IMO, those phones wouldn't stand a chance against a $325 iPhone, but of course, this was a straw man argument. Obviously, unit sales and market share would increase, to what extent is arguable, but what is known is that profitability would decrease by tens of billions annually. Per my earlier response, it need not be a $325 price point, so margins on hardware wouldn't have to drop to zero.
You are too optimistic about the size of the advertising opportunity. You are talking about taking Apple's $95B in iPhone hardware revenue, and cutting out 30%, giving up $30B in pure operating profit. In return for what? Google only generated something like $12B in profit for all of 2013, and just partnering with Google doesn't mean Apple gets to take all of Google's profits. You're comparing revenue and profit. The profits from mobile ads + apps + media purchases, coupled with a boom in market share of the hardware, would be massive. And hardware profits need not drop to zero to accomplish this.
Apple has a golden goose in the iPhone. It is asinine to kill it, especially while it is still growing. Not suggesting they kill it. Suggesting they maximize it. |
