“The reason why Apple did this with the iPod, and why I’m convinced they’ll do it again with the iPhone, is that when it comes to managing the balance between per-unit profit and overall market share, Apple is determined to err on the side of market share. (Not as much with the Mac, however — the difference being that PCs are now a firmly established market.) Most gadget companies, when they have a smash hit on their hands, try to milk it. A typical company that found itself selling millions of $400 hard-drive-based digital music players would try its best to continue selling the same $400 hard-drive-based digital music players for as long as it could. Apple, despite an overwhelming 70 percent market share, aggressively added features and drove down its own prices, year after year after year.”
(Via Daring Fireball.)
Good analysis on how Apple “thinks” in “Erring on the Side of Market Share.” I found the monopolistic discussion towards the end, the most trenchant. Companies tend to be “sales-guy” driven who want to grow market share at the expense of quality/consumer value/innovation or go for profits by milking the cash cow once they have a monopolistic position. Apple since the turn of the millennium has avoided away this successfully. That’s why I spit fire on Microsoft. They are like Apple in the late 90’s (pre-Jobs) when I was considering leaving the platform/going with Mac clones. I wish Windows 7 née Vista SP2 continues to flop. Microsoft has shown that it can learn its lesson given enough pain. Security in Vista is demonstrably more robust. I’m hopeful they will experience enough pain to finally concentrate on usability in Windows 7. That’s good for everybody, even Mac OS X users.