Originally Posted by doomlord52
Originally Posted by lordikon
It's capitalism, you should know better. Why would they charge less when they're already selling so many they can't keep up with demand? Simple supply and demand, basic economics.
Besides, how many consumers care about gross profit margins of the products they're purchasing? There is only one thing that matters for a consumer, and that's the price they're paying and the quality they're getting.
I know its capitalism, but it's well known that if the price goes down, demand goes up. It's a balancing act. If they brought down the price slightly, they'd be able to grab the people who go with other phones based on price point. While that may only be a slight drop in price, it would be a pretty large increase in demand - they'd actually make more money.
Yes, supply and demand is a balancing act, but there's more to it than just that
Just for an example I'm going to throw out some numbers here (which may not be accurate, but it's just an example):
Let's say they sell 10 million 16GB iPhone 5s in the first month. Let's say they make $400 on each of those by pricing them at $600. That means they've made $4 billion in profit on those devices.
Now let's say they would've sold 11 million if the price had been $550 instead, giving them $350 in profit per device. Now they've made $3.85 billion. Of course, maybe they would've sold 12 million, or even 13 million. But, this only taking into account demand. They may not have the capacity to make 12 million in a month, or if they wanted that extra capacity maybe they would end up paying more per device, which would further cut into profits. Another thing to consider is the upgrade schedules from their previous phones, not everyone is eligible for an upgrade from their older iPhone to a newer one all at once, people buy phones throughout the year and thus people will become eligible over time, so you wouldn't want to have a huge production capacity just for the first month and then end up using only half of it for the next 11 months. They can keep their costs lower by not having excess production capacity, while maintaining enough supply to meet demand at the price they've chosen. And finally, they have their image to uphold. It sounds lame, but their products are always viewed as extremely high-quality, and lower the price too much could tarnish that, people expect that more expensive items are of higher quality (happens all the time in sales of almost any product).
I'm sure there's much more to it than just the aforementioned points, and I think it goes without saying that Apple probably has multiple PhD economists working for them that understand this much better than you or I.
Originally Posted by nathris
Originally Posted by lordikon
Considering the iPad accounts for 68% of all tablets I don't think it's a stretch that they have 92% of traffic out there.
Yes but they're looking to grab the part of the market that doesn't want to pay $500+ for a tablet. Now there's a tablet option for iOS for $329. I do think it should've been closer to $249 but I think they would've cannibalized the iPad 3/4 and the iPod Touch at that price.
You have your numbers mixed up. Android has 68% of the smartphone marketshare, iOS has 52% of the tablet marketshare, according to Forbes.
And the numbers are badly skewed. Android doesn't make any distinction between tablet and phone in the user agent. For the stock Jellybean browser its the same on both my Kindle Fire and Galaxy Nexus. Plus, if I choose request desktop site it changes my user agent to just Linux, so there's absolutely no way Apple could have accurate info. They're simply lying.
Apple's marketshare WAS lower than 68%, the iPad 3 brought it back up.Edited by lordikon - 10/23/12 at 12:15pm