Sorry to say Ryan, but investors should be glad you are not running Apple.
No argument here. But they might have regrets in a few years if the hardware-only-high-margin approach fades and they're left scrambling for a new model. Has happened in many other tech industries, signs of it happening here. Apple isn't immune.
Your suggestions sound like what happened to Sears...Once upon a time when one bought tools or appliances, you went to Sears. Not because they were the cheapest, but because they sold quality items for a fair but higher price... Then a genius decided Sears needed to compete with Walmart and Kmart... they even bought Kmart. Sears had to do something because those competitors and others were taking business from them and profits were in decline. No argument that they haven't reacted ideally, but you're highlighting a situation where a leader in quality and margin can falter and need to change something. You're presuming that my earlier suggestions amount to "competing on he low end". They do not. They're focused on monetizing differently (shifting margins from one source to another) - not cutting quality. In Sears' case, their technology (e.g., website, which matters hugely these days) is horrific. Quality of operations has plummeted.
I go in there and just marvel at how the stores are deserted. Its really sad. They are closing stores, you see the closed stores down here, people are losing their jobs. One store was next to an Office Depot. That Office Depot will probably close too since the Sears turned Kmart has turned empty shell, people used to combine trips.
It's not just Walmart taking their business - it's Amazon. And Amazon is adding jobs and growing sales like mad. Retail sales overall are growing, so losses in one place are clearly being made up and then some elsewhere.
Amazon and others aren't succeeding merely because of price. Their model has huge advantages as well. And it's no just Amazon (who themselves, for the moment, have very low margins)... the countless merchants who sell through them are profiting like mad through sales volume opportunities that were impossible just a few years ago. Think of this akin to Apple's opportunity to make money on ads, media, apps to a much greater extent than they do now.
So I went to Sears thinking I'd get it for $50. Nope $69.99. So I went home, (no smart phone, dumb person), and bought one online, store pick up no ship charge. Exact same one. $50. Guess they screwed up because its back up on the price. We're off topic here, but I know a bit about Sears. You're describing a problem they have because their technology is a mess. If you play the game right with them (automated price alerts combined with points and code promos plus cash back), you could likely get that item for a net cost of $30 if you watch it for a couple weeks. If you know what you're doing with SYWR, you can get a couple hundred dollars worth of stuff virtually free each *month*. It's killing Sears. But Sears isn't Apple... unrelated problems. |
