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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 te

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.
  - gwright 13y ago
    I tend to agree with you that partitioning the market into two tiers ("junk" and "premium" in particular) is an artificial distinction but I disagree with your characterization of the iPad mini as something from the bottom tier. It is a different form factor, but that isn't the same thing as lower quality or less featureful. Apple isn't afraid to use form factors, feature sets, and multiple SKUs to partition the market it is just that they focus on partitioning the upper-end of the market and not the entire market. I wonder if Apple could ever manage multiple brands to partition the market even further in the way that Gap Inc, partitions the clothing retail market via its Banana Republic, Gap, and Old Navy brands.
    - cageface 13y ago
      I disagree with your characterization of the iPad mini as something from the bottom tier. My point is that the iPad mini is neither premium nor junk, but somewhere in the middle. It expands Apple's user base and makes them a tidy per-unit profit. Like a lot of people, I was hoping the iPhone 5C would be a similarly mid-tier priced device that would open up new markets for them but unfortunately (IMO) a premium-priced phone.
  - simonh 13y ago
    I'm a Mac mini owner myself and its clearly a premium product. Mine is laser cut out of a single block of Aluminium and cost over £1000. You can check my posts (as simon.hibbs) about it in the Mac Mini forums on Macrumors when I bought it last December. EDIT sorry, you said iPad mini. The tablets that were openly derided at launch as being far too over priced to possibly compete with the Nexus 7. The one that costs about 30% more than similarly specced Android devices. As for 'good enough', you're absolutely correct, but Windows has been good enough for over a decade. That doesn't seem to have helped the windows PC vendors all that much. I fully understand why you think the way you do, but for you're not actually engaging with my points. You're just try to rationalise why Apple can't possible get away with doing what they have actually been doing very successfully for decades.

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.
- gwright 13y ago
  I tend to agree with you that partitioning the market into two tiers ("junk" and "premium" in particular) is an artificial distinction but I disagree with your characterization of the iPad mini as something from the bottom tier. It is a different form factor, but that isn't the same thing as lower quality or less featureful. Apple isn't afraid to use form factors, feature sets, and multiple SKUs to partition the market it is just that they focus on partitioning the upper-end of the market and not the entire market. I wonder if Apple could ever manage multiple brands to partition the market even further in the way that Gap Inc, partitions the clothing retail market via its Banana Republic, Gap, and Old Navy brands.
  - cageface 13y ago
    I disagree with your characterization of the iPad mini as something from the bottom tier. My point is that the iPad mini is neither premium nor junk, but somewhere in the middle. It expands Apple's user base and makes them a tidy per-unit profit. Like a lot of people, I was hoping the iPhone 5C would be a similarly mid-tier priced device that would open up new markets for them but unfortunately (IMO) a premium-priced phone.
- simonh 13y ago
  I'm a Mac mini owner myself and its clearly a premium product. Mine is laser cut out of a single block of Aluminium and cost over £1000. You can check my posts (as simon.hibbs) about it in the Mac Mini forums on Macrumors when I bought it last December. EDIT sorry, you said iPad mini. The tablets that were openly derided at launch as being far too over priced to possibly compete with the Nexus 7. The one that costs about 30% more than similarly specced Android devices. As for 'good enough', you're absolutely correct, but Windows has been good enough for over a decade. That doesn't seem to have helped the windows PC vendors all that much. I fully understand why you think the way you do, but for you're not actually engaging with my points. You're just try to rationalise why Apple can't possible get away with doing what they have actually been doing very successfully for decades.