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Apple Market Share vs. Margin Debate Ahead of Reported Back-to-School Promo

Posted May 30, 2008 11:34am EDT by Aaron Task in Investing, Computers, Electronics

It's a day ending in "Y," so there must be new speculation about goings on at Apple.

The latest: Apple is going to announce big back-to-school promotions, "some of the biggest incentives in the company's history," according to AppleInsider.com.

Henry wonders if promotional activity is really a "good thing," because Apple typically hasn't had to put stuff on sale. My take is that Apple may be willing to sacrifice margins in order to gain market share, a smart strategy as it tries to cement its dominance with the under-25 consumer. (Imagine being a college student going to class with a boring Windows-based laptop or, heaven forbid, a Zune.)

At the same time, Apple would be wise to take advantage of demand for its products from adults, too, especially as Microsoft loses its grip on corporate IT budgets.

Meanwhile, the closing of New York's 24-hour Apple store has some folks buzzing about the possibility of a 3G iPhone commercial. More important, Apple continues to rack up agreements with international carriers as it prepares (we all assume) to soon roll out the 3G iPhone.

102 Comments

Yahoo! Finance User
Yahoo! Finance User - Friday May 30, 2008 12:08PM EDT

"(Imagine being a college student going to class with a boring Windows-based laptop or, heaven forbid, a Zune.)" You remian objective. That's important. Good grief.

vunderchild
vunderchild - Friday May 30, 2008 12:09PM EDT

i agree

oakharbor4
oakharbor4 - Friday May 30, 2008 12:13PM EDT

Apple has been one of the few companies that I have seen able to retain its margins. Selling their products at high cost to retailers and balanced with the high demand of apple products, most companies such as best buy are only seeing margins from the products being attached along with ipod or imacs. If that keep this a rare move in the company, I can only see positives in this actions.

you
Yahoo! Finance User - Friday May 30, 2008 12:13PM EDT

the big issue here is that Apple is king on most with college and university students, not to mention the high schoolers. this group of consumers display a huge amount of loyalty and will be mac users/buers for perhaps the rest of their lives and there's nothing wrong with sale pricing to capture more of this ever-expanding market. The phone is a big home run and a huge market builder and the non-stop vision of apple is fun to watch, and of course, invest in as well. cheers.

kennysntv
kennysntv - Friday May 30, 2008 12:17PM EDT

I think they have a good point. Mac may be for the next generation. I have a zune and despite MS major f ups it works for what I need it to do . Play music and show photo's and video. However for my fledgeling business a mac would be best There fore MS has really lost its market for the office placce and mac is replcing it. Howver are we going to live by two Operating systems only? Why not Linnox? a third competitor would alow for more competition

lovemyvistapc
lovemyvistapc - Friday May 30, 2008 12:21PM EDT

So sick of this biased crap. These guys are the 2 biggest dorks. I hate tech ticker

you
Yahoo! Finance User - Friday May 30, 2008 12:40PM EDT

Reality check: PCs are still used by majority of businesses, and businesses have much more spending power than college students who love macs.

barcelona_design
barcelona_design - Friday May 30, 2008 12:53PM EDT

... these guys are lame!

you
livinginmeridian - Friday May 30, 2008 12:55PM EDT

I say sell them at cost to students. For a very short time. The long term rewards will be returned 10 fold.

kaamulan
kaamulan - Friday May 30, 2008 12:58PM EDT

...wait 'til these college kids graduate! Face it... MS is dead, really.

you
Zannydispenser - Friday May 30, 2008 12:59PM EDT

Man are these guys out of it, (or totally sucking up to Apple!) I did an unscientific check of my own. I checked out what my Jr. High School aged daughter & the 20+ kids in her afterschool computer club were using. As far as computers, Dell & HP have nothing to worry about. Not a Macbook in sight. All Dell's , HP's, & one kid had a Gateway. As for mp3 players, Apple fared better, 5 iPods (all Nano's) against 4 Sansa's, 5 Verizon VCast cell phones , & a pair of iRiver players.

you
livinginmeridian - Friday May 30, 2008 01:02PM EDT

lovemyvistapc: It is painful to know you got ripped off isn't it? There are two kinds of Vista users - Those that admit Vista is garbage, and those that try to defend their purchasing blunder by hiding behind their ability to run more software that doesn't work well.

you
dorchy2008 - Friday May 30, 2008 01:14PM EDT

Dude, the apple store in new york did not close, except insofar as it closed for an evening, probably to film a commercial. But it didn't "close" in the typical sense of the word. After all the negative articles you've written about apple, maybe it is time that the SEC starts to take a look at your articles.

lovemyvistapc
lovemyvistapc - Friday May 30, 2008 01:19PM EDT

livinginmeridian my vista pc runs great. Don't believe all the ms hate. Read some dell reviews and see what people say about vista. It's hip to hate ms and apple can do no wrong. Apple is much more evil than ms.

titletownjake
titletownjake - Friday May 30, 2008 01:23PM EDT

We are witnessing the new paradigm. Apple is increasing it's market share on all fronts while others are languishing. There is not stopping them. If they lower prices, look out. Microsoft's operating systems are so last century. One other thing, Dell has 5 product design engineers - Apple has 1800.

The Pike
The Pike - Friday May 30, 2008 01:39PM EDT

As for the mp3 players look around it's MAC/Apple stomping them all. Even many of my MAC hating friends have ipods. Including several who a few years ago swore they'd never own a Apple product. Hehhehehe "You will be assimilated"!!!

R-Dub
R-Dub - Friday May 30, 2008 01:40PM EDT

An artist I used to work with fresh out of college and was still paying off her Apple a year and a half after starting her job. The thing is, we all had Microsoft based PC's where we worked. In business, it's all about the server platform and the desktop applications. Macs are for fun.

you
ogdoggmg - Friday May 30, 2008 01:41PM EDT

If the new iPhone has built in GPS and 3G I will be buying them for my entire family. Sorry Nokia. I also love my current iPhone so much that I will be buying nothing but Apple products for the rest of my life. I don't care if I have to pay twice as much, the user experience is unmatchable. My PC is so full of virii I can barely surf the web on it anymore. I'm so sick of reformatting every month... Macbook, here I come. Nearly everyone I know is making the switch to Apple. In another 2-3 years, PC's will be strictly cheap workplace machines.

R-Dub
R-Dub - Friday May 30, 2008 01:42PM EDT

An artist I used to work with fresh out of college and was still paying off her Apple a year and a half after starting her job. The thing is, we all had Microsoft based PC's where we worked. In business, it's all about the server platform and the desktop applications. Macs are for fun.

you
Yahoo! Finance User - Friday May 30, 2008 01:46PM EDT

In all honesty, I haven't had any problems with Vista.

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