The conventional wisdom is to pursue profits by maximizing market share. Apple pursues profits by specifically targeting only the high-margin segments of the overall market, and effectively forgoing market share in the low-margin segments, no matter how large those low-margin segments are.
Under Apple’s current pricing strategy, the “perceived value” of a given product line increases while the nominal price stays the same. Consider:
The previous Apple owner has had her $1000-ish white MacBook for years now. It makes funny sounds when it boots, loads a movie, or if you pick it up in a way it doesn’t like that morning. The new MacBook Air that Apple sells for about the same price seemingly weighs *nothing* and performs most of what she does 10x faster. That $1000 suddenly looks like a bargain compared to what it got you 2-4 years ago.
With this in mind, let’s look at how Apple has gone after lower margin-segments in the past:
- Music player market: smaller, less functional, equal quality devices.
- Phone market: last year’s phone, new low price.
- Tablet market: smaller, equally functional, equal (in many respects, higher) quality device.
If Apple decides to go after a higher- or lower-margin market segment, it’s going to be by releasing a higher- or lower-margin product, not by changing prices. Apple doesn’t need to chase $1,200 laptop buyers by lowering the price of the Retina MacBook Pro; there are a variety of Airs and non-Retina Pros at that range that would satisfy most users’ needs. In this way, Apple doesn’t have to settle for taking less from people who’d be willing to pay more.