In this week’s Monday Note, former Apple Executive and erstwhile BeOS Innovator Jean-Louis Gassée says “Remember netbooks? When Apple was too greedy and stupid to make a truly low-cost Macintosh? Here we go again, Apple refuses to make a genuinely affordable iPhone. There will be consequences – similar to what happened when the Mac refused to join netbooks circling the drain.”
Mr. Gassée is withholding judgment on the new iPhone until he has a chance to play customer, buy the product, and use it for about two weeks, but addresses the conventional hand-wringing over the 5C’s $549 allegedly exhorbitant pricetag. He notes that Microsoft kept most of the money with the de facto monopoly enjoyed by its Windows + Office combo, while it let PC hardware manufacturers race to the bottom (think netbooks), leaving HP, which is still the largest PC maker, with a measly 3% operating profit for its Personal Systems Group in the last quarter By contrast, Apple’s share of the PC market may only be 10% or less, but the Mac owns 90% of the $1000+ segment in the US and enjoys a 25% to 35% margin, so Mr. Gassée says why not look at iDevices in the same light and see a small but profitable market share in its future?
Gassée laments that none of this reality check will dispel anticipation of the Cupertino company’s death, and suggests that we could simply dismiss the Apple doomsayers as the industry’s nattering nabobs of negativism, or take a closer look at what insists under the surface, ergo: what are the emotions that cause people to reason against established facts, to feel that the small market share that allowed the Mac to prosper at the higher end will inevitably spell failure for iDevices?
While in the meantime, we can expect to see more hoses attached to Apple’s money pump.
For the full commentary visit here: