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 April 23rd

Tue, 8:00 PM
Apple v. Samsung: Google to Cover Some Costs, Assume Some Liability
7:30 PM
Apple Expands In-Store Trade-In Program to iPads and More
2:45 PM
Apple to Samsung: If You Want to Copy Us, Think Environment
2:14 PM
Apple Releases Security Update 2014-002 for Mavericks, Lion, Mountain Lion
1:09 PM
Apple Rolls Out 6.1.1 Update for 2nd, 3rd Gen Apple TV
1:03 PM
Apple Releases iOS 7.1.1 with Improved Touch ID, Bug Fixes
11:45 AM
Jailbroken iPhones Give Up Apple IDs in Malware Attack
10:01 AM
Report Claims Rumored 5.5-inch iPhone 6 Delayed Until 2015
9:08 AM
Apple Hires FDA Expert Divya Nag for Health and Fitness Team
Mon, 7:45 PM
How Apple Could Have Increased iPad Sales, But Didn’t
7:12 PM
Google Camera Saves The World…From Vertical Video
6:55 PM
Samsung Argues that Apple Should Get $38.4 million, Not $2 Billion
  • __________
  • Buy Stuff, Support TMO!
  • Podcast: Mac Geek Gab
  • Podcast: Apple Weekly Report
  • TMO on Twitter!