Losing market share wouldn't be a problem in a growing market if they still managed to both maintain a large enough user base and a growth of profits.
I'd invite you to read such article for example. It's almost one year old, though.
Since then, PC sales continued to slip (quarter and 4 trailing quarters views), while Mac sales market share maintained growth (4 trailing quarters view).
Now, it's not telling in detail about the particular case of ultrabook sales that probably are in better shape than desktop sales in comparison, for example.
But with the current tendency, I wonder how you expect Apple to lower prices and sell high-end products with lower margins, with at best same profits or possibly less as the market continues shrinking. How much more value is there to extract in that market?
Check my previous post, too.
I agree with you.
Losing market share is not a problem in a growing market unless for strategic reasons (as keeping market share high could place the company in a strategic position). However, losing market share in a shrinking market (as the current PC market) could be a disaster.
I am not implying Apple will sell products with lower margins. As I see it, Apple has been consistenly reducing the price of the MacBook Air. However, I don't know if Apple is reducing the margins of the sales (in order to keep the Air competitive) or if the the manufacturing costs are down and Apple managed to keep the margins.
My assumption is that the new MacBook Air will have an unibody aluminum chassis and a 12-inch display with a 2304x1440 resolution. Perhaps it does, perhaps it does not. I assume this because in my mind this is the most likely scenario given the rumors I have been reading so far. People may disagree on whether these assumptions are correct or not (particularly the retina display or the resolution I mentioned), but I am not discussing them right now and I am just assuming they are correct just for the sake of discussing the price.
When Apple first released the 15-inch MacBook Pro with a retina display back in June 2012, this new machine carried a US$ 400 premium over the previous model (US$ 2,199 versus US$ 1,799 considering the lower end versions). There were two costly improvements to justify this price increase:
Apple chose to put a retina display instead of the regular resolution. The resolution quadrupled, going from 1440x900 to 2880x1800. I remeber manufacturing costs were said to be US$ 50 more for each of these displays at the time (first half of 2012).
Apple put an SSD instead of the HDD. SSDs are more expensive than HDDs and, back in 2012, they were even more expensive. Even today, in 2014, Apple charges an additional US$ 200-250 for putting a 256 GB SSD inside an iMac (instead of the 500 GB or 1 TB HDD, respectively) and an additional US$ 350 for putting a 256 GB SSD inside a 13-inch non-retina MacBook Pro (in exchange for the 500 GB HDD).
So, the US$ 400 premium was justified by these two improvements. I also remember that, in March 2012, just a few months earlier, Apple released the iPad with a retina display and charged no premium at all for adding the retina display. The iPad kept its base price at US$ 499 regardless of the addition of a screen with four times the resolution.
Now, we are (or at least I am) talking about a 12-inch MacBook Air with a 2304x1440 resolution. I do not see here the same types of costly improvements that made the retina MacBook Pro more expensive than the non-retina model. Let me explain:
The retina display of the Air, at least in my concept, is not going to have four times the resolution of the previous model. I am talking about 3.1x the resolution versus the current 11-inch version or 2.5x the resolution versus the 13-inch. So, the difference in resolution is not so much. In addition, manufacturing costs of retina displays are down from two years ago. If the price difference was US$ 50 from a 1440x900 to a 2880x1800 display in 2012, I can only imagine that the price difference is much less from a 1366x768/1440x900 to a 2304x1440 display in 2014. So, Apple would not need to charge a premium just for adding a retina display here and there would be virtually no difference in margins.
The MacBook Air already has an SSD. So, Apple will not have to add an SSD to it. The SSD was probably the major cause of the price increase in the retina MacBook Pro two years ago. Apple still charges an US$ 350 premium to add a 256 GB SSD to a non-retina MacBook Pro, which means that this was a major cause of price increase. This cause does not exist here.
In addition to that, prices of SSDs and retina displays will only go down until the end of the year. So, these are the reasons why I think Apple can release a retina MacBook Air without raising the prices and still keep their margins.
Now, I am not saying Apple will do this. Apple can do it. But Apple can simply choose to raise its margins by charging a premium.