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The top executive of Apple once again downplayed the importance of low-price products as a way to preserve or increase market share. Tim Cook believes that Apple needs to make appealing products which quality and performance will encourage their owners to buy more products from Apple, which will naturally drive the company’s revenue.

“The most important thing to Apple is to make the best products in the world that enrich customer’s lives. […] We are not interested revenue for revenue sake, we could put the Apple brand in lot of things and sell lot more stuff, but that is not what we are here for. We want to make only the best products and so what does that mean for market share? We have been able to do that […] I would not view these things as mutually exclusive as some might,” said Tim Cook, chief executive officer of Apple.

Many rumours recently emerged about Apple’s plan to design a special low-cost version of the iPhone to take advantage of rapidly growing smartphone demand in emerging markets. So far, Apple has simply slashed pricing on previous-generation models in order to attract price-conscious consumers. For example, if entry-level iPhone 5 costs $199 with a contract, then iPhone 4s is priced at $99 with subscription, whereas iPhone 4 is available for free with a two years plan.

While Apple can naturally continue to sell older-generation products on emerging markets at discount prices, in the long run this will unlikely help it to successfully compete against rivals since previous-gen products sometime lack functionality of current-generation low-end devices.

It should also be kept in mind that Apple earns loads of money by selling music, software and accessories for its PCs, smartphones and tablets. Developing markets hardly provide such opportunities, therefore it is in question whether the company actually wants to gain a strong presence in such countries.

While Apple does concentrate on premium devices, it still has created iPad mini using outdated components as well as low resolution display. Moreover, Apple continues to sell its cheap iPod shuffle music player that cannot be called the best music player in its price-segment. All-in-all, when Apple can make a relatively low-cost product and there is a market for it, it takes the opportunity in many cases, especially in case the final product encourages more purchases from Apple. Still, Apple prefers not to talk about pricing strategies and opportunities.

“I am not going to go into our pricing strategy, but we feel great about the opportunity of getting products to customers and a percentage of those buying other Apple products. And that we have obviously seen evidence of that through history and continue to see evidence of that today,” added Mr. Cook.

Tags: Apple, iPad, iPhone, iPod, Macintosh, Mac, macbook, MacBook Air, MacBook Pro, Business

Discussion

Comments currently: 5
Discussion started: 01/24/13 10:48:24 AM
Latest comment: 11/12/13 03:35:15 AM
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1. 
tim cook the world greatest pretending not being defeated,the ship is sinking shares at 500$,yeh tim you dont care about mainstream market..arrogance is your best feature
1 0 [Posted by: heldown  | Date: 01/24/13 10:48:24 AM]
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2. 
What's the point of being in business if it is for revenue, there is no reason to be in business if it is not for the sake of generating revenue. This is just marketing b/s as if it were not for revenue for revenues sake one would go broke.
How one generates revenue and profit are not by cutting margins or profit, but by making the most of all profit opportunities. This means if the punter will pay a primum price for a non premium product well and good. So long as one can get customers to pay top dollar do so. Low cost products sold at a primum price is the only way to go.
1 1 [Posted by: tedstoy  | Date: 01/24/13 03:43:03 PM]
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Companies are generally in business for profit, not revenue. Revenue is one way to get there, but doesn't always; i.e. you could increase revenue and lower profitability in some situations.

Even so, you already see questions being asked of and about Apple that weren't when Jobs was running the show. It's looking a lot like post-Jobs Apple is upon us more and more, as his influence becomes more of the past, and less of the present and future.

I wouldn't like to be an Apple investor. I just don't have that warm feeling about the company, at all. They seem to be heading for disappointing quarters.
0 2 [Posted by: TA152H  | Date: 01/24/13 05:46:25 PM]
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What's the point of being in business if it is for revenue, there is no reason to be in business if it is not for the sake of generating revenue. This is just marketing b/s as if it were not for revenue for revenues sake one would go broke.
The PC enthusiast market is filled with small companies that have made a living off of niches with high profit margins from liquid cooling to PC modification supplies. There is a reason these same companies don't expand with more affordable products: Less demand and more risk (because those customers are not like higher-end enthusiasts that may purchase more often).

What Cook is saying about Apple is that hiring the extra workforce and R&D just to sustain higher-volume revenue might not be worth the lower margins.

They aren't Dell, Apple is the equivalent of Alienware or Falcon Northwest selling only premium products, except to a larger specific audience due to using their own OS.
0 0 [Posted by: lehpron  | Date: 01/25/13 08:50:47 AM]
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