’s winning strategy: Lower prices | Technology News

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28/10/2011 05:27
Apple's winning strategy: Lower prices
such as Motorola's Droid Bionic ($299 through Ve-
rizon Wireless), the cost drops to $199 if you shell
out $50 for a data plan.
The Times also noted that the Samsung Galaxy S
II sells through T-Mobile for $230, though it's avai-
lable through AT&T for $199, while the HTC Amaze
4G costs $260 through T-Mobile, but it can also be
had from such retailers at Amazon for $199.
However, smartphone consumers who don't want
to choose an expensive data plan, switch carriers,
or check Amazon for better deals could easily see
the iPhone as the best option based in part on price.

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Then there's the iPad.
In the past, Apple had always been seen as a com- The first crop of Android tablets that hit the market
pany selling niche, high-quality products at high
failed to come close to the iPad's entry-level price of
prices. In recent years, however, it's captured
$499, with the Times specifically pointing to the Mo-
business by keeping costs more competitive.
torola Xoom, which was priced at $800 off contract.
The failure of Android tablet makers to compete
The company's lower price strategy applies not
on price or quality gave Apple the opportunity to
just to its iPhone and iPad products, but also to the
corner the market.
MacBook Air-all have been able to meet or beat the
prices offered by some of its rivals, according to an
Now, of course, rival tablet makers have finally
analysis in yesterday's New York Times. But Apple
caught on and are quickly introducing models that
also keeps its own internal costs down by locking in
match or beat the iPad on price. Amazon may pre-
prices on huge amounts of hardware components
sent the biggest challenge when it launches its $199
through multi-year deals with manufacturers.
Kindle Fire next month. But even though the iPad's

share of the tablet market has dipped over the past
Looking at the iPhone 4S, Apple sells the entry level
several months, Apple isexpected to hang on to its
16 gigabyte model for $199. That price comes in
leading share at least over the next several years.
lower than some of the popular Android handsets,
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28/10/2011 05:27
Apple's winning strategy: Lower prices
Even Apple's traditionally high-priced laptops have
seen their prices chopped. In July, the company
tweaked its MacBook Air and cut the entry-level
prices to $999 for the 11-inch model and $1,299 for
the 13-inch edition.
Finally, Apple's own costs are kept in check, noted
the Times, as the company uses its hefty war chest
to stock up on large quantities of flash memory and
other components. This puts its rivals in a difficult
position as they then have to pay higher prices for
the small amount of memory left in the marketplace.
Yankee Group analyst Carl Howe told that the pri-
cing strategy shows current CEO Tim Cook's hand
at work, as he had been running the supply chain
for 13 years.
"This is not a new thing," Howe said. "They started
this process in 2005 when they prepaid $1.25 billion
for flash memory. It was an unheard of deal at the
time that they would pay in advance for access to
a large amount of flash."
Howe added that it's the type of strategy that a com-
pany like Apple, which has a ten-year horizon, can
pull off. But companies operating quarter to quarter
"don't have a chance."
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