Lingering Recession Keeps Consumer Spending Tight

 
 
By Don Reisinger  |  Posted 2011-02-21 Email Print this article Print
 
 
 
 
 
 
 


 

5. What's the incremental benefit?

It's easy to look at Apple's recent financial performance and say that the company doesn't need to reduce pricing. It's already selling millions of iPhones, Macs and other products every quarter, and it's generating huge profits. But that's a bit short-sighted. If Apple reduces the price on some of its products, it could very easily sell more devices. And over time, that could deliver even better financial performance.

6. What happens when Steve Jobs leaves?

One of the main reasons why Apple has been able to charge so much for its products is Steve Jobs. The company's CEO has ushered in an era of "cool" that makes the higher prices seem justified in the minds of consumers. But as he recovers from an illness, one can't help but wonder what will happen when he finally leaves Apple. Will the next CEO be able to carry that "cool" banner forward? And if not, how will that affect Apple pricing? Apple must think about the future. And it needs to consider whether or not its next CEO can lead in such a way that its high pricing is justified.

7. Apple has an opening in the PC business

As mentioned, Apple's Mac pricing is high. And at such high levels, the company is missing out on a key opening that it could be capitalizing on: Most customers aren't too fond of Windows. After Windows Vista was released, few wanted to switch to the new operating system. They were looking elsewhere to spend their cash. That resulted in people questioning whether or not they should continue to use Windows. It was the opening Apple needed. So far, at least, its high pricing hasn't allowed it to attract as many customers as it could.

8. The recession continues to linger

Apple's financial performance has been nothing short of astounding. Thus it's hard to take issue with a company that's doing so well. But the Great Recession continues to impact people around the globe. The average person has less money to spend on new products. And if they must get something new, they're looking for the best deal. Apple, meanwhile, maintained its high price points. Its profit figures are up, but had the company reduced pricing over the past couple years, it could have done even better.

9. It's unexpected

If Apple announced that it was going to reduce margins across its entire product line, the vast majority of people who follow the technology industry would be stunned. For years now, Apple has been selling its products at a premium. To some extent, it has come to be expected. But reducing margins on its products would send a message to the market that Apple is trying to engage more customers. It could change the perception among some customers who, without even seeing its products, believe that its prices are out of hand.

10. It gives Apple more choices

With pricing so high, Apple has no choice but to deliver products that push the envelope in one way or another. But if it can reduce pricing across the board, it might not need to work so hard to impress. Yes, impressing customers is part of what Apple is about. But the company is also a corporation that has a responsibility to shareholders. If it can take some of the pressure off and show that it can deliver solid products at a good price, while still delivering groundbreaking devices from time to time, it can go a long way in improving its market positioning.




 
 
 
 
Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.
 
 
 
 
 
 
 

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