{"id":26171,"date":"2019-08-05T16:45:46","date_gmt":"2019-08-05T20:45:46","guid":{"rendered":"https:\/\/mjtsai.com\/blog\/?p=26171"},"modified":"2019-08-08T15:25:18","modified_gmt":"2019-08-08T19:25:18","slug":"apple-no-longer-is-the-iphone-company","status":"publish","type":"post","link":"https:\/\/mjtsai.com\/blog\/2019\/08\/05\/apple-no-longer-is-the-iphone-company\/","title":{"rendered":"Apple No Longer Is the iPhone Company"},"content":{"rendered":"

Jean-Louis Gassée<\/a>:<\/p>\n

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When the iPhone grew to represent more than 50% of Apple’s revenue, critics worried that the company was overly dependent on the device. Now, critics fret because the percentage fell to 48% in the quarter ending in June. The decline isn’t bad news; it’s the mark of a neatly maturing business that benefits from its ecosystem’s network effects.<\/p>\n

[…]<\/p>\n

Still, there is a problem to be solved: What do you do when your leading product finds itself in a saturated and stagnating market? A strong temptation is to wage a price war. When the race to the bottom ends, the last man standing is supposed to be able to raise prices back to profit-making levels.<\/p>\n

[…]<\/p>\n

Apple’s iPhone Game Plan is in plain view, repeatedly explained by its executives to Wall Street analyst in Earnings Release conference calls and other public pronouncements: Let the iPhone stay in its natural element: the Affordable Luxury segment, analogous to Audi for cars or Burberry for clothing. And, from there, play the ecosystem game.<\/p>\n<\/blockquote>\n

Why is the alternative selling products at a loss in a race-to-the-bottom? Why not trade some margin for more marketshare, which would help both the app ecosystem and services revenue? Or expand down by designing lower cost, lower end products that are nevertheless good and still have good margins.<\/p>\n

This is probably even more needed with the Mac product line. Too many potential customers are being turned away because the base prices keep going up and up.<\/p>\n\n

See also:<\/p>\n