Apple to Sacrifice Margin For Market Share?

  • Posted: 21 April 2002 05:08 PM

    According to yesterday’s comments from Fred Anderson , Apple CFO, the company may be changing it s approach to the market, willing to cut margins in an effort to gain market share.

    Is this a smart move for Apple? Is it a change that’s been a long time in coming?

    Will Apple gain serious market share by reducing its profits per unit in favor of more unit sales?

    Robert

         
  • Posted: 19 April 2002 05:02 AM #1

    As long as they manage to keep up their R&D and turn a healthy profit, I see no harm in lowering profit margins.

    Furthermore, I think Fred Anderson said that they were willing to cut margins on the iMac, he didn’t really comment on the other parts of the line-up, right? My guess is that we’ll continue to see lower prices for the consumer bits and slight lower prices for the professional machines.

    What I also thought of is that, maybe, Apple is now earning enough from their software products (WebObjects, Powerschool, Final Cut Pro, DVD Studio Pro) that they can afford to lower the prices on the hardware a bit.

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    Eindvijand

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    Posted: 20 April 2002 08:28 AM #2

    Mr. Anderson basically meant that Apple wasn’t going to raise prices any more than they did.  In other words, that 2% in gross margins is already accounted for in the lower-than-it-could-have-been price hike for the iMac.

    And no, I don’t think we will see prices fall on the rest of the product line.

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  • Posted: 20 April 2002 05:28 PM #3

    On 2002-04-20 11:28, Bryan wrote:
    Mr. Anderson basically meant that Apple wasn’t going to raise prices any more than they did.  In other words, that 2% in gross margins is already accounted for in the lower-than-it-could-have-been price hike for the iMac.

    And no, I don’t think we will see prices fall on the rest of the product line.

    I agree. I don’t see Apple lowering prices. In fact, I was at Fry’s today looking at laptops. I’m suprised at how much Windows laptops have come up in price. The belief that Macs cost more is becoming a mere myth.

    Apple has chosen not to cheapen its components to maintain margin. The drop in PC sales has changed the dynamics of the market. PC makers need to cover costs over fewer units. There is tremendous upward price pressure on PC makers.

    I believe Apple is uniquely positioned for the economic recovery. Storng brand image, quality products and by the end of 2002, 49 retail stores located in high traffic retail centers.

    Robert

     

         
  • Posted: 21 April 2002 05:08 PM #4

    Interesting, DT.  Great post.

    You could well be right.

    I have always believed there was a silver lining somewhere from Apple.  Maybe 2002 will be it.

    I do think the laptop is the next big issue for a possible jump.  The 14” iBook is really nice.  I really think Apple needs a couple of more laptops, e.g. a smaller (high powered) Ti for professionals, or some kind of Palm-like device for consumers. Or some other variant. 

    TMO enthusiast.