Apple's Growth Trails Smartphone Market in 3Q 2013, but Improves in Broader Mobile Phone Market

[EbookReader]

.

Wow. Again, nothing you posted proves your claim. Shipments and valuation don't prove consistent profitability of low margin hardware. Nor does a single quarter of unspecified profit supported by software and services revenue.

Here's my claim:

There is profits to be made selling high end smartphones at thin profit margin. Xiaomi has proved it.


It's very easy to prove my claim. Xiaomi has made a PROFIT. "High volume, thin profit" strategy needs VOLUME. And Xiaomi has reached that VOLUME after 2 years in the business. And they are gaining market share very fast. They are expecting an increase of 178% in smartphones sold in 2013 compare to 2012. As VOLUME increase, so will PROFITS.

"High volume, thin profit margin" strategy does have the word "profit" in it. In case you miss it.


http://www.bloomberg.com/news/2013-...ales-of-iphone-beating-handset-to-triple.html
Xiaomi Turns Profit

Xiaomi Corp., the smartphone maker that outsells Apple Inc. (AAPL) in China, has turned profitable for the first time as market-share gains put the company on pace to almost triple handset sales this year.

Sales in the first half more than doubled to 13.2 billion yuan ($2.16 billion), and may rise to 28 billion yuan for the full year, from 12.6 billion yuan for all of last year, President Bin Lin said in an interview at the company’s headquarters in Beijing yesterday. Handset sales may jump to 20 million units, from 7.19 million last year, he said. He didn’t supply a figure for profit.

The three-year-old company, which was valued at $10 billion in its latest round of funding, is expanding product offerings after selling handsets priced at about a third of the cost of Apple’s iPhone 5 in China.



You may believe that this one profitable quarter is an anomaly and that Xiaomi can't be profitable in the future. But investors (people who actually look at Xiaomi books) disagree. $4 billion valuation in 2012 turned to a $10 billion valuation 1 year later. Xiaomi must be doing something right.

 

[Dmunjal]

You may believe that this one profitable quarter is an anomaly and that Xiaomi can't be profitable in the future. But investors (people who actually look at Xiaomi books) disagree. $4 billion valuation in 2012 turned to a $10 billion valuation 1 year later. Xiaomi must be doing something right.

You bring up a good point with regards to Apple from a financial standpoint.

They could lower their prices and increase market share and get better technology in the hands of their customers. This would help the stock price as investors pay for growth. Apple increased revenue 4% this year. Hardly fast growing. So, both customers and investors would benefit.

They could also increase their dividend and turn into somewhat of a utility like AT&T which pays close to 6% return. This would benefit shareholders, too.

Instead, Apple accumulates cash which benefits only Apple.

No wonder Carl Icahn is all over them.

 

[BaldiMac]

Here's my claim:

There is profits to be made selling high end smartphones at thin profit margin. Xiaomi has proved it.


It's very easy to prove my claim. Xiaomi has made a PROFIT. "High volume, thin profit" strategy needs VOLUME. And Xiaomi has reached that VOLUME after 2 years in the business. And they are gaining market share very fast. They are expecting an increase of 178% in smartphones sold in 2013 compare to 2012. As VOLUME increase, so will PROFITS.

"High volume, thin profit margin" strategy does have the word "profit" in it. In case you miss it.


http://www.bloomberg.com/news/2013-...ales-of-iphone-beating-handset-to-triple.html
Xiaomi Turns Profit

Xiaomi Corp., the smartphone maker that outsells Apple Inc. (AAPL) in China, has turned profitable for the first time as market-share gains put the company on pace to almost triple handset sales this year.

Sales in the first half more than doubled to 13.2 billion yuan ($2.16 billion), and may rise to 28 billion yuan for the full year, from 12.6 billion yuan for all of last year, President Bin Lin said in an interview at the company’s headquarters in Beijing yesterday. Handset sales may jump to 20 million units, from 7.19 million last year, he said. He didn’t supply a figure for profit.

The three-year-old company, which was valued at $10 billion in its latest round of funding, is expanding product offerings after selling handsets priced at about a third of the cost of Apple’s iPhone 5 in China.



You may believe that this one profitable quarter is an anomaly and that Xiaomi can't be profitable in the future. But investors (people who actually look at Xiaomi books) disagree. $4 billion valuation in 2012 turned to a $10 billion valuation 1 year later. Xiaomi must be doing something right.

So if they've lost $100 million over the last three years and made $1 this past quarter, somehow that is proof of the success of this strategy? Yes, I made up numbers to emphasize my point, because you haven't provided any real ones. And again, they specifically mentioned that their profit last quarter was supported by software and services.

Look at the PC industry for how low margin hardware sales work. No one stays profitable. Eventually, any efficiencies that you've created to undercut the competition are minimized.

 

[Dmunjal]

So it they've lost $100 million over the last three years and made $1 this past quarter, somehow that is proof of the success of this strategy? Yes, I made up numbers to emphasize my point, because you haven't provided any real ones.

Look at the PC industry for how low margin hardware sales work. No one stays profitable. Eventually, any efficiencies that you've created to undercut the competition are minimized.

That's not entirely fair. The PC market was doing fine even with low margins as long as there was growth. Problems started when growth stopped. Mostly due to Apple!

Apple is playing like the market is about to be saturated and slow down. Others are playing for continued growth.

 

[BaldiMac]

That's not entirely fair. The PC market was doing fine even with low margins as long as there was growth. Problems started when growth stopped. Mostly due to Apple!

Apple is playing like the market is about to be saturated and slow down. Others are playing for continued growth.

I guess it depends how long term you are looking. If you are just talking about a company that wants to milk the low end for a few years and then go on to something else, of course high volume, low margin can work.

But eventually the market will be saturated, so it's hardly a sustainable strategy.

I don't see how you think Apple is playing the market like it is already saturated. I think they are doing the exact opposite. The are looking at the mobile phone industry as a whole and continuing to grow their share every quarter as the smartphone segment expands while concentrating on the high end. If they were playing in a saturated market, they would have to expand into other segments.

 

[Dmunjal]

I guess it depends how long term you are looking. If you are just talking about a company that wants to milk the low end for a few years and then go on to something else, of course high volume, low margin can work.

But eventually the market will be saturated, so it's hardly a sustainable strategy.

I don't see how you think Apple is playing the market like it is already saturated. I think they are doing the exact opposite. The are looking at the mobile phone industry as a whole and continuing to grow their share every quarter as the smartphone segment expands while concentrating on the high end. If they were playing in a saturated market, they would have to expand into other segments.

The smartphone market is the mobile phone market. The mobile phone market is going away. And Apple's share of the smartphone market is shrinking every quarter. I still think Apple is being too conservative.

 

[BaldiMac]

The smartphone market is the mobile phone market. The mobile phone market is going away. And Apple's share of the smartphone market is shrinking every quarter. I still think Apple is being too conservative.

Again, Apple's share of the mobile phone market is growing every quarter.

 

[Dmunjal]

Again, Apple's share of the mobile phone market is growing every quarter.

Slower than everyone else. Not really bragging rights.

The mobile phone market is like the PC market. It's dead. The smartphone market is the market.

That's like saying the iPad is growing in the overall computer market when it isn't growing in the tablet market.

 

[BaldiMac]

Slower than everyone else. Not really bragging rights.

The mobile phone market is like the PC market. It's dead. The smartphone market is the market.

That's like saying the iPad is growing in the overall computer market when it isn't growing in the tablet market.

Ah. Sorry. I wasn't talking about bragging rights.

 

[ciaran00]

At some point, people are going to realize that Apple is starting to lose the smartphone wars.

And the result of "losing the smartphone wars" for Apple is?

1. Quality developers no longer make apps for iOS?
2. Accessory market dwindles?
3. Worse support for device problems since not as many use them?
4. Apple's earnings shrink?

Now, I'd like you to show me where #1, #2, #3, or #4 apply to Macs.

The marketshare mantra is dogma for you guys. Please wake up. Apple products are immune to vastly diminished marketshare conditions.

This is how things work when there's one provider of the product vs. a thousand. Market share has nothing to do with Apple's strategy, and it does not affect the end user in any meaningful way, except in these online forum nerd battles.

 

[Max(IT)]

And the result of "losing the smartphone wars" for Apple is?

1. Quality developers no longer make apps for iOS?
2. Accessory market dwindles?
3. Worse support for device problems since not as many use them?
4. Apple's earnings shrink?

Now, I'd like you to show me where #1, #2, #3, or #4 apply to Macs.

The marketshare mantra is dogma for you guys. Please wake up. Apple products are immune to vastly diminished marketshare conditions.

This is how things work when there's one provider of the product vs. a thousand. Market share has nothing to do with Apple's strategy, and it does not affect the end user in any meaningful way, except in these online forum nerd battles.

Agree.

I can see people at Cupertino reading this forum from time to time and laughing very loudly about the "lost smartphone war"

They don't care about market share. They do care about profits and a solid user base.
If they want market share, they'd introduced a low cost iPhone instead of iPhone 5c.
We could speak about it forever but what matter is that in electronic shops there are a crowd of smartphones AND THE IPHONE. Better or worst doesn't matter, for the people the iPhone is a different league and most of them don't know anything about what is inside their phone.

Apple is accustomed to operate from a smaller market share, since its beginning.
BTW did some of the fandroid storming the thread take the time to read apple's final results of 2013 ? It's linked in the very first page of this thread. Speak about the "lost smartphone war" ....

 

[EbookReader]

So if they've lost $100 million over the last three years and made $1 this past quarter, somehow that is proof of the success of this strategy? Yes, I made up numbers to emphasize my point, because you haven't provided any real ones. And again, they specifically mentioned that their profit last quarter was supported by software and services.

Look at the PC industry for how low margin hardware sales work. No one stays profitable. Eventually, any efficiencies that you've created to undercut the competition are minimized.

Are you saying Xiaomi "high volume, thin profit" strategy is not successful?

They have made a profit TWO YEARS after they sold their first smartphone. That's very rare in the start-up business, especially a start-up with valuation in the billions.

If you don't think Xiaomi strategy is successful, beside Apple and Samsung smartphone business, can you name another smartphone business that has a higher valuation than Xiaomi's 10 billions?

Nokia? Nope
Blackberry? Nope
HTC? Nope
LG smartphone business? Nope
Sony smartphone business? Nope


Apple strategy: High end smartphone at high profit margin (sacrificing market share for high profit margin)
Xiaomi strategy: High end smartphone at thin profit margin (sacrificing high profit margin for market share)

Both strategy has worked well for the two companies.

 

[Max(IT)]

I'm not so informed about Chinese market, but in what way is xiaomi "high volume" ???

 

[EbookReader]

I'm not so informed about Chinese market, but in what way is xiaomi "high volume" ???

They sold their first smartphone in November 2011. Think on that for a minute. That's exactly 2 years ago.

2012: 7.19 smartphone sold
2013: forecasting 20 million smartphone sold (178% increase)
2014: ?
2015: ?

The "growth" trend is very much in favor of Xiaomi. Wouldn't be surprised if they sell 30 millions + smartphones in 2014 in China. And they only made 4 smartphones so far (Mi, Mi2, Mi3 and the Hongmi).


p.s. How many smartphones sold a year would you consider "high volume"?

 

[EbookReader]

As for specs, the Xiaomi Mi 3 > Nexus 5 (better camera, bigger battery)

Xiaomi Mi 3 ($327 off contract)

Qualcomm Snapdragon 800 quad-core 2.3GHz CPU
Sharp/LG 5″ 1080P IPS display with ultra-sensitive touch
2GB RAM
16GB storage
SONY 13 MP Exmor RS CMOS back camera
2MP BSI front camera
3050 mAh battery



Google Nexus 5 ($349 off contract)

Qualcomm Snapdragon 800 quad-core 2.3GHz CPU
4.95" 1080p display (IPS TFT for those interested)
2GB RAM
16GB storage
8MP OIS rear camera
1.3MP front camera
2300mAh battery



It's easy to see why Xiaomi will be a force to be reckon with in China in the years to come. Especially since most devices there are sold unsubsidized / off-contract.

 

[Max(IT)]

As for specs, the Xiaomi Mi 3 > Nexus 5 (better camera, bigger battery)

Xiaomi Mi 3 ($327 off contract)

Qualcomm Snapdragon 800 quad-core 2.3GHz CPU
Sharp/LG 5″ 1080P IPS display with ultra-sensitive touch
2GB RAM
16GB storage
SONY 13 MP Exmor RS CMOS back camera
2MP BSI front camera
3050 mAh battery



Google Nexus 5 ($349 off contract)

Qualcomm Snapdragon 800 quad-core 2.3GHz CPU
4.95" 1080p display (IPS TFT for those interested)
2GB RAM
16GB storage
8MP OIS rear camera
1.3MP front camera
2300mAh battery



It's easy to see why Xiaomi will be a force to be reckon with in China in the years to come. Especially since most devices there are sold unsubsidized / off-contract.

Tech specs say nothing about how good a smartphone is to me.
This is a typical android reality distortion, where a poorly optimized os depends on powerful chipsets to handle things well.

A phone restricted to a single market (while a big one as the Chinese) is limited in my opinion.

 

[autrefois]

And the result of "losing the smartphone wars" for Apple is?

1. Quality developers no longer make apps for iOS?
2. Accessory market dwindles?
3. Worse support for device problems since not as many use them?
4. Apple's earnings shrink?

Now, I'd like you to show me where #1, #2, #3, or #4 apply to Macs.

For examples of the first three in terms of the Mac, please see 1998-present. Tons more developers and accessory makers for Windows vs Macs. Mac computers had made somewhat of a comeback recently, but the past year their growth has slowed again. Anyone who thinks the dearth of software and accessory offerings for Macs compared to PCs is unrelated to their relative marketshare isn't paying attention.

Once iOS devices become 15% or less of the marketshare for smartphones and tablets, as Macs are for the computer market, do you really think the quality developers and accessory makers are going to prioritize products for iPhone and iPad?

As for the 4th point (Apple's earnings shrink?), if you think I care about whether or not Apple's earnings shrink a little if it means they make better, more affordable products, then you entirely missed the point of my post and ignored a number of other posts in this thread. Apple and its execs are already extremely rich. So? The long-term health of iOS, the iPhone, and the iPad is at risk if short-term wealth/earnings is all that matters. I believe the long-term health of the company and its products is more important both from the point of view of a consumer and of someone who wants products to improve. If Apple can't produce a quality phone that is competitive in price, they will continue to lose marketshare and soon become an also-ran.

 

[ciaran00]

dearth of software and accessory offerings for Macs compared to PCs

Obviously you haven't used 3rd party Mac software. Incredibly well designed and better than most equivalents on PC. Interesting that you don't mention games - but I'll concede that point to you. Poor marketshare on Mac has essentially meant that most game developers won't bother with Mac releases. The only saving grace here is that Macs also run Windows. The same is not true for the iPhone.

As for the 4th point (Apple's earnings shrink?), if you think I care about whether or not Apple's earnings shrink a little

Don't be silly. If you're a Blackberry user and your company tanks, then you DO care because you're holding onto technology that's been end-of-life'd. Apple having money (no, a ton of it) means that the producer of Apple hardware/software has the resources to continue building devices, software, and the ecosystem. If you're such a big fan of products that make no business sense, go buy yourself a Nook Tablet and let us all know how it goes.

 

[EbookReader]

Tech specs say nothing about how good a smartphone is to me.
This is a typical android reality distortion, where a poorly optimized os depends on powerful chipsets to handle things well.

It's your opinion that Android is a poor OS. Not fact.

A phone restricted to a single market (while a big one as the Chinese) is limited in my opinion.

limited in what way? like inferior?

If Apple only sell the Iphone 5S in North America instead of worldwide, does that mean the Iphone 5S is limited / inferior?

p.s. Xiaomi is looking to expand beyond China. It sold its first smartphone 2 years ago. It needs to walk first before it can run.

 

[Max(IT)]

It's your opinion that Android is a poor OS. Not fact.

When you need a powerful chipset to run an os not any better than another iOS running under a less powerful harder, well those are facts, not opinions ...

limited in what way? like inferior?

If Apple only sell the Iphone 5S in North America instead of worldwide, does that mean the Iphone 5S is limited / inferior?

p.s. Xiaomi is looking to expand beyond China. It sold its first smartphone 2 years ago. It needs to walk first before it can run.

Limited means limited ...
The product seems to be a valid one, but I will judge it when they are going to deal with a worldwide market.

 

[EbookReader]

http://www.gsmarena.com/counterpoint_nokia_climbs_to_4th_place_in_us_smartphone_market-news-7114.php
US smartphone market share

 

[BaldiMac]

Are you saying Xiaomi "high volume, thin profit" strategy is not successful?

Nice try. No. What I'm saying is that Xiaomi is not proof of your claim based on the currently available data. It may very well turn out to be. But I think the long term success of a low margin hardware strategy is unlikely.

They have made a profit TWO YEARS after they sold their first smartphone. That's very rare in the start-up business, especially a start-up with valuation in the billions.

If you don't think Xiaomi strategy is successful, beside Apple and Samsung smartphone business, can you name another smartphone business that has a higher valuation than Xiaomi's 10 billions?

Nokia? Nope
Blackberry? Nope
HTC? Nope
LG smartphone business? Nope
Sony smartphone business? Nope

Once again, valuation is not proof of your claim.

 

[Mockenrue]

Tech specs say nothing about how good a smartphone is to me.
This is a typical android reality distortion, where a poorly optimized os depends on powerful chipsets to handle things well.

This cuts both ways. My iPad 3 was hyped as amazing upon release, but OS performance was worse than the iPad 2. With the release of iOS 7, the iPad 3 is dog slow. So I bought the iPad Air. Despite something like 4x processor specs, the OS still isn't as smooth as the iPad 2 was upon release. There's still stutter during transitions, and I was shocked to see lag still occasionally there when hitting the special character shift (.?123 button) on the iOS keyboard. Sounds like "poorly optimized os depends on powerful chipsets to handle things well" to me.

As an owner of both iOS and Android products, I see the gap as narrowing. Android optimization is getting better (especially starting with JB), and iOS is getting worse. Really frustrating. As a former iPhone owner, I prefer Android now on phones. Despite the iOS 7 frustrations, iPad still way ahead of Android tablets, so our family has 3 iPads and no Android tablets.

People with both platforms can avoid both reality distortion fields...

 

[autrefois]

Obviously you haven't used 3rd party Mac software. Incredibly well designed and better than most equivalents on PC. Interesting that you don't mention games - but I'll concede that point to you. Poor marketshare on Mac has essentially meant that most game developers won't bother with Mac releases.

I didn't say that there isn't good 3rd-party software, just that compared to Windows there's a lot less out there. I would argue this applies to games as well: there are some great ones, but a lot less of them than for PC. A lot of big names are missing on the Mac side, or the Mac version is feature-poor or comes out later. I don't want iOS to become like this.

 

[Max(IT)]

This cuts both ways. My iPad 3 was hyped as amazing upon release, but OS performance was worse than the iPad 2. With the release of iOS 7, the iPad 3 is dog slow. So I bought the iPad Air. Despite something like 4x processor specs, the OS still isn't as smooth as the iPad 2 was upon release. There's still stutter during transitions, and I was shocked to see lag still occasionally there when hitting the special character shift (.?123 button) on the iOS keyboard. Sounds like "poorly optimized os depends on powerful chipsets to handle things well" to me.

As an owner of both iOS and Android products, I see the gap as narrowing. Android optimization is getting better (especially starting with JB), and iOS is getting worse. Really frustrating. As a former iPhone owner, I prefer Android now on phones. Despite the iOS 7 frustrations, iPad still way ahead of Android tablets, so our family has 3 iPads and no Android tablets.

People with both platforms can avoid both reality distortion fields...

I have both, on tablet and phones, and I can say that tablet wise there is no contest at all: iPad is away ahead also with the "poorly optimized" iOS 7.
Regarding smartphones Android starting with JB is indeed a valid solution, but in my experience is lagging behind iOS and still plagued by fragmentation and bloatware inside ....