Apple and Verizon both face a similar problem. Both have had a strategy based on “premium” positioning. Apple, in phones or computers, always emphasized “quality,” but not “low price.”
Verizon, to this point, has been able to have leading market share (measured by subscribers) as well as staking out the “premium” position in the mobile operator market.
All that becomes problematic once markets saturate, or competitors start to match quality, though. In a saturated market, how does a supplier grow if the “premium” customers already have been gotten?
How can a new set of values be created to recapture quality leadership? And even if that can be done, will consumers continue to pay for such perceived quality advantages?
It is hard to say whether Apple or Verizon faces the bigger challenge. As was the case in the personal computer market, Apple has about 15 percent share of the smartphone installed base, but its growth has slowed to the point where one has to conclude the present market is saturated.
So it is reasonable to argue that the old model--premium product, premium price--has reached a limit. The rest of the market seems to be either in the “low cost device, less advanced features” or “good enough value, reasonable price device” or “prefer a high-end Android” segments.
Apple hates to move “down market,” but it is hard to see how it keeps growing share if it does not do so.
Verizon’s tasks are even harder, as it is tougher to differentiate an app or device than an access service. Verizon might have hoped to take clear leadership of the emerging 5G market, but all of its competitors are moving fast to close off that avenue.
Though Verizon traditionally has differentiated on the quality of its network, it will be very hard to do so in the 5G era, as its leadership in 4G was eroded as well.
As a practical matter, even if Apple and Verizon both face a similar problem--exhaustion of growth in the “premium” segment--the strategies possibly could be opposites. Apple has to move down market. Verizon has to restore some credible “premium” value.
If not, Verizon also has to move down market. That is not in either company’s cultural heritage.
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