Apple COO Jeff Williams 'Very Aware Of' Concerns Over Apple Product Cost

[CmdrLaForge]

I don’t get what is this talk. You can easily see their bottom line profits from their balance sheet and they are quite large. But that’s ok as long as people go and buy their products.

https://finance.yahoo.com/quote/AAPL/

https://ycharts.com/companies/AAPL/profit_margin

 

[KPandian1]

So why does Apple make the case of the more expensive Apple watch with the sapphire crystal out of stainless steel if it isn’t as strong as an aluminum alloy?

Horses for courses.

Different metals for different purposes, watchmakers have consistently used stainless steel casing, even gold or other precious metals.

 

[ksec]

It's funny to me that people nowadays are so quick to criticize Apple and their products' prices. Apparently I'm old because I remember when Apple was a luxury brand... I mean, even the first iPhone was $699 for the 8GB model... something that was UNHEARD of at the time. I mean, I switched to that phone from a Motorola V600 which was, what, $160 at the time? And I went from a behemoth Gateway laptop that was huge and made out of plastic for somewhere around $550 to a 12" PowerBook G4 that was around $1,200. You're paying for not only performance, but the quality. I'm typing this on a 2013 MacBook Pro and I don't see myself getting rid of it anytime soon because it runs flawlessly and probably will for at least a few more years. And not only that, but when I *do* decide to upgrade to something new, I can guarantee that I'll be able to sell this laptop for at LEAST a third of what I originally paid for it... if not more. The resale value never seems to cross critics' minds for some reason.

It's entertaining because nowadays, everyone has/wants/needs a computer for their everyday lives, so everyone just assumes that every computer (or phone, or tablet, or whatever) should be priced to fit everyone's budget. That's just not how things work, whether millennials want to accept it or not. Want a cheap laptop? Go to Dell. Want a cheap phone? Check out Motorola. What a cheap tablet? Go to Costco and get some Amazon Kindle Fire Tablet Alexa blah blah blah. Want performance and quality and something that will cause you the least amount of headaches? Then work a few hours overtime and buy that Apple device you're complaining that you can't afford.
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If you're willing to spend a grand on a phone, a $15 charger isn't going to sway your decision. And here: https://www.apple.com/shop/buy-mac/macbook-pro/13-inch-space-gray-2.3ghz-dual-core-128gb# ... literally right on Apple's website, a MacBook Pro without a Touch Bar, and it's not even in the refurb store (where there are more options).

So much this.

You see there are now 900M iPhone users, and you could bet there are less than 90M of those who had been with Apple since the PowerMac, or even iPhone since the beginning.

Most of them don't know Apple. They join the cult somewhere during the iPhone boom. They have absolutely no idea what Apple is about, nor its past history.

Although I still maintain that iPhone XS is slightly lacking in value preposition. Mainly due to competition catching up and much lower price. ( All Chinese brands are one way or another partly funded by Chinese Government ).

 

[KPandian1]

Most of them don't know Apple. They join the cult somewhere during the iPhone boom. They have absolutely no idea what Apple is about, nor its past history.

I still maintain that iPhone XS is slightly lacking in value preposition.

This seniorities is charming - they might be the only ones hanging on to this eco at the end (my family included)!

 

[PickUrPoison]

No. Apple has to up Samsung there, it will cost $3200 plus AC+ before tax!

Apple will tout how great and bigly the ASP (or per unit profit) is for this "landmark" discovery product.

You’re thinking too small. According to posts in the Huawei Mate X thread, Apple’s version will be priced at $4,000

 

[technole]

So much this.

You see there are now 900M iPhone users, and you could bet there are less than 90M of those who had been with Apple since the PowerMac, or even iPhone since the beginning.

Most of them don't know Apple. They join the cult somewhere during the iPhone boom. They have absolutely no idea what Apple is about, nor its past history.

Although I still maintain that iPhone XS is slightly lacking in value preposition. Mainly due to competition catching up and much lower price. ( All Chinese brands are one way or another partly funded by Chinese Government ).

I remember people bitched at me for having the first gen iPod, saying I could have gotten something like a Nomad Muvo for "cheaper".

Who are the idiots now? LOL.

 

[Glassed Silver]

Hmmm... yellow rain!

Glassed Silver:mac

 

[Pugly]

Macs from 10 years ago up until the 2016 updates were decently priced for at least the entry models. Apple made you buy quality parts, but they always seemed to be within $100 or so of similar Windows PCs. But lately Windows laptops are much more competitive in design, and you get so much more for your money.

Nowadays the Apple Tax is real, and you get even less for that extra cost.

I'll probably end up buying used Apple products if there isn't a change in their pricing. Which isn't really a big deal considering the slowing pace of notable improvements.

 

[cuencap]

Hi Jeff, one iPhone costs one grand, two for 2, and 3 for 3.... simple right? The thing is we do have to replace 3 iPhones in short, very short period of time, and periodically. And MacBooks, speakers, watches. They add up. You knew that, for sure, right? Good. Great!

Nobody has to replace anything in “very short” periods of time. An iPhone lasts a solid 4-5 years nowadays. If you feel you need a new one sooner, you must need it because of the new features of a new phone. If that’s the case then you must feel the upgrades are worth it at the advertised prices, therefore your argument is invalid.

 

[borntrouble]

I've already bought my last apple products. Macbook pro? Too expensive and doesn't work well. Iphone? Give me a break.
I'll keep buying used or no name. osx used to be reliable to the point of insanity, now it's garbage. windows 10 is better.

So what are you still doing here?

 

[simonmet]

Example: NOTHING can justify the ridiculous SSD upgrade prices (even with same performance metrics) but pure greed. Greed which begins to damage their image.

And RAM. They charge like double (or more) the going rate of good quality 16 GB just to upgrade from 8. Never mind 32. It’s insane. Storage prices have come down a lot too.

Like Tim and all the other execs who make excuses, this guy is just full of it.

 

[DevNull0]

Their profit margin has been steady at 38-39% even after the recent price increases. I suspect that they have quite a lot of other expenses in creating their products lately.

Their R&D budget has exploded beyond $14 billion for 2018. More in that one year than everything spent over all of 1998 to 2011 under Jobs. To be clear, Apples 2018 R&D budget alone exceeded everything Jobs spent while creating iPod, iPhone, iPad. The G4 cube, the transition to Intel. The silver powerbooks. The LCD iMacs. iBook, eMac, XServe. Airport, Time Capsule, the Cinema displays. The Mac Mini, AppleTV. The cheese grater Mac Pro too.

And during that time they managed to update most products 1-2 times per year.

All of that totalled less R&D spending than Apple spent last year. And what did they release last year? Not a heck of a lot.

Apple's R&D budget is insane and the products just don't reflect it. But all of that cost comes straight out of the bottom line reducing their margins. So they're giving a whole heck of a lot less product to the customer for the same margin on paper.

On top of that, their marketing campaign has been insane since Timmy took over. They don't have a whole heck of a lot of product so they're using advertising to prop up sales. That cuts into margins too without giving any value to the customer. Granted a billion dollars there doesn't look like much next to their R&D disastrous juggernaut. And granted not a huge dent in their bottom line, but someone has to pay for hiring catastrophes, like the 9-figure mistake that was Ahrendts.

 

[houttbe]

Sure, Apple pays rather more attention to product development and quality than others. But customers also pay for gold plating ($ 5bn new campus!) and moonshots (project Titan). Google gets advertisers to pick up the tab for these. Apple looks at its customer base.

 

[iPadified]

Apple does have monopoly on Apple products and services which makes it easy for them to have high prices. When the sales goes down, they will change their prices if we collectively stop buying Apple products they need to do something.

Apple is a completely other beast today than under Scully. Then Apple sold only traditional computers. Today Apple has diversified and be happy for that, otherwise the Mac would likely be dead.

 

[0388631]

Yes, of course, but the fact remains that there were lines of people camping out in front of stores for days before it was released, and they were all willing to pay $699.

It was a groundbreaking product at the time.

 

[DevNull0]

Apple is a completely other beast today than under Scully. Then Apple sold only traditional computers. Today Apple has diversified and be happy for that, otherwise the Mac would likely be dead.

Oh yes, of course. Because pocket-sized computers with network connectivity in 2019 are totally different than desktop and laptop computers were in 1994. The business principles are totally different. Wow.

 

[KJL3000]

I recently needed a new keyboard with numeric keypad. Apple discontinued the wired version and is now selling the “magic” keyboard for 150€. How much R&D do you need for a Bluetooth keyboard to sell it for 150€? This is ridiculous ...
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put higher margins on larger SSDs so that they can lower the prices on the base SSDs. it's a standard corporate pricing strategy

That’s what PR would say...

 

[jlc1978]

I understand if they want to charge more, but if consumers stop buying their products then there will definitely be a problem. I'm sure there is some major disconnect between Apple's share price and how much revenue and profit Apple makes. Microsoft is valued much higher in overall value than Apple despite making less revenue and profit. Apple has somehow messed up when it comes to convincing big investors they have decent growth potential.

Apple's challenge is it is fundamentally viewed as a consumer products company and the phone market, which helped fuel is rapid growth, has slowed. MS, OTOH, has pretty much ditched the consumer market and focused on business, Windows and other services with high growth potential. That's why Apple is focusing more and more on services rather than products for growth.

 

[Valkyre]

Hi Jeff, one iPhone costs one grand, two for 2, and 3 for 3.... simple right? The thing is we do have to replace 3 iPhones in short, very short period of time, and periodically. And MacBooks, speakers, watches. They add up. You knew that, for sure, right? Good. Great!

DISCLAIMER: I agree about almost everything regarding apple prices, especially in some products. They definitely need to work on this pronto. The below post has not much to do with prices per se but consumer mentality.

I dont understand this. What do you mean you HAVE to replace 3 iphones in very short period of time? Do you mean that you have to upgrade your phone every single year? If that is so, then I am sorry but its more your issue than Apple's... you dont HAVE to upgrade every year, unless you are an absolute "must have latest tech" enthusiast, in which case, like I said, it is your issue.

I upgrade iphones every 3 years or so. And I consider myself a pretty hardcore user. I bought my iphone 6s back in 2015. Even though I just upgraded to the X, my 6s still flies today and feels fresh. My point is that iphone prices shouldnt be influenced by consumers like you (no offense). You want the latest and greatest, so you must be willing to pay the price for it.

 

[jlc1978]

farewelwilliams said: ↑
put higher margins on larger SSDs so that they can lower the prices on the base SSDs. it's a standard corporate pricing strategy

That’s what PR would say...

Except it makes sense for a pricing stand point. You accept a slightly smaller margin on the low end stuff to get the price conscious consumer who wants your product while pricing top of the line products to get higher margins since those who want or need the specs will pay. In the end you sell more and make more revenue and profits. It's no different than the car manufacturer who sells the base stripped model cheap and makes the money on all the options.

 

[femike]

Is Jeff Williams living on the same planet? He is certainly living is his bubble which he cannot see out of.

eg Knowing that the laptops have non-replaceable ram, ssd, batt, the price for a 15in Apple laptop in ludicrous.
Just make a plastic mac book (eg like ~2009) with ports and user replaceable ram, ssd, batt at a realistic price with decent cooling. No fancy thin design required just make it reliable.

macOS improvements are slow, there software application improvements have stagnated, quality control has gone down, inadequate testing, the list goes on and on. Maybe stop getting employees like Angela that gets paid &68 million, she for example wasn't worth it. I'm sure the executive salaries have gone up as the cost of products have gone up.

 

[Evamika]

Well, for me, the main reason for not getting the new flagships wasn’t the price, but rather the fact that all that beauty is sandwiched in two pieces of glass. If I’m going to pay 1100$ for a phone it has to be better designed.

And then of course is iOS. The main reason that is deteriorating the joy of having Apple. Don’t get me wrong here, I’m not talking about its performance, but rather the design, or lack of it. It’s Black and White since iOs7. Yes it has ton of emojis. There is a saying “the grass looks greener on the other side”, but in this case it does look greener.. and bluer.. and more red an orange!
When was the last time you were truly excited about getting a new OS?

 

[pika2000]

true... but when you've been sucked into the echosystem, paying $700 for THE flagship which now costs $1000+ just 2 years later, that's messed. and no, the Xr is not a flagship.

guaranteed we will see a price drop this year.

It’s your choice that you only want to keep your flagship phone for 2 years. And it’s still your choice to remain in the Apple ecosystem.

 

[StellarVixen]

He goes on to explain that to build the Apple Watch's activity tracker, Apple built a physiology lab with 40 nurses and 10,000 participants. Still, Williams conceded it's an area that they are paying attention to:

This, and who knows what other "crazy" stuff are they doing.


It is no secret that they are investing more than their competition in certain features. I too, do want less expensive iPhone, but with things like this...we will keep paying off their R&D bills.

 

[BruceEBonus]

You’ve got to pay for leading tech like folding screens and 5G and hyper wide camera 180 degree photography ... oh no. That’s the others isn’t it? Still. Some great Emojis on the way!.