I think you were trying to ask a different question than you actually asked... I think you wanted someone to convince you that your opinion of iPhone was wrong and to take a stab at convincing you that you want one. You don't. Your opinion is a personal choice, and you're probably not missing anything.That is one way to define "value''. That is not the way I used it, nor the way I see it. A product's "value" is whatever a purchaser deems it to be. In this sense, the term refers to what the person buy deems the device "worth it" or "not worth it". It is independent of quality, market value, popular opinion, etc. The individual makes that determination at the point of sale.
I flatly disagree with this, from the perspective I am speaking from. From the business perspective, sure. But I don't buy individual devices based on the "business" opinion, or company-profits. I buy based on anecdotal, and first-hand, personal experience. That is where the truth of quality vs popularity lies. For example, the single greatest tool in a shopper's arsenal is Amazon's review system. I do not purchase anything without seeing what people say regarding a product, both good and bad. I don't go looking into a company's profit spreadsheet or accounting audits.
Saying that there are things that the iPhone can't do that I want to is the ONLY question to ask, from a customer standpoint. It's MY money, I'm going to put it where I feel it'll better serve ME. What Apple has done is find the best marketing team to sell their "good-enough" products. But I'm looking for the best.
None of this answers my question. How does Apple make such profits, given that they neither sell the most phones, nor make the best ones?
I think it's simply because it is a monopoly. Only Apple makes iPhones. So they can charge whatever they want for a device that is not (really) superior to their competitors. When you compare them against individual competitors, they look great. But the competitors are splitting the profits of the much, much larger pie.
In other words, it's all smoke and mirrors. The only way to tell if Apple is losing ground is to measure it against itself.
That said, my answer did address your actual question. Apple dominates profits because enough people value having iPhones and, for whatever their reasons, are willing to trade money less or equal to their perceived value for a phone. The market as a whole values the iPhone more than the market values the components of iPhone, so Apple gets to keep the difference.
When I said "Value is measured by what a consumer is willing to sacrifice to acquire the product which is some combination of money, opportunity cost, etc." that is the same as your statement that "A product's 'value' is whatever a purchaser deems it to be. In this sense, the term refers to what the person buy deems the device 'worth it' or 'not worth it'." So we agree on that point.
Nobody should make their purchase decisions based on what's good for someone else (or some corporation), so we agree on that. I think you misunderstood where I was going though. It's not about business opinions and personal opinions. It's all about personal opinions which, when aggregated, lead to business results. People don't buy Apple because Apple makes a profit; Apple makes a profit because people buy their stuff.
Where we start to diverge is when you say "Saying that there are things that the iPhone can't do that I want to is the ONLY question to ask, from a customer standpoint." Surely that's not the only question. Asking what it can do must be important too. Asking how well it can do the things it does, and how easily, and how reliably must be important. Asking how much it costs to get that combination of things it can do (including the cost of not being able to do other things) must be important.
There is certainly a sense in these forums some times that people fixate on certain narrow things and give them importance beyond what I can comprehend. The process usually seems to go something like this.
- There's no feature X in iPhone.
- I want feature X.
- I don't want iPhone because it doesn't have feature X.
- Everybody must want feature X.
- Anybody who wants iPhone when it doesn't have feature X is stupid or deluded.
Apple does not sell the most phones, that's a measurable fact. (That also means they don't have a monopoly.) The problem you're having is that you're taking your definition of what's "best" for you and assuming the market is a billion people with your opinion. Doesn't work that way. 18%, or so, of people feel differently than you do and those are enough to fuel Apple's success.
So the answer to your question of what makes Apple so profitable is that they made the best device for the right 18%.