Apple's business model starts to falter

[Moggy C]

All my working life I have been involved in marketing high-end products that sell at a premium, often far outweighed by any intrinsic value.

Though I loathe Apple for all the huge bills I have had to pay when the precious "Apple-Macs" that creative staff insist on to boost their credentials have fallen over big-time, I admire their marketing. (Breakdowns on Mac have always been far rarer than old-style PC, but by god, when they do go you'd better sell a kidney!)

It has been a textbook exercise in premium branding and extending that brand far further than you could envisage.

But now it is looking like the market is changing sufficiently to discomfort the company.

I am fascinated to see what their response will be. I'm hoping it's innovatory, as so many of their of the products have been.

Moggy

http://www.bbc.co.uk/news/business-21022111

[Matt-100]

I've said for months now that apple risks a stock collapse and rapid sell off. The company is hugely over-valued (although it has fallen significantly on the NYSE over the past few months). I personally wouldn't be surprised if 30-40% of apple's share price was written off in a two-day period, such is the extent of their bullish price tag.

In Q4 2011 apple had a 85% market share in the tablet market with their flagship iPad. Today that figure stands at 45%.

[Paul F]

Convincing your loyal customers to replace their high-end unit with an upgraded (and ever more expensive) model every two years is fine until 1. Money is tight globally, and/or 2. Your competitors start to offer similar products at lower costs.

Personally I never bought into the whole "Apple" spin and hype, my mobile phone is a tool, not a fashion accessory, so long as it makes and receives a call that's enough for me, and working in a science/techhy background, IBM clone PC's do the job at a fraction of the costs of a Mac (even with the need to reboot windows frequently ) .

If Apple's bubble bursts, some may think it's not before time, some saw Jobs as an inspirational demi-god, others saw him as nothign more than a clever marketeer.....:diablo:

No doubt if Aple does slip up, then many will feel it's all down to the loss of Job's 'visionary' style. I'd see it as inevitable 'maturing' of their market in a tough economic climate.

[charliehunt]

I agree with your last sentence...and I finally bought into Apple a few months ago, having started as an Android baby! Ah, well.....

[Matt-100]

I wonder if Apple will have the same fate as Nokia? Once a mobile juggernaut, now a frail shadow of its former self. :diablo:

[TonyT]

I use an ipad2, indeed I'm using it now, it has virtually taken over my web browsing, but would I rush out to replace it with the ipad3 nope, that route is for suckers..
Microdross got caught short with the touch screen technology but are addressing that, plus Everyman and a dog are producing clones of the Appe products so their niche market is dwindling....
I cannot fault the ipad2, but I rue the day when the battery gives up the ghost as they ae nigh on impossible to get replaced. Ohh and they need to address the issues with no flash....

[ThreeSpool]

I also have an iPad 2, and spending another couple hundred won't make it any more useful. In fact, I use it to control the Sky Box and surf the internet whilst watching TV. When it gets replaced, I think I'll be going for a Windows Surface Pro.

[TonyT]

Same use here

[Lincoln 7]

Had a new Laptop for Christmas, it runs on Windows 8, it's a complete nightmare, I much preferred Vista.
So the new Windows 8 remains unused until I get my P.H.D. from Uni

Jim.
Lincoln .8, sorry, 7,

[Lincoln 7]

Same use here

Hi Tony, "Daddy Christmas" purchased a new I.Pad 4 for Christmas,for my wife, apart from being unable to transfer all her Apps, for which Apple wanted £50.00. to reinstate her original settings, everything seems O.K. But, why should she have to pay again for the Apps she has already purchased. I see what Moggy means. I firmly believe that these Companies rely on the good name they USED to have, but have now lost the plot, at the expence of we, the consumer.
Blo**y rip off merchants.
Jim.
Lincoln .7

[ThreeSpool]

Jim, I don't understand why Apple would want more money for transferring Apps and settings. It's all done through iTunes, unless you created a new account? Or, an App had a different version for a later model iPad?

[ThreeSpool]

Same use here

I particularly like the imdb app. I am useless if asked "what was such and such in?", or "who is that?"

[hampden98]

I think you are all being a bit unfair to Apple.
Before the Apple iPod, iPhone and the revolutionary touch screen, simple finger controls and sleek design (you have to admit that the sleek white iPod is a design classic) there were just mobile phones.
I worked in the Mobile phone industry up until 2009 and the touch screen Apple devices were just amazing and really took the industry by storm.
The reason Apple are now falling from the top spot is because everyone is copying them. Kindle Fire, Nexus 7 all use that basic Apple touch screen idea.
Combined with the clever adverts and simplistic silhouette dancers that minimalist yet space age, almost clinical design was a world beater.

[Lincoln 7]

Jim, I don't understand why Apple would want more money for transferring Apps and settings. It's all done through iTunes, unless you created a new account? Or, an App had a different version for a later model iPad?

Hi, I think she did set up a new account to try and get all her old stuff from the old 2 IP to the new 4 IP.but it all went pear shaped.
Whichever way you look at it,I think it was a very poor P.R. job from Apple.wanting 50 squid to just alter a few settings at their end.
Jim.
Lincoln .7

[Matt-100]

Whilst others may/may not (one for the courts) be copying apple, the fact remains their products are very over-priced. An article in The Times showed an iPhone 5 costs around £150 to manufacture and distribute, yet if you were to buy one off the high-street you'd be looking at paying around £530. That's one hell of a mark-up.
The Samsung Galaxy SIII (arguably a better handset) is available for around £300.

[BlueRobin]

Moggy, more and more I get the impression Apple are acting like a bloated monopoly, believing in their own hype and failing to push. Why bother when the money is rolling in? Failing to innovate will be their downfall. This is similar to Microsoft the the 90s. There is also a simile there too by copying other peoples ideas. The huge legal budget they are throwing around globally just serves T stifle innovation so they are not left behind, Just a few months it was highlighted they hadn't really increased the R&D budget that much. Then you get the iPhone 5, though much hyped, didn't really meet expectations by being that little bit taller. Frankly it sucks.

Also another thing. When you can deploy IOS to a legacy device and all the new features, does that not make the new model slightly redundant?

Where the mobile platform does work over Android is that it's patrons are prepared to pay for apps, so the environment is more geared toward innovative development.

I use an iPad 4 by the way and like it for the above reason, but I've never had one before or a tablet. I certainly wouldn't buy an iPhone and happy of the features my superior HTC Android gives me over the 5.

Wish list for the next iPad. Two speakers instead of one. Also Gorilla Glass please.

[Lincoln 7]

Having had a fiddle around with the Apple and Samsung, I much prefer the Samsung, very user friendly, and a damn site cheaper, both outright or contractual.
Jim.
Lincoln .7

[ThreeSpool]

Well, people do pay that much for the iPhone. Therefore, Apple doesn't need to sell as many. Or, an Android has to sell far more than the iPhone to make a similar profit.

I think the bigger issue is how fragmented the market is getting. I have a reasonable interest in technology and I find it increasingly difficult to keep up with what is out there.

[Bob]

Apple sucks......



(and I say that as an Apple user since 2001...)

[TonyT]

The reason Apple are now falling from the top spot is because everyone is copying them. Kindle Fire, Nexus 7 all use that basic Apple touch screen idea.

Not Apples original idea is it?, my mobile phones were o2 XDA's and touch screens long before the iPads etc ever arrived on the scene.

[MSR777]

I have an iPad 4, I'm thrilled to bits with it. Had a look at the Samsung.....not impressed by it quite honestly. Yes, it costs less than the iPad, and it shows, and no way am I giving up my I phone

[TonyT]

I can't fault my iPad either, bar the lack of flash etc and the worry about when the battery finally gives up the ghost.

Mine is the 32 hard drive one with wifi I use 3G for that. Have DVD connectors to connect it to the TV and can plug my camera in it, mate was stunned when I took some pics and sent one to his phone when we were in the back of beyond, he was standing near me but didn't realise what I was doing.

Have a spare keyboard for it, but it only works in the upright position, also have a normal Apple one I use some times.

[Moggy C]

I don't think anyone is saying there is anything particularly wrong with Apple products, odd, stupid glitches like the iPhone that couldn't make calls unless you held it in a certain way and the map fiasco apart.

But the business model that saw them pioneering new markets is in the past, somehow they have to turn this around, and increasingly it seems that people are no longer prepared to pay the hefty premium or (I'm guessing) keep up with the very short life-cycle with new models appearing at increasingly shorter intervals.

The next iPad Mini is already rumoured.

Moggy

[TonyT]

A bit like Intel, what the point of buying a trillion core processor when the billion core processor still can run all the software available at full chat without breaking into a sweat. Speeds outstripped software so the old PC no longer needed upgrading ever year or so for the majority of users.

[charliehunt]

[QUOTE=Matt-100;1976269 the fact remains their products are very over-priced.[/QUOTE]

The market and only the market will decide the priced. Apple have been able to maximise their profits for many years and only now might have to start rethinking their strategy. Selling less for more can equate with selling more for less. The gross profitability might be the same.

I think it's way too early to talk of Apple's demise.

[hampden98]

Not Apples original idea is it?, my mobile phones were o2 XDA's and touch screens long before the iPads etc ever arrived on the scene.

Yeah, but Apple introduced the `swipe` technology. Touch screens have been around since the 70's (at least) but only Apple made it popular.

[ZuluAlfaKilo]

I don't think anyone is saying there is anything particularly wrong with Apple products, odd, stupid glitches like the iPhone that couldn't make calls unless you held it in a certain way and the map fiasco apart.

When I bought an iPhone 4 I tried and tried to replicate that antenna fault. But no matter how hard I tried, it never dropped a call or was unable to connect to the network unless I was in a remote location where coverage was problematic no matter what phone you used.

Maps. Yes, it has its issues, but its more useful to me than the new Google maps for iPone.

[Moggy C]

I think it's way too early to talk of Apple's demise.

That's for sure. The company will be around for a while yet, but as its market share slips what can it do to stop itself becoming marginalised? Or will it just abandon the mass market totally and settle for a high-end, but smaller, slice?

Moggy

[charliehunt]

I reckon the latter. In fact they would probably say that they no longer supply the mass market in any case. I sense that they will not compromise much on their margins relying on innovation at a high level ( the "maps" mistake will not be repeated!) commanding a high sales price. There are still a great many Apple addicts, for whom they can do no wrong, out there with new ones joining weekly.

[Matt-100]

I personally wouldn't be surprised if 30-40% of apple's share price was written off in a two-day period, such is the extent of their bullish price tag.

Maybe I was being a little pessimistic, but today's market is being pretty ruthless...
http://www.google.com/finance?cid=22144