[MatthewPhillips]

> Except Apple doesn't seem to care about achieving huge market share for the iPhone. They care about money, and by delaying the iPhone 5 they've managed to make even more money than usual. It must be habit that we go for the market share argument so often. A corporation's responsibility to its shareholders isn't to spread its logo across the land like a religion, but to return value (real dollars, not imaginary market share dollars) for their investment.

Citation needed. I'm just a dumb programmer but I'm pretty sure that Apple at 30% market share makes more money than Apple at 19% market share. Please edutate me if not correct.

[AllenKids]

Market is not fixed in place, when one factor changes, other numbers vary accordingly.

For example 30% of a total 100M units sold is roughly the same of 19% of a total 150M units sold. IF APU stay the same, it makes no difference financial wise to Apple. But to achieve 30% of 150M units sold, Apple may have to branch out another line of more affordable phones, it may have to give more control to the carriers, it may have to iterate on a faster pace than it is comfortable with, all of these would hit Apple's margin and equal things out.

With Nokia LG SE and Motorola in the red, Apple is now siphoning about 50% of industry profit at a market share of, what, 5% of all phones sold?

Which is not to say market share is not important, but it is not the utimate goal.

For now Apple's more urgent problem remains to be manufacturing capability, its fancy process or unique components always causes shortage upon new iOS devices launch and well into the second quarter, it almost forms a pattern (iPhone 3G/iPhone 4/iPad 2 etc). If the murmurs from Foxconn et al is to be believed the same backlog will happen to iPhone 5/iPad 3 again.

[trotsky]

Yet reports seem to indicate Apple is planning on rolling out a "budget" price point phone [1], so they probably are worried about market share after all.

Apple is on a long term digital media dominance play. They want to be the one stop locked in shop for many people's music, software, video and books. Sure they'll continue to be interested in making good money on their hardware but their evolving iOS platform strategies clearly point to what they're looking forward to. And in that version of the world where content sales is king, market share means a whole lot.

http://techcrunch.com/2011/02/10/iphone-nano/

[AllenKids]

These kinda rumors are literally a dim a dozen. I'll believe it when I see it.

Of course it is a perfectly valid strategy and Apple successfully implemented just that with its iPod line. Still the timing and implementation are everything. Handset market is clearly more competitive and turbulent, Apple is treading extremely cautiously.

[epistasis]

A "budget" price point phone would be better understood in terms of market segmentation rather than market share; i.e. getting money from people who have a lower maximum price, now that they've gotten money from those who are willing to pay more.

If they wanted market share, they would have just led with the "budget" phone.

[r00fus]

> If they wanted market share, they would have just led with the "budget" phone.

But Apple has a luxury brand, and a "budget" device would detract from that (even the lowly iPod shuffle fills a niche for well-off folks: it's small and sleek).

Budget in this context means pre-paid (as per the last earnings ). And I bet that iPhone will not be compatible with a post-paid plan (or vice-versa)... it will be interesting to see how Apple navigates this as they've been very deft at positioning new products in terms of their existing product lines.

[gonzo]

Tim Cook has made several pointed references lately to the pre-paid market.

[mistermustard]

Apple has consistently claimed the highest share of the mobile phone market's profit without selling the most phones.

Source: http://www.businessinsider.com/apple-smarphone-profits-2011-...

And the quarter before that: http://tech.fortune.cnn.com/2011/01/31/apple-is-still-suckin...

And the quarter before that: http://tech.fortune.cnn.com/2010/09/21/pie-chart-apples-outr...

[MatthewPhillips]

If they want to maintain the same (or better) share of profits they must take market share. Smartphones are only 28% of the total phone market today. That is what the article is talking about; future growth potential.

[Hyena]

That's not true. Expanding market share can mean selling at lower price points, which in turn means lower margins and potentially lower ROI. Moreover, the simple ways around this, like keeping older product lines longer, have risks in the technology sector not present in other areas. There's a lot of incentive to be not more than two models behind on mobile phones, not so much with cars.

[p0ppe]

The profit margin is more important than market share.

Profit = products sold * profit margin. If you have to decrease your profit margin, to increase market share, the total profit might suffer.

[MatthewPhillips]

Why would they have to decrease profit margin?

[mgkimsal]

I don't think the OP was saying that they'd definitely have to do so, but it's typically something companies do to increase market share generally speaking. Reduce price point means reducing profit margin, but often increasing market share because the lower price means more people can buy.

Apple typically hasn't done this (or certainly not to the extent other mfgs do) but certainly still like talking about their increasing market share.

[AndrewDucker]

Because you can now buy an Android phone for less than £100. If Apple want to compete with that they'll have to compromise on both quality and profit margin.

[MatthewPhillips]

Right now Apple is only competing in the high end mid-sized slate smartphone segment. You're pointing out just 1 other smartphone segment that they could compete in, the lower priced segment. There are many ways Apple could compete. They could release 2 or 3 new styles of iPhones while retaining the same price.

[AndrewDucker]

Apple pride themselves on making the iPhone simple, and not fragmented. I can't see how they can do that and still release the iPhones in different styles, unless we're talking nothing more than different covers.

The massive market growth in smartphones is being caused by the smartphone becoming cheaper - if they want more of the market then they have to enter that area.

[MatthewPhillips]

They release different styles of Macs and iPods, why is the iPhone the one product of theirs that has no differentiation?