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Apple makes money chiefly by selling devices to the public. Joe needs a phone, walks into an Apple store plays with an iPhone and buys one. Suprise works here

by Steko 15y ago

Apple makes money chiefly by selling devices to the public. Joe needs a phone, walks into an Apple store plays with an iPhone and buys one. Suprise works here because of the burst of publicity and the ease of purchase. This approach is based on limited supply and tries to maximize dollars per unit. Microsoft's Windows platform makes money chiefly by selling OS licenses to hardware companies like Dell. Every month these companies write 8+ digit checks to Microsoft. The multi-year roadmaps involved make surprise a disadvantage. This approach seeks to maximize $100 licenses. Sony's Playstation platform makes money chiefly by taking a cut from other developers. Sony convinces someone like EA to develop for their system and makes $5 every time one of us buys an EA game for $50. The development lead time involved means the announcement has to be at least a year in advance. Amazon's Kindle platform also makes money chiefly by taxing the ecosystem (in this case e-books). However the lead time to produce an e-book is minimal and so surprise again works. Nintendo puts another twist it -- they make money chiefly by selling blockbuster first party titles on their own platform. Google makes money chiefly by selling ads. A company or ad agency writes Google a check with an expected level of visibility. This approach seeks to maximize units and industry growth (even competitors). Facebook I guess we can expeect the same approach, trying to get aunt millie with the 10 year old cel phone onto a smartphone. Maybe I should say something about phone hardware vendors like HTC who sell phones to carriers complete with rebranding, etc.

DougBTX 15y ago
> and tries to maximize dollars per unit. I've never really understood this line as applied to Apple, since I don't recall them dropping prices after the initial release. If they did I'd expect a "wait two months for the prices to drop" meme, but I've never heard that recommendation.
- Steko 15y ago
  There's no guarantee that supply increases indefinitely. At some point it will negatively affect your margin per unit. Until you get to that point I guess the goal is to manage demand by staggering releases to different areas and segments. Even so sometimes your margin goes down but the consumer price is the same like when Apple expanded ipad sales thru Walmart/Best Buy/Target/whoever 6 months after the ipad launched when their supply started to ramp up. Their margin for an ipad at Best Buy is what 15% lower then if they sell it direct but the customer pays the same price.
  - objclxt 15y ago
    ...than if they sell it direct through the online store, perhaps. I would imagine the overall margins to Apple on an iPad sold in a Best Buy and an iPad sold in an Apple Store are similar, because Apple Stores are typically located on extremely expensive real estate and have much higher running costs than Best Buy stores. Apple obviously would prefer you to buy it in an Apple Store, because they have more control over the consumer relationship and experience - but running a physical retail store is not cheap, and that's a cost Apple has to cover if they sell direct, which they don't if they sell via Best Buy.
PakG1 15y ago
I'd be curious on a statistical breakdown comparing average book authorship time to volume of sales and gross revenue of sales. Because quality books always take a long time to write. Already written books are easy to put up for sale, yes, but I'm curious about the data for new productions.

by Steko 15y ago

DougBTX 15y ago

> and tries to maximize dollars per unit. I've never really understood this line as applied to Apple, since I don't recall them dropping prices after the initial release. If they did I'd expect a "wait two months for the prices to drop" meme, but I've never heard that recommendation.

Steko 15y ago
There's no guarantee that supply increases indefinitely. At some point it will negatively affect your margin per unit. Until you get to that point I guess the goal is to manage demand by staggering releases to different areas and segments. Even so sometimes your margin goes down but the consumer price is the same like when Apple expanded ipad sales thru Walmart/Best Buy/Target/whoever 6 months after the ipad launched when their supply started to ramp up. Their margin for an ipad at Best Buy is what 15% lower then if they sell it direct but the customer pays the same price.
- objclxt 15y ago
  ...than if they sell it direct through the online store, perhaps. I would imagine the overall margins to Apple on an iPad sold in a Best Buy and an iPad sold in an Apple Store are similar, because Apple Stores are typically located on extremely expensive real estate and have much higher running costs than Best Buy stores. Apple obviously would prefer you to buy it in an Apple Store, because they have more control over the consumer relationship and experience - but running a physical retail store is not cheap, and that's a cost Apple has to cover if they sell direct, which they don't if they sell via Best Buy.

PakG1 15y ago

I'd be curious on a statistical breakdown comparing average book authorship time to volume of sales and gross revenue of sales. Because quality books always take a long time to write. Already written books are easy to put up for sale, yes, but I'm curious about the data for new productions.