Apple Will Nudge Prices Down in 2012: PC Market Will Collapse
Jack Welch, the former CEO of GE, had an edict that each business unit needed to be #1 or #2 in the market or else he sold it off. HP is #1 in PC market share but it is exiting a business that it no longer can control and soon will bleed a lot of cash. HP’s Operating margin is under 6% and falling while Apple’s is at 40% and growing. So the question I have been thinking about is: if Apple were to cut prices on iPADs $50 and MAC Air’s by $100 would the PC industry collapse?
The question goes to the heart of demand elasticity and consumer preference. We know that a large portion of the PC market has been required to remain windows due to legacy applications – just as the IBM mainframe continues to satisfy a portion of the Fortune 500 customer needs. But Apple at less than 6% of the worldwide PC market is in position to cause it to flip in 2012.
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