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Apple Takes 104% of All Smartphone Profits Following Galaxy Note 7 Recall
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To me, from a consumer standpoint, these metrics are useless.
Perhaps from an investor standpoint, it is valuable info.
But I'm not concerned with profits, and I believe this is a poor indicator of device quality.
Two things stand above all others when I make a purchasing decision:
1. Personal experience (ie. my hands on the device)
2. Reviews from multiple sources. There is no substitute for doing your homework, so you can factor in things you cannot quantify first-hand at the point-of-sale (durability, customer support, etc).
I need all that info to properly assess a device's value (defined in my case as a ratio of "cost vs features").
Which company made how much money is irrelevant in this decision-making process.
And all these metrics show, once more, that even numbers contradict themselves in the man-made construct we call mathematics.
Perhaps from an investor standpoint, it is valuable info.
But I'm not concerned with profits, and I believe this is a poor indicator of device quality.
Two things stand above all others when I make a purchasing decision:
1. Personal experience (ie. my hands on the device)
2. Reviews from multiple sources. There is no substitute for doing your homework, so you can factor in things you cannot quantify first-hand at the point-of-sale (durability, customer support, etc).
I need all that info to properly assess a device's value (defined in my case as a ratio of "cost vs features").
Which company made how much money is irrelevant in this decision-making process.
And all these metrics show, once more, that even numbers contradict themselves in the man-made construct we call mathematics.
A monopoly is based on MARKET SHARE (of which Apple is losing 12-88%), not PROFIT SHARE.
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Correct. It's not a sole indicator of device quality, but it IS a great indicator that the company you bought it from will be around to support your product.
Yes it is.
But I'm more interested in the actual reasons why that is.
It's not because their devices are better. They aren't, in the context that people aren't able to do more on Apple devices than a host of other products on the market. As a matter of fact, in some cases they're actually able to do less.
Apple doesn't even sell more phones than everyone, either, so that ain't it.
So, how does Apple actually make such profits?
That is where they are better than everyone else.
Anyone care to explain what "that" is?
Good point, but how significant is this in a product category that cycles every 2 years?
Are any of the companies offering devices that compete with iPhone in danger of going under in 2 years?
And if they do, what significance does that have to a customer, unless the device they bought is truly a piece of junk that won't even last 2 years?
I'm more interested in real-world scenarios at the consumer-level here.
Galaxy S7. Not Note S7. We'll be fine.
Here, you're going to need this:
I won't need it because I have chosen an ecosystem that's not based on and entirely dependent on harvesting my info. You won't need it either with your head in the sand. But I hope you were at least honest with your bro since I noticed that you didn't dispute the facts.
Citing a "precipitous decline" in profits, of course.Apple stock will probably plummet in a few months once they're down to just 101% of industry profits. Just you watch.
You're so out of touch, 103 percent is new and thinner math vocabulary developed by Apple.
It is included in touch bar and emoji in the latest beta OS's.
This is a rather silly statement. While the iPhone is a very good phone, it's arguably not the "very best," if we measure by camera quality, or features, or AI assistant, or even in terms of advanced OS.
But, be that as it may, unless you are a short term investor, why would you be happy to read such a headline?!!
As a consumer, such a headline tells you mainly that Apple is charging far more for its mobile products than the market norm. In other words, the headline translates into "
WE ARE OVERPAYING FOR APPLE PRODUCTS!"
To achieve such level of profits, it also means that Apple is spending a smaller portion on R&D than others, which one can argue is evident in the rather stagnant Apple line up.
But you are right about Tim Cook. He is placing a priority on short-term profits and Board-engratiating, which makes him smart, if one cares only about Tim Cook and the select few around him. His bonuses will grow in the near future and when Apple slips into an IBM-like curve, Tim Cook will retire happily someplace and will join a few more boards, where he will push for the same results.
But as a consumer, you should feel at least a little bit screwed.
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Hahaha yeah right... Apple is after that 'low volume' market... suuurrreeee..
Not high end, high end is Vertu and Apple are a very very very long way from that, and considering all other flagship phones start out the same cost as Apple, it's hardly high end.
Also market share equals good stocks, if Apples one hit pony product drops sales its had it.
Ok, I specifically wrote lower volume. That was intentional. Why you disregarded that to make you're sarcastic comment is beyond me.
Maybe these pieces will help you:
- Profit = revenue - costs. Therefore, industry profit = industry revenue - industry costs.
- A loss is a negative profit. There is literally no difference between the a loss and a negative profit, or a profit and a negative loss.
If the industry, as a whole, had revenue of $100, and costs of $90, then the industry profit was $10.
If one company within that industry had revenue $75, and costs of $25 for $50 in profits, then their share of the industry's profits was $50 / $10 = 500%
Another company within the same industry could have revenue of $20, and costs of $15, for $5 in profits, giving them 50% of the industry's profits.
All the rest of the companies within that industry would have a total of $5 in revenue, and costs of $55, for a profit of -$45, leaving them with -450% of industry profits.
Add all those profit percentages together, and you get a grand total of 100% (500% + 50% + -450% = 100%) of the industry profits.
When discussing profits of an group as a whole you don't just ignore losses within that group.
Apparently by liberal arts majors. Not business. Not engineering. Not any scientific method.
It's still an incredibly meaningless number.
The most profit you can make is 100%.
Apple did not make $12.50 (125%) in that example. They still only made $10.
The correct way of reporting this is to separate out profits and losses.
Anything else is typical modern internet blather.
Value is measured by what a consumer is willing to sacrifice to acquire the product which is some combination of money, opportunity cost, etc.
The total value of a product is the value added by the final producer plus the value of the components and labor that make up the producers costs.
Profit is a measure of how much value the producer has added to the product.
So being more profitable does mean you have produced a "better" product, not anecdotally based on individual testimony, but broadly as judged by the market. The vendors who are losing money have basically destroyed value-- the market values what they are selling less than the parts and labor that went into it.
What is the specific thing that Apple is doing? I think that's the wrong question in a product as feature rich as a smartphone and its surrounding ecosystem. Saying there's things that an iPhone can't do is beside the point. What Apple has done is find the best balance of everything.
The other thing here is that Samsung is also a component manufacturer, so some of the profits from the iPhone and others is showing up on Samsung's bottom line via a different division. That's part of the total value of the product that isn't showing up in the mobile phone profits for either Apple or Samsung.
When you buy an iPhone, part of what you're buying is memory, and part is the display, etc. When Samsung produces a more valuable component than their competitors, Apple uses it in the iPhone and that part of the iPhone value doesn't show up in Apple's profits (or in Samsung's mobile division profits) but in Samsung's semiconductor or display technology division profits.
What that means is that when Samsung's mobile division is only showing 0.9% of the industry profit, that doesn't mean that Samsung as a whole doesn't see more benefit than that. What it means is that consumers don't value Samsung's phone much more than they value the components that went into it-- but they still value Samsung's components. Samsung may be perfectly happy with the fact that they are basically using their phone as a conduit to sell more parts.
I just prefer a device that doesn't explode. Washing machine or phone. Take your pick.Ask any consumer if they would prefer lower prices and less corporate profit, or higher prices (lower value) and excessive corporate profits.
I know which I would rather prefer.
Profit is revenue minus costs.
Apple makes a consistent profit because they keep their revenues sufficiently higher than their costs.
One of the ways they do this is by managing their supply chain costs *extremely* well.
They keep development costs low by designing a small number of devices each cycle, and producing those few designs in massive quantitates. Those large quantities enable them to get discounts from their suppliers, even without hurting their suppliers' margins (because switching production lines between various outputs costs time and money).
Another way, which is equally important, but apparently less obvious (even to others within the industry), is that they avoid playing in the low-margin space of the industry. The vast bulk of Android phones, for example, are in the low-margin end of the industry, where an individual phone may make the manufacturer $10 in profits. If you don't sell absolutely immense quantities of those devices, those per-device profits are going to be eaten up by the advertising costs necessary to sell them, and the logistics costs of shipping and storing devices. Those phones can be profitable on a per-device level (costs $x to make, sells for $y), even while that particular *line* of phones is never profitable to sell as a whole.