All iPads What is more important for existing product: Market or Margins? POLL

Discussion in 'iPad' started by PracticalMac, Apr 29, 2013.

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WHat is more important, Market or Margins?

Poll closed Jun 8, 2013.
  1. Market is king, more customers means more profits.

    3 vote(s)
    42.9%
  2. Margin is what makes a company profitable, its the bottom line.

    2 vote(s)
    28.6%
  3. I don't know enough to make a decision.

    2 vote(s)
    28.6%
  1. PracticalMac, Apr 29, 2013
    Last edited: Apr 29, 2013

    PracticalMac macrumors 68030

    PracticalMac

    Joined:
    Jan 22, 2009
    Location:
    Houston, TX
    #1
    If you ran Apple, what would be more important *for a product moving forward (an established product)*, Market or Margins?

    Sure having great margins is important to a companies bottom line, give the ability to readily fund R&D, ads, support (hardware and various services), and software updates free of charge.


    Then look at Market position side.
    Google is promoting a little-to-no profit tablets (Nexus series), the Nexus 7 is a huge seller despite generally inferior hardware (except higher resolution screen). Google is clearly not interested in profits, since the Nexus 7 has little and besides that their primary income is from web services, including from iOS apps.

    Clearly, Google is producing Nexus series simply to claw a foothold in the iPad dominated tablet market, profits be damm.

    Amazon is doing a very similar tactics, market over profits (even competing with Google), however Amazon also sees it as a Sales Point for their company, in a way a physical presences for this online store (your house becomes the brick and mortar) and expects to make additional profits simply by you using the Fire (even pre-loading your account info to make it easier to spend on Amazon).

    Amazon is simply using the over century old tactic, sell the device cheap, make profits on the media/refills.


    EDIT: I forgot to add, Apple maintain some margin on iPad sales, but smaller then currently. I think they earn some 40% margin now, so consider a 4~9% margin


    The poll is simple, Market or Margins or don't know.


    ADDITION:
    This is in relation to the future price of iPads. The maturation of the tablets and average price drop of tablets is making the current price of iPad's not appealing to potential customers.
     
  2. aarond12 macrumors 65816

    aarond12

    Joined:
    May 20, 2002
    Location:
    Dallas, TX USA
    #2
    Amazon makes almost no money, but they're huge. They have a US$114B market cap. Amazing for a company that operates with margins around the 1-2% mark.

    Apple has a market cap of US$408B. While most of their profits currently come from the iPhone, they margins are tremendous on all their products.

    Amazon -- lots of products. Apple -- few products.

    It's clear what the business world thinks: Profit is king. It would be nice to have the iPhone and other Apple products dominate the market, but that brings its own set of issues: The quality of tech support goes down; the quality of the products goes down; the DoJ steps in for anti-trust and monopolistic investigations; Apple loses its "hunger" for improving products.
     
  3. PracticalMac thread starter macrumors 68030

    PracticalMac

    Joined:
    Jan 22, 2009
    Location:
    Houston, TX
    #3
    Amazon's revenue is primarily selling physical items, shipped by mail order. Those items do not need any Amazon device to sell.
    Its eBook is relatively new but dominates, recently expanded to music and movies, however they are designed to run on any platform.

    Apple's gets a huge profit from music and movies, but its ability to sell that relies completely on Apples hardware, or Windows with iTunes.


    If it is not obvious to some then this, if Apple cannot dominate on hardware devices, then its ability to attract media companies (music, books, video, etc) dwindle until no one license to Apple.
    Fewer Apple devices, Fewer media to buy on iTunes.
     
  4. Arran macrumors 68040

    Arran

    Joined:
    Mar 7, 2008
    Location:
    Atlanta, USA
    #4
    Both, but at different times.

    Margins at first. Verify that people actually want your new product. A hefty price validates desirability.

    Then shift to market once competitors (noticing your juicy margins) launch a competing product.

    Subdue the competition, refresh your product and shift back to margin while you can.

    Rinse and repeat.
     
  5. maflynn Moderator

    maflynn

    Staff Member

    Joined:
    May 3, 2009
    Location:
    Boston
    #5
    Without marketshare margins will be no margins and without proper margins, it doesn't matter how much markeshare you have.

    My point is that you need to have a proper balance of both imo. Margins set to the level that ensures you do not drive customers away but enough to make a profit and also grow your business
     
  6. Apple fanboy macrumors P6

    Apple fanboy

    Joined:
    Feb 21, 2012
    Location:
    Behind the Lens, UK
    #6
    No point in having a 99% margin but only selling one unit a month. Also no point in having a 99% market share but losing a million pound a month. Both are key. You can decide to sacrifice margin to increase your market share (and thus get more people tied into your eco system), but only in the short term if your not making the margin on the content. I believe this is what we are seeing a lot of now with the big players.
     
  7. robertpetry macrumors 6502

    Joined:
    Feb 12, 2009
    Location:
    Indianapolis, IN
    #7
    It is just like the demand curve. You must find the intersection of highest margins and highest market share. That will be the ever changing sweet spot where you make the most money.

    Apple seems pretty good at finding this intersection.
     
  8. PracticalMac thread starter macrumors 68030

    PracticalMac

    Joined:
    Jan 22, 2009
    Location:
    Houston, TX
    #8
    Completely agree with you.

    I amended my posting to mention an established product, not a new one (no, mini is not new, just smaller factor of existing).

    ----------

    Not disputing the curve intersection, but I think that intersection has moved.


    Admittedly, do not have exact figures of sales.
     

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