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If companies such as Apple cannot produce products at prices that people want, then they should go out of business. That helps everyone by providing them with t

If companies such as Apple cannot produce products at prices that people want, then they should go out of business. That helps everyone by providing them with the products they demand - it doesn't hurt them. Aggressive competition is a great thing. It incentivizes innovation to reduce cost and incentivizes competitors to differentiate themselves, which gives more options to consumers at lower prices. The assertion that intense competition prevents companies from providing new products is unsubstantiated by anything in the article.

jmspring 14y ago
Given the sales numbers and profits, I'm not convinced that Apple isn't already producing the products people want at the price those people are willing to pay. Race to the bottom affected the PC market. Look at how Dell, HP, and others are doing. Yes, there is a large number of consumers that are very price sensitive. When they get subsidized devices (like the Kindle with ads), some portion of that group complains about the ads. The best thing that could happen is for people to become more educated about the tradeoffs and make decisions accordingly.
- hazov 14y ago
  All these devices are really cheap to produce, Apple and Samsung are selling them for US$ 500 to US$ 600 because of their high margins. There's nothing wrong with this situation but as has happened with the PCs, consumers will probably see that there's no use sustaining prices that are high forever and when there's demand there will be supply. And boom, your will probably have a new race to the bottom.
  - jmspring 14y ago
    I am pretty sure the thing you are missing is that there will be a segment of the market that will pay more -- as is happening with apple products. There is also a segment that is all about price and these are the people buying devices accordingly. Unfortunately, there is a segment of the second group that buy cheap and then expect more. Eventually, devices will catch up to meet even the needs of those likely to complain at the lower price point.
wes-exp 14y ago
Aggressive competition is a great thing. It incentivizes innovation to reduce cost and incentivizes competitors to differentiate themselves, which gives more options to consumers at lower prices. Competition is not always beneficial. Consider copyrights and patents. These are deliberate monopolies, i.e. huge restrictions on competition, in order to foster desirable economic outcomes. As an example, if we eliminated pharmaceutical patents, this would enable greater "competition" in the pharmaceutical manufacturing industry, but guess what? Private companies would cease to invest in drug research. Meaning that, you, as the consumer, lose out on potentially new treatments being invented and brought to market.
- wycx 14y ago
  Please refrain from using the pharmaceutical industry as an ideal model for innovation, competition and new treatments fostered by patent protection. There is a significant problem with the emergence of multiple-drug resistant infections. Even with patent protection, pharma companies are not pursuing development of new antibiotics. Why? Because the economics are unfavorable. Better to have a monopoly drug like Lipitor that people have to take for the rest of their lives than an antibiotic that you only take for two weeks [1]. Patent-protection does not necessarily provide solutions that markets want. It only provides solutions that are profitable with patent protection. There is clear market failure regarding antibiotics. Where are the desirable economic outcomes and new treatments? Appealing to the pharma industry as an example of where patents work at their best is not helpful for a discussion on patents unless you identify its obvious shortcomings. [1] http://www.abc.net.au/4corners/stories/2012/10/25/3618608.htm http://www.abc.net.au/4corners/stories/2012/10/25/3618608.ht...
  - wes-exp 14y ago
    I agree that patent protection has some deep flaws in the pharmaceutical and other industries. I would even be in favor of abolishing software patents. However, this is really a tangential discussion to the original point that competition is not always beneficial. I referenced copyright and patents as examples of this idea, but the specific pros and cons of these is really a separate issue.
  - 14y ago
eddieplan9 14y ago
When China does dumping, you don't call it a good thing, right? This is essentially the same thing: taking advantage of a success business in one market to eliminate competitors in another market by pricing things at near cost or even below cost. In case of Amazon and Google, they are using money from other divisions to fund the mobile hardware division; in case of China, they are using profit from other state-owned enterprises to fund dumping in solar panel, for instance.

jmspring 14y ago

Given the sales numbers and profits, I'm not convinced that Apple isn't already producing the products people want at the price those people are willing to pay. Race to the bottom affected the PC market. Look at how Dell, HP, and others are doing. Yes, there is a large number of consumers that are very price sensitive. When they get subsidized devices (like the Kindle with ads), some portion of that group complains about the ads. The best thing that could happen is for people to become more educated about the tradeoffs and make decisions accordingly.

hazov 14y ago
All these devices are really cheap to produce, Apple and Samsung are selling them for US$ 500 to US$ 600 because of their high margins. There's nothing wrong with this situation but as has happened with the PCs, consumers will probably see that there's no use sustaining prices that are high forever and when there's demand there will be supply. And boom, your will probably have a new race to the bottom.
- jmspring 14y ago
  I am pretty sure the thing you are missing is that there will be a segment of the market that will pay more -- as is happening with apple products. There is also a segment that is all about price and these are the people buying devices accordingly. Unfortunately, there is a segment of the second group that buy cheap and then expect more. Eventually, devices will catch up to meet even the needs of those likely to complain at the lower price point.

wes-exp 14y ago

Aggressive competition is a great thing. It incentivizes innovation to reduce cost and incentivizes competitors to differentiate themselves, which gives more options to consumers at lower prices. Competition is not always beneficial. Consider copyrights and patents. These are deliberate monopolies, i.e. huge restrictions on competition, in order to foster desirable economic outcomes. As an example, if we eliminated pharmaceutical patents, this would enable greater "competition" in the pharmaceutical manufacturing industry, but guess what? Private companies would cease to invest in drug research. Meaning that, you, as the consumer, lose out on potentially new treatments being invented and brought to market.

wycx 14y ago
Please refrain from using the pharmaceutical industry as an ideal model for innovation, competition and new treatments fostered by patent protection. There is a significant problem with the emergence of multiple-drug resistant infections. Even with patent protection, pharma companies are not pursuing development of new antibiotics. Why? Because the economics are unfavorable. Better to have a monopoly drug like Lipitor that people have to take for the rest of their lives than an antibiotic that you only take for two weeks [1]. Patent-protection does not necessarily provide solutions that markets want. It only provides solutions that are profitable with patent protection. There is clear market failure regarding antibiotics. Where are the desirable economic outcomes and new treatments? Appealing to the pharma industry as an example of where patents work at their best is not helpful for a discussion on patents unless you identify its obvious shortcomings. [1] http://www.abc.net.au/4corners/stories/2012/10/25/3618608.htm http://www.abc.net.au/4corners/stories/2012/10/25/3618608.ht...
- wes-exp 14y ago
  I agree that patent protection has some deep flaws in the pharmaceutical and other industries. I would even be in favor of abolishing software patents. However, this is really a tangential discussion to the original point that competition is not always beneficial. I referenced copyright and patents as examples of this idea, but the specific pros and cons of these is really a separate issue.
- 14y ago

eddieplan9 14y ago

When China does dumping, you don't call it a good thing, right? This is essentially the same thing: taking advantage of a success business in one market to eliminate competitors in another market by pricing things at near cost or even below cost. In case of Amazon and Google, they are using money from other divisions to fund the mobile hardware division; in case of China, they are using profit from other state-owned enterprises to fund dumping in solar panel, for instance.