is doomed unless they go cheap for marketshare It never stops…..
Two of the worst money pits possible? No, Apple needs to get back to basics. Enough with the fashion boutique BS. The sooner Apple returns to user-focused hardware mated to intuitive software that just works, the better. As it is now, Apple across the board looks like an expensive version of Android and Slate and Chrome junk. Built-in Apple apps are weak, hardware unrepairable, RAM dramatically overpriced. Apple needs to be much, much better on all the obvious stuff.
The best example of Apple completely dominating the market in both share and profit was with the iPod. After coming out with the iPod mini (and a windoze version of iTunes), Apple’s market share took off and then they effectively killed the competition with the nano and finally shuffle.
Apple started off at the high end and progressively introduced new products with lower price points. When the shuffle came out, the competition was beaten at all price levels.
Apple were successful because they came out with products that could be priced lower and still maintain margin. Simply dropping prices wins you nothing. Remember Compaq or even Dell. Both played the share game by dropping margins and look where it got them. Dell survived by going private and Compaq got bought out by HP for a bargain.
My point is that Apple can drive out competitors in the PC market but should only do so whilst maintaining margins. The expectation is that ARM-based PCs will give them an edge over Intel-based competition. Maybe and they could potentially gain share in the mid range market.
Apple has one and only one product in the approximate realm as Porsche. I costs $6k and up and no mainstream user can justify it.
The rest of Apples products, hate to tell you, are now on par with a Cooper Mini. An overstyled FWD BMW that cuts obvious corners on usability but has an army of bloggers telling us how that is all the car you should ever need. Sorry but the iPhone company isn’t highly revered in the world of higher performance computing.
When I bought a Mac, iPhone, and 911 thanks to Apple (long since 2005 and longer with Apple products), i got the best in class, currently the cult of Tesla is up in arms over the Taycan which is the best electric car you can buy and will only get better, after owning the 911 for six months I now understand. Very fast incredibly fun to drive and the handling on another level to most cars. Apple is far ahead of the tech rabble and the Microsoft IT geeks can’t stand it Apple doesn’t need to play marketshare just make the best product and profit share will come….
This would be a good way to attract the anti-trust folks of the justice department.
Gregory, how do you figure that? Apple can increase its market share by quite a bit without approaching a monopoly. There will always be cheaper devices and customers that prefer Android.
“a recessionary economy”
Hilarious. We’re in the beginnings of a depression, and MDN only thinks it is a recession?
We’re not living in 1929 joker, allow people back to work and the economy skyrockets again. Supply masks, gloves and new safety protocols until there is a widespread treatment/vaccine available.
What would be nice is a “spec bump”- give us a 1TB SSD for the price of a HDD in an imac. Give us 256gb instead of 64gb on a iPhone pro.
“You get what you pay for” is a fine maxim and Apple has done well to confirm long-term ROI…even with premium pricing. Imo, Apple could do better with this maxim in respect to memory/storage.
The high prices either cause an exasperated sigh and, or going elsewhere to bring to needed levels with 3rd party additions. Why the continued tone-deafness in this realm and what’s the actual advantage?
For the customer, this has been nothing but a cringe-worthy moment when buying an Apple machine. I get the need for profit and healthy margins, but when it’s an overriding notion in the customer’s mind, “I’m getting taken,” hasn’t the decades-long line been crossed long enough?
I’d emphatically say, “yes.” On the same table for discussion, I’d throw iCloud storage and ATV (device). In comparison to competitors, they’re both cringe-worthy too. Lowering prices in these low unit & profit sectors would allow margins to be relatively undisturbed.
The ecosystem is healthy and well designed. Make the entry more welcoming.
If you don’t want Apple, don’t buy it get a Korean or a Chinese knock-off, this is just the same old Apple is doomed unless they go cheap for marketshare It never stops…..
ARM based notebooks. iCloud for apps and storage.
Two of the worst money pits possible? No, Apple needs to get back to basics. Enough with the fashion boutique BS. The sooner Apple returns to user-focused hardware mated to intuitive software that just works, the better. As it is now, Apple across the board looks like an expensive version of Android and Slate and Chrome junk. Built-in Apple apps are weak, hardware unrepairable, RAM dramatically overpriced. Apple needs to be much, much better on all the obvious stuff.
Same….
An Apple branded, Chromebook like device would satisfy 70, 80% of user uses for their computer.
Apple should give everybody a free year of news + and it wouldn’t hurt them but help people trying to get information.
The best example of Apple completely dominating the market in both share and profit was with the iPod. After coming out with the iPod mini (and a windoze version of iTunes), Apple’s market share took off and then they effectively killed the competition with the nano and finally shuffle.
Apple started off at the high end and progressively introduced new products with lower price points. When the shuffle came out, the competition was beaten at all price levels.
Apple were successful because they came out with products that could be priced lower and still maintain margin. Simply dropping prices wins you nothing. Remember Compaq or even Dell. Both played the share game by dropping margins and look where it got them. Dell survived by going private and Compaq got bought out by HP for a bargain.
My point is that Apple can drive out competitors in the PC market but should only do so whilst maintaining margins. The expectation is that ARM-based PCs will give them an edge over Intel-based competition. Maybe and they could potentially gain share in the mid range market.
That is why Apple will use their own CPU’s in the Mac higher margins.
Apple is doomed unless they go cheap like Porsche……
Apple has one and only one product in the approximate realm as Porsche. I costs $6k and up and no mainstream user can justify it.
The rest of Apples products, hate to tell you, are now on par with a Cooper Mini. An overstyled FWD BMW that cuts obvious corners on usability but has an army of bloggers telling us how that is all the car you should ever need. Sorry but the iPhone company isn’t highly revered in the world of higher performance computing.
Porsche makes everything from a well sorted £45k family ute kid hauler to Le Mans winning endurance racecars. An impressive range actually.
Apple makes expensive disposable portable electronics, updated less often than carmakers refresh their product. Know the difference.
When I bought a Mac, iPhone, and 911 thanks to Apple (long since 2005 and longer with Apple products), i got the best in class, currently the cult of Tesla is up in arms over the Taycan which is the best electric car you can buy and will only get better, after owning the 911 for six months I now understand. Very fast incredibly fun to drive and the handling on another level to most cars. Apple is far ahead of the tech rabble and the Microsoft IT geeks can’t stand it Apple doesn’t need to play marketshare just make the best product and profit share will come….