Apples Iphone and Economies of scale.

In Jason Schwarz’s piece ,“let’s talk” iphone 5 is a game changer” ,

He says:

“After witnessing 142% unit growth for the iPhone in Apple’s most recent quarter, we believe that the upcoming iPhone 5 will command a similar growth trajectory in the holiday quarter. Last year Apple sold 16.24 million iPhones, this year we expect they will sell at least 32.48 million units.

One reason Apple is ahead of  the curve is simply that by the time one can manufacture 16 million units of anything, R&D becomes essentially free. They can afford to have ‘best in class’ features and components but the sheer economies of scale that 16 million units allows is staggering.

The masterstroke in this  Coup is that Apple has one model of phone.  Different capacities aside, the tooling, moulding and programming are essentially the same.

Prior to the launch of the iphone, mobile phone manufacturers were all focused on  differentiation by product, that is , by material, features, colours and functions.  This allowed them to build around a product life cycle of approximately 1 year, with each model evolving from the last.

The Iphone however, works on the strategy  of being the absolute best tool for media consumption.  It has all the connectivity features commonly available AND an API that allows developers to go to town. This creates a software economy that allows each individual to build functionality according to their personal needs and  view of the world.

It is, as mentioned , a window to ones worldview.

The consumer is engaged, delighted and enchanted and they vote with their wallets.

 

 

 

 

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