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Other Firms Prepare to Eat Apple's Lunch

7/19/2013 09:50 AM EDT
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Kinnar
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If the lunch does not have variety...
Kinnar   7/19/2013 1:58:20 PM
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If the lunch does not have variety to cater the entire market segment it will not be accepted by all, Apple has failed to supply the models that can be affordable to different level of purchasers. Most of the others are being able succeed by providing many variant of their models of Smartphone. So it is natural that Apple's Lunch will be surely getting eaten by others.

WielTukhut
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Re: Units vs. profit
WielTukhut   7/19/2013 2:04:44 PM
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@Tom Murphy: The article talks about units (market share), I talk about profits, as market share is irrelevant.

So I talk about profits, you start talking about stock market value, which is as irrelevant as market share.

What has market value to do with how good a company performs??? Everybody knows that stock market value is determined by people and companies manipulating stock prices (as they only make money with stock prices going up and down a lot - either way -, as long as stock prices don't stay stable).

What I say in my post is that profits and only profits matter, not market share (or stock market value). Where is the wrong direction you are talking about? Their 12 percent year-on-year growth??? Because other companies except Samsung give smartphones away (as they are not making any profits by selling smartphones), it does not mean that Apple (or Samsung) are going in the wrong direction.

chanj0
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CEO
Re: Apple Did Not Invent the Smartphone
chanj0   7/19/2013 2:12:18 PM
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I agree with you and thanks for the wiki link.

Microsoft has been trying to create the smartphone market since the CE era. Symbian follows. Nokia launched multiple products with Symbian and MeeGo. So is Ericisson. Android came next in 2003 if you still remember the bulky Android smartphone. No products were getting enough attention. At the time, iPhone was no where to be seen.

However, I have to give credit to Apple that successfully creates the smartphone market by training user to use touch screen and by leveraging capacitor touch on a glass screen. The big leap of improvement of user experience comes into place. This makes the legacy of Jobs.

If we look further back in time, Newton is no doubt the first PDA that has ever made. Although the market didn't response well. It did pave the road to the creation of iPhone. To me, iPhone is an evolutionary product starting from Newton to iPod Touch with 3G capability. In between, there are Palm, Windows CE, Symbian and Android.

eewiz
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Re: they have trying so long already
eewiz   7/19/2013 2:14:56 PM
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Hi Tom,

  First of all, there are strong rumours of a cheap lower specs iPhone coming out. which indicates that they are willing to work with lower margins. And if tablet sales is any indicator of smart phone sales, people will still chose the cheaper iPhone over similar priced Android phones with better hardware specs.

"At some tipping point, it becomes uneconomic to make them, and the trend away from high-priced phones seems to be accelerating. "

Your point about the tipping point is very valid. But the thing is, Apple makes only very limited number of device models, its pretty easy for them to hit this tipping point. Lets take the example of notebooks. Apple has 6 models and all of them share pretty much the same manufacturing process. If you want to buy a good build quality notebook, you will find that Apple's price is cheapest in the category. When I did a comparison myself for an ultrabook, I found the  similar quality windows devices cost atleast 2X that of Apple's notebook(thinkpad X1 carbon, sony Vaio a few models). These companies find hard to hit the tipping point because they sell 20 different models. 

Inshort Apple will always have the volume for the tipping point.

 

Inaddition, the only company in smartphone market which has strong brand affinity from its customers is Apple. Samsung/HTC/Sony doesnt have it. People will change Android phones based on who gives the best hardware spec at the cheapest price. 

 

Tom Murphy
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Re: they have trying so long already
Tom Murphy   7/19/2013 2:40:47 PM
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EE Wiz, You said "In short Apple will always have the volume for the tipping point."

I truly admire Apple's past innovation and Tim Cook's masterful hand in managing the supply chain.  That said, "always" is a word I've learned not to use in the tech world.  Better, faster, cheaper is what keeps the industry moving forward.  Companies in the past that depended on fat margins a big name to keep them ahead learned that the hard way. Apple has legions of fans and a boatload of cash, so right now it's their game to lose.

Tom Murphy
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Re: Units vs. profit
Tom Murphy   7/19/2013 2:46:18 PM
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WielTukhut:   Profit margin is important, but so is the size of your market. And I didn't see Apple fans writing off the equity markets as being totally corrupt last year when the stock crossed $700 a share.   Apple may do very nicely with a smaller piece of a bigger pie given their fat margin, but the move towards lower-cost phones suggests there is serious concern about this inside Apple.

Apple is highly respected for its past innovation, and I hope it can regain its edge there -- I truly do.  Because once it starts playing the margin game, it will find itself on a slippery slope with narrower margins.

mcgrathdylan
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Re: they have been trying so long already
mcgrathdylan   7/19/2013 5:52:42 PM
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I think you make a good point eewiz. Despite all the growth in smartphones, only Apple and Samsung make any money at it. The rest of the companies can knock themselves out trying to take market share from Apple, but that's not necessarily going to equate to profit.

rick merritt
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Author
Growth in the mid and low end
rick merritt   7/19/2013 6:17:13 PM
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For a while now analysts have been ssaying the brunt of the growth for smartphones will be at the mid and low end as smartphones spread across the product/market spectrum.

Historically, Apple has only played at the high end with a premium product. Cook might take a different turn in the future but it would be a very ndifferent ballgame for Apple.

 

mcgrathdylan
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Blogger
Re: Growth in the mid and low end
mcgrathdylan   7/19/2013 6:50:52 PM
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There has been a lot of speculation/conjecture about Apple coming out with lower cost iPhones. That would be a very un-Apple thing to do. I'm not sure how that would play out.

Peter Clarke
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Re: Growth in the mid and low end
Peter Clarke   7/20/2013 5:36:12 AM
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Yes

Company cultures that are successful at one business model tend to suffer and striuggle when they are wrenched in a different direction, although sometimes that wrench is necessary as the previous business model may be coming to the end of its natural arc.

So Apple might suddenly embrace narrower margins ...but that could undercut its premium-price culture (and spending habits) and make the brand less cool. The result could be a loss of sales at the high-end without the guarantee of any sales at the lower end.

People might then turn around and say that company had shot itself in the foot but it would not necessarily be true.

Maybe the thing Apple should do is invent something based on smooth user experience and premium price but in a completely different field...such as ....i don't know...personal health and wellbeing.

 

 

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