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fjtorres · 04-02-2012, 09:10 AM

First movers *always* lose market share. Nobody ever keeps 100% of the market they pioneer; not IBM, not Microsoft, not Palm, not Google, not Amazon, and certainly not Apple. It is naive or deluded to expect/pretend otherwise.

Successful tech markets, as they mature, always grow beyond the capacity of any single company to satisfy so it is irrelevant to point to market share declines as proof that followers are "beating" or "destroying" or even "catching up" to the first mover.

Market share is not the best figure of merit to judge market impact because the blind pursuit of market share often results in sub-optimal profitability; not all users are worth pursuing. (C.F., PALM; their attempt to maintain market share at all costs in the PDA business led them to a low-tech, low-ball strategy that saw them pursue the least profitable customers--pocket organizer users--at the expense of the more affluent corporate customers willing to pay higher prices for increased functionality like color and multimedia, thereby letting the PocketPC camp cherrypick the market and outstrip Palm on revenue and *profits* despite a lower market share.)

Market share-based strategies make sense as part of a growth strategy where the bulk of the profits come from follow-up sales of products or services. (Microsoft, Amazon, Boeing, Nintendo are all companies where the high-visibility up-front product enable the *real* corporate cash-cows.)

Apple does not pursue a market share-driven strategy but rather a profit margin-based. The bulk of their profits come from the actual hardware. The software and content revenues are important but secondary to the per-unit income. As a result, they design and price their products to balance out market share and margin and optimize their gross profit. Note that Apple's 18-25% share of the cellphone market results in far more profits than any single competitor. And that their products remain the benchmark for comparison. Not everybody buys Apple but most everybody at least looks at their products before buying. They still remain market leaders and everybody else remains followers.
For now.

Being leaders means they are everybody's target and sooner or later somebody will score a real hit. But not yet. Maybe not even soon.

Things change, so stay tuned.

04-02-2012, 09:10 AM	#27
fjtorres Grand Sorcerer Posts: 11,732 Karma: 128354696 Join Date: May 2009 Location: 26 kly from Sgr A* Device: T100TA,PW2,PRS-T1,KT,FireHD 8.9,K2, PB360,BeBook One,Axim51v,TC1000	First movers always lose market share. Nobody ever keeps 100% of the market they pioneer; not IBM, not Microsoft, not Palm, not Google, not Amazon, and certainly not Apple. It is naive or deluded to expect/pretend otherwise. Successful tech markets, as they mature, always grow beyond the capacity of any single company to satisfy so it is irrelevant to point to market share declines as proof that followers are "beating" or "destroying" or even "catching up" to the first mover. Market share is not the best figure of merit to judge market impact because the blind pursuit of market share often results in sub-optimal profitability; not all users are worth pursuing. (C.F., PALM; their attempt to maintain market share at all costs in the PDA business led them to a low-tech, low-ball strategy that saw them pursue the least profitable customers--pocket organizer users--at the expense of the more affluent corporate customers willing to pay higher prices for increased functionality like color and multimedia, thereby letting the PocketPC camp cherrypick the market and outstrip Palm on revenue and profits despite a lower market share.) Market share-based strategies make sense as part of a growth strategy where the bulk of the profits come from follow-up sales of products or services. (Microsoft, Amazon, Boeing, Nintendo are all companies where the high-visibility up-front product enable the real corporate cash-cows.) Apple does not pursue a market share-driven strategy but rather a profit margin-based. The bulk of their profits come from the actual hardware. The software and content revenues are important but secondary to the per-unit income. As a result, they design and price their products to balance out market share and margin and optimize their gross profit. Note that Apple's 18-25% share of the cellphone market results in far more profits than any single competitor. And that their products remain the benchmark for comparison. Not everybody buys Apple but most everybody at least looks at their products before buying. They still remain market leaders and everybody else remains followers. For now. Being leaders means they are everybody's target and sooner or later somebody will score a real hit. But not yet. Maybe not even soon. Things change, so stay tuned.