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Technology Stocks : Apple Inc.
AAPL 278.37+0.1%3:59 PM EST
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To: pyslent who wrote (168994)4/28/2014 2:20:51 PM
From: Ryan Bartholomew  Read Replies (4) of 213176
 
Let's say Apple cuts the price of the iPhone by 50%. They would easily triple their market share overnight. Better investment or worse?
Great question. Assuming it would triple global share is too optimistic, as there are plenty of other great phones ~$400. Nonetheless, it's safe to assume it would skyrocket. A key factor would be if the quality and costs would remain the same. If they did - where would that leave profit per device (I don't have the current iPhone margin handy, but I presume it would eliminate all hardware profits).

If Apple did three things with their hardware, I'd buy shares at $700, let alone $580:

1) Continue to use iOS as the default, taking away nothing from those who currently use and prefer it, but allow the *option* for alternative OSs to run on their hardware.

2) Partner with someone (presumably Google) who can monetize the use of the devices immensely more efficiently than they do now.

3) Cut prices by 25% to 35%, depending upon model and current margins.

This would crush hardware margins but cause market share and overall sales to go nuts. Revenue from the ad partnership (and perhaps from apps/content when other OSes are run, if that was included in the arrangement) would more than make up for it.
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