Wrt SONY, actually their mobile sales were up 11% to their highest level ever. But even they see the writing on the wall and are cutting back.
Does it really matter whether it's "midrange" or "flagship"? Does that help you spend $800 for a phone? Fact is even high-end phones are coming down in price, to the $500 range or even less. Midrange is going for $100-$300. Low-end are now less than $100. This is the schism that currently exists between those that get it and those that don't. Even Apple may have to adjust its prices eventually. The pain will not be Samsung's or Android OEMs' alone. Just as computer prices constantly came down over time, phone prices will have to as well. If Samsung's strategy and infrastructure is setup for $600-$800 phones, then it's doomed. If they adjust for $100-$500 then they will be fine.
Sony mobile sales were still below their greatly slashed forecast from Oct. That's pretty sad considering Sony threw out the kitchen sink with that lowered forecast. And it's easy to increase sales when you're starting from a low base. The fact that Sony could only increase it 11% from such low level is pretty pathetic. They had a gimme and still failed.
I think what's most likely to happen isn't that the prices of all phones will come down, it's that the maximum price of an Android phone will come down. This is because increasingly competant Android devices exist at the low end, thus driving down the cost of the high end too. Apple will remain stubbornly high end only, and quite rightly, as that is what will maintain profits and prevent a downward spiral of prices.
up 11% from a year ago...
So they sold like 11 more phones. :biggrin: Think about the phones Sony had out a year ago. The only reason I own Sony shares is that the company is so pathetic, the stock goes up when Sony screws up less than expected. That's pretty good position to be in. When you're rewarded for sucking less than expected. :awe:
Well, we've all seen this movie before and that is one reason why they lost the PC market to Microsoft in the 1980s. They'd be stupid to do it again. Margins for them is currently 38%. It's great but nothing good lasts forever. And with carriers pushing plans that encourage customers to buy the phones outright (or over time) instead of paying $200 every two years, it's only a matter of time before people start seeing the real price of these smartphones. T-Mobile started this with their JUMP program and, last time I heard, it's now accounts for nearly 50% of industry subscriptions. That is a huge jump in such a short time and even Apple will have to see where the market is going.
Apple's problems in the '80s were more that it had truly bad profit margins (today's would seem modest by comparison) and started developing an increasingly confusing and inaccessible product line.
Besides, I'm not sure if "be more like Windows and Android vendors" is the right model. That Windows PC race-to-the-bottom strategy worked so long as PCs were the center of the universe, but it also created a toxic market that set up the downfall of numerous companies. Sony quit the PC business, Acer lost gigantic amounts of share (though it is recovering), Toshiba is axing a lot of its consumer stuff, Samsung no longer sells laptops in Europe... if you're not Apple, Dell, HP or Lenovo, you're probably losing sales.
Same thing for Android. If Apple has 20 percent of the market share (an increase, no less) but 93 percent of the profits, with a declining Samsung taking most of the rest... well, that suggests that it's pretty terrible to be an Android OEM these days. Even Xiaomi is seeing its profits grow much more slowly than its shipments, which implies that it wouldn't take much for its success story to turn sour. Why would Apple want to join a pack of companies that are basically doing their best to commit hara-kiri?
Apple's problems in the '80s were more that it had truly bad profit margins (today's would seem modest by comparison) and started developing an increasingly confusing and inaccessible product line.
Besides, I'm not sure if "be more like Windows and Android vendors" is the right model. That Windows PC race-to-the-bottom strategy worked so long as PCs were the center of the universe, but it also created a toxic market that set up the downfall of numerous companies. Sony quit the PC business, Acer lost gigantic amounts of share (though it is recovering), Toshiba is axing a lot of its consumer stuff, Samsung no longer sells laptops in Europe... if you're not Apple, Dell, HP or Lenovo, you're probably losing sales.
Same thing for Android. If Apple has 20 percent of the market share (an increase, no less) but 93 percent of the profits, with a declining Samsung taking most of the rest... well, that suggests that it's pretty terrible to be an Android OEM these days. Even Xiaomi is seeing its profits grow much more slowly than its shipments, which implies that it wouldn't take much for its success story to turn sour. Why would Apple want to join a pack of companies that are basically doing their best to commit hara-kiri?
Who said they would join those firms willingly? I said that those lofty prices have not changed in 8 years. That means that, for the consumer, iPhone prices are going down much much slower compared to Android phones. With so many carriers promoting the JUMP/NEXT/EDGE/EASY PAY subscription plans within the US and everyone else selling phones at MSRP, it's only a matter of time before the price of phones start approaching cost. Add the fact that firms like Google and other cloud services make precious data OS-agnostic, Apple will have to think long and hard about keeping those lofty prices.
Fact is, if we compare Mac sales to Windows, Apple is at 10%. They're non-existent in the enterprise but they have (consumer) profits that's the envy of other vendors. If they have no problem with their iOS devices going the route of Mac devices then they should keep doing what they're doing?
I just don't think Apple has any pressure (at least, not in the next couple of years) to give into the herd mentality and make cheaper devices. That's especially true when Apple is doing very well in China -- you know, the place where everyone says you "must" compromise on profit and quality to succeed. In North America, the higher price of flagship phones still isn't as much of an issue because payment plans typically mask the cost. You might pay $25 per month for that new phone, but you're also getting a discount on your monthly bill.
And it's hard to say that the iPhone will necessarily mirror the Mac. The pricing is considerably lower (and thus more favorable), the customers are different (just about everyone can use a phone, not everyone needs a computer), and the competition is different (in China, for example, there's room for both mass market and upscale brands). With that said, I don't think Apple is going to change its mind either way. It's both stubborn and aware that it's wiser to play the long game. Too many companies scramble for market share at all costs and don't realize that very few vendors ever 'win' that war, let alone enjoy the rewards for more than a short time.
Just ask Samsung: its goal has (as far as I can tell) always been to win by having the most sales. That's why it spends amounts on marketing that would make Apple blush, develops phones for seemingly every niche and gladly compromises on build quality and performance if it means lower prices and reaching wider audiences. That only worked so long as there was no other major vendor that could undercut Samsung... and, well, Chinese vendors can undercut Samsung. It was only in mid-to-late 2014 that the company seemed to acknowledge that its strategy was no longer all that effective.
I wouldn't stake too much on the CHinese. Yeah, they like to show off their wealth and iPhones are a luxury item. But things can change quickly in that country. Just look at the fortunes of so many luxury firms. They were riding high for a long time then, suddenly, sales started to flat-line, then decline. And this huge spike in sales may be Apple joining the rest of smartphone OEMs in making the types of phones ex-Japan Asians like. But who knows what things will look like later this year. As an investor I hope I'm wrong, but who knows.
That is a long-term concern, of course. The point is more that the "do what everyone else does" requests fly in the face of the evidence we have, and there aren't any signs that this is going to change in the near future.