Apple's Share of Cellphone Industry Profit Estimated at 32% for First Half of 2009

Seems they don't want to lower margins to fit the economy as they know hype is driving the product.
Money hungry... Wonder if it will backfire.

I really don't like the way Apple are going with the iPhone and it's locked and controlled environment...but I'm sure Apple share holders will be giddy at this news.

D4F said:

Seems they don't want to lower margins to fit the economy as they know hype is driving the product.
Money hungry... Wonder if it will backfire.

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I'd say that, given the crazy sales numbers, it's not backfiring.

justflie said:

I'd say that, given the crazy sales numbers, it's not backfiring.

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At least not now.
Problem is their market share is very small in regards of unit sales. They don't have a user base large enough to keep it up if something goes wrong that's how I see it.
So it is working ok just now but like I wrote I wonder if it will backfire on day.

States what we all knew already. Apple stuff is way more expensive than everyone else's.

Better GM than most, and it's working for them. I haven't been impressed with them lately with the App Store fiasco's with Google and NIN, but other than that I love this phone! Congrats I guess haha

Does that mean we are over paying for the iPhone???

That is a crazy amount of money. The other big players in the industry must feel pretty foolish, having a company enter the business and out-do them all within two years.

This is such startling news. As an iPhone owner of course this will have an powerful affect on my life, my plans for the future. Life as we know it will never be the same. It can't be the same.

I'm ...whelmed.

D4F said:

Seems they don't want to lower margins to fit the economy as they know hype is driving the product.
Money hungry... Wonder if it will backfire.

Click to expand...

Seems they don't need to lower margins as they've created a product that people want to buy.

Profitability. They're doing exactly what they should be.

There, I fixed your comment for you.

edesignuk said:

I really don't like the way Apple are going with the iPhone and it's locked and controlled environment...but I'm sure Apple share holders will be giddy at this news.

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+1. I love the iPhone and can appreciate the benefits a closed system like this can offer, but am growing increasingly concerned about Apple's hamfisted App Store control as well as their poisonous partnership with AT&T.

ODog4523 said:

States what we all knew already. Apple stuff is way more expensive than everyone else's.

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I know, huh. I mean, I can get an 8 GB Palm Pre with a smaller screen for the same price as a 16 GB iPhone 3 GS with a bigger screen.

Oh, wait...

LagunaSol said:

Seems they don't need to lower margins as they've created a product that people want to buy.

Profitability. They're doing exactly what they should be.

There, I fixed your comment for you.

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Exactly. I agree 100%. A product is only worth what people are willing to pay for it......and people are paying for it. People have this idea that companies "owe" them. A company makes a product to make money from it. That's the whole point of a company. When a company has high profit margins, their employees benefit.....(no job cuts, pay raises, etc.) which is GOOD for the economy. Why demonize a company because it's being successful? If anything, other companies should be following Apple's example. High quality means a higher price, and people WILL pay the price for high quality.

info like this is a double-edged sword for apple. their shareholders love to see such an absurd markup, but any customer who sees this and gives it two seconds thought will realize that it means they are paying WAY too much for the "privilege" of using Apple's hardware. It makes me thing of Apple more like Bose. That's not a good thing, by the way.

When it becomes plausible to use OS X very easily on non-apple hardware, their sales will begin to fall.

The iphone hasn't had any strong competition yet, true, but it is only a matter of time. If they insist of 50% margin, they aren't going to stay on top forever. 50% margin can't maintain critical mass in an open economy.

The number of units sold may be small, but the bottom line is the price per unit continues to boost their profit margin. More money for research and development would be nice.

DipDog3 said:

Does that mean we are over paying for the iPhone???

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i've compared the cost of the iphone to others with the same features, and the iphone is usually same price or cheaper

Apple's supply chain is a lot simpler, lowering costs. there are 4 iphone models being sold and the one difference in each generation is storage. and they share a lot of other components.

Compare that to RIM where there is a different piece of hardware to fill each niche. and same thing with HTC and others. Palm is being smart and following a similar model to keep costs down.

here is an example. i have a Sprint BB Curve 8330 which is 3G on CDMA. Sprint just released a new Curve on T-Mobile with a higher model # but no 3G. at the same time they are selling 3G Curves on CDMA. they also just released the Tour for CDMA carriers, but t-mobile has the 2G 8900. then there are the no wifi/no camera models for high security enviroments. each of these has different parts and requires it's own supply chain and assembly infrastructure.

benpatient said:

info like this is a double-edged sword for apple. their shareholders love to see such an absurd markup, but any customer who sees this and gives it two seconds thought will realize that it means they are paying WAY too much for the "privilege" of using Apple's hardware. It makes me thing of Apple more like Bose. That's not a good thing, by the way.

When it becomes plausible to use OS X very easily on non-apple hardware, their sales will begin to fall.

The iphone hasn't had any strong competition yet, true, but it is only a matter of time. If they insist of 50% margin, they aren't going to stay on top forever. 50% margin can't maintain critical mass in an open economy.

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look at any phone with a similar spec list and it will cost as much or more as an iphone. last year my wife wanted a BB Storm, i checked the price and over 2 years it costs more than the iphone because you have to pay RIM an extra $10 a month

benpatient said:

info like this is a double-edged sword for apple. their shareholders love to see such an absurd markup, but any customer who sees this and gives it two seconds thought will realize that it means they are paying WAY too much for the "privilege" of using Apple's hardware.

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What are you talking about? iPhone-equivalent devices cost exactly the same (for the consumer) as Apple's stuff. Palm Pre, $199. Apple iPhone 3GS, $199. Most other comparable devices, $199.

And do you think the Palm Pre would be priced at $199 if the iPhone weren't priced at $199? Probably not.

The reasons Apple's margins are so strong are 1) they aren't playing in the low-margin entry-level device market (and rightly so), and 2) they are able to get bigger subsidies from AT&T because the iPhone is the number one object of lust in the mobile handset market right now; it brings new subscribers (and lucrative data plans) to AT&T, so AT&T is willing to pay for the exclusivity.

benpatient said:

50% margin can't maintain critical mass in an open economy.

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P.S. have you looked at Microsoft's margins on their money-making products over the years?

D4F said:

Seems they don't want to lower margins to fit the economy as they know hype is driving the product.
Money hungry... Wonder if it will backfire.

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Generating less profit does not help the economy. Profits enable businesses to expand, thereby buying more stuff and employing more people.

Bjohnson33 said:

That is a crazy amount of money. The other big players in the industry must feel pretty foolish, having a company enter the business and out-do them all within two years.

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Yes, those players got spanked. They really should have tried the phones they were selling first. Those phones were garbage.

Why should I be happy about this?.....

DipDog3 said:

Does that mean we are over paying for the iPhone???

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....unless I am an Apple Employee or Stock Holder?

Once Apple opens up the market to more Wireless Carriers, their big windfall (in the form of sales subsidies) will end. Maybe this is why Apple pursued single Wireless Carriers in most of the countries that they sell iPhones.

Well....I think ATT (and the other in-country Wireless Carriers) are rethinking their exclusive contract with Apple. Maybe too much is going to Apple? (that came from us!)

NoExpectations said:

Once Apple opens up the market to more Wireless Carriers, their big windfall (in the form of sales subsidies) will end.

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Um, why? Their subsidies will be no lower than any competing device from any competing company (who will have lower margins if only because they also sell entry-level, low-profit devices, which Apple does not), and probably higher if the iPhone remains the "must have" gadget.

NoExpectations said:

I think ATT (and the other in-country Wireless Carriers) are rethinking their exclusive contract with Apple. Maybe too much is going to Apple? (that came from us!)

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I think AT&T is thrilled to be the exclusive provider of the iPhone in the U.S. right now and is more than happy to pay for the privilege.

It's called business.

This news should please NO ONE but Apple's shareholders. I can't believe so many of you are viewing it as a positive.

Remember - Apple might have a big share of the profit of the market (why don't any of the articles state which country or countries this research relates to?) but that doesn't mean they have a big market share - in fact it's anything but that.

D4F said:

Seems they don't want to lower margins to fit the economy as they know hype is driving the product.
Money hungry... Wonder if it will backfire.

Click to expand...

Name me one company who is content with making "less money" than they can?

Look at the phone market competition such as Nokia, BB, Motorola, Sony and the others that give away phones or the two for one deals that flood the market with their units, while Apple remains strong and consistent with their price per unit. AT&T definitely makes their money on contracts, but takes it in the shorts on the subsidized units....

NoExpectations said:

....unless I am an Apple Employee or Stock Holder?

Once Apple opens up the market to more Wireless Carriers, their big windfall (in the form of sales subsidies) will end. Maybe this is why Apple pursued single Wireless Carriers in most of the countries that they sell iPhones.

Well....I think ATT (and the other in-country Wireless Carriers) are rethinking their exclusive contract with Apple. Maybe too much is going to Apple? (that came from us!)

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So, companies showing healthy profits should be demonized because they're doing well?

I disagree. No Wireless Carrier will offer premium subsidies for cell phones that any/all carriers can offer. They will be the same for all carriers and they will be reduced. This is why Apple chose 1 carrier for each country....their production is limited (they can sell as many as they can make) and they can get by with the business model they have in place today. Once production rates grow, they will open the market to more carriers.

I am not demonizing any company for making a profit. Profits are good.