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 TMO Headlines - Updated January 22nd

Fri, 4:33 PM
How To Maximize the Good From AI Augmenting Humanity - A Quick Take
Fri, 3:43 PM
Someone Reverse Engineered 'Wordle', Here are the Secrets
Fri, 3:23 PM
Merck Wins Court Dispute Over 'NotPetya' Attack
Fri, 2:48 PM
YouTuber Ruben Sim Must Pay Roblox Over 'Cybermob'
Fri, 1:53 PM
Security Friday: This Week in (Sad) Data Breaches – TMO Daily Observations 2022-01-21
Fri, 1:52 PM
What You Need to Know About HP+ Smart Printer Solution
Fri, 1:42 PM
Apple Stopping Providing HeadPhones With iPhones in France
Fri, 11:32 AM
Congress Explores Blockchain Energy Usage From Mining
Fri, 11:25 AM
Intel Plans Ohio Factory for Semiconductor Fabrication
Fri, 10:44 AM
New 'Monsterverse' Series Coming to Apple TV+
Fri, 9:57 AM
Red Cross Data Breach Affects 515,000 Vulnerable People
Fri, 7:14 AM
Apple TV+: 'Servant' Season Three Now Available
  • __________
  • Buy Stuff, Support TMO!
  • Podcast: Mac Geek Gab
  • Podcast: Daily Observations
  • TMO on Twitter!