Stating the obvious here, but if Apple (AAPL) really plans to cut prices on Macs and iPhones, Research in Motion (RIMM), Dell (DELL), and Hewlett-Packard (HPQ) are going to lose one of the few remaining competitive advantages they have.
As we’ve discussed, Apple captured a third of the growth of the US PC market in Q2, where it grew 9X as fast as the PC market overall. This is especially surprising given the pricing premium that Macs still command over similar models from Dell and HP. If that premium is reduced or eliminated, Macs are likely to gain share that much more quickly. This will force Dell and HP to either cut prices, which will depress their own margins, or accept lower market share, which seems unwise in an economy-of-scale business.
Similarly, Apple’s original iPhone sold spectacularly well despite a huge price premium to its closest competitor, RIM’s Blackberry. Even the new iPhone, which sells for $199, is almost twice as expensive as RIM’s Blackberry Curve. Although the high end of the consumer and business market will pay anything to have the products they want, the consumer mass market won’t. And further price cuts in the iPhone–even if it stays a premium product–will force competitors to respond.
RIM, HP, and DELL still have one major competitive advantage that Apple doesn’t–well-developed corporate sales and service organisations. It will take a while for Apple to develop this, and price cuts on Apple products obviously won’t turn the industry on its head overnight. But, slowly and steadily, Apple is working its way into both the corporate and mainstream consumer markets, and they’re both zero-sum games.
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