Alright, I’m leading you on a bit because the only ones who really complain about Apple’s prices being too high are the executives from companies that cannot figure out how to make a profit on their products; those that compete with Apple.
Motorola, The Chinese Company
Remember the Razr, Motorola’s thinner than thin phone from way back when, back when Motorola was not a Chinese company. The Razr was initially sold as a fashion phone and priced higher than most.
Motorola began its decline by trying to sell more Razrs by cutting the price and selling Razrs with low margins to compete against Samsung and LG in the feature phone market.
Guess who thinks Apple’s iPhone has an outrageous price tag? Yep. Motorola’s current president, Rick Osterloh, who really works for Lenovo which owns Motorola after purchasing the company’s carcass from Google which drove it deeper into the ground than the previous owner, Motorola.
Here’s the deal. In product marketing, differentiation is key, and products– and we’re talking about smartphones here– can be differentiated many ways; price, design, color, materials, etc.
Apple has chosen the premium end of the targeted market– smartphone buyers with discriminating tastes– and prices iPhones accordingly. That accounts for Apple being the richest and most profitable company on the earth.
Motorola has chosen a different path, far removed from those with discriminating tastes, and has latched onto a segment of the market that wants to design their own smartphones. Motorola sells smartphones that customers can design themselves from pre-packaged options.
How’s that working out so far? Osterloh thinks it will improve for Motorola, and get worse for Apple.
We do see a real dichotomy in this marketplace, where you’ve got people like Apple making so much money and charging such outrageous prices. We think that’s not the future… A great smartphone, and a great mobile internet experience, shouldn’t be an expensive luxury. It should be a simple choice for everyone.
The choice appears to be much simpler for the vast majority of customers than even Motorola’s newest head honcho thinks it is. Enough smartphone customers are choosing Apple’s iPhone models that even Android-based smartphones– such as the ones Motorola makes– are in a sales decline, while Apple’s iPhone, still selling in ever greater numbers because more customers want quality rather than do-it-yourself-packaged-plastic, has a lock on 93-percent of the smartphone industry’s profits. Motorola’s decision to go in the opposite direction from Apple has resulted in the opposite of profits.
Apparently iPhone prices are not as outrageous as competing company executives think, as Apple struggles to keep up with growing demand of its premium brand of smartphones.
Oh, one more thing. Is there a smartphone manufacturer that would prefer to keep their own sales and profits instead of swapping places with Apple? Mr. Osterloh, would you care to comment on that question? Please hurry because Motorola seems to have a habit of ditching head honchos more regularly these days.