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  • They Want Apple to Sell Junk

    November 7th, 2013

    All right, you know the score. Apple earns lots and lots of money selling gear that is generally regarded as premium priced. Sure, you can say that Apple’s prices are competitive when you compare, say, a MacBook Air with one of those UltraBooks from Dell or HP. But when it comes to those 7-inch tablets from Amazon and Google, it’s well known that profits are slim; they are used to provide platforms for sales and apps and other products. The marketing plan is similar to the way printers and razors and sold. You make them cheap, and make up the difference from selling consumables.

    However that is not Apple’s way. Products are sold with a reasonable profit level — a level some might consider excessive — without considering whether or not you’re going to buy any other stuff. Indeed, Apple is now giving away operating systems and basic consumer app suites, which means that it’s possible to use them without any third-party software. It’s all about selling the hardware, although iTunes and the App Stores do deliver some level of profit.

    But the comparisons are inevitable. Samsung is selling far more mobile gear than Apple, so, they say, Apple needs to step up to the plate and become more competitive. However, recent Samsung financials indicate that only a third of the handsets are in the premium or high-end category, such as the Samsung Galaxy S4 and the various iterations of the Note phablet. Indeed, it appears that demand for the S4 is softening, despite all the hype and the fact that such publications as Consumer Reports gave it a very high rating. Compare that to the news that iPhone sales were up 26% year-to-year in the last financial quarter. So how can anyone suggest Apple is doing something wrong?

    Indeed, when you look at the reviews of cheap Android gear, you read about technology that’s several years old, with low-power processors, scant memory, inferior screens, and an older version of the OS. Indeed, one of the improvements to Android 4.4 KitKat is to make it usable on a gadget with as little as 512MB of RAM, which may not be saying much. Some low-end smartphones have 256MB. So much for the end of fragmentation.

    This isn’t to say that Apple isn’t doing things to lower the cost of admission. So you can get the first generation iPad mini, with standard definition display, for $299. Maybe that seems pricy compared to a $199 Android tablet with an HD screen, except that the 7-inch widescreen form factor offers far less usable space than the 7.9-inch iPad mini. But, for better or worse, they are placed in the same categories, and that may not be the right choice.

    When it comes to the iPhone, Apple expects the 4s, from 2011, to be the cheap model, or as cheap as they plan to get. Other than sacrificing profits, how does Apple make it cheaper? The iPhone 5c was expected by some to be the inexpensive model, but it’s just a repackaged 5 for $100 less, retail. Nothing wrong with that, of course. That there is an ongoing concern about sales ignores the fact that more people want the high-end iPhone 5s, which is actually a good thing.

    In the end, if sales of the iPhone 5c end up being higher than what Apple would have achieved had the iPhone 5 remained in the lineup, that’s a good thing. The 5c is cheaper to produce, and delivers near-identical performance with superior battery life. Indeed, I suspect some customers prefer the multiple choice of colors. The plastics do not look cheap.

    But the theory is that sales of Apple products must inevitably decline as more and more cheaper gear is sold. Sales of high-end gear will flatten as the market saturates, which sort of ignores the aspirational factor. Wouldn’t people prefer to buy something better if they could afford it? Besides, as people in developing countries earn more disposable income, would they choose some anonymous Android feature phone, or a reasonably well equipped smartphone? If the latter, it means more potential business for Apple, which still retains the highest customer ratings in the industry.

    Now when it comes to giving things away, Apple hasn’t quite received the love when it comes to iWork. In order to make the apps compatible on all platforms, from OS X, iOS to iCloud, Apple evidently simplified the code and the feature set. So-called power user features, such as mail merge, are missing in action in Pages. This may explain why the installation doesn’t remove iWork 09 from your Mac.

    As of this week, Apple has posted a support document that confirms exactly why the new iWork apps lost features, with the promise that many will be reintroduced in the next six months, and more features will be added going forward. This is the same approach Apple took with iMovie some years back, and with the controversial release of Final Cut Pro X.

    Besides, nobody forces you to upgrade iWork if you prefer the older version. As with FCP X, just be patient. Free doesn’t have to mean junk. And Apple has said time and time again they won’t sell junk.



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    3 Responses to “They Want Apple to Sell Junk”

    1. David says:

      I think the key indicator of 5C success isn’t whether it sells more than the 5 would have, but whether the 5S sells more than it would have had the 5 remained in the lineup. From my position on the sidelines I’d say the 5C is doing a fantastic job of pushing people toward the 5S.

      People will always tell Apple that they would sell more if they lowered prices, but that isn’t always true. If you have an object with prestige value lowering its price lowers its value. Lowering the price too far destroys its value.

      In China the iPhone is a prestige item. It is a product that people aspire to own and are proud to show off. That wouldn’t be true if another 10-20% of the population could afford one. It would become just another phone and start being compared to lower priced phones from other manufacturers.

      I believe the 914 hurt Porsche’s image as a premium brand. I heard many say it was just a Volkswagen with a phoney badge on the hood. Apple would be wise to avoid the same mistake.

    2. Frank says:

      For me, the big issue with iWork is the lack of backwards compatibility. I have iWork’08, but skipped ’09 because it wasn’t compelling enough to pay the upgrade. I upgraded to the new version and promptly discovered that it won’t open iWork’08 files because they’re “too old.” While I can still use iWork’08, I’m concerned that it will end up in the software dustbin with ClarisWorks after a future system update.

      The only way to migrate my files from ’08 to the current format, now that iWork’9 is no longer being sold, is to export them as Word/Excel/PowerPoint files and open them in the new format.

      Apple’s changing of formats without warning is concerning from an archival point of view and makes me think that I’ll probably stick with Office, as MS seems more willing to maintain access to older file formats.

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