Apples and pears?
Posted by Giles Lury on May 19, 2009
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Apple’s recent quarterly results made interesting reading…
They sold 2.22 million Macs, 3.79 million iPhones and 11 million iPods. What interested me most however was the relative size of these figures and the likely share of the respective markets that they represent.
Despite the huge impact, widespread respect and undoubted appeal of both the iPhone and Macs they are both very minor players in their markets.
The iPod is the “pear” to these “apples” with a much larger share of its marketplace and much higher unit sales. Unfortunately for Apple it also seems to have the lowest profit margins. Analysts have estimated that the iPhone is Apple’s most profitable product with a gross margin of about 43 percent, compared with estimates of 35 percent for the Mac and 25 percent for the iPod.
Looking to explain some of this difference it may be the lower profit margin means the relative price premium you pay for an iPod versus other MP3 plyers is smalller than the premiums for iPhones and Macs. However a key difference for me is that the iPod isn’t just the product but part of a vetically integrated offer linking almost seamlessly with iTunes. It is this link with content, a link which other hi-tech manufacturers like Sony recognise, that adds to the appeal of the product and ultimately its performance in the marketplace.