Apple COO Jeff Williams 'Very Aware Of' Concerns Over Apple Product Cost

[DevNull0]

But those BoMs aren't right. Based on what Apple reports, they can't be. The aggregate gross margin for iPhones last quarter was, at most, about 40%.

I'm pretty sure those BoM's are right. Don't forget Apple's gross margin reflects their $14 billion R&D debacle last year, as well as the annualized cost of $5 billion spaceship, 8-digit hiring mistakes like Ahrendts, etc. So they probably are making 60%+ margins on the actual CoGS and blowing it on Timmy's idiocy.
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LOL. The amount of business they lose to hackintoshers is rounding error.

And the amount they lose to people fleeing the whole ecosytem? Certainly more than a rounding error.

 

[Carnegie]

I'm pretty sure those BoM's are right. Don't forget Apple's gross margin reflects their $14 billion R&D debacle last year, as well as the annualized cost of $5 billion spaceship, 8-digit hiring mistakes like Ahrendts, etc. So they probably are making 60%+ margins on the actual CoGS and blowing it on Timmy's idiocy.
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And the amount they lose to people fleeing the whole ecosytem? Certainly more than a rounding error.

Apple’s gross margins don’t include R&D, that’s reported separately as part of operating expenses.

As for CoG, that’s what the 34.3% gross margin (for products) from the last quarter is based on. (Product sales minus cost of goods) divided by product sales was 34.3% - not 60%.

 

[modul8tr]

Everyone is missing the point entirely. If you have to come into an internet forum complaining about how your *luxury* phone (and iPhone has always been a luxury device) is too expensive, with supporting charts and analytics to “expose” (lol) how a major corporation is trying to (gasp) make money while making something really cool, maybe you can’t afford it and should consider something within your budget. Apple isn’t required to lower prices just so you can have one, in the same way that Rolls Royce isn’t required to price Bentley’s for the mass market.

If you replace iPhone with Birkin Bag in this article, you see how first world silly this is.

I paid $600 cash up front for the first iPhone, and cash for whatever the iPhone 3G cost ($400-$500??) and I paid zero up front for the coolest phone they’ve ever made imo, iPhone XS Max. The XS MAX compared to everything prior to X class is a stunning piece of luxury tech. Also, do people understand they move heaven and earth to engineer AND MASS MANUFACTURE things like Face ID TrueDepth Camera System??? How about that SICK custom silicon they’re making?? Must be super cheap to do that. They charge what the market will bear, when the market won’t bear it they change. It’s really not that serious people.

First world problems.

 

[jonnysods]

That’s exactly what the prices aim to do. There’s no need to upgrade for 3, 4 or more years these days. You will get more value from a £1000 iPhone today than you would a £500 iphone 7,8,9 years ago.

But would Apple prefer you impulsively get a new phone every 1-2 years for a lower price, or one device every 4 years? I think they'd rather see us burning through phones wouldn't they?

 

[Roger67]

Everyone is missing the point entirely. If you have to come into an internet forum complaining about how your *luxury* phone (and iPhone has always been a luxury device) is too expensive, with supporting charts and analytics to “expose” (lol) how a major corporation is trying to (gasp) make money while making something really cool, maybe you can’t afford it and should consider something within your budget. Apple isn’t required to lower prices just so you can have one, in the same way that Rolls Royce isn’t required to price Bentley’s for the mass market.

If you replace iPhone with Birkin Bag in this article, you see how first world silly this is.

I paid $600 cash up front for the first iPhone, and cash for whatever the iPhone 3G cost ($400-$500??) and I paid zero up front for the coolest phone they’ve ever made imo, iPhone XS Max. The XS MAX compared to everything prior to X class is a stunning piece of luxury tech. Also, do people understand they move heaven and earth to engineer AND MASS MANUFACTURE things like Face ID TrueDepth Camera System??? How about that SICK custom silicon they’re making?? Must be super cheap to do that. They charge what the market will bear, when the market won’t bear it they change. It’s really not that serious people.

First world problems.

The iphone is not a luxury item. No smartphone is. Maybe if the case was made out of expensive fur or something far out like that. It's not a Porsche or a BMW. It's an electronic device with software targeted towards those who aren't comfortable with technology or don't want to be bothered by it - this is very hard to do but also profitable in an increasingly technical world. The iphone is cute and it's nonthreatening. It's a fine wine for which the delicate flowers were pollinated by hand and the fruit was picked at the perfect moment and was stored in handmade heirloom oak casks, and all this was done in an exquisite winery, if you're into that kind of thing.

 

[jonblatho]

Dismissing huge margins by citing stuff like R&D etc

Their margins have been roughly flat or trending downward since 2012. If you look at the "actual numbers," of course.

 

[apolloa]

What a shocker. An Apple stool exec defending their pricing strategy.. wonder how much he’s on? Plus let’s not forget those shares he owns and wants to boost the value off so he makes even more £££
I love the spin doctor excuse of ‘R&D’ which I’m sure they get back in the first month or so.

 

[iMcLovin]

so the 20% raise on the new iphone xs and xs Max was because they didn't have a large enough cut on iphone x or because they had such an immense R&D cost between from the huge innovation between these phone generations? Must be something I don't understand here.

 

[apolloa]

Hmm...a $1500 Hermès Apple Watch...no, you don’t want to be an elitist company.

Eh what? Did you forget about the first Apple Watch being sold in versions with an RRO of 11,000 and 12,000 and I think 13,000 dollars? You still got a plastic box for that money, the EXACT same internals as the $300 dollar watch made on the exact same sweat shop Chinese factory.
They are not just utterly elitist, they are incredibly arrogant and snobby with it too! But their sales are slipping due to it, and IMO it’s all since Cook took charge, that’s when these crazy prices were announced and all other prices shot up, or they ignored updating their devices.
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My 970 EVO 2 TB SSD is currently $680 (CDN). This is very fast flash memory, 3500MB read/2500MB write. It is not cheap stuff. For my MBP it would have cost $1750 (CDN) plus the value of the default 256gig. Their pricing very clearly values it at a flat $250 per 256gig, so $2000 for the same 2TB. Except Apple's is slower.

It is literally 3 times the price to get the slower Apple SSD vs a superior product for my non-Apple gaming machine. And the real kick in the pants is that for the privilege of paying Apple the $2000, I would have had to pay $500 more for the emojiBar model of the MBP (I have the 13" non-emojiBar model).

So yeah, Apple pretending they're aware at all of how absurd their pricing is really is a gigantic laugh.

I could go on, for example mentioned the mac mini, but as I said, I don't want you to accuse me of an uninformed rant.

Let’s not forget, you can blow around 6 and a half grand on the fully maxed out 15” MB Pro, but that includes the extensive R&D that went into ensuring you got a keyboard that’s awful to type on and will break if dust get underneath the keys.. bargain.
Does it look nice? Yes, is it an enlist item? Hell yeah, is it poor value, obviously so..

Oh and then let’s not also forget the lovely new iPad Pros, up to is it 2 grand in cost? And that includes all that wonderful ‘care and love’ and ‘R&D’ to create a manufacturing process that means your guaranteed to receive yours pre-bent!! Something Jobs would have fired people for!!
But not Timmy’s new greedy corp!

I can’t wait for the new iMacs to see how much they increase the prices on them all.
[doublepost=1551126034][/doublepost]Decent products Apple makes hat don’t seem to be flawed are it’s AirPods and the Apple Watch, the cheaper ones, not the pay an inflated several hundred for a simple leather strap made in a Chinese sweat shop with some extra branding ones.

 

[cmaier]

What a shocker. An Apple stool exec defending their pricing strategy.. wonder how much he’s on? Plus let’s not forget those shares he owns and wants to boost the value off so he makes even more £££
I love the spin doctor excuse of ‘R&D’ which I’m sure they get back in the first month or so.

1) what is a “stool exec?”
2) “how much he’s on” - are you accusing him of doing drugs?
3) “wants to boost the value off” - do you really think that telling people that you are aware your prices are too high is the sort of thing that results in the stock market boosting share prices?
4) “spin doctor excuse...”. You may be “sure they get back” the R&D in the first month or so, but if you actually read their 10Ks you’ll see that is not at all the case.

 

[apolloa]

1) what is a “stool exec?”
2) “how much he’s on” - are you accusing him of doing drugs?
3) “wants to boost the value off” - do you really think that telling people that you are aware your prices are too high is the sort of thing that results in the stock market boosting share prices?
4) “spin doctor excuse...”. You may be “sure they get back” the R&D in the first month or so, but if you actually read their 10Ks you’ll see that is not at all the case.

1: that’s autocorrect for you, I meant to say stooge.
2: that’s your ‘own’ personal opinion and interpretation, many would understand I meant how much ‘money’.
3: It would be the truth, something that Apple doesn’t like saying unless forced to these days. In fact I think my point went right over your head.
4: What’s a 10k? In your style, are you suggesting he runs 10k a lot?

 

[cmaier]

1: that’s autocorrect for you, I meant to say stooge.
2: that’s your ‘own’ personal opinion and interpretation, many would understand I meant how much ‘money’.
3: It would be the truth, something that Apple doesn’t like saying unless forced to these days. In fact I think my point went right over your head.
4: What’s a 10k? In your style, are you suggesting he runs 10k a lot?

A 10k is a report that public companies are forced to submit each year. https://en.m.wikipedia.org/wiki/Form_10-K
If you don’t understand how public reporting works for securities, your opinions on Williams’ motivations, specifically that they have something to do with moving the stock, aren’t worth very much.

 

[apolloa]

A 10k is a report that public companies are forced to submit each year. https://en.m.wikipedia.org/wiki/Form_10-K
If you don’t understand how public reporting works for securities, your opinions on Williams’ motivations, specifically that they have something to do with moving the stock, aren’t worth very much.

You seem to know a lot, are you an Apple share holder by any chance? I can’t see why you would want to know what a 10K is otherwise.
I also bet it doesn’t specifically single out R&D on a single product and if they’ve made that money back or not.

 

[cmaier]

You seem to know a lot, are you an Apple share holder by any chance? I can’t see why you would want to know what a 10K is otherwise.

Most people who have 401k’s, or who invest in any stocks, know about 10Ks and 10Qs. It’s fairly basic financial literacy, as these reports are the primary way that any public company informs the investing public about its financial situation.

 

[apolloa]

Most people who have 401k’s, or who invest in any stocks, know about 10Ks and 10Qs. It’s fairly basic financial literacy, as these reports are the primary way that any public company informs the investing public about its financial situation.

You mean people in America then.. which to those many of us who aren’t American wouldn’t necessarily know about, your 401 is what we call a pension. And companies call results financial results, not 10K’s or 10Q’s.
But from what you’ve said would possibly imply you do own Apple stock then, considering you’ve talked about those who own shares?

 

[cmaier]

You mean people in America then.. which to those many of us who aren’t American wouldn’t necessarily know about, your 401 is what we call a pension. And companies call results financial results, not 10K’s or 10Q’s.
But from what you’ve said would possibly imply you do own Apple stock then, considering you’ve talked about those who own shares?

Apple is an American company, so American disclosure requirements apply. I am not sure why my stock ownership is relevant, but I have 401k’s and they probably hold some shares of Apple, presumably alongside lots of other stocks.

 

[thekev]

Everyone is missing the point entirely. If you have to come into an internet forum complaining about how your *luxury* phone (and iPhone has always been a luxury device) is too expensive, with supporting charts and analytics to “expose” (lol) how a major corporation is trying to (gasp) make money while making something really cool, maybe you can’t afford it and should consider something within your budget. Apple isn’t required to lower prices just so you can have one, in the same way that Rolls Royce isn’t required to price Bentley’s for the mass market.

If you look at Apple's numbers, they represent a mass market product. Luxury car brands are not comparable. Most of them exist today as subsidiaries of larger car brands. I suspect if Apple drifted in that direction, their shareholders would not be pleased.

 

[sracer]

Everyone is missing the point entirely. If you have to come into an internet forum complaining about how your *luxury* phone (and iPhone has always been a luxury device) is too expensive, with supporting charts and analytics to “expose” (lol) how a major corporation is trying to (gasp) make money while making something really cool, maybe you can’t afford it and should consider something within your budget. Apple isn’t required to lower prices just so you can have one, in the same way that Rolls Royce isn’t required to price Bentley’s for the mass market.

If you replace iPhone with Birkin Bag in this article, you see how first world silly this is.

I paid $600 cash up front for the first iPhone, and cash for whatever the iPhone 3G cost ($400-$500??) and I paid zero up front for the coolest phone they’ve ever made imo, iPhone XS Max. The XS MAX compared to everything prior to X class is a stunning piece of luxury tech. Also, do people understand they move heaven and earth to engineer AND MASS MANUFACTURE things like Face ID TrueDepth Camera System??? How about that SICK custom silicon they’re making?? Must be super cheap to do that. They charge what the market will bear, when the market won’t bear it they change. It’s really not that serious people.

First world problems.

For those looking at the dip in sales figures for the latest iPhones as evidence that Apple will realign their pricing (in Western markets), they may be in for a rude awakening.

All Apple needs to do is wait out this current and temporary dip. Because many of those with iPhones will need to upgrade and what are they gonna do? Bite the bullet and buy the latest iPhone all while complaining about the high cost.

One might ask if there is a concern that they won't upgrade to another iPhone and switch to Android? Very little risk. Most iPhone owners have been convinced that Android phones are malware-infested, identity-stealing, private info-spewing, bank account-compromising, non-upgradeable, bloated devices that wouldn't be worth owning if they were PAID to take one.

And if they aren't scared by that, they're held captive to all of the "investment" in iTunes purchases.

The 800 lb gorilla is still sleeping. Wait until it awakes.

 

[AppleScruff1]

Plus, if idiots actually looked at the profit margins they have remained between 36-39% for the last 5-7 years. So , no ,they are not making more money on average. Maybe on certain storage tiers, yes. But not overall.

36% of $1000 is more than 36% of $650.

 

[tridley68]

Unlike every other company that lets you pay whatever you feel like?

Dude you totally missed the point but its Monday.

 

[PickUrPoison]

The iPhone XS entry level model costs more than $1800 in Australia. That is elitist.

That’s nothing, you’ve got it easy. In Hong Kong the base XS Max is $9,500. That’s 5 times as elitist!

 

[I7guy]

...
One might ask if there is a concern that they won't upgrade to another iPhone and switch to Android? Very little risk. Most iPhone owners have been convinced that Android phones are malware-infested, identity-stealing, private info-spewing, bank account-compromising, non-upgradeable, bloated devices that wouldn't be worth owning if they were PAID to take one.

Sure that’s one possible explanation. The other and more probable is I don’t like android and like iOS better.

And if they aren't scared by that, they're held captive to all of the "investment" in iTunes purchases.

The 800 lb gorilla is still sleeping. Wait until it awakes.

Sure the cost of switching outweighs the pain of staying aboard.

 

[Peperino]

I Don’t blame the Apple, if people are paying the current price then why would you lower it. Economics101 for crying out loud.

It seems that you failed Economy 101.

Recently Apple lowered guidance for future quarters
Reduce the production of iPhones
Lowered iPhone prices in Japan and China
Mac and iPads sales are down quarter over quarter.
Why do you think Apple is NOT reporting unit sales numbers anymore?

In addition, it is common sense that if Apple lower hardware prices and gains more marketshare on its products, its services income will increase. But it seems that greed and please the shareholders is more important.

 

[KJL3000]

Except it makes sense for a pricing stand point. You accept a slightly smaller margin on the low end stuff to get the price conscious consumer who wants your product while pricing top of the line products to get higher margins since those who want or need the specs will pay. In the end you sell more and make more revenue and profits. It's no different than the car manufacturer who sells the base stripped model cheap and makes the money on all the options.

I would actually agree if the margins on the lower end wasn’t high already.

If you're complaining about price, why would you want an Apple branded keyboard? You do know you can plug in any keyboard. Plenty of third party Mac keyboards work and are quite cheap.

From what I've seen, all Logitech keyboards (and most of their other products) and most other third party companies use materials that California considers to be toxic (prop 65, BPA plastics, etc...), but the materials are cheaper so it costs less to the customer. Apple doesn't use those chemicals or those types of plastics which is why it's more expensive. I don't think I've ever seen a prop 65 warning on any of Apple's products ever, but take a look at nearly any Logitech product and you'll see that prop 65 warning somewhere on the box.

The discontinued numeric keyboard was also built with non-toxic, environmental friendly materials but was half the price. Same for every other product that had significant price raises. Why are you defending Apple for raising prices significantly on almost every product since 2016? In my understanding apple’s goal (at least under Steve Jobs) was to deliver the best products on earth to most of the people. There have been also lots of price cuts when it turned out products have gone too expensive, often announced in keynotes. I am perfectly fine with paying a little extra for Apple products, but they just crossed a line that leads lots of long time customers and younger people to other brands. Their focus are shareholders and revenue today, compensating slower sales and less innovation with higher prices. This won’t work in a long term, in my opinion.

 

[PickUrPoison]

Apple’s gross margins don’t include R&D, that’s reported separately as part of operating expenses.

As for CoG, that’s what the 34.3% gross margin (for products) from the last quarter is based on. (Product sales minus cost of goods) divided by product sales was 34.3% - not 60%.

There’s quite a bit of confusion about gross margin. One big problem is sometimes selling price minus BOM cost is mistakenly called gross margin.

But as you correctly state, it’s sales minus cost of goods. There’s a lot more costs included in costs of goods besides the cost of components.