Will Apple Survive Price Competition?

Seven months is not a reasonable life cycle for any durable product. You wouldn’t buy a new TV, game console, Blu-ray player, refrigerator, or car every seven months. In fact, if a manufacturer discontinued and replaced your TV after seven months, you’d be pissed. But it’s like an addiction: carriers and OEMs need the high they get from the fleeting sales bump after the release of an incrementally new model, a bump that quickly flatlines. Hilarious price adjustments ensue; a $199.99 phone falls to $149.99, $99.99, $49.99, and eventually free over the course of a single year. theverge

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Apple right now is riding on huge sales volume, thus they can afford dishing out expensive to make Chip and component while still maintaining unprecedented margin. All in single product. But if one look at current 5 inch line up in China, I seriously doubt Apple can survive this game much longer once consumer jump onto 1080p thin 5″ model. Then they will experience what TI and RIM, sudden collapse of sale while still need to maintain large and complex supply chain.

This is not hypothetical, several of apple supplier went from top in the market to almost broke in no time once apple moves on. The original chip maker went bust and bought by Nvidia once Apple moved to Samsung for iPod CPU. Touch screen suppliers also experienced big jitter from apple changing technology.

So maintaining apple complex supply chain when there is sudden market change will be daunting.

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