4 ms·

This reminds me of the arguments about whether popular bands should raise ticket prices on the one hand, or create the conditions for ticket scalpers on the oth

This reminds me of the arguments about whether popular bands should raise ticket prices on the one hand, or create the conditions for ticket scalpers on the other. Let's say Apple wants to be as innovative in hardware as a company like Essential – and therefore use components or manufacturing processes that aren't available at the scale of tens of millions per quarter. What should Apple do? * Not innovate. Leave this for smaller companies; wait for the price to come down. Risk: lose market, engineers, and ability to build competence, to other companies. * Release in limited supply at a low price; leave the surplus to rent seekers (scalpers). Risk: Leaves money on the table; insert middleman in relationship between Apple and (ultimate) customers. * Release in limited supply at a low price; attempt to control scalping by limiting sales per customer and locking phones to the original purchaser. Risk: Complicated mechanism that people will hate. * Charge a higher price, in order to set demand to supply. Risk: Bad image; magnifies effects of wealth inequality.

hyperpallium 9y ago
An interesting analysis in general; though just for this specific case, this phone is more a different niche, than purely better. It's larger and heavier. There are technologies, like process nodes, that improve on several dimensions, and while I'm sure the military has access to "future" process nodea, the yields are just so dramatically low (and also therefore dramatically more expensive), that it's not really feasible for a mainstream product. The adgances it will have will be much less profound: more CPU cores, more GPU cores, maybe higher clocking, and a heavier battery to power it all. So, it's simply an attempt to broaden the product line, like the "plus" and (unsuccessful) "C" models. Also, given that Apple sold a $10,000+ watch, they probably don't mind charging more. Though, it'll be priced to sell (which that watch didn't). However, given that phones have overshot most people's needs (e.g. 5s iPhones are still selling well), Apple will soon need a killer app that requires all that power... like AR. Unfortunately, there's no indication that AR is a killer app. Who knows, maybe Apple will change that.
Alterlife 9y ago
* Sell previous years iPhones at competitive prices In India, the SE was recently on sale for Rs. 18500 after discounts and cashbacks are accounted for... with budget alternatives.
EddieRingle 9y ago
Couldn't they also invest some of their massive cash reserves into production and R&D?
- dmix 9y ago
  Yes but I don't see how that would affect their pricing strategy? Cash reserves make it easier for them to make a riskier play into the luxury market. But in the long-run the reserve is only a temporary fallback not a sustainable model. Pushing the price up makes it easier to play with the price margins and add more expensive parts. It could also be fueled by the output of their R&D but they could also see the value proposition they offer as justifying a higher price from entirely non-functional aspects (ie non-software/hardware innovation), just merely the emotional draw of the product via design and branding. The measure is whether people still want the product as much rather than whether it does x & y better than the competitors. People tend to discount the utility of emotional appeal and the connection people have to the products they use daily. Instead focusing on CPU speeds or raw feature comparisons.

hyperpallium 9y ago

An interesting analysis in general; though just for this specific case, this phone is more a different niche, than purely better. It's larger and heavier. There are technologies, like process nodes, that improve on several dimensions, and while I'm sure the military has access to "future" process nodea, the yields are just so dramatically low (and also therefore dramatically more expensive), that it's not really feasible for a mainstream product. The adgances it will have will be much less profound: more CPU cores, more GPU cores, maybe higher clocking, and a heavier battery to power it all. So, it's simply an attempt to broaden the product line, like the "plus" and (unsuccessful) "C" models. Also, given that Apple sold a $10,000+ watch, they probably don't mind charging more. Though, it'll be priced to sell (which that watch didn't). However, given that phones have overshot most people's needs (e.g. 5s iPhones are still selling well), Apple will soon need a killer app that requires all that power... like AR. Unfortunately, there's no indication that AR is a killer app. Who knows, maybe Apple will change that.

Alterlife 9y ago

* Sell previous years iPhones at competitive prices In India, the SE was recently on sale for Rs. 18500 after discounts and cashbacks are accounted for... with budget alternatives.

EddieRingle 9y ago

Couldn't they also invest some of their massive cash reserves into production and R&D?

dmix 9y ago
Yes but I don't see how that would affect their pricing strategy? Cash reserves make it easier for them to make a riskier play into the luxury market. But in the long-run the reserve is only a temporary fallback not a sustainable model. Pushing the price up makes it easier to play with the price margins and add more expensive parts. It could also be fueled by the output of their R&D but they could also see the value proposition they offer as justifying a higher price from entirely non-functional aspects (ie non-software/hardware innovation), just merely the emotional draw of the product via design and branding. The measure is whether people still want the product as much rather than whether it does x & y better than the competitors. People tend to discount the utility of emotional appeal and the connection people have to the products they use daily. Instead focusing on CPU speeds or raw feature comparisons.