3 ms·

Using Android would put them in direct competition with (very) low-margin Chinese manufacturers. This is the "Android is the race for the bottom" argument. It

by ergo98 16y ago

Using Android would put them in direct competition with (very) low-margin Chinese manufacturers. This is the "Android is the race for the bottom" argument. It is perplexing how it keeps getting a free pass on here. Nonetheless, for the sake of argument let's go with the notion that Android really is the domain of "(very) low-margin Chinese manufacturers" (ignore that the top selling devices are high-end devices like the Droid X, Galaxy S, Desire Z, etc), would having their own OS really defend Nokia from competing with them? Of course it wouldn't. Android isn't taking marketshare from Android -- it's taking it from every other maker. You can't stick your head in the sand and pretend that somehow that helps your margins. Consumers generally consider every other option available out there. This is what Apple got right: if you have your own operating system and ecosystem nailed down correctly, people do not mind paying larger margins, and you are in a different game. It's interesting to consider that in the PC space Apple used to control their own hardware, even developing their own chips. It was a disaster. Now they use commodity hardware with a glossy shine, and it has dramatically helped their bottom line: They differentiate on top of the common, and that is their secret to success. This is almost entirely the case with the iPhone as well, where the processor is made by Samsung, the wireless chipset by broadcom, the screen by various manufacturers, etc. The whole "the iPhone model proves the case" analysis is a profound example of a confirmation bias. You can't throw a corpse without finding a dozen counter-examples where such a "go your own way" model was an absolute, unabated disaster (including about 90% of Apple's existence), yet somehow that conclusion keeps getting restated like it's a scientific fact. It's absurdity.

danieldk 16y ago
It's absurdity. No, it's not. There are always counterexamples, but in your argument you completely ignore margins in the PC and laptop market. The vast majority of laptop and PCs are sold at low margins. Since most manufacturers cannot compete one software, they compete on price. One of the few vendors that makes large margins has its own operating system. Of course, Macs are nice hardware-wise, but most people will switch 'because it is not Windows'. This doesn't mean that every company differentiating on software-succeeds. ignore that the top selling devices are high-end devices like the Droid X, Galaxy S, Desire Z, etc The smartphone market is relatively small and new, as is Android. The race to the bottom has just started.
- ergo98 16y ago
  No, it's not. There are always counterexamples, but in your argument you completely ignore margins in the PC and laptop market. Just to digress for a minute, a related memes that I keep reading is "Apple is comfortable in their very profitable niche". Through most of Apple's history, their niche was remarkably unprofitable. In 2001 Apple lost $52 million dollars, while Dell made $3.19 billion. How does that play into your theory? In 1997 Apple lost $1.08 billion dollars, while Dell made $747 million. I could find counter-example after counter-example. The smartphone market is relatively small and new, as is Android. The race to the bottom has just started. Competitiveness is indeed just kicking off in earnest. No company is immune to it, and pointing to Apple's tremendous success at leveraging iTunes and their iPod franchise into a lucrative smartphone initiative in no way can be applied to anyone else. Again, there are endless counter-examples (how's Amiga doing these days? Atari? The ST was a pretty great machine, so they must be storming the margins), yet you demonstrated a perfect and remarkably myopic confirmation bias to demonstrate a competitive lesson.
  - danieldk 16y ago
    Through most of Apple's history, their niche was remarkably unprofitable. Yes. And it is common knowledge that Apple was notably mismanaged company during the nineties. Explain Apple's popularity, taking OS X and iOS completely out of the equation. Now think why Jobs refuses to set up licensing contracts with other vendors. Those iMacs and iPhones don't look so interesting anymore if you can get a HP computer/phone with OS X/iOS two third of the price, one and a half times the performance. I am pretty sure the majority of the Mac users that I know would've bought HP.
    - redrobot5050 16y ago
      >I am pretty sure the majority of the Mac users that I know would've bought HP. Its funny you say that. Apple Cinema displays used to be the exact same LCD display as HP displays, except they had a FireWire and USB hub built into them. They also cost $400 more. Even if Apple licensed to clone vendors again, it's unlikely HP would produce third third the price and one and a half times the performance. Apple's Pro lines remain competitive with the market. Apple also led the way in doing things like putting accelerometers in laptops and swivel/tilt controls, Etc. HP could have done that with their hardware on the windows side (and written/loaded drivers for the hw) but choose instead to sell a bland box. Perhaps this is why Apple's hardware offerings continue to look interesting in light of cheaper alternatives.

by ergo98 16y ago

danieldk 16y ago

It's absurdity. No, it's not. There are always counterexamples, but in your argument you completely ignore margins in the PC and laptop market. The vast majority of laptop and PCs are sold at low margins. Since most manufacturers cannot compete one software, they compete on price. One of the few vendors that makes large margins has its own operating system. Of course, Macs are nice hardware-wise, but most people will switch 'because it is not Windows'. This doesn't mean that every company differentiating on software-succeeds. ignore that the top selling devices are high-end devices like the Droid X, Galaxy S, Desire Z, etc The smartphone market is relatively small and new, as is Android. The race to the bottom has just started.

ergo98 16y ago
No, it's not. There are always counterexamples, but in your argument you completely ignore margins in the PC and laptop market. Just to digress for a minute, a related memes that I keep reading is "Apple is comfortable in their very profitable niche". Through most of Apple's history, their niche was remarkably unprofitable. In 2001 Apple lost $52 million dollars, while Dell made $3.19 billion. How does that play into your theory? In 1997 Apple lost $1.08 billion dollars, while Dell made $747 million. I could find counter-example after counter-example. The smartphone market is relatively small and new, as is Android. The race to the bottom has just started. Competitiveness is indeed just kicking off in earnest. No company is immune to it, and pointing to Apple's tremendous success at leveraging iTunes and their iPod franchise into a lucrative smartphone initiative in no way can be applied to anyone else. Again, there are endless counter-examples (how's Amiga doing these days? Atari? The ST was a pretty great machine, so they must be storming the margins), yet you demonstrated a perfect and remarkably myopic confirmation bias to demonstrate a competitive lesson.
- danieldk 16y ago
  Through most of Apple's history, their niche was remarkably unprofitable. Yes. And it is common knowledge that Apple was notably mismanaged company during the nineties. Explain Apple's popularity, taking OS X and iOS completely out of the equation. Now think why Jobs refuses to set up licensing contracts with other vendors. Those iMacs and iPhones don't look so interesting anymore if you can get a HP computer/phone with OS X/iOS two third of the price, one and a half times the performance. I am pretty sure the majority of the Mac users that I know would've bought HP.
  - redrobot5050 16y ago
    >I am pretty sure the majority of the Mac users that I know would've bought HP. Its funny you say that. Apple Cinema displays used to be the exact same LCD display as HP displays, except they had a FireWire and USB hub built into them. They also cost $400 more. Even if Apple licensed to clone vendors again, it's unlikely HP would produce third third the price and one and a half times the performance. Apple's Pro lines remain competitive with the market. Apple also led the way in doing things like putting accelerometers in laptops and swivel/tilt controls, Etc. HP could have done that with their hardware on the windows side (and written/loaded drivers for the hw) but choose instead to sell a bland box. Perhaps this is why Apple's hardware offerings continue to look interesting in light of cheaper alternatives.