Apple's Share of Mobile Phone Industry Profits Reportedly Rises to 39%

[firewood]

Those dumbphones each only make something like 5% of the profit that Apple makes from each iPhone. So any company (e.g. Apple) selling only high-profit phones gets a bigger percentage of the overall profit. D'oh!

Check your math. Adding two positive profits (5% from dumb phones + bigger number) should result in a larger total profit, that larger sum then getting compared to the industry total. Not happening.

The answers that makes more sense are that these other companies are selling some of their product at a loss, or their internal costs are so high it's eating all of their potential profit out of their higher revenue.

 

[MurphyM]

So you're a shareholder ? Because as a consumer, profit share is massively unimportant. It just shows how much of a price gouge Apple is doing. Also, profit is not R&D investment. Profit is money in their pockets.

Heck, even as a shareholder you should start being pissed at this news. With such massive profits, you'd think shareholders would get some dividends...

I'm more interested in their individual margins than the graph here. That said, the graph makes a point as to Apple's place in the market - and more information is often better than less. I wouldn't go so far as to say profit share is massively unimportant.

As for gouging - the prices people pay for the iphone seem fair when it's subsidized. Even when it's not it's not wholly outrageous. The demand shows millions of people don't feel gouged.

Not really looking for a dividend. I'm more than happy with the shareholder value aapl has returned to me since 2006. Wouldn't hate a dividend, but it's not a deal breaker.

 

[MurphyM]

...Has anyone tried any of the new Win 7 equipped laptops vs a mac?

There really is no major difference, and if it werent for certain key pieces of software.. mainly Logic Pro for me, there'd be no need to shell out for a mac/osx if you cared about money...

I hear what you're saying, but for a lot of us who switched there isn't enough motivation to try Windows again. I've invested in Mac software and peripherals. I used to make a living with Windows enterprise stuff, so they clearly had a chance to retain me as a customer and didn't.

The hassle of running av software is enough to keep me out for now. I generally don't truly even consider Windows now, despite possible $$$ savings.

Microsoft needs to find a way to get into retail too. The convenience of dropping off a Mac for repair at the mall or picking up a new ac adapter is significant.

There are plenty of pluses in the Win7 column, but not enough to go through a switch again just now.

 

[akm3]

This just means that Apple rips off the customer & overcharges as much as they can. That means that there is really very little in the iPhone. At this rate the iPhone should be a free phone for all of those that are receiving a subsidy or $199 max for a 32GB model. Anything more is Apple ripping off their loyal customers. Why are we so stupid at times.

You can't rip off the customer and overcharge in a non-monopoly situation. Customers pay Apple prices because they believe it's worth it. The ones that don't (90%+!) buy a cheaper windows laptop. Apple isn't forcing anyone to buy their products.

You get something different with an Apple product. Either you can afford the premium and it's worth it to you, or it's not worth it to you, or you can't afford the premium.

If Apple were a monopoly and they had the only computers in the world and everyone else was legally barred from competing with them, then yes, they would be ripping off customers and overcharging.

 

[akm3]

Shows you have a lot to learn about investing. Dividend stocks are typically for older folks who needs regular income. A growth stock like Apple have a much higher return in term of gain in share price.

A $100 stock that pays $4 annual dividend is a return of 4% (assuming constant stock price). A $100 growth stock gaining $20 in stock price result in a return of 20%. So between the two stocks, choosing a 20% return stock is a no brainer. It's all about the return.

The amazing fact about the figures is that potential sales that Apple may gain with only a 3% existing market share. As an Apple investor, it just makes me drool. The upside is very promising indeed, if Apple can capitalize. Conversely, their 70% iPod market share has no or very little growth left.

Apple was smart to market (to investors) the iPhone and iPad as separate legs from the iPod, from a revenue standpoint, but *Really* the iPhone and iPad are just the next phase of the iPod business, in my opinion. So that 'very little growth' left in the iPod division is really just because they aren't counting iPhones/iPads there. But AAPL was very smart to do this.

 

[akm3]

Here's what I don't get. Android is open source and free for handset makers to use so there's minimal development costs for them as far as software goes. They produce a wider array of hardware and, reportedly, sell more units than Apple. Not counting the buy-one-get-one deals, Android phones are comparably priced with comparably priced contracts, a portion of which goes back to the hardware maker in the form of subsidies.

So how exactly is it that Apple is still taking a significantly larger chunk of the profit than their competitors? I don't see how that happens. The only scenario I can imagine is that the only time people buy Android handsets is when there are buy-one-get-one offer and that Android phones really only sell competitively at half-price. I can't imagine that's the case, and if it is, how on earth is that a good business strategy?

Apple makes one phone, for the whole world. They are all the same, so they can make up in volume massive pricing advantages in manufacturing. They also have no hard keyboard, so they don't have to make changes to symbols or characters to localize it to various markets around the world.

This strategy of only making one thing and making a brazillion of them saves them a ton of money compared to their competitors with so many different models. They only have to R&D it once. They can buy ALL of the components at attractive prices (often shutting out their competitors who must choose secondary components or pay higher prices). They are a supply chain behemoth. Even little things like tiny boxes for shipping means they can fit more product on each container ship from China thus the per unit shipping charges are lower.

Apple is world class state of the art managing their supply chain costs.

 

[akm3]

As I said earlier in this thread, Apple is the R&D lab for the world in the way Bell Labs once was.

What do modern OS UIs look like today? OS X.

What do music players look like? iPods.

What do smart phones look like? iPhones.

What do upcoming tablets look like? iPads.

If Apple didn't absolutely invent the look and feel of all of these products, they put a lot of R&D into them to figure out what would please a user. The market quickly copied Apple.

We're living in an Apple world whether or not you use Apple products. Heck, just look at how many Apple haters hang out here. Apple is the center of their world even if it's out of hate.

To follow this line of thought (That I agree with) The whole world is using Apple products - just they get them two years late and they are copies from other companies.

 

[firewood]

This just means that Apple rips off the customer & overcharges as much as they can.

If customers were ripped off, they could return their iPhones and buy whatever they though could do more for a cheaper price. What percentage do that?

In fact, the long lines indicate that Apple could probably charge even more, which means Apple is letting customers rip Apple off by letting them paying less than the market will bear.

 

[SeattleMoose]

Apple vs MS All Over Again...Eventually

In the end there will be the iPhone/Apple OS vs All others/Android OS.

But unlike the Apple vs MS battle there is no "corproate lock" by the other side.

Consumers will decide. And most will NOT have an iPhone but it will be seen as the better designed but more expensive device.

Those with means will go with Apple, those without will go with Brand X running Android OS. Complete with flame wars and "my Dad is bigger than your Dad posturings".

Sorry folks, move along, nothing new here..... .

 

[NebulaClash]

To follow this line of thought (That I agree with) The whole world is using Apple products - just they get them two years late and they are copies from other companies.

Yes, in many areas this is what I mean.

If you buy Apple, you might pay more, but you get the gold standard and you get the future early from a company that is people-oriented and it shows.

If you buy from those who imitate Apple, you get some flashy features and gobs of functionality later than Apple built by tech-oriented companies and it shows.

Some folks like gobs of functionality and imitative UIs that look close enough and can be torn apart so they can customize it. Go for it. I prefer the gold standard.

 

[apolloa]

Wow, so they have managed to show the world how the are a money grabbing corporate giant whose profit margins are massive due to over charging all us dumb idiots.
I have an iPhone 4, but even I can see Android catching up with Apple and due to that being available on cheap handsets, then Apple can kiss that profit margin bye bye because we all know they are arrogant enough to NEVER lower their prices.

 

[JediZenMaster]

If customers were ripped off, they could return their iPhones and buy whatever they though could do more for a cheaper price. What percentage do that?

In fact, the long lines indicate that Apple could probably charge even more, which means Apple is letting customers rip Apple off by letting them paying less than the market will bear.

Exactly no one held anyone down and forced them to buy anything from Apple. So no one was ripped of because they chose to buy it. It really amazes me about the lack of research for discussions on this board. People will truly say anything even if it makes them look uninformed just to get a pot shot at apple.

 

[koiaug]

Wow, so they have managed to show the world how the are a money grabbing corporate giant whose profit margins are massive due to over charging all us dumb idiots.
I have an iPhone 4, but even I can see Android catching up with Apple and due to that being available on cheap handsets, then Apple can kiss that profit margin bye bye because we all know they are arrogant enough to NEVER lower their prices.

Cheap Android? Well, when your iPhone ($199 + 2 year contract) commitment is up, feel free to go over to the cheaper Android phone for $199 + 2 year contract.

 

[KnightWRX]

Cheap Android? Well, when your iPhone ($199 + 2 year contract) commitment is up, feel free to go over to the cheaper Android phone for $199 + 2 year contract.

There's more than 1 Android phone out there. That's the beauty of choice. You can get the top of the line, same specs or better than iPhone 4 model or you can get the much cheaper, lower end model for a much lower price.

Then there's everything in between.

 

[ConceptVBS]

Because larger gross margins can be reinvested in R&D, bringing innovative new products to consumers in the future. Increased profitability can also be used to increase operational resources, such as cost centers like staffing a telephone support center or staffing a retail store with technical experts. It also provides cash to enable strategic acquisitions of key technology.

When you start with a larger gross margin, you have more flexibility to spend on SG&A and other expenses (R&D, M&A) before you reach net profit.

It is interesting to note that Apple leads the consumer electronics industry in customer satisfaction: computers, MP3 players, smartphones, tablets, whatever.

Can money buy happiness? Perhaps it can.

Wrong logic.

Look at gas prices. Gas companies enjoy their current profit margins. You think they will reinvest their earned profits back into their company to increase efficiency, find new oil fields, develop better gas pipelines?
What incentive do they have to lower their prices when they are enjoy the extra profitability? With the demand relatively high, they wouldnt budge.

The same logic goes with Apple. Demand is consistantly there. People will still purchase Apple products. Why would Apple DECREASE their prices later on? It makes no business sense.

Stop thinking from the companies point of view. We are consumers. We want: great quality, excellent customer support all at a great price.

 

[Amnesia87]

I'm guessing this isn't just phone sales, but profitability of their entire mobile division, so it likely includes things like cases, and apps and other accessories, which is part of the reason iDevices are so profitable.

So wait, it's "meh" that Apple is now not showing growth anymore ? Without growth, how will they attain #1 ? By shrinking less than the other guy ? The point is, the market grew more than Apple did.

Btw, Jul 2010 includes the initial 3 million iPhone 4 launch that was in June.

You do understand that you can have growth and lose market share at the same time right?

Smartphones are an EMERGING MARKET, so while yes, Apple's total market share may be decreasing, their sales numbers are not. Apple is showing growth, but their market share is decreasing because there are at least a dozen companies pushing out android phones, and only apple is making iOS devices.

There's more than 1 Android phone out there. That's the beauty of choice. You can get the top of the line, same specs or better than iPhone 4 model or you can get the much cheaper, lower end model for a much lower price.

Then there's everything in between.

You do know apple does sell a $99 iPhone right?

As to the lower end cheaper/free android phones. I personally prefer to avoid signing a 2 year contract for outdated technology. But I'm sure you love your free Droid Eris... MMMMMM 528mhz so fast, Android 2.2 is AMAZING and so fast. I bet you are glad your 6 month old phone was 2.2 ready, wait, it isn't? oh, sorry, my mistake.

Wrong logic.

Look at gas prices. Gas companies enjoy their current profit margins. You think they will reinvest their earned profits back into their company to increase efficiency, find new oil fields, develop better gas pipelines?
What incentive do they have to lower their prices when they are enjoy the extra profitability? With the demand relatively high, they wouldnt budge.

The same logic goes with Apple. Demand is consistantly there. People will still purchase Apple products. Why would Apple DECREASE their prices later on? It makes no business sense.

Stop thinking from the companies point of view. We are consumers. We want: great quality, excellent customer support all at a great price.

Ummm, the reason oil companies don't need to reinvest money is because opec regulates oil prices for all oil companies, and there currently is no viable alternative to gas, so they don't have to worry about competition.

The cell phone market is a completely different ballgame as there are tons of viable options and no real regulation of prices, it's a competitive market. Apple may have the highest profit margins, but they also have massive R&D expenditures. Despite the antenna of the iPhone 4's antenna being fundamentally flawed in it's current implementation, it still required a massive R&D undertaking and it cost a ton of money to develop.

I mean if their website is even remotely accurate their testing labs cost over 100mil...

 

[NebulaClash]

I have an iPhone 4, but even I can see Android catching up with Apple and due to that being available on cheap handsets, then Apple can kiss that profit margin bye bye because we all know they are arrogant enough to NEVER lower their prices.

What did the iPhone originally cost? What does it cost now? Ergo, your statement is laughably false.

 

[NebulaClash]

You can get the top of the line, same specs or better than iPhone 4 model.

Someone else has a retina display level of pixel density?

 

[dgree03]

Someone else has a retina display level of pixel density?

Ok you win, apple has one spec better in there iphone 4. The screen(altho small!) Now name something else??

 

[KnightWRX]

You do know apple does sell a $99 iPhone right?

As to the lower end cheaper/free android phones. I personally prefer to avoid signing a 2 year contract for outdated technology. But I'm sure you love your free Droid Eris... MMMMMM 528mhz so fast, Android 2.2 is AMAZING and so fast. I bet you are glad your 6 month old phone was 2.2 ready, wait, it isn't? oh, sorry, my mistake.

You mean the 99$ iPhone 3G sold back in June of 2010... with iOS 4.0's multi-tasking.. oh wait... at least backgrounds.. nope... well it was fluid and performe... oh no, not that either.



Contradiction much ?

Ok you win, apple has one spec better in there iphone 4. The screen(altho small!) Now name something else??

Even then, Apple was at least 8 to 10 months late to the high-res screen game. The 3GS should have had a higher res display. 800x480 and 858x480 was already announced and coming out on Android last year, and it's pretty much a given on higher end phones this year.

 

[NebulaClash]

It's not just resolution, it's the pixel density.

This is all irrelevant. Those who want to criticize Apple will do it no matter the facts.

"They have nothing better!!!"

"Uh, here's one."

"OK, they have one. Name another!!!"

You can name another and it will be "Name yet another!!!"

I'm tired of this game.

 

[youlookingatme]

You mean the 99$ iPhone 3G sold back in June of 2010... with iOS 4.0's multi-tasking.. oh wait... at least backgrounds.. nope... well it was fluid and performe... oh no, not that either.



Contradiction much ?

Yet, it was the best smartphone on the market.

- Easy to use
- Exchange Ready
- Applications, Applications, Applications, Applications
- Copied by others, but not duplicated.
- Solid, unless you jailbroke the thing, or were a complete idiot

Even then, Apple was at least 8 to 10 months late to the high-res screen game. The 3GS should have had a higher res display. 800x480 and 858x480 was already announced and coming out on Android last year, and it's pretty much a given on higher end phones this year.

Apple is 5 years ahead of everyone in the smart phone game.