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This One Chart Shows Why Apple’s “New Categories” Can’t Come Soon Enough


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By Ina Fried 8, 2014, 9:00 AM PST
Tim Cook has made it abundantly clear that Apple will be going into some new market segments this year.
He said it on last month’s earnings call, and reiterated it this week in an interview with the Wall Street Journal.
“There will be new categories and we’re working on some great stuff,” Cook told the Journal this week, adding, of course, “We’re not ready to talk about it.”
Whatever it is Apple has cooking (and many expect a watch, or possibly a more serious entry in the television space), it can’t come soon enough. While smartphones continue to grow, most of that growth is in the low-end and mid-tier of the market — areas Apple has continued to eschew in favor of producing premium iPhone models.
In its earnings report this week, chipmaker ARM Holdings forecast that the high-end part of the smartphone market — the only part in which Apple currently competes — will grow only an average of four percent over the next five years. The overall market is set to grow 10 percent, fueled by growth at the low end.
“Anybody in the premium space has to be careful,” ARM Executive VP Antonio Viana said in an interview this week.
Apple is most definitely in that space, with the iPhone generating $32.5 billion last quarter, more than half of Apple’s total sales.
And while Apple isn’t alone in that area, it is the only company that sells phones exclusively at the high end. Rival Samsung has a particularly diverse portfolio of smartphones, with a model at almost every price and screen size.
Apple hasn’t ruled out moving into other price segments, but Cook has said Apple won’t do so unless it can do something up to its high standards, a point he reiterated with the Journal. Where it comes to true smartphones, Cook said Apple is typically No. 1 or No. 2 in the market.
“Would I like to be one in the places where we are two? You better believe it,” he told the Journal. “If there is a way we can do that without changing where our line is on a great product, then we’re going to do it. But what we’re not going to do is we’re not going to make junk.”

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