Why Apple Won't Make Cheaper Macs Or iPhones To Build Market Share

Some industry watchers believe Apple needs to make cheaper iPhones or Cheaper Macs to gain a larger market share around the world. But for the company that rofits off almost all of its products, market share is of little concern. And that isn’t expected to change anytime soon, Apple marketing executive Greg Joswiak said this week at the Code/Mobile conference in Half Moon Bay, California.

“Backstage, we were talking about some of the mistakes Apple made in the ’90s, and some of it was trying to do things like making cheap products that were chasing market share instead of chasing a better experience.” Joswiak said. “You make that mistake once in your life; you’re not going to make it twice.”

It’s a strategy that has paid off for Apple, especially with its iPhone, which grew to more than $100 billion in sales for 2014 and accounted for over half of Apple’s total revenue. Even as its iPad struggles with declining sales, the company still makes a profit on the tablet.

For every 16GB Wi-Fi iPad Air 2, it costs $275 to manufacture, according to a teardown performed by IHS. This nets Apple $224 for each $499 iPad Air 2 sold. Margins are even higher for the iPhone 6, which nets Apple $448.90 for each 16GB smartphone sold at the unsubsidized retail price of $649.

And even as the PC market faces flat sales, the Mac has made huge gains in 2014, taking the No. 5 spot for PC shipments in the third quarter.

“Here we are now still outgaining the PC market, a very mature market that’s contracting and Macs are growing by 20 percent,” Joswiak said. “We’re just trying to create the best experience. [When] we do that everything seems to follow that.”