Is Apple On Its Way Out?

With the release of Apple products at cheaper prices, some are speculating that Apple is on its way out. Some argue that the prestige of Apple was not based on its superior technology per se, but on innovation in creating the ‘coolness factor.’ It’s true, isn’t it? Think about it. Some argue that owning an Apple product makes people feel like they belong to a semi-elite category – meaning the minute a person become an owner of an Apple product, they are initiated into some kind of club. Because of this ‘cool factor’ Apple was able to keep prices high, and develop an inner circle the locked out all other technology  that seems to scream “Welcome to the hip and cool club.”

A BBC article, The End of Apple As We Know It, argues that Apple’s new strategy of marking down their items is just the ticket to a downward spiral. What kind of club is elite if it lets everyone in? The article states, “The stars are being aligned toward a vision that is the antithesis of what Jobs dedicated his career towards. Rather than making great products that change how people work and play, Apple is on a path toward the mundane, a virtual John Sculley redux where consumer packaged goods are dressed up as high-tech and nobody really cares anymore.

The last time this battle was fought, Jobs lost his job to the forces of conformity and short-term profit maximisation. The spiral of ordinariness took more than a decade to overcome — and not until the prodigal son returned to the helm of the company he co-founded.”

Forbes also agrees in the article 7 Reasons Apple is More Doomed Than You Think, stating, “Blodget argues that a cheaper iPhone is in the works and that’s good for Apple shareholders. But if Apple goes ahead with that cheaper version, its margins will shrink and that will mean further profit declines.

If a company is going to attract capital, it must have a competitive advantage. There are two ways to get that — Differentiation — delivering a better product for which customers pay a price premium or Low Cost Producer — making an adequate product, charging customers the lowest price and profiting by lowering costs below competitors’ levels.

Apple’s competitive advantage used to be Differentiation – it made better products for big existing markets like MP3 players, smart phones, and tablets – that caused Apple’s appeal to investors and customers to soar.”

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It will be interesting to see what happens to the Apple world in the next several months. Will the critics of cost-savings iPhones be vindicated?