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Thread: A Parable for Leica?

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    Senior Member stephengilbert's Avatar
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    A Parable for Leica?

    The New Yorker has an interesting piece on our current markets. "According to one estimate," it says, "Nokia has nearly twenty times Apple’s market share, but the iPhone alone makes almost as much money as all Nokia’s phones combined." http://www.newyorker.com/talk/financ...alk_surowiecki

    Perhaps this kind of condition will allow Leica to thrive, or at least survive, even with a tiny market share. If they could consistently produce products that didn't have to be returned for adjustment or repair, they'd really be onto something.

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    Re: A Parable for Leica?

    Turn it the other way - Apple is temporarily successful with a high-margin product. Such a position is under constant attack by competitors and, in most markets, impossible to defend except by moving upmarket even more, thereby reducing market share. Apple might enjoy a good run, but competitors will relentlessly go after the high market segments.

    This is exactly the process Leica went through over the last 30 or so years. The problem with the high-market strategy is that to get out of your corner you have to dilute your brand by selling products of lower perceived value. Leica has tried this over and over, yet the M series remains the core product series.

    Another company in this position is Porsche - numerous attempts to move downmarket (924, 944), but few reached success (Boxster). 911 remains the core high-end product. Porsche is a very successful company, but strong growth does not seem to be a priority.

    Like Leica, Porsche is a privately held company. This makes it easier to resist the temptation to move downmarket towards high-volume products. Specifically, Porsche execs have stated that they want to avoid the quarterly earnings perspective created by the US stock market, now a global phenomenon.
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    Re: A Parable for Leica?

    "Apple is temporarily successful"

    Pretty long "Temporary" if you ask me : -)

    -Marc

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    Re: A Parable for Leica?

    Yea with 48 billion in cash reserves. I'll take 1 percent and retire
    Photography is all about experimentation and without it you will never learn art.

    www.guymancusophotography.com

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    Senior Member stephengilbert's Avatar
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    Re: A Parable for Leica?

    I think the point of the article is that companies like Apple can survive and prosper without equaling the market share of their larger competitors. Maybe Leica can as well. Quien sabe.

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    Senior Member Lars's Avatar
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    Re: A Parable for Leica?

    Temporarily means not permanent. Marc I don't have to lecture you on product lifespan. From a corporation perspective, it's only been 10 years since Apple almost went under, so yep that's short term when you think of market positioning.

    Usually what happens with a company with deep pockets is when growth flattens out shareholders demand the reserves to be handed out as dividends. Apple eventually needs to keep turning its reserves into growth to keep its shareholders content, and you know what they say about growth - it's temporary.

    Stephen Apple is a giant not an underdog hardly has any larger competitors - HP, Dell?

    Guy that's your hard-earned cash in Apples pockets. If you're like me you thought long and hard about buying Apple stock in 2002, and decided not to.
    Last edited by Lars; 25th March 2010 at 00:22.
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    Re: A Parable for Leica?

    Quote Originally Posted by Lars Vinberg View Post
    Temporarily means not permanent. Marc I don't have to lecture you on product lifespan. From a corporation perspective, it's only been 10 years since Apple almost went under, so yep that's short term when you think of market positioning.

    Usually what happens with a company with deep pockets is when growth flattens out shareholders demand the reserves to be handed out as dividends.

    Stephen Apple is a giant not an underdog hardly has any larger competitors - HP, Dell?
    Yep, no lecture needed

    Product lifespan is old think in a brave new world of game changing innovation. The only time Apple got into hot water was when they forgot that. Solution? Bring back the innovation wizard to restart the engine.

    Besides, I can't even think of a product in the technology sector that has a permanent lifespan. It's publish or perish.

    Something is working ... with tumble weeds blowing through all the Malls here ... the Apple store is standing room only from 10AM to 9PM every day.


    -Marc

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    Re: A Parable for Leica?

    Quote Originally Posted by stephengilbert View Post
    The New Yorker has an interesting piece on our current markets. "According to one estimate," it says, "Nokia has nearly twenty times Apple’s market share, but the iPhone alone makes almost as much money as all Nokia’s phones combined." http://www.newyorker.com/talk/financ...alk_surowiecki

    Perhaps this kind of condition will allow Leica to thrive, or at least survive, even with a tiny market share. If they could consistently produce products that didn't have to be returned for adjustment or repair, they'd really be onto something.
    HI Stephen
    Well, I don't deny that things do need to go back to Leica - I'm afraid it's part of the game with things like the mechanical rangefinder.
    However - for one reason or another I've been 'involved' in several returns recently (not all mine) - the story seems to be that whereas a few years ago we were talking several weeks at best, turnaround times are now really quick and efficient (I'm speaking of Solms, don't know about NJ).

    Lars
    What success isn't temporary? Seems to me that the obvious similarity between Leica / Apple / Porsche is not so much the high cost, but the fact that they are not insulting their customers by making products redundant in a few months.
    By hanging on to a design continuity they encourage users to hang on to their product without feeling that it's immediately out of date - this, in turn, has a big effect on secondhand values and makes it more likely that people will return for more . . . . quite the opposite of 'product lifecycle' in fact.

    I'd like a bit of the kind of 'temporary' that Apple represents too!

    all the best

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    Senior Member Lars's Avatar
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    Re: A Parable for Leica?

    Quote Originally Posted by fotografz View Post
    Yep, no lecture needed

    Product lifespan is old think in a brave new world of game changing innovation.
    Nothing new there. New tech, higher pace of innovation sure but it's all happened before.
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    Re: A Parable for Leica?

    I still think that Apple is aggressively cutting prices on their products to compete with their PC counterparts - so for a few more hundred bucks, a customer might be easily persuaded to go with Apple and pay a bit of a premium for better design.

    Not so with Leica where it's prices are astronomically higher than other 35 mm digital cameras in the market (Leica is almost eliminated from the equation when somebody is in the market for a 35mm digital camera - unless that person is dead set on getting a Leica). Unlike Apple, Leica also is not aggressively competing in terms of technological advances (LCD screen, battery management, processor speed etc). Sure they put a full-frame sensor inside the M9 - but on an outdated M8 spec-ed body? Of course the m9 is successful - but how much more successful would it be if the innards were improved?

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    Re: A Parable for Leica?

    Quote Originally Posted by roanjoh View Post
    I still think that Apple is aggressively cutting prices on their products to compete with their PC counterparts - so for a few more hundred bucks, a customer might be easily persuaded to go with Apple and pay a bit of a premium for better design.

    Not so with Leica where it's prices are astronomically higher than other 35 mm digital cameras in the market (Leica is almost eliminated from the equation when somebody is in the market for a 35mm digital camera - unless that person is dead set on getting a Leica). Unlike Apple, Leica also is not aggressively competing in terms of technological advances (LCD screen, battery management, processor speed etc). Sure they put a full-frame sensor inside the M9 - but on an outdated M8 spec-ed body? Of course the m9 is successful - but how much more successful would it be if the innards were improved?
    How much more successful can the M9 be? The backorders are only now getting filled ... very slowly.

    Outdated is your perspective ... not mine. You can keep all the bells and whistles IMO. I'm sick of them on all my other cameras. KISS please.

    Okay, maybe a stop more ISO.

    -Marc

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    Re: A Parable for Leica?

    All the Apple products I have seen are Made In China. The quality, fit and finish, is superb; probably better than could be made in the US at that volume.

    Perhaps Leica should consider China as a way to lower manufacturing costs?

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    Re: A Parable for Leica?

    Quote Originally Posted by fotografz View Post
    How much more successful can the M9 be? The backorders are only now getting filled ... very slowly.
    Success or bad planning? Any sales exec loves to say that demand exceeds expectations, but that doesn't mean much by itself. Leica reps have said the same thing about S2 sales.

    Real numbers in terms of product revenue would be more relevant.
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    Re: A Parable for Leica?

    Another take on Apple's success (caution: hilarious):

    http://stuffwhitepeoplelike.com/2008...pple-products/

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    Re: A Parable for Leica?

    Quote Originally Posted by fotografz View Post
    How much more successful can the M9 be? The backorders are only now getting filled ... very slowly.

    Outdated is your perspective ... not mine. You can keep all the bells and whistles IMO. I'm sick of them on all my other cameras. KISS please.

    Okay, maybe a stop more ISO.

    -Marc
    ............ and a high-res screen for the chimpers!!! Is that too much to ask for Leica??

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    Re: A Parable for Leica?

    Quote Originally Posted by Mango View Post
    All the Apple products I have seen are Made In China. The quality, fit and finish, is superb; probably better than could be made in the US at that volume.

    Perhaps Leica should consider China as a way to lower manufacturing costs?
    That would be the day.........!!!

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    Re: A Parable for Leica?

    Cheap isnt somethign that rates highly in my decision making tree - for anything... Price says nothing about Value.

    People either get this or they dont.

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    Senior Member Lars's Avatar
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    Re: A Parable for Leica?

    Quote Originally Posted by PeterA View Post
    Cheap isnt somethign that rates highly in my decision making tree - for anything... Price says nothing about Value.

    People either get this or they dont.
    That's just irrational. Ask any economist or consumer on the planet - everything else being equal, lower price is better. People either get this or they don't.
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    Re: A Parable for Leica?

    Lars there is nothing irrational about different shapes to indifference curves or differentiated utility curves - clearly ours differ - but that doesn't make me irrational - it just makes you different to me. -

    Regarding the difference between price and value - well that is how I make my living - arbitrage every day now for a couple of decades - umm started about the time I finished my Doctorate ..in ..( you guessed it ) - economics. -

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    Re: A Parable for Leica?

    Quote Originally Posted by Lars Vinberg View Post
    That's just irrational. Ask any economist or consumer on the planet - everything else being equal, lower price is better. People either get this or they don't.
    True, but the sticking point is "everything else being equal". Both objective and subjective evaluations pertain, and some "detractors" might try to dismiss the latter, but it's inappropriate in comparing value – both perceived and real.

    A $14 Casio watch will keep time more accurately than a $14,000 Jaeger-LeCoutlre, but some may feel that there is more value in a carefully crafted timepiece vs. a mass-produced, stamped-out plastic-coated mechanism for keeping time. Both allow one to make it to the bus stop on time, but there is a difference in perceived value, as well as market potential, market share, appreciation, etc.

    My remarks are off-topic, but when it comes to "value" and personal demarcation of same (with regard to consumer goods), one is well-served by appreciating that each of us has a different scale by which we measure such things. For example, I recognize that I get much better "value" by buying Apple's computer offerings (when one buys very carefully, buys RAM from other resources, etc.) than do my Windows-buying (mostly Dell's) colleagues. The funny thing is that my colleagues are mostly feeling the same way lately. Several are very, very geeky and have always built their own machines; program comfortably in a staggering list of languages, etc.; but due to issues beyond the topic here, are adding Macs and slowly migrating. My point is that there is more than one way to evaluate "value".



    Apple's success IS mostly recent, in that we've watched it grow during the past 10 years (I bought AAPL at $14 after their deep slide). But we have also watched them transform from a computer company to a consumer electronics company to a cell-phone vender to a... Apple has no debt, billions of dollars of cash, and most importantly, innovation (or at least, effective marketing). Most of the other big names specialize in polishing feeding troughs for lemmings. That is a seriously successful business model, but it also allows room for niche players and those who will to press against the norm.

    Nokia and Microsoft do not sit idle, but neither do Apple. My point is not to tout Apple, but to remind us all that neither side of any competition sits idly taking punches and not adapting. Nokia will move, MS will move, Apple will move... He who sits by, guarding his chips, will be flanked by more than one competitor.

    Cheers

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    Senior Member Lars's Avatar
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    Re: A Parable for Leica?

    Nah, I still say your statement is irrational (tongue in cheek) But this is not an economics forum so perhaps we should leave it at that.

    I have to say, though, that Leicaphiles can be very creative in rationalizing purchase decisions. (This is the Sunset bar, so Leica-bashing is OK.)
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    Re: A Parable for Leica?

    Quote Originally Posted by Lars Vinberg View Post
    Nah, I still say your statement is irrational (tongue in cheek) But this is not an economics forum so perhaps we should leave it at that.

    I have to say, though, that Leicaphiles can be very creative in rationalizing purchase decisions. (This is the Sunset bar, so Leica-bashing is OK.)
    Absolutely they can be creative in rationalizing purchasing decisions (we can, I can). Just like Porsche Drivers, Apple users and Jaeger-LeCoutre owners. Which really does prove Peter's point doesn't it?

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    Senior Member Lars's Avatar
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    Re: A Parable for Leica?

    Quote Originally Posted by jonoslack View Post
    Absolutely they can be creative in rationalizing purchasing decisions (we can, I can). Just like Porsche Drivers, Apple users and Jaeger-LeCoutre owners. Which really does prove Peter's point doesn't it?
    Nope.

    Peter's statement indicated that he is indifferent to pricing. I don't think he is but that's what his statement indicated.
    Last edited by Lars; 26th March 2010 at 02:09.
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    Re: A Parable for Leica?

    Quote Originally Posted by Lars Vinberg View Post
    Nope.

    Peter's statement indicated that he is indifferent to pricing. I don't think he is but that's what his statement indicated.
    He didn't say he was indifferent, he said:

    Cheap isnt somethign that rates highly in my decision making tree- for anything... Price says nothing about Value.

    That doesn't indicate indifference, simply that it isn't his first priority. He certainly implied that he is interested in Value.

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    Senior Member Lars's Avatar
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    Re: A Parable for Leica?

    This is silly bickering over semantics and I apologize for that... but I can't help myself

    "Price says nothing about value." It's right there - no relationship between price and (perceived) value. That statement is only rational for someone with unlimited resources. For the rest of us, value relates to what you get for your money.
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    Re: A Parable for Leica?

    Actually, I find this whole subject very interesting ... both sides of the coin in the discussion. Short text bytes hardly scratches the surface.

    I am revamping my whole marketing structure for selling my photography, and for a variety of reasons the hardest part was setting prices in today's marketplace. I posed some questions regarding pricing on a Pro forum I use, and the flurry of opinions was very interesting reading.

    IMO, the term "Value" is a very relative word and depends on context. An extreme example could be a $2 million piece of medical equipment that could save lives. Value is obvious, and price is no object.

    To use Lar's example of Leica ... one need not be the Sultan of Brunei or Peter A to place a priority on such expensive gear. Priority suggests that there is a hierarchy of perceived value based on personal experience/want/need/desire. Someone may be willing sacrifice this or that, in order to have this. Those unwilling to make those sacrifices may think it is rationalizing what they think is an irrational decision ... meaning it is irrational by their standards of evaluation. So, value is far from being empirical, and is a personal thing at best.

    I place a very high value on my M9 system and made some serious sacrifices to build it because in semi-retirement I do not have unlimited resources. Based strictly on a business model, it would be difficult to rationalize that level of expenditure. However, other value factors come into play here ... like the effect that a rangefinder has on my work as evaluated by my creative criteria and personal vision, and the fact that this camera is unique as are some of the lenses ... added to the subjective opinion regarding IQ.

    Conversely, I could not bring myself to make the sacrifices to move to the Leica S2. Even if all the perceived value factors lined up perfectly, which for me they do not, it still would not be worth the sacrifices ... notably being unable to build the M9 system. Having settled my pricing irritation with Hasselblad, I choose to cancell my order for a H4D/60 and move to the H4D/40 instead because it is the rational thing to do considering my current work needs and a shift in my photographic offerings for sale. Meaning it has more value based on my criteria.

    -Marc

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    Re: A Parable for Leica?

    These discussions are indeed interesting - they deal with the real world of human preferences..

    I imagine that everyone can find something in their home which they would find difficult if not impossible to put a price on - so high is the value to them. And yet to someone else that very same object may be so 'worthless' that they would not buy it any price - perhaps the object may be a photograph of a relative or a now past away favoured pet...or something as obscure as a piece of paper with some barely legible writing on it - and the feint remainders of a lipsticked kiss or a trace of perfume ...

    If you can think of an example like this - then you can understand that price does not equate to value when it comes to personal preferences.

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    Re: A Parable for Leica?

    Back to Leica compared to Apple: I can see how a discerning buyer would see some parallels but in all honesty the two companies are quite different, as are their product offerings and market strategies.

    Apple's fortune is based on innovative market strategies combined with clever product innovation and positioning. Recently the company has moved more and more towards recurring revenue mass markets - music, mobile phones, and now ebooks. Part of the success with recurring revenue - subscriptions - is that it allows for subsidized product pricing. Phones is an obvious example. Add to that the product design that Apple does so well and you have a recipe for market success.

    It's also interesting to note that with a subscription model, product lifespan becomes less of an issue - over here people swap phones every 12 months, with a suscription model the actual device cost is hidden in the monthly fees.

    Back to Leica: Its product philosophy is based on no compromises, product lifespan is counted in decades, customers often consider their purchase of a Leica product an actual investment (and often rightly so).

    So, for Leica the purchase barrier is extremely high, products have a more or less unlimited lifespan (except for the recent digital bodies which arguably become outdated far sooner than their build quality would suggest).

    I'm not sure where to go with this.. the companies are at the core so very different, with Apple being the wizard at approacing a mass market with high margins whereas Leica operates at little or no profit and couldn't care less about reaching a broad market.

    So while there is something to learn from the article that Stephen originally linked to, I don't think it would help Leica much.
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    Re: A Parable for Leica?

    Lars - I completely agree with your observation between Leica and Apple. Apple used to be very similar to Leica, it wasn't until recently when they started opening the flood gates (iTunes on PC, iPod on PC, Windows on Mac) that more consumers made the swap and they gained a bigger following.

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    Re: A Parable for Leica?

    Quote Originally Posted by roanjoh View Post
    ... Apple used to be very similar to Leica, it wasn't until recently when they started opening the flood gates (iTunes on PC, iPod on PC, Windows on Mac) that more consumers made the swap and they gained a bigger following.
    Hence the increased "Value Proposition" for some.



    One point Lars raises is that for Leica "...product lifespan is counted in decades, customers often consider their purchase of a Leica product an actual investment (and often rightly so)", and that was sure the case in an analogue world, but this may change in the digital age. Of course, I'm referring to bodies, sensors, etc. here, but it may suggest that Leica will need to continue to adapt, just as Apple has.

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    Re: A Parable for Leica?

    Quote Originally Posted by Lars Vinberg View Post
    "Price says nothing about value." It's right there - no relationship between price and (perceived) value. That statement is only rational for someone with unlimited resources. For the rest of us, value relates to what you get for your money.
    I'm no economics expert....but I'd have to disagree. I don't think there is a necessary connection between price and actual (or perceived) "value"....however that might be measured or determined. I think that's what Peter was implying in the phrase "says nothing about value". The lowest priced item isn't necessarily the one with the highest value....even for those of us with limited resources.

    I can imagine a scenario in which 2 items which are supposed to do the same thing or have the same function, might have very different objective capabilities and prices. Suppose item 1 costs 20% less than item 2, but item 1 only delivers 50% of the necessary function/capability as item 2 (on whatever objective scale of measurement is appropriate). Or perhaps the expected life of item 1 is one-half of item 2.

    I would say that item 2 is the better value, even though it costs more than item 1. Of course, you could also factor in non-objective (but nonetheless important) measures of functionality too.

    Gary
    Last edited by bensonga; 26th March 2010 at 10:50.

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    Re: A Parable for Leica?

    Quote Originally Posted by Lars Vinberg View Post
    I'm not sure where to go with this.. the companies are at the core so very different, with Apple being the wizard at approacing a mass market with high margins whereas Leica operates at little or no profit and couldn't care less about reaching a broad market.
    Well, I have some sympathy with the rest of your post. However, do you KNOW that Leica are making no profit on:
    M9
    Noctilux
    21 f1.4
    24 f1.4
    50 f1.4

    I confess that I don't know, but considering that they can sell all they can make (and how expensive they are) it would be very odd if they weren't making profit on these items . . .

    As for Apple . . . We develop software for business users who use windows, but we use Macs in the business - a good reason why has just happened - one of our 17"MBP computers has had an obscure problem which corrupts files (of course it shouldn't). Having identified this, a quick trip to the Apple store, a prebooked appointment with someone who knows what they're talking about and a soak test means that 4 hours after the problem has been noticed a motherboard problem has been diagnosed and being fixed. The amount of aggravation this kind of service relieves is worth every penny of the price of entry . . . we were talking about value?

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    Re: A Parable for Leica?

    Lars- Perhaps in Sweden the iPhone is still upmarket. The use of iPhones in the US is huge and from observation not just from people who buy upmarket. It was reported in the last few days that the web useage on smart phones is dominated by the iPhone with a 50% share. To me, Apple has created a different phone/internet experience. I am willing to bet they will add to that with the iPad starting next week.

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    Re: A Parable for Leica?

    Quote Originally Posted by TEBnewyork View Post
    Lars- Perhaps in Sweden the iPhone is still upmarket. The use of iPhones in the US is huge and from observation not just from people who buy upmarket. It was reported in the last few days that the web useage on smart phones is dominated by the iPhone with a 50% share. To me, Apple has created a different phone/internet experience. I am willing to bet they will add to that with the iPad starting next week.
    iphone is mid to upper market here - some features missing, like a useable camera and decent sound quality, and the closed ecosystem is not liked by everyone. Pricing is through the roof as always with Apple products.

    As for the 50% web user share, is that number of devices or traffic volume? I would guess the latter. Sometimes you see some really weird numbers, it's important to understand what's actually measured.

    Here people tend to use mobile broadband a lot as well, so the mobile internet experience comes in many more flavors than phones. Latest 4G USB modems available now were benchmarked at 90+ megabits/sec the other day. Prepaid 3G modems are cheap and fast, $10/week or $35/mo. Many have left wired connections completely, use mobile broadband at home.

    Re your own experience with iphone, I would say that Apple took the US out of the dark ages on the mobile side with the 3G - you guys were a bit behind the curve there for years (no offense meant but it's reality), still are in some respects. Over here the iphone was certainly a new direction but without 3G and MMS on the first gen it was outdated the day it hit the stores (wasn't actually officially sold here for that reason). When the 3G was launched by local operator Telia, people were actually hired to stand in line outside, to make it seem more popular than it was. This of course just fed the perception that Apple is all about hype. The latest gen is pretty good but by now the alternatives are many, the novelty factor of the UI is no longer there.

    iphone is actually a good example of Apples challenge to constantly innovate. Many people here see Android taking over over the next few years. As operators get lower-priced alternatives to attract customers with, Apple's market share will diminish. Thus the ipad as a possible new platform to sell media and apps. However Android will kill there too - we already see $150-200 Android tablets and a lot of Chinese companies will sell sub-$100 tablets after the summer. So while Apple is an amazing profit machine, each product category (desktop, laptop, ipod, iphone, ipod) has its high profitability run that is limited in time to a few years. If Apple stops innovating then the shareholders will demand their share of the huge war chest.
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