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 July 7th

Mon,9:29 PM
Amazon Cloud Drive Comes to iOS App Store
7:40 PM
PHATASS, the Prince Harvey Rap Album Recorded at an Apple Store
5:55 PM
An Electric Car Won this Year’s Pikes Peak Hill Climb
5:20 PM
Keyport High-Tech Multi-Tool: $39.99
5:15 PM
Apple Stores Are Holding the New MacBooks Captive
3:20 PM
3 Free iPhone Apps for Tracking the International Space Station
1:11 PM
TMO Daily Observations 2015-07-06: Dr. Mac’s Apple Music and Siri Problems
10:49 AM
Amazon Invents the New Black Friday: Prime Day
9:32 AM
How to Control Apple Music “For You” Playlists
Fri,6:36 PM
iCloud Music Library and DRM: Now with Slightly Less Disaster
9:38 AM
Apple Music - Or Some Streaming Service - Needs To Steal Discovery From Napster
8:00 AM
Happy U.S. Independence Day
  • __________
  • Buy Stuff, Support TMO!
  • Podcast: Mac Geek Gab
  • Podcast: Apple Weekly Report
  • TMO on Twitter!