I have just found someone who seems to share my point of view on Apple's pricing and margins, it's John Sculley, the former CEO of Apple in an interview with the UK's Daily Telegraph.... ...He is also right about software, I had already suggested that access to the iOS ecosystem should not be just limited to the most expensive, high margin devices on the market.
The challenge that Apple faces with its current business, Sculley says, is the rapid commoditisation of the products it is designing. "iPhone is beautiful. But guess what; so is Samsung, so are HTC’s phones. The hardware commoditises over time. It’s really all about the software."
Sculley says that Apple’s greatest problem will therefore be maintaining its customary high profit margins, and points to the prospect of the company moving in to payments or TV services.
John Sculley: Apple, Misfit Shine and the future of technology - Telegraph
First: where in this article does Sculley talk about Apple's pricing structure regarding the iPhone? All I see is him making the asinine statement that the iPhone is being commoditized... which is a load of crap. The only people trying to commoditize the iPhone are the talking heads on Wall Street who only care about market share and stock valuation. The
consumer has certainly not commoditized the iPhone. If that were true, then iPhone sales would steadily decline year over year as cheaper priced competition enter the marketplace.... which the 5S/5C release proved is not the case. People are willing to pay top dollar for a product, a brand, they trust and see value in.
Second: Where in the article does Sculley talk about iOS should be on other devices besides Apple devices? I see him talking about Apple needing to move in to TV, or a software payment system (like Microsoft has for Office) because it might be hard to keep profit margins high in the case of commoditization (which by definition would lead to pricing competition) and Apple is, thankfully, doing the exact opposite... giving away this software for free. Why? To differentiate their products, to infuse intrinsic value in to their ecosystem for their customers, to avoid a price competition and keep from the commoditization of their products.
Third: John Sculley... haha, the same guy who predicted in the late 80's that the USSR would land a man on Mars within the next 20 years? The same guy the board of Apple gave the boot because he was running the company in to the ground? Yeah... I'm sure he knows what Apple should be doing.
I love that so many people have an idea of what Apple
should be doing, yet many of them wouldn't even be able to reach the levels of Apple's success given the same resources. In John Sculley's case in particular. He
had his shot running Apple. He failed.
Relevance? So Russians can't buy iPhones with carrier subsidies... so what? If they want an iPhone, guess they'll have to buy one at full price then. Is this
another track from the broken record "Apple owes me a cheaper iPhone"?
The "commoditization" of the iPhone also matches with Verizon's recent sales figures which suggest that one out of every two smartphones that they sell, is an iPhone
Commoditization by definition means that products that are distinguishable in terms of their unique attributes or brand name, become simplified commodities in the eyes of the market and/or consumers. Which means it would fall from differentiated, to undifferentiated and be subject to a price competition with its competitors, as it no longer stands apart.
Verizon's sales figures argue the
exact opposite of this. By the numbers, one of every two smartphones Verizon sells is an iPhone...
despite the plethora of lower priced devices from the competition. That shows that the consumer sees the iPhone as a unique product, worth its higher asking price.