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During the explosive growth period of the iPhone, Apple followed through The strategy of Steve Jobs. Keep the price of hardware high, but keep the price of software and services as low as possible. Apple's revenues and profits have reached record levels. Now that the hardware market is saturated, sales of iPhone no longer increase, and Apple, Tim Cook, must reconnect with years of dogma to build a new business model.
Steve Jobs' strategy was flawed. At some point, you have no room to grow.
Steve Jobs (Ben Stanfield / Flickr creative commons)Ben Stanfield. Flickr CC
On the pricing of equipment, Apple lost its unified approach around the world, with significant price declines in China to fight demand-side demand, alongside efforts in India to raise the average selling price by removing cheaper handsets from the portfolio. In the United States and Europe, Apple offers significant discounts on the iPhone, although this is via the exchange of older handsets.
Keeping the price of high equipment becomes an increasingly difficult strategy. The exchange of market shares to maintain a higher price can not last forever. Something must change.
Customers gather while they participate in a class to learn how to use their iPhones at an Apple Store on January 7, 2019 in Beijing, China (photo by Kevin Frayer / Getty Images)Getty
Over the past year, Tim Cook has made it clear that he believes Apple's future is to be a "service-first" company. the goal of revenue from services is expected to double from $ 41 billion in 2016 to $ 82 billion in 2020. Of course, there is no indication of the profit margin offered by the different services. So it's debatable whether the App Store, a streaming TV service or individual music subscriptions can offer the same performance as the iPhone at the time.
But there is a shock at the heart of this software-driven strategy first … you need a lot of users to make it work. This is usually the reason why software companies tend to "give" key elements to build an audience (just look at Google's efforts to grow with Android).
Cook's Apple wants to have a profitable branch of software and services. It also wants prices for the materials needed to access these services to remain high. I do not think he can handle both. So who will it be?
Now, read why lack of demand in China highlights Apple's broken strategy …
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During the period of explosive growth of the iPhone, Apple has applied the strategy of Steve Jobs. Keep the price of hardware high, but keep the price of software and services as low as possible. Apple's revenues and profits have reached record levels. Now that the hardware market is saturated, sales of iPhone no longer increase, and Apple, Tim Cook, must reconnect with years of dogma to build a new business model.
Steve Jobs' strategy was flawed. At some point, you have no room to grow.
In terms of hardware prices, Apple has lost its unified approach around the world, with significant price declines in China to counter the demand for efforts in India to increase the average selling price in China. removing the cheapest handsets from the wallet. In the United States and Europe, Apple offers significant discounts on the iPhone, although this is via the exchange of older handsets.
Keeping the price of high equipment becomes an increasingly difficult strategy. The exchange of market shares to maintain a higher price can not last forever. Something must change.
Customers gather while they participate in a class to learn how to use their iPhones at an Apple Store on January 7, 2019 in Beijing, China (photo by Kevin Frayer / Getty Images)Getty
Over the past year, Tim Cook has made it clear that he thought that Apple's future would be to be a "service-oriented" company, with the goal of doubling service revenues from $ 41 billion in 2016 to $ 82 billion in 2020. It is therefore doubtful whether the App Store, a streaming television service the same performance as the iPhone at its peak.
But there is a shock at the heart of this software-driven strategy first … you need a lot of users to make it work. This is usually the reason why software companies tend to "give" key elements to build an audience (just look at Google's efforts to grow with Android).
Cook's Apple wants to have a profitable branch of software and services. It also wants prices for the materials needed to access these services to remain high. I do not think he can handle both. So who will it be?
Now, read why lack of demand in China highlights Apple's broken strategy …