Apple Pricing and Competitors

 
 
By Joe Wilcox  |  Posted 2009-04-22 Email Print this article Print
 
 
 
 
 
 
 


 

Based on an eWEEK analysis, Windows PCs also benefit from Microsoft's "I'm a PC" ads. By September, the U.S. economy had officially reached a crisis state, with consumer spending dropping in nearly every category over the subsequent five months. Around the same time, a big sales surge in netbooks started, in the fourth quarter doubling sales from all the rest of 2008, according to IDC. But something else happened in September: Microsoft launched the first wave of "I'm a PC" commercials as part of its "Life Without Walls" campaign. The campaign has effectively shown Windows PCs' value and lower pricing compared with Macs.

The question for Apple is what to do about pricing. "They really need to get a $799 product out there," said Stephen Baker, NPD's vice president of industry analysis. "But I think it would be too cannibalistic to be below $799." The concern: erosion of the Mac brand and pricing associated with it.

But today's results suggest that despite share erosion, Apple can still stand fast on pricing. Compared with the PC industry, Mac shipments are weaker. But comparing Mac sales now and past Mac sales, Apple is doing well in tough economic times. Still, sequentially, Mac notebook shipments fell 22 percent and revenue by 25 percent.

iPhone analysis

Analyst consensus for iPhone shipments was 3.3 million units, so the quarter-on-quarter decline was anticipated; Apple shipped 4.363 million units during its fiscal first quarter, or about 2.2 million sold when accounting for inventory in the channel. But current iPhone shipments come against a difficult competitive backdrop. Research In Motion's BlackBerry line is doing much better than the iPhone. BlackBerry is second to Nokia in terms of worldwide smartphone market share. Earlier in April, RIM announced bang-up fiscal fourth-quarter results, with 25 million total BlackBerry subscribers, adding 3.9 million in a single quarter.

RIM's big advantage is distribution. BlackBerrys are available through all major U.S. carriers, while Apple has only AT&T. The U.S. smartphone market grew 69 percent year over year in 2008, accounting for about 20 percent of all handsets sold, according to Gartner. By comparison, worldwide, smartphones accounted for 11 percent of all cell phone sales in the fourth quarter and 12 percent for the year.

Globally, BlackBerry smartphone market share rose to 16.6 percent from 9.6 percent a year earlier. During the same time period, iPhone share increased to 8.2 percent from 2.7 percent. For the broader handset market, iPhone market share was 0.9 percent, according to Gartner.

Looking ahead, Apple is banking heavily on the release of the next-generation iPhone, which is expected in summer 2009. While good for the company's bottom line, particularly through services agreements, iPhone will remain a bit player in the broader handset market. On April 6, Barclays Capital's Ben Reitzes raised his iPhone shipment estimates, based on rumors of ramped-up production, from 13.3 million units to 17.4 million units in 2009. He predicts 22 million units will be shipped in 2010. Market leader Nokia shipped more than five times as many handsets in first calendar quarter as Apple is expected to ship for all of 2009.

Joe Wilcox is editor of Microsoft Watch.



 
 
 
 
 
 
 
 
 
 
 

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