Makes sense for your case - however, keep in mind there is plenty of cases where the innovation is the very ability to offer something for a lower price. This is more true in manufacturing than software though I wouldn't be surprised in the long run if it also begins applying to software.
Offering a lower price can definitely stem from having a new innovative manufacturing technique or business model which would certainly give the innovator a huge advantage.
Apple's iPad is a great example where they got the cost of making a tablet (though arguably were the first real tablet) to an incredibly low price and have delivered the best and cheapest product on the market at the time. That said, look at Amazon's Kindle which is radically cheaper now a few years later. I suspect not many people would buy it over the iPad if it weren't so cheap. That's a great advantage for Amazon for selling but I think it says a lot about Apple that it can charge such a premium for its product that really anyone else should be able to make from the same core components.
I was really struck by this phenomena when I asked the day of the iPhone 5 announcement if a co-founder (who isn't an apple fan boy) if he was going to buy the new iphone. He said yes. I asked if he had seen the price yet or read all the new specs. He replied no. How many companies can convince you to buy a product you haven't tried or heard the price for? I doubt anyone would say the same thing of Samsung or Amazon products. Apple definitely puts out the best product and experience if you measure it from that perspective.
How many companies can convince you to buy a product you haven't tried or heard the price for?
The flip side to this is that the iPhone's lost its marketshare to Android devices largely because of price initially. It gave competitors a chance to exist in the market and cater to a huge market that Apple largely ignored. Lower pricing(with average product at best) gave competitors like Samsung an entry into the market and today, it's given them a shot to actually compete on product.
I think it is a dangerous strategy for Apple in the long-term. There are price-sensitive nations where Apple is barely known and its competitors(such as Samsung) are dominating in a market Apple had a huge headstart in.
Something similar happened with Apple and Windows.
There is a danger to what Apple has as well, in that with every revision they reduce how much they can innovate. Users are willing to buy an iPhone 5 because all the changes are incremental. If the iPhone 6 has a new UI paradigm, Apple will undo a lot of what they've created. If Apple upped the price to a thousand dollars (or lowered it and compromised on part quality) your co-founder would have thought twice.
My point being, every time Apple innovates significantly it throws away a lot of consumer good-will, because it has to rebrand everything. So far the strength of the overall Apple brand has kept this strategy together, but after a few more mis-steps like iOS 6 people might start hesitating before they instinctively 'buy Apple'.
That is a bit backwards. The Kindle Fire is much lesser hardware than iPad. iPad is inexpensive at wholesale BoM because Apple has amazing supply chain in hardware. Amazon has efficoency in logistics but not in components.
Apple wins in profits because it keeps more per unit (including the App Store cut), even at then same retail price for competitors with the same BoM. Like Coke does.
Think about health care, and nutrition, in my opinion the two biggest problem the world is facing. Innovation in those spaces can mean achieving the same at extremely low prices so every can have access to proper medecine, treatment, and food.
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Makes sense for your case - however, keep in mind there is plenty of cases where the innovation is the very ability to offer something for a lower price. This is more true in manufacturing than software though I wouldn't be surprised in the long run if it also begins applying to software.
Offering a lower price can definitely stem from having a new innovative manufacturing technique or business model which would certainly give the innovator a huge advantage.
Apple's iPad is a great example where they got the cost of making a tablet (though arguably were the first real tablet) to an incredibly low price and have delivered the best and cheapest product on the market at the time. That said, look at Amazon's Kindle which is radically cheaper now a few years later. I suspect not many people would buy it over the iPad if it weren't so cheap. That's a great advantage for Amazon for selling but I think it says a lot about Apple that it can charge such a premium for its product that really anyone else should be able to make from the same core components.
I was really struck by this phenomena when I asked the day of the iPhone 5 announcement if a co-founder (who isn't an apple fan boy) if he was going to buy the new iphone. He said yes. I asked if he had seen the price yet or read all the new specs. He replied no. How many companies can convince you to buy a product you haven't tried or heard the price for? I doubt anyone would say the same thing of Samsung or Amazon products. Apple definitely puts out the best product and experience if you measure it from that perspective.
How many companies can convince you to buy a product you haven't tried or heard the price for?
The flip side to this is that the iPhone's lost its marketshare to Android devices largely because of price initially. It gave competitors a chance to exist in the market and cater to a huge market that Apple largely ignored. Lower pricing(with average product at best) gave competitors like Samsung an entry into the market and today, it's given them a shot to actually compete on product.
I think it is a dangerous strategy for Apple in the long-term. There are price-sensitive nations where Apple is barely known and its competitors(such as Samsung) are dominating in a market Apple had a huge headstart in.
Something similar happened with Apple and Windows.
There is a danger to what Apple has as well, in that with every revision they reduce how much they can innovate. Users are willing to buy an iPhone 5 because all the changes are incremental. If the iPhone 6 has a new UI paradigm, Apple will undo a lot of what they've created. If Apple upped the price to a thousand dollars (or lowered it and compromised on part quality) your co-founder would have thought twice.
My point being, every time Apple innovates significantly it throws away a lot of consumer good-will, because it has to rebrand everything. So far the strength of the overall Apple brand has kept this strategy together, but after a few more mis-steps like iOS 6 people might start hesitating before they instinctively 'buy Apple'.
That is a bit backwards. The Kindle Fire is much lesser hardware than iPad. iPad is inexpensive at wholesale BoM because Apple has amazing supply chain in hardware. Amazon has efficoency in logistics but not in components.
Apple wins in profits because it keeps more per unit (including the App Store cut), even at then same retail price for competitors with the same BoM. Like Coke does.
Simple, yet amazing, insight, Zaid.
Think about health care, and nutrition, in my opinion the two biggest problem the world is facing. Innovation in those spaces can mean achieving the same at extremely low prices so every can have access to proper medecine, treatment, and food.