Linked by Thom Holwerda on Tue 20th Oct 2009 12:48 UTC
Yesterday, during the conference call following Apple's stellar results for the fourth quarter of 2009, Apple talked about its forecasts for the coming quarter, which included a drop in revenues and lower margins. The web has drawn conclusions that this means Apple will be lowering its prices - but I'm kind of missing where the conclusion comes from.
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Member since:
2007-12-13
It attests to their business acumen. The competition in the low-end is very very high. So high that the margins there are razor thin. Those vendors compensate in bulk, but the overhead for the bulk model is increasing, as is the sensitivity to volatility in supply and part costs. So, Apple's chosen to compete in a different market segment (the higher end) and from a different position (function and form vs. cost-cutting vs. high-end gaming).
It works. Like any good species, it's found it's niche, and one where it has been largely free to operate with minimal competition.
Of course, it's only a matter of time before jealous competitors seriously eye that same niche. There's really not much room left in the low-end of the market, after all -- and Apple's clearly having a party. When that happens, Apple's steam-rolling days will be over and growth will scale back.
I'm impressed with their financials though. 34B in cash reserve, no debt, and their 180B market cap makes them bigger than Google. They're bigger than GE even, and have 75% the revenue of Microsoft despite not having all those enterprise agreements. For a company that was all but dead a 15 years ago, it's come a very long way.