Apple bitchslaps iPhone rival Xiaomi: World No 1? That's BIG TALK Apple has declared war on its Chinese smartphone rival Xiaomi after execs from the two firms locked horns during a public event. Bruce Sewell, Apple's general counsel and senior vice president of legal and government affairs, appeared alongside Xiaomi founder Lei Jun at the World Internet Conference. The Apple exec might have …
Saying you've been gouged over an iPhone selling at the regular price, is like saying "Mercedes are gouging people with the buying price their top-of-the-range convertible, because it costs so much". That's an absurd statement, right? Because nobody is forcing you to buy the Merc, and in fact the only people who want the expensive one, partly want it because it's expensive. So that can't happen with an iPhone, when everyone knows it costs loads, and in fact that's part of why people like it.
I just don't think it's logically possible to price-gouge people over a veblen good. A veblen good is something which people want more of, the more you charge for it, so it contradicts the basic law of supply and demand, which is that the cheaper something is, the more likely people will be to buy it. Gouging is like when you charge people US$100 for a cup of water in a desert, or US$2000 to take a 1hr taxi ride during a flood (what happened to my mum visiting her dying friend in New York this time last year). It's when you've really REALLY got someone over a barrel and you hit them with an unexpected charge because they really have no choice, like they'll get ill or lose even more money if they don't pay.
You say "nobody is forcing you to buy the Merc", but at least here in Japan, that is exactly what is happening.
In a car analogy, it would be like Mercedes made a contract with all car dealers in the whole country, to each sell a ridiculous high fixed quantity of Mercedes cars. What is happening here is - all Japanese telcos are giving away IPhones for cheaper contracts than even the lowest spec Android handset.
To come back to your analogy - they will still sell you a Fiat, but you will have to cash out more than for a Mercedes.
Of course, this is not Apple's fault - it's the stupid Japanese telcos that signed such contracts.
For Apple it's a nice situation. They enjoy a 50.4% market share in the home country of Sony, Sharp, Fujitsu, Kyocera, ... and with hardware that doesn't really fit to the Japanese market. As an example NFC is extremely widespread here, but even the IPhone 6's NFC doesn't support the Japanese "seifu Ketai" (mobile wallet) system.
So yes, if you can establish a monopoly by smart contracting a limited channel (Only 3 big telcos here), you can happily gouge the customers. At least until someone else breaks in by offering a better alternative for a reasonable price. In case of Telcos this is difficult, as you need the infrastructure. As a result smart phone contracts here got significantly more expensive here in the last few years. Dumb-phone contracts not so much, as there are still some independent 2G providers around.
cheap iPhone with cheap service contract
Well, if you want an Android for some reason, it's rather nasty to sponsor a cheap Iphone for the fanbois. I for my part rather don't like IOS. Been there, was glad to leave.
My solution was to get a feature phone contract, throw the phone away and use the sim in an unlocked handset I bought overseas. For mobile data I use a 3G modem.
Not very comfortable, but it works.
Doesn't follow. Two cases:
1. Company A makes widgets that cost $1 to make, company B makes them for $0.5. The selling price is the same. Company B makes more money. It doesn't undercut company A to get 100% market share because of monopoly laws. Company B is more profitable.
2. Company A makes a product with a perceived value of X which costs 90% of X to make. Company B makes a product with a perceived value of 110% of X, costs 100% of X, but sells for 150% of X. Is their product overpriced?
The answer is that it is worth what people will pay for it. If people want a perceived value > X and the only way to get it is to pay 150% of X, then 150% of X is the fair price.
For whatever reason many people do not perceive Samsung products as being worth as much as Apple products. That being so, if they have the disposable income they will continue to buy Apple. Apple does not become overpriced until people stop paying the asking price, again for whatever reason.
That is how Apple will become #12.
It will focus on profits and ignore quality.
It will focus on shareholders and ignore employees.
It will make a heap of money short term and forget about the future, because for shareholders a bad future is merely a bad day, a day you sell and buy something better.
But eventually even the dimmest most technologically incompetent customers will wake up to the fact that they are being ripped off paying so much for exceptional pretty pieces of communications equipment (that post-purchase they immediately hide inside hideous neoprene covers).
Short term profits, even a couple of more years. Then when the disrespectful rip-off attitude comes home to roost the current shareholders sell off and buy something else. Few customers will really care that they've been ripped off. It is only the employees who will be left in the lurch.
It happened with US automakers. Decades of dedicated followers. Charging so much money for such crap.
And then other companies (which happened to be Japanese) came in and took it all away.
It wasn't until US automakers started to focus on customer satisfaction and value that they stopped going belly-up.
I love reading all the posts by Apple haters saying they're doomed because they're "gouging" their customers. They make it sound like they want to own Apple products but only if they could pay less, or Apple made minimal profit from them.
Samsung charges similar prices for the GS5 to iPhone 6 and Note 4 to iPhone 6 Plus. So Apple is gouging and Samsung is not? Or is Samsung gouging too? How about if Blackberry sold a phone for a similar price, but lost money that year? Is it only gouging if you're making "too much" money, or is there a certain price threshold some people believe phones should not exceed?
You're only being gouged if you buy a product for more than you think it is worth - and that's really your problem because no one is forcing you to buy an iPhone. If you value the iPhone/Note 4 enough to think it is worth what Apple/Samsung asks, then you'll buy it and not feel you're buying gouged. If you value them below their asking prices, you'll buy something else.
I'm sure everyone who whines about gouging every time an Apple article comes up spends money on things I think are foolish and you're being "gouged". But I wouldn't go trolling on for people I think are being gouged paying extra to get a 3D TV, or something useless like a Nest thermostat.
"It happened with US automakers"
Decades ago, I was an US auto reviews magazine. It had a page dedicated to each model with pros and cons. A page for an Renault model had:
pros:
- this is good;
- this is awesome;
- this is truly unbelievable;
...
cons:
- it's a french car and no sane American will buy one.
This pretty much sums it all about US automobile market idiocy at the time.
The funniest thing is, that Apple has been focused on "customer satisfaction and value" all the time, from day one. They are still the number one there and that explains why people generally prefer to buy their stuff, if they can afford it.
Mobile phones is a very competitive market. You can't win it with cheap price. It also needs to provide the customer satisfaction and quality.
Apple give people what they want - great phone, great support but it does come at a price - but really the difference in cost between a high end Samsung and iPhone evaporates to almost nothing when you look at it over 2 years and then consider resale / trade-in value.
It's the same to an extent with cars - a BMW may cost more than an equivalent [insert other make] to buy from day one but it holds it value better so the cost of ownership may well be the same or less and you probably get a better made car with better support.
Why?
The obsession with being biggest may work for whales and armed forces, but for some companies margin and customer loyalty may be much more important. Gigantism hasn't exactly worked well for HP, is no longer working so well for Microsoft, and at one point went badly wrong for IBM.
Electronics companies have to be big enough to get economies of scale, but beyond that, once the internal politics, product fragmentation and corporate unwieldyness kick in, being bigger may not mean being better.
That's a new word for me. Thanks.
The point being made here is that Apple IS worried and had taken for granted the Chinese market. But now that it sees serious competition and erosion of market share (wakey wakey - smelling coffee?), it starts bitchslapping (as the title says).
Which is how it should be. And 2 years down the line, Apple Inc. will be a whittled down company.
How long does this Veblen lust last ? That's the question.
The iPhone is NOT a Veblen good. It is not nearly expensive enough. It is a mildly aspirational good; it is bought by lower middle and skilled working class people, as part of lease contracts where the true cost of the phone is concealed. An iPhone is "perceived" as costing a couple of hundred dollars only, because most people are financially clueless. The difference is between "free" on contract and $200 on contract, which is not nearly enough for the Veblen effect to kick in.
One of the factors in the success of the iPhone is that lack of regulatory oversight of the US carriers has allowed them to get away with very high contract prices, which extend to BYOD contracts. If the European situation of the SIM-only low priced contract obtained in the US, and people bought rather than leased their phones, the market share might well change.
While the Apple executive is correct in stating that the task for becoming the No.2 smartphone maker internatinally is very difficult, the reality dictates that Americans always think they are the center of the universe, and have denial of the fact that Samsung, as a Korean, Non-American company overshadows Apples sales worldwide.
This therefore at least allows that a Chinese firm, with a potential market of 2 billions plus customers in Asia alone would completely surpass Apple and every other American company in Mobile, Social Media and possibly e-Commerce marketshare,
Apple seems to be owning the market at the moment
http://www.uswitch.com/mobiles/mobile_tracker/
Number 1, 2, 3, 5 and 7 in the top 10 according to uSwitches mobile tracker, and iPhone 6 still not meeting demand even after pumping out half a million iPhones a day out the factory for the last 2 months.
Infact if you look at the historical data on uSwitch the iPhone 5S was number 1 even when it was almost a year old.
I think more people are starting to 'get it', and i don't mean get one (but that too), i mean understand why iPhones are better. I laughed at the iPhone in its early days and got a Nokia N95, then an N900, i then laughed still at the iPhone specs and got a Samsung Galaxy S2 with Android think i was right because my phone had better specs. Then i got an iPhone 5, and afterwords i wish i had got the iPhone years before, the user experience is so much better, its not about the specs and the second you go down the comparing specs route you have lost already.
Most recent example is Apple Pay. Yep other phones have had NFC for years, was it used much? Nope. Apple does it, executes its delivery correctly, integrates it with touch ID and guess what, in its first week Apple Pay does more transactions than Googles Wallet has EVER done. Don't compare the specs, its all in the experience.
uSwitch data means what? You do realise that sales only account for part of the data? You did read that bit?
According to that page "Not only do we look at sales but we also look into how much interest there has been for each handset."
Define interest and tell me what that means as far as making a phone the best? Suppose one of those partner sites happens to be GSM Arena, which has a handy comparison page. By default it loads a phone. Today it appears to be the Nokia N1. For some time it was an iPhone 6. Does that count as "intererst"? Will the N1 start to shoot up the list soon? In the past I've compared numerous phones on there, all manufacturers, all sizes. Just to see how they measure up. Strangely, even though I may compare 12 phones, I only buy 1. How many "interest" hits do all those comparisons make?
Listening to a song and thinking, that's not bad, doesn't send it to the top of the charts. Flicking through a book in WH Smith does not propel it to number 1 in the bestsellers list. Looking at a phone on a website does not make it any good.
You may like the "user experience", although I fail to see how pressing on an icon on an iPhone is any more pleasurable than pressing on the same icon on an Android phone. Personally I like the user experience of £350 in my pocket and not in the bank account of a greedy multinational.
As for NFC payments, of course they're more popular with iPhone users. It's another opportunity to flash off their iShiny in front of the plebs. "£9.99? Of course, I'll just get my iPhone out and pay for that." iPhone user feels smug, checkout girl unimpressed, rest of queue thinking "what a dick" , especially when they all know the card reader isn't NFC enabled, and out comes cash or card, just like the rest.
Crikey, these commentaries are astonishing.
Smartphones are not expensive items. $1000 might be a bit hard to raise if you are homeless, but for vast swathes of the human race, this is not a big ticket item. Further, it has a life of several years before the technology and software development in unison abandon the platform, and probably several more before it dies. Let's be conservative and say 5 years, $200 p.a. It is not like the $1000 is pissed against the wall or goes up in smoke immediately upon purchase.
For smokers, that is probably 1/10th of what they spend on fags a year.
For me, it is certainly less than I spend on beer a year (beer is very expensive here)
Veblen items need to be both expensive (and known to be so) and obvious to see in absolute terms. Further, ownership needs to be conspicuous to the plebs. So high value items that no one notices don't count. That $250,000 understated Patek on your arm that only a watch enthusiast notices doesn't count.
A Contador counts.
An S5 or Note doesn't count because they are plastic crap and look like crap after the paint wears off the plastic. They don't count.
The iPhone for all its faults is a well designed looking piece of kit and doesn't look or feel cheap, nor are they cheap to design & manufacture. However, they are not expensive in any objective sense, so they don't count either.
A Vertu might count, if only enough of the plebs could spot them at a glance.
All you poverty stricken wannabe Apple haters moaning about how expensive an iPhone is (and strangely not moaning about the cost of an S5 or X3 or whatever) who think that only hipsters and people with whom you do not wish to be associated are Apple's primary customer base, are so far removed from the reality on the ground, that I sincerely believe you must all live in your mothers' basements and play WoW all day
The real difference in cost might add up to a few pounds a month on a contract and the iPhone actually has a trade-in value after 2 years! iPhones are worth around half after 2 years (depending on model / condition) which is a lot more than I see non-iPhones going for - so take that into account when looking at the monthly cost and there is probably bugger all in it.
Either way it's going to come down to literally a few pounds per month for anything remotely similar and the iPhone may actually work out cheaper when you look at TCO.
TCO? Ah the beloved comment of the Apple user....
Customer A walks into a phone shop and buys an iPhone for £600, safe in the knowledge that in 2 years he can sell it for £300.
Customer B walks into a phone shop and buys an Android for £300, safe in the knowledge that in 2 years he can sell it for £30.
Two years later, customer A sells his iPhone, and is pleased with the £300 he has, and goes to gloat over his Android owning friend. "Look at this, £300 for a second hand phone" and waves it in his friends face. "Look at this, here's the £300 I've had in the bank for the last 2 years, and here's the interest I got on it. And look at this, here's my phone. Where's yours?"
Still, £300 for a second hand phone,eh?
I'll just get my Orange San Francisco out, £99 and 4 years old, let's talk TCO shall we?
Wanna see a b#tch slap? Put one of us in there mang. Just watch as we tell China where they can stick their yellow river and back up their mings.
A.) Mexico can out produce China and we're not dumb either. We don't need to steal or cheat to make headway. Why do we? We're not cut off from the rest of the world and everyone wanted our stuff. (albeit they stole it from us)
B.) I am American, 4th generation but the economic power of Mexican, Canada and the United States (as well as the $$) will put an end to this Chinese dominance. We built the most pyramids in ancient history. We built some of the most advanced science in ancient and modern history (the northern hemisphere of Americas) I think we can put together a few mobes.
C.) Mexico and United States booted the monarch in England on two separate occasions. We didn't have 100 years of a British footprint. We will get Quebec to come around first and then the rest of Canada will fall. Once that happens. Stick that giant eye sore of a building that looks like an arch up your xiaomi.
I mean this as a friendly competition. I love Chinese culture and the history. China should be proud of its accomplishments. It's influenced so much and many great inventions (and religions) have come from China's influence. I would not advocate hurting chinese but have no problem in competing them under the yellow sea.
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