4 ms·

Apple Chiefs Discuss Strategy, Market Share, and the New iPhones

6 points by lazydon 13y ago

outside1234 13y ago
I get what he's saying but it rubs me the wrong way. What he is saying is that he only wants to serve the richest 10% of the market. That's his choice. But I think it will ultimately be their demise. The rest of the world needs phones too. Is an iPhone 4 class phone really so out of date that someone in India can't use it? I think they could. I think it'd be orders of magnitude better than what they currently use. What I think is this: He is worried that nobody would buy the 5S if there was a cheap 4 because the 4 is what 90% of us need (not want) and is at the price point that the 90% of us need it to be at.
- bsullivan01 13y ago
  It will probably dilute their brand, or so they think. This way they know what everyone is talking about and everything they have is in the phone, no feature missing in this version or that version. For example, a lot of times I hear Lumia this and that, only to find out that it's about a certain version. The world is pretty large so even 1x%-2x% is huge.
- nonchalance 13y ago
  90% of the economic profits are to be found in the top 10% of the market. Simple as that. By going after the low-end, they are chasing after a market which is arguably smaller in profits than the market they have yet to capture (namely the high end -- they are strong but haven't expanded to everyone yet) and risk losing customers (that would get the low-end device rather than the high-end) The flaw in your logic manifests itself in many places, including app store revenues (comparing iOS to Android)
  - owenmarshall 13y ago
    > The flaw in your logic manifests itself in many places, including app store revenues (comparing iOS to Android) I think this is what so many people ignore when trying to compare ecosystems. People who have a major focus on what they spend on their phone are also going to have a major focus on what they spend on phones. The last figures I heard: Android lead iOS by 10% on app downloads, but the iOS App Store generated over 2x revenue.
- smith7018 13y ago
  > I think it will ultimately be their demise. It's funny how people have been saying that since the first iPod came out and yet here we are.
- TenTo100 13y ago
  Um iPhone4 _is_ sold in India.. at the equivalent of > $500. On the other hand, there are mobile carriers galore selling phones with near top-end specs (quad-core, HD, extensible memory... and the clincher, dual-SIM!) and no-skin Android (4.2+) at $150 or less.
cageface 13y ago
There's a lot of middle ground between Apple's current exceptional margins and the bottom feeders. I'm not sure why this is always cast in such black & white terms. Apple has a lot of pricing options open here that would enlarge their market share without sacrificing anything essential in performance or build quality. And please let's not have any Mercedes analogies. It doesn't matter to me what car my friends drive but the network effects of mobile ecosystems are very real.
- bsullivan01 13y ago
  It doesn't matter to me what car my friends drive but the network effects of mobile ecosystems are very real. True, very true. But so far is very healthy and I suppose Tim Cook will eat these words if their ecosystem was in danger of being neglected by developers.
- simonh 13y ago
  Except that Apple really honestly don't care about market share. They want to capture the high margins and profits in the premium end of the market, and that's it. Going too far down market would threaten to undercut the value proposition of their premium products too much. The corollary of this is that Apple knows there is a large 'junk' end of the market, and they don't care who captures it. Android, Windows Phone, Blackberry, Symbian? It doesn't matter. There's not enough profit there to be worth it. It happens to be that Android has captured the lion's share of that end of the market, and therefore dominates sales numbers. Doesn't matter. Whether one OS dominates the low end, or a dozen OSes split it between them makes no difference to Apple as long as they keep producing consistently high quality products that sell well. Just look at the PC industry. Apple makes as much or more profit than all the Windows licensees put together. Windows market share domination has actually played into Apple's hands by forcing Windows Licensees in a race to the bottom against each other, leaving Apple the only high quality premium PC hardware vendor outside the server market. Selling lower priced Macs would just undercut their own high end sales and margins, and the same goes for phones.
  - cageface 13y ago
    These are the same black & white terms people usually use to frame this debate but the iPad mini has already demonstrated that there's room under the premium tier for quality products and healthy margins. Apple's dwindling market share undermines their efforts to establish Facetime, iMessage, iCloud etc as popular services. The problem with dismissing the low end of the market as "junk" is that this segment of the market is increasingly made up of reasonably capable phones with Android 4.x, which is good enough to serve most people's needs. We've already hit the point of diminishing returns on increasingly powerful mobile chips.
001sky 13y ago
Title:Apple's Cook: "We' re not in junk business" Actual Title: Apple Chiefs Discuss Strategy, Market Share—and the New iPhones
dannyr 13y ago
Not sure about the context but Tim Cook's statement sounds arrogant. People in 3rd-world countries use these "junk" phones to improve their lives. Even here in the US, some of the poor doesn't own a PC but own a cheap Android phone.
grecy 13y ago
> Apple’s market share is bigger than BMW’s or Mercedes’s or Porsche’s in the automotive market. What’s wrong with being BMW or Mercedes? That's the money quote to me. For some reason everyone continues to think Apple should try to be the Toyota or Kia of the computer world, but in reality, it's perfectly acceptable to be BMW or Mercedes.
- kanamekun 13y ago
  There are differences between being a product marketplace and a platform marketplace... the article touches on what might happen if Apple loses their status as the preferred mobile platform: << Android’s growth has far more important implications than just bragging rights. Developers tend to make apps for iOS before coming up with a version for Android. If Android continues to show up on more devices, the order could flip. As of 2013’s second quarter, Apple’s App Store generated 2.3 times more revenue than Google’s app store, Google Play, according to App Annie, an analytics firm. But Google Play had 10 percent more downloads overall. It’s one thing to cede a portion of the market because it’s racing toward the lowest possible price, but what if that market becomes the center of gravity for the entire industry? >>
- devx 13y ago
  You make it sound as if that's some original thought from Apple headquarters. I've seen that comparison for years in blog comments. I swear sometimes it felt that even Steve Jobs got his talking points from blog comments.
  - grecy 13y ago
    Oh no, not at all. I realize this has been around for a long, long time (in fact the quote is attributed to Jobs). I personally think it's as important today as it was back then, and people need to be reminded of it.
ahnda 13y ago
So their answer to Android eating their lunch in market share is, "we weren't hungry anyway"?

6 points by lazydon 13y ago

I get what he's saying but it rubs me the wrong way. What he is saying is that he only wants to serve the richest 10% of the market. That's his choice. But I think it will ultimately be their demise. The rest of the world needs phones too. Is an iPhone 4 class phone really so out of date that someone in India can't use it? I think they could. I think it'd be orders of magnitude better than what they currently use. What I think is this: He is worried that nobody would buy the 5S if there was a cheap 4 because the 4 is what 90% of us need (not want) and is at the price point that the 90% of us need it to be at.

bsullivan01 13y ago
It will probably dilute their brand, or so they think. This way they know what everyone is talking about and everything they have is in the phone, no feature missing in this version or that version. For example, a lot of times I hear Lumia this and that, only to find out that it's about a certain version. The world is pretty large so even 1x%-2x% is huge.
nonchalance 13y ago
90% of the economic profits are to be found in the top 10% of the market. Simple as that. By going after the low-end, they are chasing after a market which is arguably smaller in profits than the market they have yet to capture (namely the high end -- they are strong but haven't expanded to everyone yet) and risk losing customers (that would get the low-end device rather than the high-end) The flaw in your logic manifests itself in many places, including app store revenues (comparing iOS to Android)
- owenmarshall 13y ago
  > The flaw in your logic manifests itself in many places, including app store revenues (comparing iOS to Android) I think this is what so many people ignore when trying to compare ecosystems. People who have a major focus on what they spend on their phone are also going to have a major focus on what they spend on phones. The last figures I heard: Android lead iOS by 10% on app downloads, but the iOS App Store generated over 2x revenue.
smith7018 13y ago
> I think it will ultimately be their demise. It's funny how people have been saying that since the first iPod came out and yet here we are.
TenTo100 13y ago
Um iPhone4 _is_ sold in India.. at the equivalent of > $500. On the other hand, there are mobile carriers galore selling phones with near top-end specs (quad-core, HD, extensible memory... and the clincher, dual-SIM!) and no-skin Android (4.2+) at $150 or less.

cageface 13y ago

There's a lot of middle ground between Apple's current exceptional margins and the bottom feeders. I'm not sure why this is always cast in such black & white terms. Apple has a lot of pricing options open here that would enlarge their market share without sacrificing anything essential in performance or build quality. And please let's not have any Mercedes analogies. It doesn't matter to me what car my friends drive but the network effects of mobile ecosystems are very real.

bsullivan01 13y ago
It doesn't matter to me what car my friends drive but the network effects of mobile ecosystems are very real. True, very true. But so far is very healthy and I suppose Tim Cook will eat these words if their ecosystem was in danger of being neglected by developers.
simonh 13y ago
Except that Apple really honestly don't care about market share. They want to capture the high margins and profits in the premium end of the market, and that's it. Going too far down market would threaten to undercut the value proposition of their premium products too much. The corollary of this is that Apple knows there is a large 'junk' end of the market, and they don't care who captures it. Android, Windows Phone, Blackberry, Symbian? It doesn't matter. There's not enough profit there to be worth it. It happens to be that Android has captured the lion's share of that end of the market, and therefore dominates sales numbers. Doesn't matter. Whether one OS dominates the low end, or a dozen OSes split it between them makes no difference to Apple as long as they keep producing consistently high quality products that sell well. Just look at the PC industry. Apple makes as much or more profit than all the Windows licensees put together. Windows market share domination has actually played into Apple's hands by forcing Windows Licensees in a race to the bottom against each other, leaving Apple the only high quality premium PC hardware vendor outside the server market. Selling lower priced Macs would just undercut their own high end sales and margins, and the same goes for phones.
- cageface 13y ago
  These are the same black & white terms people usually use to frame this debate but the iPad mini has already demonstrated that there's room under the premium tier for quality products and healthy margins. Apple's dwindling market share undermines their efforts to establish Facetime, iMessage, iCloud etc as popular services. The problem with dismissing the low end of the market as "junk" is that this segment of the market is increasingly made up of reasonably capable phones with Android 4.x, which is good enough to serve most people's needs. We've already hit the point of diminishing returns on increasingly powerful mobile chips.

001sky 13y ago

Title:Apple's Cook: "We' re not in junk business" Actual Title: Apple Chiefs Discuss Strategy, Market Share—and the New iPhones

dannyr 13y ago

Not sure about the context but Tim Cook's statement sounds arrogant. People in 3rd-world countries use these "junk" phones to improve their lives. Even here in the US, some of the poor doesn't own a PC but own a cheap Android phone.

grecy 13y ago

> Apple’s market share is bigger than BMW’s or Mercedes’s or Porsche’s in the automotive market. What’s wrong with being BMW or Mercedes? That's the money quote to me. For some reason everyone continues to think Apple should try to be the Toyota or Kia of the computer world, but in reality, it's perfectly acceptable to be BMW or Mercedes.

kanamekun 13y ago
There are differences between being a product marketplace and a platform marketplace... the article touches on what might happen if Apple loses their status as the preferred mobile platform: << Android’s growth has far more important implications than just bragging rights. Developers tend to make apps for iOS before coming up with a version for Android. If Android continues to show up on more devices, the order could flip. As of 2013’s second quarter, Apple’s App Store generated 2.3 times more revenue than Google’s app store, Google Play, according to App Annie, an analytics firm. But Google Play had 10 percent more downloads overall. It’s one thing to cede a portion of the market because it’s racing toward the lowest possible price, but what if that market becomes the center of gravity for the entire industry? >>
devx 13y ago
You make it sound as if that's some original thought from Apple headquarters. I've seen that comparison for years in blog comments. I swear sometimes it felt that even Steve Jobs got his talking points from blog comments.
- grecy 13y ago
  Oh no, not at all. I realize this has been around for a long, long time (in fact the quote is attributed to Jobs). I personally think it's as important today as it was back then, and people need to be reminded of it.

ahnda 13y ago

So their answer to Android eating their lunch in market share is, "we weren't hungry anyway"?