As has been discussed before in the context of falling incomes in America, an area of growth for most businesses is in providing luxury for the masses. I have discussed two businesses that do it extremely well: Bath & Body Works and Victoria's Secret. Following a similar strategy, Walmart announced recently that it will sell the Linspire laptop at less than $500. So I was not surprised when Apple Computer announced that it will embrace the "luxury for the masses" strategy. The company has introduced a desktop computer that is less than $500, plus it is also introducing lower-price versions of its other popular consumer electronics products like iPod. (Related article: As incomes fall, American consumers cut spending)
What does it mean for you?
What does it mean for you?
- If you are a provider of hardware/software/peripherals/services that are platform-independent then this is great news for you since it will bring more PCs (and other electronic devices) to homes. Most management consultants believe that the growth in IT and semiconductor sector is coming from the consumer sector, not the enterprise sector. Developments like this will further drive the growth in the consumer segment.
- America is a laggard in broadband connectivity. The United States trailed 12 of the 15 top economies, including Canada, in broadband penetration, according to latest data. The same is true for wi-fi and wi-max. But we do much better at cable penetration. The implication is that cheaper computers will enable greater broadband access.
- A strong correlation has been found between ebusiness and broadband connectivity. The 2004 global e-readiness rankings from the Economist Intelligence Unit and IBM put the UK in second place, with the US dropping to sixth, mainly due to UK's adoption of high-speed broadband communications. So think of increasing your investment in ecommerce.
- A major thrust behind Apple's change in strategy is that it is embracing what Motorola calls "seamless mobility" (Related article: Sirius and Microsoft to collaborate to provide video via satellite in automobiles). Bringing down the prices of its portable electronics products will not only make them affordable to a larger number of people, it is also a way to introduce them to iLife - a lifestyle approach that Apple is pushing. I expect similar moves by other companies active in consumer electronics.
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