Mercury Rising 鳯女

Politics, life, and other things that matter

How To Sell Computer Products

Posted by Phoenix Woman on April 18, 2009

Apple’s market share has dropped as its competitors flood the market with cheap netbooks. However, this is not necessarily a bad thing for Apple:

As Gartner’s Mikako Kitagawa notes, sales for Apple’s competitors are being driven by the explosion of interest in low-cost netbooks — not just among penny-pinching consumers, but in the professional and education markets as well.

As result, Gartner estimates that average selling prices (ASPs) for computers sold in the first quarter may have fallen as much as 20% across the board — cutting sharply into PC makers’ revenues.

Except at Apple. Despite rumors that its engineers may be working on some kind of device with a 10-inch screen, the company has so far shown zero interest in duking it out with the likes of Acer and Asus in the bargain basement mini-notebook market.

So even as Apple’s market share shrinks, its margins and gross revenue are likely to have held up better than any of its competitors.

There you go.

6 Responses to “How To Sell Computer Products”

  1. Apple v. “How to lose a little bit on every sale and try to make it up on volume”

  2. Mark Gisleson said

    Otoh, I need a new computer this year and Apple’s prices continue to rise year after year. A bottom of the line professional desktop Mac now costs $2499 and comes with only a 640GB drive. The configuration I’d like comes in at $2800 and that’s still the bottom of the line desktop system.

    Granted, there’s always the iMac, but to get the 24-inch screen you have to spend at least $1,500.

    The solution? Obama needs to switch the government over to Macs. Better security, cheaper maintenance, longer life and it would drive down the cost of Macs while rewarding Apple for delivering quality instead of spyware bait.

  3. Kathy said

    NASA was all Apple Macs for a long time, then they switched to PCs and the Space Shuttle crashed.

    I love my iMac.

  4. Marcus said

    I did a paper in college for a business class, comparing Dell and Apple. I noted that while Dell had more sales, their profits continued to fall, since they kept cutting prices to raise the volume of sales. Apple kept doing what it’s been doing for years, and while not #1 in sales (except in sales of Macs), their profit margins remained the same, and their tangible assets have kept growing. Dell has bought back shares of stock, which keeps the price up, but decreases the cash on hand for such things as R&D. Apple has kept plugging away in R&D, bringing out more products that help expand it’s brand beyond the Mac (iPhone, iPod, Apple TV, etc), and thus is expanding it’s revenue stream – and it’s stock price has kept pace. I’m biased, since I love my iMac and iPod, but when you look at the financial factors – cutting price to gain volume, you may ‘win’ in the short term, but in the long term you’ll barely make a profit.

  5. Charles II said

    One thing, though, Marcus. What matters is not revenue but profit. Because of the manufacturing cost curve, and the effect that falling prices has on market size, it’s possible to keep cutting prices while increasing revenues. This worked for a very long time for IBM and HP. Dell’s advantage was never R&D based, since it wasn’t designing chips or applications. It was customization. Once PC Club and similar shops appeared, Dell lost differentiation.

    Apple’s advantages were based in graphics. Until about 1990, there were things you could do on a Mac that you simply couldn’t do on a PC. So, it competed in a different market. It never obtained more than 10% of overall computer market share, because it could not compete against PCs in number crunching applications. It was also virtually impossible to network. But around 1990, things changed. It overcame the networking limitations, but PCs overcame the graphics limitations. I think the key was that by 1995, price had ceased to be a major issue. The difference between a $1000 computer and a $700 computer may be 30%…. but it’s also $300 dollars, or about 20 hours of work for a typical person. The difference between a $4300 Mac and a $3000 PC in 1990 was also 30%. But it was more like 150 hours of work.

    So, the story you tell applies to the last 10 years. But there’s a larger story.

  6. Stormcrow said

    About the “spyware bait” …

    iBotnet: Researchers find signs of zombie Macs

    Macs are harder to compromise at the OS level than Windows PCs, in general.

    But most attacks these days are not aimed at the OS. They’re aimed either at the client software, or they’re “Level 8” attacks against the wits of the user. Like the one I just cited, which was a pure social engineering scam.

    You can be driving an OpenBSD cybertank, and you’ll get nailed by one of those as easily as if you were running Windows 95.

    “MacOS X” != “Secure”.

    Security depends far more on situational awareness and keeping your wits than it does on which OS you use.

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