The Mac Observer

Skip navigational links

You're viewing an article in TMO's historic archive vault. Here, we've preserved the comments and how the site looked along with the article. Use this link to view the article on our current site:
Fortune: Apple's High Margin Approach Has Risks

Fortune: Apple's High Margin Approach Has Risks

by , 12:30 PM EDT, October 11th, 2007

Bernstein Research Analyst Toni Sacconaghi has found both strength and vulnerability in Apple's high margin sales approach, according to Fortune/CNNMoney on Thursday.

Mr. Sacconaghi noted that Apple's global PC market share has increased in 10 of the last 11 quarters. It is now 2.7 percent. Also, notebook sales have been particularly strong. They account for 47 percent of Apple's unit growth.

However, the analyst sees some risk for investors. Some may think that Apple has plenty of room to grow globally, but the problem is that if one breaks down Apple's penetration into price ranges, Apple already has significant market share in the highest ranges.

The net effect is that while Apple continues to obtain high margins in the high price ranges, the tactic is not so good for gaining market share.

"Accordingly,” Sacconaghi concluded, “we believe Apple faces a trade-off in its Mac business over the next 2-3 years: either lower price (and margin percentage) to sustain share gains, or retain its current price premiums and face slowing unit growth."

Recent Headlines - Updated September 3rd

Tue,5:33 PM
MGG 517: Random Access Gab
5:19 PM
Cartoon Network Turns to iOS App Maker Pixel Press For Draw-Your-Own-Game
5:12 PM
Last Chance for 8 Award-Winning Mac Apps for $39.99
5:00 PM
Apple’s Deal with Major Credit Cards Companies Has Hidden Value
3:34 PM
Samsung Taps David Hasselhoff, Knight Rider, and K.I.T.T.4 for Smart Home Ad
3:19 PM
Apple: Celebrity Photo Theft Due to Compromised Passwords, Not iCloud Security
1:03 PM
TMO Daily Observations: 2014-09-02
11:22 AM
Analyst: New iPhones Coming, Maybe an iWatch, too
10:13 AM
Report Claims iWatch Still in Testing, No Sept 9 Unveiling
8:50 AM
Apple Lands Digital Wallet Deal with Amex, Visa, MasterCard
Mon,5:52 PM
Apple Fixes iCloud Security Gap, ‘Actively Investigates’ Celeb Photo Theft
8:00 AM
Happy Labor Day
  • __________
  • Buy Stuff, Support TMO!
  • Podcast: Mac Geek Gab
  • Podcast: Apple Weekly Report
  • TMO on Twitter!