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"But in every single case, the newcomer also enjoys a tremendous cost advantage, usually about 30 percent." This doesn't seem to fit Apple. Their products are

by Gupie 17y ago

"But in every single case, the newcomer also enjoys a tremendous cost advantage, usually about 30 percent." This doesn't seem to fit Apple. Their products are more expensive than the competitors, e.g. iPlayer vs Zen, Mac vs PC. They market their products as being more stylist, easier to use, trendy...

tptacek 17y ago
Cost advantage has nothing to do with price or market segment. In the premium car segment, Audi has cost advantages over BMW, despite them both selling luxury vehicles. You may be confusing cost advantage with price competitiveness. A lower cost of goods, or a better-controlled supply chain, can enable price competitiveness (like it appears to have done for Apple this time), but that's only one of the benefits.
krmmalik 17y ago
I wouldn't be surprised if Apple in fact is enjoying these cost savings. They just don't happen to be passing them onto the consumer, rightly or wrongly.
- elblanco 17y ago
  It's well known that Apple regularly tries to corner manufacturing on key components for a spell. If I recall Samsung had an agreement with Apple for a number of years for nearly all of their flash memory of a certain type. http://www.engadget.com/2009/02/20/apple-once-again-squeezing-samsungs-flash-memory-supplies/ http://www.engadget.com/2009/02/20/apple-once-again-squeezin...
jimbokun 17y ago
Are you so sure? With iPod, at least, Apple has made it extremely difficult for competitors to undercut them. For example, they got bigger discounts from RAM suppliers than any of their competitors, because they were placing a bigger order. Quickly googling "zune prices" and "iPod prices" right now, for example, I see a 32GB HD Zune listing for $269 and 32GB iPod touch for $259. Microsoft can't even by the crappier, but cheaper version in the market because they don't have the scale in this market that Apple does.
- Gupie 17y ago
  Looking at Amazon the iPod is most expensive: iPod touch $269.99, Amazon Creative Zen X-Fi Touch 32GB $229.99, Zune $234.99 The difference for lower spec players is large with the iPod being twice the price of its direct competitors! iPod nano 8GB $133.99, Sony Walk 8GB $67.57, Creative Zen 9GB $87.68, Philips GoGear 8GB $69.88

by Gupie 17y ago

tptacek 17y ago

Cost advantage has nothing to do with price or market segment. In the premium car segment, Audi has cost advantages over BMW, despite them both selling luxury vehicles. You may be confusing cost advantage with price competitiveness. A lower cost of goods, or a better-controlled supply chain, can enable price competitiveness (like it appears to have done for Apple this time), but that's only one of the benefits.

krmmalik 17y ago

I wouldn't be surprised if Apple in fact is enjoying these cost savings. They just don't happen to be passing them onto the consumer, rightly or wrongly.

elblanco 17y ago
It's well known that Apple regularly tries to corner manufacturing on key components for a spell. If I recall Samsung had an agreement with Apple for a number of years for nearly all of their flash memory of a certain type. http://www.engadget.com/2009/02/20/apple-once-again-squeezing-samsungs-flash-memory-supplies/ http://www.engadget.com/2009/02/20/apple-once-again-squeezin...

jimbokun 17y ago

Are you so sure? With iPod, at least, Apple has made it extremely difficult for competitors to undercut them. For example, they got bigger discounts from RAM suppliers than any of their competitors, because they were placing a bigger order. Quickly googling "zune prices" and "iPod prices" right now, for example, I see a 32GB HD Zune listing for $269 and 32GB iPod touch for $259. Microsoft can't even by the crappier, but cheaper version in the market because they don't have the scale in this market that Apple does.

Gupie 17y ago
Looking at Amazon the iPod is most expensive: iPod touch $269.99, Amazon Creative Zen X-Fi Touch 32GB $229.99, Zune $234.99 The difference for lower spec players is large with the iPod being twice the price of its direct competitors! iPod nano 8GB $133.99, Sony Walk 8GB $67.57, Creative Zen 9GB $87.68, Philips GoGear 8GB $69.88