The Hardware Monetization Paradigm

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    Posted: 13 June 2009 11:49 AM #16

    I have a fellow family member involved in Apple’s manufacturing process. I assure you that Apple’s innovation process is still at work but it is working in the back room so-to-speak on the engineering and manufacturing level.


    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

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    Posted: 13 June 2009 12:37 PM #17

    Brilliant. Thanks for putting that together. It’s a pleasure to read.

    This provoked a separate but related idea I’ve posted regarding these years of college students as an “Apple boom.”

  • Posted: 14 June 2009 01:59 PM #18

    Eric Landstrom - 13 June 2009 02:49 PM

    I have a fellow family member involved in Apple’s manufacturing process. I assure you that Apple’s innovation process is still at work but it is working in the back room so-to-speak on the engineering and manufacturing level.

    Apple continues to innovate and continues to provide avenues for developers and accessory makers to innovate. The best way to sell one’s products is to increase the number of people and enterprises that have a vested and direct interest in the success of one’s products. The thousands of iPhone OS developers can be among the company’s most ambitious sales people.

    Additionally, thousands of developers invest in the growth and further development of the platform.

    Add to this Apple’s retail store network and online presence and developers have exceptionally access to a growing base of users without stepping outside retail infrastructure to sell products. I see even the direct access to iTunes and sales directly through the iPhone as innovative commercial steps. Other handset makers are hard-pressed to deliver the same kinds of sales avenues for developers and accessory makers Apple provides to its partners. These are innovative steps though easily overlooked when one thinks of innovation only as bells and whistles added to the products.

  • Posted: 14 June 2009 03:50 PM #19

    Hardware monetization at work. See the Barron’s article on the impact of the app store and its tens of thousands of apps on hardware sales.

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    Posted: 15 June 2009 01:06 AM #20

    dc930 - 12 June 2009 04:51 PM
    Play Ultimate - 12 June 2009 04:22 PM
    dc930 - 12 June 2009 04:14 PM

    As successful as an Apple tablet would inevitably be, I don’t see it ever flattening the market for cheap laptops anytime soon.  People will ALWAYS be attracted to a sub-$500 (or $400, or $300) laptop.

    Price is rarely the only factor that people use when making a purchase decision. For example, the wide range of price alternatives in the auto marketplace and they all have the same functionality.  It is all a question of “value;” whatever that term means.

    Right, but how many $12,000 Hyundais (or Chevy’s or whatever) are sold compared to $30,000 BMW’s?  Many more.  And those 2 cars certainly have different functionality.  But let’s get off of cars - I think they are a poor comparison to computers.

    I contend that on the contrary, price is THE primary factor for many people.

    I’m sure many people here have had the situation where we have been asked for our recommendation for computers (we are asked because we “know” computers, and they don’t).  Many people at my work ask for my opinon.  I try to explain the “value” of a Mac, and try as I might, a lot of them end up saying “thanks for the info, but Best Buy was having a sale and I got a laptop for $699”.  It is my firm belief that price is by far the largest factor for a certain segment of the computer-buying population.  Which is why they will continue to have bad experiences with cheap hardware.  Over time, (we’ve already seen it start) more and more people will start to see the “value” in the computers they are purchasing, but there are SO many people that don’t bother to think this way.

    Therefore, the sub-$500 laptop market isn’t going away anytime soon.  (Again, I don’t think this is bad for Apple…they purposefully avoid these types of consumers.)

    Edited: I apologize for this being a little off-topic, perhaps I should have started this discussion in different thread.

    I agree.  However there does come a time when eventually certain people will bite the bullet and can no longer resist.  Case and point the iPhone.  Yes the first one was $600 and that was similar with the iPod.  Over time everyone got one. The same thing is happening with the iPhone.  Despite one carrier and high monthly plans, more and more people have to have one. And once they do, they never go back.

    Same with the iTablet.  The first one may cost $800 but over time it will drop in price and people will chose one over the other netbooks. There will always be a market for the cheap computers and netbooks, but Apple will give millions better reasons to pony up more money and switch to a Mac.

  • Posted: 15 June 2009 01:34 AM #21

    pats - 12 June 2009 04:24 PM

    The other area of interest to me is the 500M investment in LG.  I would assume this was to guarantee production of certain OLED displays.  The upfront money gives LG the ability to finish the R&D.  Back in 2008 LG inked a deal with Kodak in order to use their technology in future devices


    Kodak created a 15min background video available here on OLED

    I scratched my head when this was announced.  Your inference regarding OLED could be the missing piece that explains the size of this investment.  However, at the time it was made the whole of Kodak had a market value of about $500mm.  Thus I do wonder whether this technology is really all that they would have us believe.

    Interesting video in any case.  Nice catch.

  • Posted: 01 July 2009 05:32 AM #22

    Thanks for the suggestion, I wish it had worked.


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