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MacRumors
Sep 21, 2010, 12:39 PM
http://www.macrumors.com/images/macrumorsthreadlogo.gif (http://www.macrumors.com/2010/09/21/apples-share-of-mobile-phone-industry-profits-reportedly-rises-to-39/)


http://images.macrumors.com/article/2010/09/21/143556-aapl_mobile_phone_share_1h10.jpg

Fortune reports (http://tech.fortune.cnn.com/2010/09/21/pie-chart-apples-outrageous-share-of-the-mobile-industrys-profits/) on a new research note from Canaccord Genuity analyst T. Michael Walkley which compares Apple's performance in the mobile phone industry to that of some of the other major players for the first half of 2010. According to the report, Apple sold 17 million iPhones during the first half of the year, a minuscule fraction of the 400 million handsets sold by top manufacturers Nokia, Samsung, and LG combined. But when looking at industry profits, Apple snagged 39% of the pie while the other three companies combined to take only 32%.We are also impressed with Apple's ability to monetize its innovative products through selling high-margin consumer products that drive strong earnings results and growth trends for Apple shareholders. A case in point is the mobile phone market, where most handset OEMs struggle to post a profit or even 10% operating margins (except RIM and recently HTC), while we estimate Apple boasts roughly 50% gross margin and 30%+ operating margin for its iPhone products.Walkley goes on to note that Apple "leads the industry in every metric except for unit share".

The data points to a continuation of a long-standing trend in the mobile phone industry that saw Apple taking 20% of profits in 2008 (http://www.macrumors.com/2009/07/20/apple-estimated-to-account-for-20-of-cellphone-industry-profit/) and 32% of profits in the first half of 2009 (http://www.macrumors.com/2009/08/05/apples-share-of-cellphone-industry-profit-estimated-at-32-for-first-half-of-2009/).

Article Link: Apple's Share of Mobile Phone Industry Profits Reportedly Rises to 39% (http://www.macrumors.com/2010/09/21/apples-share-of-mobile-phone-industry-profits-reportedly-rises-to-39/)



WiiDSmoker
Sep 21, 2010, 12:43 PM
So this proves that Apple is price gouging all of us :(

SockRolid
Sep 21, 2010, 12:45 PM
Good for Apple! I think we'll be seeing more statistics like that in other areas soon.

One small nitpick: the profit pie chart is drawn as though the two "slices" add up to 100%, or a whole pie. But in fact 39% + 32% only add up to 71%. So roughly 1/3 of the pie should either be empty or occupied by some other companies' slice...

mlts22
Sep 21, 2010, 12:47 PM
So this proves that Apple is price gouging all of us :(

Hard to say... iPhones are in the same price range as most Android phones, and the total cost over two years is price competitive with others out there.

Jarbo
Sep 21, 2010, 12:47 PM
As noted by commenters in the Fortune Report, that 39% takes up more that 50% of the pie.

They seem to have updated the chart on their end (http://tech.fortune.cnn.com/2010/09/21/pie-chart-apples-outrageous-share-of-the-mobile-industrys-profits/).

While super impressive, the measure against industry smartphones is really the most appropriate analysis. At least until apple comes out with a low end phone (they won't)

kdarling
Sep 21, 2010, 12:49 PM
Good thing Apple's making so much money off their customers, since their market share continues to decline (http://content.usatoday.com/communities/technologylive/post/2010/09/android-gains-market-share-on-everyone-else/1) in relation to Android.

http://i.usatoday.net/communitymanager/_photos/technology-live/2010/09/17/smartphonex-large.jpg

linux2mac
Sep 21, 2010, 12:55 PM
Not surprising since it's the best phone out there :D

skeep5
Sep 21, 2010, 12:56 PM
nothin like a little apple pie!

dgree03
Sep 21, 2010, 12:56 PM
Cue everyone celebrating that apple sell people less phone to people for more:rolleyes:

fifthworld
Sep 21, 2010, 12:56 PM
God for Apple, but very unprofessional analysis. As neither of the charts represent the 100% of the market they should have used a bar chart instead of the somehow misleading pie. IMHO the analyst is just a guy trying to have his name in the media, and he has!

avigalante
Sep 21, 2010, 01:03 PM
Good thing Apple's making so much money off their customers, since their market share continues to decline (http://content.usatoday.com/communities/technologylive/post/2010/09/android-gains-market-share-on-everyone-else/1) in relation to Android.

http://i.usatoday.net/communitymanager/_photos/technology-live/2010/09/17/smartphonex-large.jpg

Hardly the case. This is US smartphones only, not worldwide. Android is on several carriers in the US, while the iPhone is only on AT&T.

paradox00
Sep 21, 2010, 01:04 PM
Good thing Apple's making so much money off their customers, since their market share continues to decline (http://content.usatoday.com/communities/technologylive/post/2010/09/android-gains-market-share-on-everyone-else/1) in relation to Android.


But their unit sales are continuing to increase. Quoting market share numbers like the mean something in such a rapidly expanding market is pointless. You make it sound like Android is hurting Apple in some way, yet what do they report every quarter? Record unit sales and profits.

nsayer
Sep 21, 2010, 01:05 PM
Well, wait now. Apple doesn't lead the market in unit sales, but how much of those unit sales numbers are made up of throw-away phones? That is, phones that are either given away under contract or super-cheap pay-as-you-go phones?

The only reason Apple isn't leading every metric in the mobile market is that they don't play in the low-rent portion of the market. Remarkably similar to their positioning in the PC market as well - they don't make machines that compete with the very cheapest PCs available.

BC2009
Sep 21, 2010, 01:12 PM
Good thing Apple's making so much money off their customers, since their market share continues to decline (http://content.usatoday.com/communities/technologylive/post/2010/09/android-gains-market-share-on-everyone-else/1) in relation to Android.

http://i.usatoday.net/communitymanager/_photos/technology-live/2010/09/17/smartphonex-large.jpg

The problem Apple has right now is their lock-in with AT&T. They have pretty much dried up that entire customer base for market share. I'm sure that exclusivity contract can't end soon enough for Apple, especially with the pent-up demand among Verizon customers to get their hands on a Verizon iPhone.
(8 million current Verizon customers would move to the iPhone should it become available on the carrier) (http://www.macrumors.com/2010/09/21/survey-looks-at-customer-carrier-preferences-once-atandt-loses-iphone-exclusivity/)

I still think that Google made a huge error by selling the Nexus-One with T-Mobile instead of with Verizon, but still HTC and Motorola did a good job of capitalizing on that pent-up demand with Verizon customers with the Verizon "Droid" branded phones. The question now is how sustainable that growth is (eventually the pent-up demand will dry up) and how loyal those Android customers are going to be (i.e.: how many got a Droid because they wanted something but could not get an iPhone). Only time will tell, but it will be interesting to see how it all plays out.

If Google can gain enough mind-share with Verizon customers to keep them loyal in order to fend off an Apple iPhone then that will be a major factor in deciding Android's success.

jsjacob
Sep 21, 2010, 01:12 PM
So this proves that Apple is price gouging all of us :(

Only if you believe the value you receive is not equivalent or less than the price you paid *and* if you think Apple should not have resources to spend on R&D.

I happen to think the price I paid is fair and I want Apple to create future products. I don't think of my phone as a commodity (yet).

paradox00
Sep 21, 2010, 01:16 PM
Good for Apple! I think we'll be seeing more statistics like that in other areas soon.

One small nitpick: the profit pie chart is drawn as though the two "slices" add up to 100%, or a whole pie. But in fact 39% + 32% only add up to 71%. So roughly 1/3 of the pie should either be empty or occupied by some other companies' slice...

The charts show 100% of the data they presenting. They are directly contrasting Apples profits against the combined profits of Nokia, Samsung and LG. Between those four companies, Apple has 55% of the profits, which is what the chart depicts.

It is the proper way of presenting that chart since it is folowing the same rules as the previous one. Percentages are not special, they are data points like anything else. I guess it would have been less confusing if they provided the profits in millions of dollars, but what they did isn't really wrong.

rdupuy
Sep 21, 2010, 01:18 PM
But their unit sales are continuing to increase. Quoting market share numbers like the mean something in such a rapidly expanding market is pointless. You make it sound like Android is hurting Apple in some way, yet what do they report every quarter? Record unit sales and profits.

True, but by the analysis RIM is doing great as well.
Their profits are up huge this past quarter.

I think people are trying to read the tea leaves - not necessarily to say that Apple is going to be unprofitable next quarter - heavens no.

But that Apple - yes because they aren't on any carriers pay-as-you go options, not even AT&T's, because they aren't on T-mobile and Sprint. Because they aren't on Metro PCS, Cricket or any other regional carrier - for all the excuses made, they are losing marketshare in the U.S.

It's not that Apple isn't owning the most profitable part of the market, but they aren't taking the 'additional profits' that are available in other segments of the market.

And in the long run, I think people are watching marketshare, and not just overall profits.

Google's strategy with Android - does appear to be working in the sense that Android is gaining marketshare at a rapid clip. Will Google make money? Probably, looks that way, although their model for making money is completely different from Apples - and they don't even get included on these charts.

So...we put out a chart that highlights something positive for Apple - and no doubt it is a positive.

I'm still interested in the marketshare #'s though, because those pay-as-you go phones, are still phones. Among those phones, some apps will be purchased. The other carriers - are still carriers - among the customers of those carriers, apps will be purchased.

kerryb
Sep 21, 2010, 01:21 PM
So this proves that Apple is price gouging all of us :(

No it means that selling low end to get market share does not equal profit share.

kdarling
Sep 21, 2010, 01:27 PM
But their unit sales are continuing to increase. Quoting market share numbers like the mean something in such a rapidly expanding market is pointless.

I agree with you. Share charts, especially while the overall market is growing, certainly don't show how much each company's individual sales are rising (or not).

You make it sound like Android is hurting Apple in some way, yet what do they report every quarter? Record unit sales and profits.

They had those things even the first year. Should they have stopped at that original number ? Heck no. There's always room for more.

paradox00
Sep 21, 2010, 01:34 PM
True, but by the analysis RIM is doing great as well.
Their profits are up huge this past quarter.

I think people are trying to read the tea leaves - not necessarily to say that Apple is going to be unprofitable next quarter - heavens no.

But that Apple - yes because they aren't on any carriers pay-as-you go options, not even AT&T's, because they aren't on T-mobile and Sprint. Because they aren't on Metro PCS, Cricket or any other regional carrier - for all the excuses made, they are losing marketshare in the U.S.

It's not that Apple isn't owning the most profitable part of the market, but they aren't taking the 'additional profits' that are available in other segments of the market.

And in the long run, I think people are watching marketshare, and not just overall profits.

Google's strategy with Android - does appear to be working in the sense that Android is gaining marketshare at a rapid clip. Will Google make money? Probably, looks that way, although their model for making money is completely different from Apples - and they don't even get included on these charts.

So...we put out a chart that highlights something positive for Apple - and no doubt it is a positive.

I'm still interested in the marketshare #'s though, because those pay-as-you go phones, are still phones. Among those phones, some apps will be purchased. The other carriers - are still carriers - among the customers of those carriers, apps will be purchased.

I can't count the number of consecutive record quarters Apple has had on one hand. It's amazing that the likes of HTC, Motorola, Samsung, LG etc. can combine their sales growth to edge out Apple. Perhaps it would be more appropriate to contrast Apple's unit sales in smartphones against other phone manufacturers, since that's what Apple is.

The only place where marketshare has any significance at all is with apps, and the Android Market is not nearly as profitable for devs as the App Store. I think the mac has shown that you can get pretty good developer support with 5% marketshare, and it doesn't have an advantage like the App Store.

Yes, a lot of people look at marketshare, because it allows them to thump their ePeens, but the percentage of phones running a free OS vs the percentage of phones running an OS that is sold on one phone is hardly a relevant comparison.

cvaldes
Sep 21, 2010, 01:34 PM
So this proves that Apple is price gouging all of us :(
No, it means selling low-end phones isn't very profitable.

WildCowboy
Sep 21, 2010, 01:39 PM
We've added in the revised charts. The initial charts showing only Nokia/Samsung/LG versus Apple in a pie chart format were definitely odd.

The new ones should be much more clear. :)

NetScheduler
Sep 21, 2010, 01:45 PM
No it means that selling low end to get market share does not equal profit share.

As a consumer, I could care less about "profit share" or how much money the company of any product earns... As a matter of fact, no thinking or rational person would buy a product based on the criteria of a manufacture's profit.

You guys are really brainwashed...

NetScheduler
Sep 21, 2010, 01:46 PM
No, it means selling low-end phones isn't very profitable.

Why would I care as a consumer?

carmenodie
Sep 21, 2010, 01:52 PM
And this is achieved with only one phone model per year. That is awesome.

DTphonehome
Sep 21, 2010, 01:52 PM
Good thing Apple's making so much money off their customers, since their market share continues to decline (http://content.usatoday.com/communities/technologylive/post/2010/09/android-gains-market-share-on-everyone-else/1) in relation to Android.


Whoooo cares? Market share means NOTHING, profit means EVERYTHING. I don't care if they make one phone a year and sell it for $4 billion. As long as the quarterly earnings continue to be stellar, I really don't care at all what Apple's market share is.

DTphonehome
Sep 21, 2010, 01:55 PM
As a consumer, I could care less about "profit share" or how much money the company of any product earns... As a matter of fact, no thinking or rational person would buy a product based on the criteria of a manufacture's profit.

You guys are really brainwashed...

Why would I care as a consumer?

Lots of people on this website are investors in AAPL. They care about things like profit. Lots of people on this website are "consumers". They care about things like FaceTime on the iPod touch. So this item is for the investors.

(I'm personally both, so I like all news :D )

dgree03
Sep 21, 2010, 01:55 PM
As a consumer, I could care less about "profit share" or how much money the company of any product earns... As a matter of fact, no thinking or rational person would buy a product based on the criteria of a manufacture's profit.

You guys are really brainwashed...

My thoughts exactly, people on this board always try to justify some of apples overpriced stuff and they act like they care about apples profitablity. What i care and see the most is apple sells costumers low end product parts for high end prices. They have a good marketing stragedy so they get away with it, but doesnt mean it should make us "feel" good(Unless your a large shareholder).

And to whoever said have more money for R&D, isnt apple historically on the low end of investing R&D??

BaldiMac
Sep 21, 2010, 01:59 PM
As a consumer, I could care less about "profit share" or how much money the company of any product earns... As a matter of fact, no thinking or rational person would buy a product based on the criteria of a manufacture's profit.

You guys are really brainwashed...

Except nobody claimed that profit is a basis for purchasing an iPhone.

Why would I care as a consumer?

Because profitability speaks to the financial health of the product. As a consumer investing (through app purchases and usage) in the iOS platform, the fact that Apple is making significant profits implies that they will continue to invest in and expand it.

DTphonehome
Sep 21, 2010, 02:00 PM
And to whoever said have more money for R&D, isnt apple historically on the low end of investing R&D??

Not sure who you're comparing them to, or where you got that, but a recent SWOT analysis says (not sure where they got these numbers):
The firm has increased their annual R&D expenditure from $782 million in 2007 to $1,333 million in 2009

I think they're spending plenty on R&D and should continue to do so as it's obviously paying off.

KnightWRX
Sep 21, 2010, 02:00 PM
Whoooo cares? Market share means NOTHING, profit means EVERYTHING. I don't care if they make one phone a year and sell it for $4 billion. As long as the quarterly earnings continue to be stellar, I really don't care at all what Apple's market share is.

So you're a shareholder ? Because as a consumer, profit share is massively unimportant. It just shows how much of a price gouge Apple is doing. Also, profit is not R&D investment. Profit is money in their pockets.

Heck, even as a shareholder you should start being pissed at this news. With such massive profits, you'd think shareholders would get some dividends...

cvaldes
Sep 21, 2010, 02:00 PM
Why would I care as a consumer?
Because larger gross margins can be reinvested in R&D, bringing innovative new products to consumers in the future. Increased profitability can also be used to increase operational resources, such as cost centers like staffing a telephone support center or staffing a retail store with technical experts. It also provides cash to enable strategic acquisitions of key technology.

When you start with a larger gross margin, you have more flexibility to spend on SG&A and other expenses (R&D, M&A) before you reach net profit.

It is interesting to note that Apple leads the consumer electronics industry in customer satisfaction: computers, MP3 players, smartphones, tablets, whatever.

Can money buy happiness? Perhaps it can.

NetScheduler
Sep 21, 2010, 02:04 PM
Lots of people on this website are investors in AAPL. They care about things like profit. Lots of people on this website are "consumers". They care about things like FaceTime on the iPod touch. So this item is for the investors.

(I'm personally both, so I like all news :D )

Oh yes, Facetime. Apple "invented" front facing cameras. It's "revolutionary"!!! It's "magical"!! It's sooooooo "elegant", and how about how thin it is!!! (every other product is "clunky", and "crappy")

Thank God Apple continues to put things like "Facetime" on phones and the iPod touch. Gee, no one else ever thought of that!

No, you're not brainwashed - not much.

zalves
Sep 21, 2010, 02:09 PM
So this proves that Apple is price gouging all of us :(

Couldn't agree more... But still its the best product... :confused:

NebulaClash
Sep 21, 2010, 02:09 PM
What price gouging? You get an iPhone for $199 (or even $99 for the 3GS) with contract, same as those other guys with their smart phones. Except for when they give them away in a 2-for-1 deal that boosts their market share while cutting their profits.

DTphonehome
Sep 21, 2010, 02:09 PM
Oh yes, Facetime. Apple "invented" front facing cameras. It's "revolutionary"!!! It's "magical"!! It's sooooooo "elegant", and how about how thin it is!!! (every other product is "clunky", and "crappy")

Thank God Apple continues to put things like "Facetime" on phones and the iPod touch. Gee, no one else ever thought of that!

No, you're not brainwashed - not much.

Do us all a favor and get lost if you hate Apple so much. This website has nothing for you.

EDIT: As far as my being brainwashed, yeah, the 500% increase in my net worth thanks to AAPL alone has made me a believer. They know what they're doing. You, do not.

KnightWRX
Sep 21, 2010, 02:09 PM
Because larger gross margins can be reinvested in R&D, bringing innovative new products to consumers in the future.

Not if they are classified as profits. R&D is costs, costs come out of profits. Profits are money in the bank (something which Apple has a ton of).

What price gouging? You get an iPhone for $199 (or even $99 for the 3GS) with contract, same as those other guys with their smart phones. Except for when they give them away in a 2-for-1 deal that boosts their market share while cutting their profits.

Except for when they give iPhone away in a "Free on a contract" deal that boosts their market share while cutting their profits...

:rolleyes:

2 for 1 deals assume that you have 2 people willing to get a phone. It's also just a form of subsidy. Apple gets money from AT&T, no matter what AT&T ends up selling the phone for. Subsidies based on contracts have nothing to do with actual unit price.

dgree03
Sep 21, 2010, 02:11 PM
Because larger gross margins can be reinvested in R&D, bringing innovative new products to consumers in the future. Increased profitability can also be used to increase operational resources, such as cost centers like staffing a telephone support center or staffing a retail store with technical experts. It also provides cash to enable strategic acquisitions of key technology.

When you start with a larger gross margin, you have more flexibility to spend on SG&A and other expenses (R&D, M&A) before you reach net profit.

It is interesting to note that Apple leads the consumer electronics industry in customer satisfaction: computers, MP3 players, smartphones, tablets, whatever.

Can money buy happiness? Perhaps it can.

So these less profitable companies like Dell, Nokia, HTC etc. are not investing as much in R&D as apple? More profits =/ More R&D..

As a costumer of apples i find i appalling that they have such a large margin... means I am get less product for More money than competitors.

NebulaClash
Sep 21, 2010, 02:12 PM
Apple seems to be the R&D lab for the phone, computer and music player industry...

Amazing hate for Apple:

If they win the profit pie, haters say: so what, it's market share that counts.

If they win the market share pie, haters say: so what, it's features that count.

If they win the features matrix, haters say: so what, someone else did it first.

The facts change, but the hate remains the same.

dgree03
Sep 21, 2010, 02:13 PM
What price gouging? You get an iPhone for $199 (or even $99 for the 3GS) with contract, same as those other guys with their smart phones. Except for when they give them away in a 2-for-1 deal that boosts their market share while cutting their profits.

Yea but we also know that RETAIL value for the the ip4 is 699 and 599... Apple is getting full retail for the phones ATT sells.. period! Att makes up the difference with overprice text and data plans for 2 years...

NebulaClash
Sep 21, 2010, 02:13 PM
Except for when they give iPhone away in a "Free on a contract" deal that boosts their market share while cutting their profits...

:rolleyes:

Never heard of this happening. Is that what happens in Canada?

NebulaClash
Sep 21, 2010, 02:14 PM
Yea but we also know that RETAIL value for the the ip4 is 699 and 599... Apple is getting full retail for the phones ATT sells.. period! Att makes up the difference with overprice text and data plans for 2 years...

As with every other smart phone, yes. It's a weird industry where the cell service providers have too much control. I hate it, but to pick on Apple for it when every other manufacturer does the same thing is too much.

dgree03
Sep 21, 2010, 02:16 PM
Apple seems to be the R&D lab for the phone, computer and music player industry...

Amazing hate for Apple:

If they win the profit pie, haters say: so what, it's market share that counts.

If they win the market share pie, haters say: so what, it's features that count.

If they win the features matrix, haters say: so what, someone else did it first.

The facts change, but the hate remains the same.

Only one they are winning now is the profit pie... funny isnt it?

KnightWRX
Sep 21, 2010, 02:17 PM
Never heard of this happening. Is that what happens in Canada?

O2 in the UK.

AIf they win the market share pie, haters say: so what, it's features that count.

If they win the features matrix, haters say: so what, someone else did it first.

The facts change, but the hate remains the same.

Hum... call me when they actually win any of these 2 ok, then we'll see how much "hate" I have. If I say Apple should lift their ban on programming language and they do, I applaud the move. If I say Apple should be less restrictive and approve Google Voice apps and they do, I applaud them.

:rolleyes:

Same could be said of the other camp :

If they lose the feature matrix, fanboys say : So what, market share is important.

If they lose market share, fanboys say : So what, profit is all that matters.

etc..

etc..

EDIT: As far as my being brainwashed, yeah, the 500% increase in my net worth thanks to AAPL alone has made me a believer. They know what they're doing. You, do not.

So you're a shareholder, hence why this news is important to you. Otherwise, it means nothing to us consumers.

And shouldn't you start asking for dividends ? :D

dgree03
Sep 21, 2010, 02:18 PM
As with every other smart phone, yes. It's a weird industry where the cell service providers have too much control. I hate it, but to pick on Apple for it when every other manufacturer does the same thing is too much.

Yes but we also know that iphone 4 has 180 something dollars in parts... so they are making their BIGGEST gross profit on 32gb ip4.. some 500 dollars...

Other companies do the same, of course. But it matters how much money it cost per phone to manufacter.

GQB
Sep 21, 2010, 02:20 PM
Oh yes, Facetime. Apple "invented" front facing cameras. It's "revolutionary"!!! It's "magical"!! It's sooooooo "elegant", and how about how thin it is!!! (every other product is "clunky", and "crappy")

Thank God Apple continues to put things like "Facetime" on phones and the iPod touch. Gee, no one else ever thought of that!

No, you're not brainwashed - not much.

You are aware,aren't you, that all innovation is incremental and based on previous invention... Right?
Get off your high horse.

NebulaClash
Sep 21, 2010, 02:24 PM
Only one they are winning now is the profit pie... funny isnt it?

Stock market loves them, yes.

But it says a lot about how Apple is revolutionizing business. The computer manufacturers thought feature lists were the way to win the music player market. It wasn't. Phone manufacturers think cheap handsets that blanket the market is the way to win. It isn't.

Apple is monetizing every step of the way, but in ways that are right in line (or cheaper as in the cut they take in iTunes compared to what historically creative types paid to get their product to the masses) with industry norms. But because Apple controls the entire chain, they get to keep the money every step of the way.

Bet those other phone manufacturers wished they had Apple's profits...

Mistrblank
Sep 21, 2010, 02:25 PM
Good thing Apple's making so much money off their customers, since their market share continues to decline (http://content.usatoday.com/communities/technologylive/post/2010/09/android-gains-market-share-on-everyone-else/1) in relation to Android.

http://i.usatoday.net/communitymanager/_photos/technology-live/2010/09/17/smartphonex-large.jpg

I don't know what you're looking at but to me it seems that Microsoft and RIM are hemorraging the more than Apple there, particularly given they play the same multi platform and multi carrier game as Google is. The lost Apple Share is meh.

That July number also likely doesn't take into account the balloon number that is iPhone 4.

NebulaClash
Sep 21, 2010, 02:25 PM
Yes but we also know that iphone 4 has 180 something dollars in parts... so they are making their BIGGEST gross profit on 32gb ip4.. some 500 dollars...

Other companies do the same, of course. But it matters how much money it cost per phone to manufacter.

Yes, as you say other companies are doing the same thing. So why pick on Apple? You want an iPhone? $99 will get you one. Hardly outrageous.

NebulaClash
Sep 21, 2010, 02:26 PM
That July number also likely doesn't take into account the balloon number that is iPhone 4.

Correct, which is why that study keeps getting trotted out. It's the quarter that included the leak about the iPhone 4 as well as the normal spring slowdown as people waited for the new version. It's the perfect quarter to make Apple look bad artificially, and that's why people love it.

They won't be pushing the next study...

Rocketman
Sep 21, 2010, 02:28 PM
This chart is the single most important item posted to MacRumors that all critics should see.

Rocketman

KnightWRX
Sep 21, 2010, 02:28 PM
The lost Apple Share is meh.

So wait, it's "meh" that Apple is now not showing growth anymore ? Without growth, how will they attain #1 ? By shrinking less than the other guy ? The point is, the market grew more than Apple did.

Btw, Jul 2010 includes the initial 3 million iPhone 4 launch that was in June. :confused:

cvaldes
Sep 21, 2010, 02:30 PM
Not if they are classified as profits. R&D is costs, costs come out of profits. Profits are money in the bank (something which Apple has a ton of).
Please look up the difference between gross margin and net income (profit), then consult Apple's 10-Q statements.

Net sales - cost of sales = gross margin
Subtract operating expenses (R&D, SG&A) and you reach operating income
From operating income, subtract miscellaneous income/expenses as well as income taxes and you reach net income.

Gross profit and gross margin are interchangeable terms. Same with net profit and net income.

This latter number is what you think of as "profit," but you really need to start with gross profit/gross margin because there are a lot of costs associated with manufacturing, developing, marketing, and selling products.

NebulaClash
Sep 21, 2010, 02:33 PM
So wait, it's "meh" that Apple is now not showing growth anymore ? Without growth, how will they attain #1 ? By shrinking less than the other guy ? The point is, the market grew more than Apple did.

Btw, Jul 2010 includes the initial 3 million iPhone 4 launch that was in June. :confused:

Apple did show growth, but as you yourself said the market grew so fast that it outpaced Apple's growth in that quarter. Apple continues to show growth.

#1? Probably never. The cell market is so massive that Steve Jobs initially suggested a 1% worldwide share of the overall would be a nice goal. Looks as if he's now tripled that and is still growing.

KnightWRX
Sep 21, 2010, 02:35 PM
#1? Probably never. The cell market is so massive that Steve Jobs initially suggested a 1% worldwide share of the overall would be a nice goal. Looks as if he's now tripled that and is still growing.

Steve's figure was 2% btw, and it looks like they are sitting about there worldwide now and stagnating.

And they didn't show growth. They showed unit growth, but that doesn't matter when talking about share. More units means nothing if everyone else is also selling more units, unless you're a shareholder and looking purely at profit figures.

RealityMonster
Sep 21, 2010, 02:37 PM
Oh yes, Facetime. Apple "invented" front facing cameras. It's "revolutionary"!!! It's "magical"!! It's sooooooo "elegant", and how about how thin it is!!! (every other product is "clunky", and "crappy")

Thank God Apple continues to put things like "Facetime" on phones and the iPod touch. Gee, no one else ever thought of that!

No, you're not brainwashed - not much.

I don't think anyone claimed that Apple invented Facetime or front-facing cameras.

Apple understands two things exceptionally well:

1) Timing
2) Advertising

After that, the engineering is merely a matter of leveraging of the right technology. They didn't invent the Retina display; someone else packed that many pixels onto a screen. But Apple released it with their phone at the right time, and they managed to give it a name ('Retina Display') that is highly marketable and memorable.

So it went with the iPod, and with their desktop computers, and with the iPhone and the iPad. So it will go until Steve Jobs leaves or dies.

Apple supplies the best products for the market at the time. Anyone else could have released excellent touch-screen smartphones a few years back, or tablets or what have you, but Apple figured out WHEN it would be best to do it, put together sufficient hardware to realize the vision, and then marketed it wisely.

That doesn't make their products bad; I really do think that their stuff is about 10% better than everyone else's. But by being smart about everything else, they can make a lot more money on that 10% than you'd expect.

dgree03
Sep 21, 2010, 02:37 PM
Stock market loves them, yes.

But it says a lot about how Apple is revolutionizing business. The computer manufacturers thought feature lists were the way to win the music player market. It wasn't. Phone manufacturers think cheap handsets that blanket the market is the way to win. It isn't.

Apple is monetizing every step of the way, but in ways that are right in line (or cheaper as in the cut they take in iTunes compared to what historically creative types paid to get their product to the masses) with industry norms. But because Apple controls the entire chain, they get to keep the money every step of the way.

Bet those other phone manufacturers wished they had Apple's profits...

That is true, i dont doubt other companies dont wish they had what apple had. however, doesnt mean hardly anything to me as a customer.

DTphonehome
Sep 21, 2010, 02:38 PM
Oh yes, You're a BIG TIME Apple investor I'm sure. Did you buy it at $5 a share.

Get lost Kid, .. You don't own any stock at all let alone Apple. Let's face it, I doubt you even have job - - - - BUT if ya do, I'll have Fries with that!!!

And your right, .. I suppose this website has nothing for me or any other Apple "user".. It's made up of mostly Pro-Apple trolls who get up in the morning dreaming about kissing Steve Jobs' ass..

Grow up ya baby.

Hate feeding the troll (and it aint me here, bud), but here goes:

Bought my first share of AAPL in 2003 at around 11 bucks (after splits considered).

I'm nearly 30 and a physician. But I am in pediatrics, so I guess technically I am a big baby.

RealityMonster
Sep 21, 2010, 02:39 PM
Steve's figure was 2% btw, and it looks like they are sitting about there worldwide now and stagnating.

And they didn't show growth. They showed unit growth, but that doesn't matter when talking about share. More units means nothing if everyone else is also selling more units, unless you're a shareholder and looking purely at profit figures.

No small part of the problem is they can't supply the products fast enough. There's a 3-month waiting list on iPhone 4s in my city, currently. They make over 100,000 units a day, and they're still undersupplying massive demand. If they can overcome their issues, we might see some proper growth again.

Reefbone
Sep 21, 2010, 02:39 PM
Only if you believe the value you receive is not equivalent or less than the price you paid *and* if you think Apple should not have resources to spend on R&D.

I happen to think the price I paid is fair and I want Apple to create future products. I don't think of my phone as a commodity (yet).

Pass me some Kool-Aid please

akm3
Sep 21, 2010, 02:41 PM
Why would I care as a consumer?

You wouldn't. And this whole topic isn't really appropriate for Mac Rumors.

But for shareholders, this is hot news.

dgree03
Sep 21, 2010, 02:42 PM
Yes, as you say other companies are doing the same thing. So why pick on Apple? You want an iPhone? $99 will get you one. Hardly outrageous.

I pick on apple because they cant match lets say and HTC EVO spec for spec.. yet they make the most profit??(I am not arguing whether specs matter) So to ME its obvious that apple is selling people overpriced(retail) products.

Thats why I am picking on apple. About the only thing apple sells that i feel ISNT over priced... its the 17in macbook pro, the ipad(since no other players in the market) and the Ipod touch(current gen.)

Of course the iphones dont seem overpriced because they are subsidized, but we customers then get gouged by att.

NebulaClash
Sep 21, 2010, 02:47 PM
Steve's figure was 2% btw, and it looks like they are sitting about there worldwide now and stagnating.

Why must you contradict everything I say?

Steve's figure was 1% (http://www.engadget.com/2007/01/09/live-from-macworld-2007-steve-jobs-keynote/). (just do a search for "1%" and you can see the very slide he used)

The chart on page 1 shows a 2.8% worldwide share, which is a 40% growth over 2%.

Can't you leave facts alone without making your anti-Apple spin?

NebulaClash
Sep 21, 2010, 02:49 PM
I pick on apple because they cant match lets say and HTC EVO spec for spec.. yet they make the most profit??(I am not arguing whether specs matter) So to ME its obvious that apple is selling people overpriced(retail) products.

Thats why I am picking on apple. About the only thing apple sells that i feel ISNT over priced... its the 17in macbook pro, the ipad(since no other players in the market) and the Ipod touch(current gen.)

Of course the iphones dont seem overpriced because they are subsidized, but we customers then get gouged by att.

All customers of all cell service providers get gouged.

So you only pick on Apple because they don't match the EVO spec for spec? Do you pick on HTC for the specs they don't match the iPhone on? All products are at least slightly different, but they are roughly in the same class for the same money.

dgree03
Sep 21, 2010, 02:58 PM
All customers of all cell service providers get gouged.

So you only pick on Apple because they don't match the EVO spec for spec? Do you pick on HTC for the specs they don't match the iPhone on? All products are at least slightly different, but they are roughly in the same class for the same money.

Well can you name one spec feature apple has the best the EVo?

I am just being devilish on this whole thing, but the point is apple is getting more money for less product, at its root. I am not talking about percieved worth... just raw money value.

SandynJosh
Sep 21, 2010, 03:04 PM
So these less profitable companies like Dell, Nokia, HTC etc. are not investing as much in R&D as apple? More profits =/ More R&D..

As a costumer of apples i find i appalling that they have such a large margin... means I am get less product for More money than competitors.

You have no idea what kinds of margins are on furniture and fashion clothing compared to Apple's margins. If Apple can be more efficient about their costs to produce a high-end phone and sell that phone for a similar prices as their competitors what's that to you?

The price you pay for ANY product is based on what the market will bear, and not in a set margin. The selling price of a gallon of milk at a convenience store is WAY more then at a grocery story, yet may cost the same.

Additionally, Apple does not compete in the bottom-feeder part of the phone market where low selling price is king and the phones are mere commodies. So, naturally their profits will not have that low margin segment stirred into the equation.

NebulaClash
Sep 21, 2010, 03:04 PM
Well can you name one spec feature apple has the best the EVo?

I am just being devilish on this whole thing, but the point is apple is getting more money for less product, at its root. I am not talking about percieved worth... just raw money value.

Retina Display. To me that's the big new feature of the iPhone 4, the one that matters the most to me, and the one that impressed me the most in person.

Infrared
Sep 21, 2010, 03:06 PM
I think they're spending plenty on R&D and should continue to do so as it's obviously paying off.

R&D spending as a rough percentage of total revenue:

Dell (1%), Apple (3%), IBM (6%), Google (12%), Oracle (12%), Microsoft (14%).

Links:

http://finance.yahoo.com/q/is?s=DELL+Income+Statement&annual
http://finance.yahoo.com/q/is?s=AAPL+Income+Statement&annual
http://finance.yahoo.com/q/is?s=MSFT+Income+Statement&annual
http://finance.yahoo.com/q/is?s=IBM+Income+Statement&annual
http://finance.yahoo.com/q/is?s=GOOG+Income+Statement&annual
http://finance.yahoo.com/q/is?s=ORCL+Income+Statement&annual

I'm not sure if there are any worthwhile conclusions to be drawn from that!

NebulaClash
Sep 21, 2010, 03:22 PM
R&D spending as a rough percentage of total revenue:

Dell (1%), Apple (3%), IBM (6%), Google (12%), Oracle (12%), Microsoft (14%).



Heh, that is interesting. We've always known that Microsoft has world-class research facilities that come up with great ideas. And we've also heard of ideas pitched inside the company that don't go anywhere if they don't push whatever the company wants pushed. Guess it's not just a matter of spending the money on the research, ya gotta put it on the shelves so people can buy it.

paradox00
Sep 21, 2010, 03:25 PM
Steve's figure was 2% btw, and it looks like they are sitting about there worldwide now and stagnating.

And they didn't show growth. They showed unit growth, but that doesn't matter when talking about share. More units means nothing if everyone else is also selling more units, unless you're a shareholder and looking purely at profit figures.

Why is marketshare significant? What does the Android user get over the iPhone user if Androids market share goes up by a percent? Market share is only important in markets of a fixed size (where the only way to grow is to gain market share) or in cases of extreme disparity (when one platform loses developer support). I guess it's important if you consider ePeen stroking to be important, since it gives you flashy numbers to show everyone.

Even looking at marketshare, one must wonder why Android is being compared to the iPhone in the first place. A better metric would be the relative sales between Apple, RIM, HTC, Motorola, etc.

Personally I've indicated in the past that Android would eventually pass the iPhone in market share because it's a free OS that any phone manufacturer can use (although I don't expect a 95/5 split like in desktop operating systems). That doesn't make it a better OS, it's just available to more manufacturers, and more manufacturers can naturally produce more phones.

The iPhone is still sold out in a lot places and people are still lining up for hours at the Apple Store to get their paws on one. Apple can't make enough phones, which is incredible.

Dusse
Sep 21, 2010, 03:26 PM
Good thing Apple's making so much money off their customers, since their market share continues to decline (http://content.usatoday.com/communities/technologylive/post/2010/09/android-gains-market-share-on-everyone-else/1) in relation to Android.

http://i.usatoday.net/communitymanager/_photos/technology-live/2010/09/17/smartphonex-large.jpg

I'm not sure exactly how they're calculating the months with that one, but (in addition to the fact that it's only USA, one of few countries with exclusive carrier) you should remember that most of that period is just before a refresh for the iPhone which obviously will mean fewer sales..

SandynJosh
Sep 21, 2010, 03:28 PM
Well can you name one spec feature apple has the best the EVo?

It's never been about specs with the iPhone. It's about the user experience. If the iPhone gives you a superior experience, you will buy it and keep buying it.

I am just being devilish on this whole thing, but the point is apple is getting more money for less product, at its root. I am not talking about percieved worth... just raw money value.

Why do you think Apple is giving you less product? Just because Apple pays less than other manufacturers for the components, has no effect on the end functionality.

The same iron that can make a single $10 horse shoe, can make $10,000 worth of needles. It's idiocy to assume the needle manufacturer is gouging you.

paradox00
Sep 21, 2010, 03:37 PM
Well can you name one spec feature apple has the best the EVo?

I am just being devilish on this whole thing, but the point is apple is getting more money for less product, at its root. I am not talking about percieved worth... just raw money value.

The devil is in the details. For instance, Apple made Foxconn buy 1000 milling machines at $20K a pop to make the steel band for the iPhone. Apple spends money on details that you would never consider on a spec sheet in order to make a better product (take as many jabs at the antenna as you want). While those things don't show up on a spec sheet, they are certainly worth something in raw money, which is what you are talking about. Not many companies buy a chip companany so that they can squeeze out a little more battery life from an existing chip design either.

MacKeeperFanMod
Sep 21, 2010, 03:47 PM
So ... Apple doesn't make the best-selling cellphone. May not even be #2 or #3! How AWFUL for them. Close the doors and give the money, all that glorious green money, back to the ... wait a minute! That's a whole lot of profit settling in one basket. Let's let a bit more settle before we close the doors, yeah?
Ya don't have to be the best seller in order to make the most money. Make it up in volume, indeed!

SandynJosh
Sep 21, 2010, 03:58 PM
Heh, that is interesting. We've always known that Microsoft has world-class research facilities that come up with great ideas. And we've also heard of ideas pitched inside the company that don't go anywhere if they don't push whatever the company wants pushed. Guess it's not just a matter of spending the money on the research, ya gotta put it on the shelves so people can buy it.

...and when you put it on the shelves it better not be a brown Zune or a pink Kin phone. I swear, sometimes it seems Microsoft works in a vacuum where the motto is, "We can do that too, but we can do it worser."

Justin122
Sep 21, 2010, 04:16 PM
null

BaldiMac
Sep 21, 2010, 04:24 PM
Yahoo have estimated that Apple will get 63 billion dollars worth of revenue this month. Using that data and the data that 3% of Apple's revenue goes to R&D, Apple will be using 30 million of that for R&D.

These are not the numbers you are looking for.

Apple made around 15 billion in revenue last quarter. 3% of that would be 450 million per quarter.

(And 63 billion x 3% = 1.89 billion)

CRTechGuy
Sep 21, 2010, 05:08 PM
Amazing 2.8% market share but 39% of the profits. Well Played Apple!

John Dillinger
Sep 21, 2010, 05:35 PM
So these less profitable companies like Dell, Nokia, HTC etc. are not investing as much in R&D as apple? More profits =/ More R&D..

As a costumer of apples i find i appalling that they have such a large margin... means I am get less product for More money than competitors.

Yep.

Has anyone tried any of the new Win 7 equipped laptops vs a mac?

There really is no major difference, and if it werent for certain key pieces of software.. mainly Logic Pro for me, there'd be no need to shell out for a mac/osx if you cared about money.

If youre honest with yourself you'll admit it. Dont get me wrong macs are smoother in some areas.. but nowhere near 500+ GBP better, as evidenced by their profits. Absolutely no way. Right now they are largely aluminium and glass status symbols. About the only Mac worth the money is the midrange iMac

I'd love to know if these mobile phone profits numbers are based off U.S? or worldwide? As it appears in U.S they retail for bout the same as Android.

However in UK, you pretty much always pay a hefty amount for the (current) iphone, on top of 18 month contract, unless you go for the most expensive plans-on an 18 month contract.

Bravo to Apple though.

dscottbuch
Sep 21, 2010, 05:45 PM
Yep.

Has anyone tried any of the new Win 7 equipped laptops vs a mac?

There really is no major difference, and if it werent for certain key pieces of software.. mainly Logic Pro for me, there'd be no need to shell out for a mac/osx if you cared about money.

If youre honest with yourself you'll admit it. Dont get me wrong macs are smoother in some areas.. but nowhere near 500+ GBP better, as evidenced by their profits. Absolutely no way. Right now they are largely aluminium and glass status symbols. About the only Mac worth the money is the midrange iMac

I'd love to know if these mobile phone profits numbers are based off U.S? or worldwide? As it appears in U.S they retail for bout the same as Android.

However in UK, you pretty much always pay a hefty amount for the (current) iphone, on top of 18 month contract, unless you go for the most expensive plans-on an 18 month contract.

Bravo to Apple though.

Couldn't disagree more, being honest. First, there is the hardware. I have had zero problems with several Apple laptops compared to every friend of mine that has bought the cheaper stuff at costco, best buy, etc. They've had power supply problems, DVD problems, keyboard problems - AND they have a terrible time getting it fixed, even under warranty. I used one of these $ saving system the other day and I could believe how bad the trackpad was, the keyboard was like mush, etc. In addition the laptop was significantly larger than my MBP. Now, I know you can easily match it spec-for-spec but I'm just judging by what people, who use computers every day, actually buy to save money and they are 'cheap' in the build sense.

As to software, my friends are still dealing with virus checkers, malware checkers, etc. Do they have to do this? I don't know but Dell, HP, Etc. all market them this way. They users continually have problems.

Big example is upgrading from an Vista system to Win 7. They had to go buy a special USB cable to transfer their data from the old to the new. The instructions said it could be done over the network but that never worked, and this was after about 5 hours of trying.

This transfer was painless on every MBP system I've dealt with over the last 5 years. Migration assistant just works.

So no, I don't think its a wash between OS's still and the hardware build quality from Apple also adds tremendous value.

John Dillinger
Sep 21, 2010, 07:03 PM
Couldn't disagree more, being honest. First, there is the hardware. I have had zero problems with several Apple laptops compared to every friend of mine that has bought the cheaper stuff at costco, best buy, etc. They've had power supply problems, DVD problems, keyboard problems - AND they have a terrible time getting it fixed, even under warranty. I used one of these $ saving system the other day and I could believe how bad the trackpad was, the keyboard was like mush, etc. In addition the laptop was significantly larger than my MBP. Now, I know you can easily match it spec-for-spec but I'm just judging by what people, who use computers every day, actually buy to save money and they are 'cheap' in the build sense.

As to software, my friends are still dealing with virus checkers, malware checkers, etc. Do they have to do this? I don't know but Dell, HP, Etc. all market them this way. They users continually have problems.

Big example is upgrading from an Vista system to Win 7. They had to go buy a special USB cable to transfer their data from the old to the new. The instructions said it could be done over the network but that never worked, and this was after about 5 hours of trying.

This transfer was painless on every MBP system I've dealt with over the last 5 years. Migration assistant just works.

So no, I don't think its a wash between OS's still and the hardware build quality from Apple also adds tremendous value.

Fair enough I suppose your mileage wil vary...

All I'll say though is that a friend of mine is going into servicing Macs and iphones, and he always has tons of work- motherboards, screens, cpus etc. (its also incredible how many people seem to drop and smash their iphones-keeps him busy though lol!)

The problem with Pcs is the fact that yes you can get some really cheap and they will have poor motherboards, noisy drives cheap fans etc that fail.

On the other hand I also own a roughly 400GBP (when new) HP laptop with win7 32bit and it works a treat. 17 inch, quiet, fast core2duo etc. smooth touchpad. I cant believe the value for the money hence my post... honestly.

I go back to 17inch MBP and the design is nice.. but its just not another 1400GBP nicer to me. The new iMacs though I will be getting plus an iPad and I will be all set, no need for a laptop ;)

And 'virus checkers etc' is really not a big deal, you just install Norton 2010 like you would Toast on a new mac and your done with it. Its all automatic and every now and then a little notice pops up telling you its deleted some tracking cookies (Something osx is not immune to). It doesnt slow the pc down more than 1% and is not hard work at all in the slightest.

I will admit you will generally have to remove the bundled software with Pcs for the most streamlined experience, but then most users wont know or care to remove the stuff anyways so it wont hurt them.

But yes the hardware design is very smooth..

heisetax
Sep 21, 2010, 08:26 PM
This just means that Apple rips off the customer & overcharges as much as they can. That means that there is really very little in the iPhone. At this rate the iPhone should be a free phone for all of those that are receiving a subsidy or $199 max for a 32GB model. Anything more is Apple ripping off their loyal customers. Why are we so stupid at times.

mccldwll
Sep 21, 2010, 08:54 PM
So you're a shareholder ? Because as a consumer, profit share is massively unimportant. It just shows how much of a price gouge Apple is doing. Also, profit is not R&D investment. Profit is money in their pockets.

Heck, even as a shareholder you should start being pissed at this news. With such massive profits, you'd think shareholders would get some dividends...


A true double troll complaining about both gouging AND failure to distribute large cash hoard. If aapl continues to piss off the clowns it must be doing something right.

mccldwll
Sep 21, 2010, 09:00 PM
Yea but we also know that RETAIL value for the the ip4 is 699 and 599... Apple is getting full retail for the phones ATT sells.. period! Att makes up the difference with overprice text and data plans for 2 years...

If you can't afford it, T Mobile probably has some prepaid plans which would interest you.

mccldwll
Sep 21, 2010, 09:10 PM
Well can you name one spec feature apple has the best the EVo?

I am just being devilish on this whole thing, but the point is apple is getting more money for less product, at its root. I am not talking about percieved worth... just raw money value.

Just wait until that POS EVo starts falling apart within the year. Count on it.

schwell
Sep 21, 2010, 09:13 PM
So you're a shareholder ? Because as a consumer, profit share is massively unimportant. It just shows how much of a price gouge Apple is doing. Also, profit is not R&D investment. Profit is money in their pockets.

Heck, even as a shareholder you should start being pissed at this news. With such massive profits, you'd think shareholders would get some dividends...

As a shareholder of Apple I am a long way from being pissed.


http://chart.finance.yahoo.com/z?s=AAPL&t=2y&q=l&l=on&z=l&c=GOOG&p=s&a=v&p=s&lang=en-US&region=US

GOOG shareholders might be getting pissed though.

koiaug
Sep 21, 2010, 09:17 PM
So you're a shareholder ? Because as a consumer, profit share is massively unimportant. It just shows how much of a price gouge Apple is doing. Also, profit is not R&D investment. Profit is money in their pockets.

Heck, even as a shareholder you should start being pissed at this news. With such massive profits, you'd think shareholders would get some dividends...

Shows you have a lot to learn about investing. Dividend stocks are typically for older folks who needs regular income. A growth stock like Apple have a much higher return in term of gain in share price.

A $100 stock that pays $4 annual dividend is a return of 4% (assuming constant stock price). A $100 growth stock gaining $20 in stock price result in a return of 20%. So between the two stocks, choosing a 20% return stock is a no brainer. It's all about the return.

The amazing fact about the figures is that potential sales that Apple may gain with only a 3% existing market share. As an Apple investor, it just makes me drool. The upside is very promising indeed, if Apple can capitalize. Conversely, their 70% iPod market share has no or very little growth left.

inkswamp
Sep 21, 2010, 09:39 PM
Here's what I don't get. Android is open source and free for handset makers to use so there's minimal development costs for them as far as software goes. They produce a wider array of hardware and, reportedly, sell more units than Apple. Not counting the buy-one-get-one deals, Android phones are comparably priced with comparably priced contracts, a portion of which goes back to the hardware maker in the form of subsidies.

So how exactly is it that Apple is still taking a significantly larger chunk of the profit than their competitors? I don't see how that happens. The only scenario I can imagine is that the only time people buy Android handsets is when there are buy-one-get-one offer and that Android phones really only sell competitively at half-price. I can't imagine that's the case, and if it is, how on earth is that a good business strategy?

jfanning
Sep 21, 2010, 09:42 PM
A $100 stock that pays $4 annual dividend is a return of 4% (assuming constant stock price). A $100 growth stock gaining $20 in stock price result in a return of 20%. So between the two stocks, choosing a 20% return stock is a no brainer. It's all about the return.

I might not be a big business type man like you, but with these two examples you have given, the first one still has growth potential, you can hold it and get further possible dividens, you can sell it and get any possible stock growth with it.

But in your second example, once you have sold it, you get no more returns.

kdarling
Sep 22, 2010, 12:14 AM
Here's what I don't get. Android is open source and free for handset makers to use so there's minimal development costs for them as far as software goes.

It's not free as far as customization, porting and testing, or less development work than say, buying WinMo and doing the same. Still, the major expense for smartphone makers is paying up to $60 a phone for other royalties and licenses.

So how exactly is it that Apple is still taking a significantly larger chunk of the profit than their competitors? I don't see how that happens.

As usual with these publicity seeking "reports", they're carefully staged. Here's the trick:

This report is comparing Apple iPhone profits (100% smartphone sales at high margin), against three companies whose total income includes only 20% smartphones, with the other 80% of income coming from selling cheap dumbphones with very minimal profits.

Those dumbphones each only make something like 5% of the profit that Apple makes from each iPhone. So any company (e.g. Apple) selling only high-profit phones gets a bigger percentage of the overall profit. D'oh! Not so shocking after all. It's like comparing an expensive steak-only restaurant chain to a cheap hamburger chain, and pointing out that the steaks make more profit.

The other inequity is that many/most of the other phones are sold outright to the world customer, whereas Apple's phone is almost always highly subsidized in order to maximize profits. (This is why the report picked those companies... they sell unsubsidized all over the world.)

The only scenario I can imagine is that the only time people buy Android handsets is when there are buy-one-get-one offer and that Android phones really only sell competitively at half-price. I can't imagine that's the case, and if it is, how on earth is that a good business strategy?

The phone maker still gets full price. BOGO is from the carrier, who sees it as a half price sale in return for getting TWO signed contract customers.

SandynJosh
Sep 22, 2010, 03:25 AM
This just means that Apple rips off the customer & overcharges as much as they can. That means that there is really very little in the iPhone. At this rate the iPhone should be a free phone for all of those that are receiving a subsidy or $199 max for a 32GB model. Anything more is Apple ripping off their loyal customers. Why are we so stupid at times.

It's not "we" that are stupid, my friend. It is you for you totally ignorant comment. Apple charges about what the market will bear and is compatible with the competition.

koiaug
Sep 22, 2010, 05:25 AM
I might not be a big business type man like you, but with these two examples you have given, the first one still has growth potential, you can hold it and get further possible dividens, you can sell it and get any possible stock growth with it.

But in your second example, once you have sold it, you get no more returns.

The point is still the same. If I sold the stock and get $120, that money can be reinvested in another company. At the end of the year, I either have $104 or $120 depending on the investment choice. Whether I keep or sell both stocks, the value of each at the end of the year is different.

No matter what the numbers are, posters here will spin the meaning - either for or against Apple. But its fun reading all the same.

KnightWRX
Sep 22, 2010, 06:14 AM
The point is still the same. If I sold the stock and get $120, that money can be reinvested in another company. At the end of the year, I either have $104 or $120 depending on the investment choice. Whether I keep or sell both stocks, the value of each at the end of the year is different.


Or you could get the growth and dividend. With its massive "cash reserve", Apple is just sitting on money instead of either investing it in bettering the company or by paying dividend.

You could have had 124$ at the end of the year. :rolleyes:

Either way, this story is for shareholders. Profits do not benefit consumers if it is not reinvested into R&D and bettering products, something which Apple does in a very limited way as the numbers show.

mccldwll
Sep 22, 2010, 07:59 AM
Or you could get the growth and dividend. With its massive "cash reserve", Apple is just sitting on money instead of either investing it in bettering the company or by paying dividend.

You could have had 124$ at the end of the year. :rolleyes:

Either way, this story is for shareholders. Profits do not benefit consumers if it is not reinvested into R&D and bettering products, something which Apple does in a very limited way as the numbers show.


Wrong again, on all counts. Retained earnings (undistributed cash) is accounted for in a stock's price (when msft distributed $3 as a special dividend, stock price dropped by $3). If you have 100 sh. of a non-dividend paying $100 stock which gains 20%, sell 4 shares. You're then 20% ahead of that 4% div. Non-growth stock on earnings, and your remaining stock is still worth 15% more. And as far as R&D expenditures, aapl is extremely efficient compared to its competitors which (especially msft, if even considered a competitor) seem to piss away money. And it's beyond laughable to suggest that the numbers show that aapl doesn't reinvest significantly into R&D. A huge percent of aapl's revenue stream today is from products which didn't even exist a short time ago. You think the Tooth Fairy brought them to aapl's production team?

BTW, working in a fast food joint would be more honorable than being paid to troll on competitor's forums.

NebulaClash
Sep 22, 2010, 08:10 AM
As I said earlier in this thread, Apple is the R&D lab for the world in the way Bell Labs once was.

What do modern OS UIs look like today? OS X.

What do music players look like? iPods.

What do smart phones look like? iPhones.

What do upcoming tablets look like? iPads.

If Apple didn't absolutely invent the look and feel of all of these products, they put a lot of R&D into them to figure out what would please a user. The market quickly copied Apple.

We're living in an Apple world whether or not you use Apple products. Heck, just look at how many Apple haters hang out here. Apple is the center of their world even if it's out of hate.

TennisandMusic
Sep 22, 2010, 11:47 AM
As I said earlier in this thread, Apple is the R&D lab for the world in the way Bell Labs once was.

What do modern OS UIs look like today? OS X.

What do music players look like? iPods.

What do smart phones look like? iPhones.

What do upcoming tablets look like? iPads.

If Apple didn't absolutely invent the look and feel of all of these products, they put a lot of R&D into them to figure out what would please a user. The market quickly copied Apple.

We're living in an Apple world whether or not you use Apple products. Heck, just look at how many Apple haters hang out here. Apple is the center of their world even if it's out of hate.

Well my OSX is ok looking...The dock is a bit of a joke. I wouldn't say Windows 7 or Ubuntu look like OSX though.

My Zune HD absolutely kills my iPhone 4 (and therefore the iPod touch) as a music player,and it doesn't look anything alike. Far better in fact.

Same goes for smartphones...you think the iPhone invented app icon grids? You think Windows Phone 7 looks anything like an iPhone?

The iPad does seem to be copied, but I don't use mine anymore except for my dev work. As a device to be used though, it's extremely lacking.

I have almost all Apple stuff, but I think you greatly overestimate their influence. Apple makes a lot of noise, and makes a good amount of money, but in terms of the industry they are still a miniscule player numbers wise.

I really find the arrogance of "investors" and diehards very sad and off putting. Most of them don't even really know what they are talking about.

NebulaClash
Sep 22, 2010, 12:11 PM
To Microsoft's credit, they are finally moving beyond the look of the iPhone and the look of OS X, but it took them a while to do that.

But that doesn't change what I wrote. Apple popularizes a look, and just about everyone else starts to copy them. Smart phones before the iPhone did not look like the iPhone. Now they do.

hacurio1
Sep 22, 2010, 12:33 PM
Cue everyone celebrating that apple sell people less phone to people for more:rolleyes:

Yup, that is actually a good thing. This allows them to spend huge amounts on R&D and continuously re-write the rules of the game. I am happy they donít use the short sighted model of volume and razor thin margins that completely repels innovation from any industry. After all, HTC and all others need someone to copy from to offer us better products at the end of the day.

firewood
Sep 22, 2010, 12:40 PM
As I said earlier in this thread, Apple is the R&D lab for the world in the way Bell Labs once was.

Certainly not. Bell Labs (and IBM's TJ Watson Labs) did basic research in physics, chemistry and other sciences, and published a huge portion of their research results. The entire technical sector of the U.S. (and eventually the world) benefited.

Apple R&D is more like a focused Xerox PARC, but without giving the future away like Xerox did.

NebulaClash
Sep 22, 2010, 12:48 PM
Certainly not. Bell Labs (and IBM's TJ Watson Labs) did basic research in physics, chemistry and other sciences, and published a huge portion of their research results. The entire technical sector of the U.S. (and eventually the world) benefited.

Apple R&D is more like a focused Xerox PARC, but without giving the future away like Xerox did.

Well, yes, if you want to take it to a literal degree you are exactly right. But I simply meant it in the sense that Bell Labs came up with lots of innovations that benefited consumers. So does Apple now, albeit simply in a more limited field. But even here their reach is more than people think. Just go through a general purpose store and see how many devices take their design cue from Apple. Watch ads and see how often something in an Apple ad is copied.

It may not be as important as what Bell Labs came up with, but it sure is widespread in influence.

firewood
Sep 22, 2010, 12:50 PM
Those dumbphones each only make something like 5% of the profit that Apple makes from each iPhone. So any company (e.g. Apple) selling only high-profit phones gets a bigger percentage of the overall profit. D'oh!

Check your math. Adding two positive profits (5% from dumb phones + bigger number) should result in a larger total profit, that larger sum then getting compared to the industry total. Not happening.

The answers that makes more sense are that these other companies are selling some of their product at a loss, or their internal costs are so high it's eating all of their potential profit out of their higher revenue.

MurphyM
Sep 22, 2010, 12:56 PM
So you're a shareholder ? Because as a consumer, profit share is massively unimportant. It just shows how much of a price gouge Apple is doing. Also, profit is not R&D investment. Profit is money in their pockets.

Heck, even as a shareholder you should start being pissed at this news. With such massive profits, you'd think shareholders would get some dividends...

I'm more interested in their individual margins than the graph here. That said, the graph makes a point as to Apple's place in the market - and more information is often better than less. I wouldn't go so far as to say profit share is massively unimportant.

As for gouging - the prices people pay for the iphone seem fair when it's subsidized. Even when it's not it's not wholly outrageous. The demand shows millions of people don't feel gouged.

Not really looking for a dividend. I'm more than happy with the shareholder value aapl has returned to me since 2006. Wouldn't hate a dividend, but it's not a deal breaker.

MurphyM
Sep 22, 2010, 01:22 PM
...Has anyone tried any of the new Win 7 equipped laptops vs a mac?

There really is no major difference, and if it werent for certain key pieces of software.. mainly Logic Pro for me, there'd be no need to shell out for a mac/osx if you cared about money...



I hear what you're saying, but for a lot of us who switched there isn't enough motivation to try Windows again. I've invested in Mac software and peripherals. I used to make a living with Windows enterprise stuff, so they clearly had a chance to retain me as a customer and didn't.

The hassle of running av software is enough to keep me out for now. I generally don't truly even consider Windows now, despite possible $$$ savings.

Microsoft needs to find a way to get into retail too. The convenience of dropping off a Mac for repair at the mall or picking up a new ac adapter is significant.

There are plenty of pluses in the Win7 column, but not enough to go through a switch again just now.

akm3
Sep 22, 2010, 02:00 PM
This just means that Apple rips off the customer & overcharges as much as they can. That means that there is really very little in the iPhone. At this rate the iPhone should be a free phone for all of those that are receiving a subsidy or $199 max for a 32GB model. Anything more is Apple ripping off their loyal customers. Why are we so stupid at times.

You can't rip off the customer and overcharge in a non-monopoly situation. Customers pay Apple prices because they believe it's worth it. The ones that don't (90%+!) buy a cheaper windows laptop. Apple isn't forcing anyone to buy their products.

You get something different with an Apple product. Either you can afford the premium and it's worth it to you, or it's not worth it to you, or you can't afford the premium.

If Apple were a monopoly and they had the only computers in the world and everyone else was legally barred from competing with them, then yes, they would be ripping off customers and overcharging.

akm3
Sep 22, 2010, 02:05 PM
Shows you have a lot to learn about investing. Dividend stocks are typically for older folks who needs regular income. A growth stock like Apple have a much higher return in term of gain in share price.

A $100 stock that pays $4 annual dividend is a return of 4% (assuming constant stock price). A $100 growth stock gaining $20 in stock price result in a return of 20%. So between the two stocks, choosing a 20% return stock is a no brainer. It's all about the return.

The amazing fact about the figures is that potential sales that Apple may gain with only a 3% existing market share. As an Apple investor, it just makes me drool. The upside is very promising indeed, if Apple can capitalize. Conversely, their 70% iPod market share has no or very little growth left.

Apple was smart to market (to investors) the iPhone and iPad as separate legs from the iPod, from a revenue standpoint, but *Really* the iPhone and iPad are just the next phase of the iPod business, in my opinion. So that 'very little growth' left in the iPod division is really just because they aren't counting iPhones/iPads there. But AAPL was very smart to do this.

akm3
Sep 22, 2010, 02:09 PM
Here's what I don't get. Android is open source and free for handset makers to use so there's minimal development costs for them as far as software goes. They produce a wider array of hardware and, reportedly, sell more units than Apple. Not counting the buy-one-get-one deals, Android phones are comparably priced with comparably priced contracts, a portion of which goes back to the hardware maker in the form of subsidies.

So how exactly is it that Apple is still taking a significantly larger chunk of the profit than their competitors? I don't see how that happens. The only scenario I can imagine is that the only time people buy Android handsets is when there are buy-one-get-one offer and that Android phones really only sell competitively at half-price. I can't imagine that's the case, and if it is, how on earth is that a good business strategy?

Apple makes one phone, for the whole world. They are all the same, so they can make up in volume massive pricing advantages in manufacturing. They also have no hard keyboard, so they don't have to make changes to symbols or characters to localize it to various markets around the world.

This strategy of only making one thing and making a brazillion of them saves them a ton of money compared to their competitors with so many different models. They only have to R&D it once. They can buy ALL of the components at attractive prices (often shutting out their competitors who must choose secondary components or pay higher prices). They are a supply chain behemoth. Even little things like tiny boxes for shipping means they can fit more product on each container ship from China thus the per unit shipping charges are lower.

Apple is world class state of the art managing their supply chain costs.

akm3
Sep 22, 2010, 02:13 PM
As I said earlier in this thread, Apple is the R&D lab for the world in the way Bell Labs once was.

What do modern OS UIs look like today? OS X.

What do music players look like? iPods.

What do smart phones look like? iPhones.

What do upcoming tablets look like? iPads.

If Apple didn't absolutely invent the look and feel of all of these products, they put a lot of R&D into them to figure out what would please a user. The market quickly copied Apple.

We're living in an Apple world whether or not you use Apple products. Heck, just look at how many Apple haters hang out here. Apple is the center of their world even if it's out of hate.

To follow this line of thought (That I agree with) The whole world is using Apple products - just they get them two years late and they are copies from other companies.

firewood
Sep 22, 2010, 02:17 PM
This just means that Apple rips off the customer & overcharges as much as they can.

If customers were ripped off, they could return their iPhones and buy whatever they though could do more for a cheaper price. What percentage do that?

In fact, the long lines indicate that Apple could probably charge even more, which means Apple is letting customers rip Apple off by letting them paying less than the market will bear.

SeattleMoose
Sep 22, 2010, 02:36 PM
In the end there will be the iPhone/Apple OS vs All others/Android OS.

But unlike the Apple vs MS battle there is no "corproate lock" by the other side.

Consumers will decide. And most will NOT have an iPhone but it will be seen as the better designed but more expensive device.

Those with means will go with Apple, those without will go with Brand X running Android OS. Complete with flame wars and "my Dad is bigger than your Dad posturings".

Sorry folks, move along, nothing new here..... .:cool:

NebulaClash
Sep 22, 2010, 03:55 PM
To follow this line of thought (That I agree with) The whole world is using Apple products - just they get them two years late and they are copies from other companies.

Yes, in many areas this is what I mean.

If you buy Apple, you might pay more, but you get the gold standard and you get the future early from a company that is people-oriented and it shows.

If you buy from those who imitate Apple, you get some flashy features and gobs of functionality later than Apple built by tech-oriented companies and it shows.

Some folks like gobs of functionality and imitative UIs that look close enough and can be torn apart so they can customize it. Go for it. I prefer the gold standard.

apolloa
Sep 22, 2010, 06:06 PM
Wow, so they have managed to show the world how the are a money grabbing corporate giant whose profit margins are massive due to over charging all us dumb idiots.
I have an iPhone 4, but even I can see Android catching up with Apple and due to that being available on cheap handsets, then Apple can kiss that profit margin bye bye because we all know they are arrogant enough to NEVER lower their prices.

JediZenMaster
Sep 22, 2010, 06:16 PM
If customers were ripped off, they could return their iPhones and buy whatever they though could do more for a cheaper price. What percentage do that?

In fact, the long lines indicate that Apple could probably charge even more, which means Apple is letting customers rip Apple off by letting them paying less than the market will bear.

Exactly no one held anyone down and forced them to buy anything from Apple. So no one was ripped of because they chose to buy it. It really amazes me about the lack of research for discussions on this board. People will truly say anything even if it makes them look uninformed just to get a pot shot at apple.

koiaug
Sep 22, 2010, 06:52 PM
Wow, so they have managed to show the world how the are a money grabbing corporate giant whose profit margins are massive due to over charging all us dumb idiots.
I have an iPhone 4, but even I can see Android catching up with Apple and due to that being available on cheap handsets, then Apple can kiss that profit margin bye bye because we all know they are arrogant enough to NEVER lower their prices.

Cheap Android? Well, when your iPhone ($199 + 2 year contract) commitment is up, feel free to go over to the cheaper Android phone for $199 + 2 year contract.:rolleyes:

KnightWRX
Sep 22, 2010, 07:09 PM
Cheap Android? Well, when your iPhone ($199 + 2 year contract) commitment is up, feel free to go over to the cheaper Android phone for $199 + 2 year contract.:rolleyes:

There's more than 1 Android phone out there. That's the beauty of choice. You can get the top of the line, same specs or better than iPhone 4 model or you can get the much cheaper, lower end model for a much lower price.

Then there's everything in between.

ConceptVBS
Sep 22, 2010, 11:29 PM
Because larger gross margins can be reinvested in R&D, bringing innovative new products to consumers in the future. Increased profitability can also be used to increase operational resources, such as cost centers like staffing a telephone support center or staffing a retail store with technical experts. It also provides cash to enable strategic acquisitions of key technology.

When you start with a larger gross margin, you have more flexibility to spend on SG&A and other expenses (R&D, M&A) before you reach net profit.

It is interesting to note that Apple leads the consumer electronics industry in customer satisfaction: computers, MP3 players, smartphones, tablets, whatever.

Can money buy happiness? Perhaps it can.


Wrong logic.

Look at gas prices. Gas companies enjoy their current profit margins. You think they will reinvest their earned profits back into their company to increase efficiency, find new oil fields, develop better gas pipelines?
What incentive do they have to lower their prices when they are enjoy the extra profitability? With the demand relatively high, they wouldnt budge.

The same logic goes with Apple. Demand is consistantly there. People will still purchase Apple products. Why would Apple DECREASE their prices later on? It makes no business sense.

Stop thinking from the companies point of view. We are consumers. We want: great quality, excellent customer support all at a great price.

Amnesia87
Sep 23, 2010, 01:03 AM
I'm guessing this isn't just phone sales, but profitability of their entire mobile division, so it likely includes things like cases, and apps and other accessories, which is part of the reason iDevices are so profitable.

So wait, it's "meh" that Apple is now not showing growth anymore ? Without growth, how will they attain #1 ? By shrinking less than the other guy ? The point is, the market grew more than Apple did.

Btw, Jul 2010 includes the initial 3 million iPhone 4 launch that was in June. :confused:

You do understand that you can have growth and lose market share at the same time right?

Smartphones are an EMERGING MARKET, so while yes, Apple's total market share may be decreasing, their sales numbers are not. Apple is showing growth, but their market share is decreasing because there are at least a dozen companies pushing out android phones, and only apple is making iOS devices.

There's more than 1 Android phone out there. That's the beauty of choice. You can get the top of the line, same specs or better than iPhone 4 model or you can get the much cheaper, lower end model for a much lower price.

Then there's everything in between.

You do know apple does sell a $99 iPhone right?

As to the lower end cheaper/free android phones. I personally prefer to avoid signing a 2 year contract for outdated technology. But I'm sure you love your free Droid Eris... MMMMMM 528mhz so fast, Android 2.2 is AMAZING and so fast. I bet you are glad your 6 month old phone was 2.2 ready, wait, it isn't? oh, sorry, my mistake.

Wrong logic.

Look at gas prices. Gas companies enjoy their current profit margins. You think they will reinvest their earned profits back into their company to increase efficiency, find new oil fields, develop better gas pipelines?
What incentive do they have to lower their prices when they are enjoy the extra profitability? With the demand relatively high, they wouldnt budge.

The same logic goes with Apple. Demand is consistantly there. People will still purchase Apple products. Why would Apple DECREASE their prices later on? It makes no business sense.

Stop thinking from the companies point of view. We are consumers. We want: great quality, excellent customer support all at a great price.

Ummm, the reason oil companies don't need to reinvest money is because opec regulates oil prices for all oil companies, and there currently is no viable alternative to gas, so they don't have to worry about competition.

The cell phone market is a completely different ballgame as there are tons of viable options and no real regulation of prices, it's a competitive market. Apple may have the highest profit margins, but they also have massive R&D expenditures. Despite the antenna of the iPhone 4's antenna being fundamentally flawed in it's current implementation, it still required a massive R&D undertaking and it cost a ton of money to develop.

I mean if their website is even remotely accurate their testing labs cost over 100mil...

NebulaClash
Sep 23, 2010, 08:23 AM
I have an iPhone 4, but even I can see Android catching up with Apple and due to that being available on cheap handsets, then Apple can kiss that profit margin bye bye because we all know they are arrogant enough to NEVER lower their prices.

What did the iPhone originally cost? What does it cost now? Ergo, your statement is laughably false.

NebulaClash
Sep 23, 2010, 08:24 AM
You can get the top of the line, same specs or better than iPhone 4 model.

Someone else has a retina display level of pixel density?

dgree03
Sep 23, 2010, 09:57 AM
Someone else has a retina display level of pixel density?

Ok you win, apple has one spec better in there iphone 4. The screen(altho small!) Now name something else??

KnightWRX
Sep 23, 2010, 10:02 AM
You do know apple does sell a $99 iPhone right?

As to the lower end cheaper/free android phones. I personally prefer to avoid signing a 2 year contract for outdated technology. But I'm sure you love your free Droid Eris... MMMMMM 528mhz so fast, Android 2.2 is AMAZING and so fast. I bet you are glad your 6 month old phone was 2.2 ready, wait, it isn't? oh, sorry, my mistake.

You mean the 99$ iPhone 3G sold back in June of 2010... with iOS 4.0's multi-tasking.. oh wait... at least backgrounds.. nope... well it was fluid and performe... oh no, not that either.

:rolleyes:

Contradiction much ?

Ok you win, apple has one spec better in there iphone 4. The screen(altho small!) Now name something else??

Even then, Apple was at least 8 to 10 months late to the high-res screen game. The 3GS should have had a higher res display. 800x480 and 858x480 was already announced and coming out on Android last year, and it's pretty much a given on higher end phones this year.

NebulaClash
Sep 23, 2010, 10:26 AM
It's not just resolution, it's the pixel density.

This is all irrelevant. Those who want to criticize Apple will do it no matter the facts.

"They have nothing better!!!"

"Uh, here's one."

"OK, they have one. Name another!!!"

You can name another and it will be "Name yet another!!!"

I'm tired of this game.

youlookingatme
Sep 23, 2010, 03:35 PM
You mean the 99$ iPhone 3G sold back in June of 2010... with iOS 4.0's multi-tasking.. oh wait... at least backgrounds.. nope... well it was fluid and performe... oh no, not that either.

:rolleyes:

Contradiction much ?

Yet, it was the best smartphone on the market.

- Easy to use
- Exchange Ready
- Applications, Applications, Applications, Applications
- Copied by others, but not duplicated.
- Solid, unless you jailbroke the thing, or were a complete idiot



Even then, Apple was at least 8 to 10 months late to the high-res screen game. The 3GS should have had a higher res display. 800x480 and 858x480 was already announced and coming out on Android last year, and it's pretty much a given on higher end phones this year.

Apple is 5 years ahead of everyone in the smart phone game.