Exactly. An Apple car will likely be a premium product replete with new technological advancements to command that price premium. The margins will likely be higher than traditional cars as a result. As we've seen in the past, Apple likes to attack markets by making an existing product much better. Cars are ripe for this sort of Apple fairy dust.
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Former GM CEO on Apple Car: 'They Have No Idea What They're Getting Into'
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Exactly. An Apple car will likely be a premium product replete with new technological advancements to command that price premium. The margins will likely be higher than traditional cars as a result. As we've seen in the past, Apple likes to attack markets by making an existing product much better. Cars are ripe for this sort of Apple fairy dust.
As I mentioned earlier, Tesla has already done this. They've completely automated the manufacturing. They have a direct sales model. They charge one price with no discounts. They offer few models built around one simplified EV design. They offer amazing service. In fact, they COPIED the Apple model.
They only make 30% vs. Apple's 40%. The competition is no longer GM and Ford eaking out a 10% margin but Tesla which is trying to revolutionize the auto industry.
How can Apple achieve 30%+ margins where the best Tesla can do is 30%? The markets are different.
Also, the subsidies are different. Tesla gets a $7500-10000 (about 10%) subsidy from the government. Apple gets $450 (about 70%) from the carriers. The margins for iPhone are much higher than iPad or Mac because of this subsidy.
In what way do carriers subsidise Apple, and how does this impact upon Apple's margins?
Apple can charge more for an iPhone than an iPad with similar hardware and COGS because of the carrier subsidy thereby increasing margins.
Doesn't impact the margins.
Does impact volume of sales. Will need to find the numbers again (kdarling had a post a few months back showing it)
But in markets where there are no, or little subsidies of phone, the iPhone does not have a very large marketshare.
what this shows is that at the full blown price of premiere flagship phones, Most people aren't willing to pay.
However, if they can get carriers to pay portions of that phone up front, those numbers changed dramatically, showing that with heavier subsidies, the iPhone did sell extremely well.
Apple gets their $849.99 for the iPhone regardless who gives them the money. Whether it's the carrier or the consumer.
So it's a win/win situation for the carriers to help subsidize the phone. What happens is that $400 or so you don't pay up front ot apple, is really hidden inside your contract. This gets you into an iPhone for cheaper up front, Gets you locked into a contract, Gets apple a device sold, and everybody wins!
You're analysis is correct. But it does impact margins. To achieve similar market share in non-subsidized countries, it would have to lower prices which would lower margins. Something Apple doesn't want to do. They have a margin goal, not a market share goal.
The current law subsidizes all EV cars, including any future iCar. Assuming, it is an EV.
the difference is in how the company is built, how the brand is managed. a supermarket brand like safeway can survive a low margin business because you expect them to be cheap, that's their brand. Whole foods have higher margins and you expect them to be expensive.
Apple, as a brand, is well built, expensive, and upper tier consumer company. they live off of margins and not volume. That's just how their company is structured. Couple that with the fact that there's already a company doing this named Tesla, it just doesn't make sense for apple to break in.
again, i'm going to double down on my prediction that apple is in a self-driving module for every car. if you own the self-driving module, you can own all electronics inside the car like the radio, head-unit, etc and that is a high margin business.
The car industry is completely different from the world of consumer electronics. Apple are going to be in for a surprise if they believe they can exert the same kind of control over automotive suppliers and manufacturers as they do for the ones that do the same for macs, tablets, and iphones.
Back in the 90's I worked in the accounting department for a production company so I'm rather familiar with the labor costs (things may have changed slightly since then, but, I doubt it). The guys who followed the camera men around making sure the wires didn't tangle were making over 100,000/year (back in the 90's!). Each specific task required a specific person to do it - people would sit around waiting for the one person to do the one task. You couldn't hire a jack-of-all trades type. Broadway shows are required to have a certain number of musicians on had whether the show needs them or not. The pension payments we made were unbelievable add to that the payments required to run the union. I'm salaried - I don't get paid overtime - union workers get huge overtime monies - for most of the workers the overtime was greater than the regular pay (with less hours). Don't tell me I don't know what I'm talking about - I do.
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which is why they're hiring people from within the industry ...
I'm sure he's just saying this because he's nervous... Even if the car is a complete POS a ton of people will buy it just because it has an Apple logo on the steering wheel. That being said, I would hope this thing doesn't have as many bugs as everything else they've made as of late (it probably will).
I worked with GM for a number of years as a technical consultant. I can tell you that while GM struggles to produce an electric car, I am sure Apple understands why GM will never produce an quality electric car.
You've heard of the unibody Macbook Pro/Air, right? Consumer electronics were not being made with such techniques before Apple made them mainstream.
You *do* realize that the other phone brands are made in pretty much exactly the same places, right? (Sometimes in the very same *buildings*.) And that Apple does a *better* job than most of its competitors in ensuring that the folks doing the work on their lines are paid better than average, and are working according to the labor laws of their respective countries, including getting owed back pay when the workers' actual employer is discovered to be shorting them in some way.
Not bad though, 0 for 2 on your main points.
Yes I've heard of them. I've even owned a few but seriously, I wouldn't consider that "pioneering technology". Aluminum has been cast and milled for ages. Apple may have pioneered the use of it in computer enclosures but they didn't pioneer the tech. I suppose it's just mincing words.
You *do* realize that the other phone brands are made in pretty much exactly the same places, right? (Sometimes in the very same *buildings*.) And that Apple does a *better* job than most of its competitors in ensuring that the folks doing the work on their lines are paid better than average, and are working according to the labor laws of their respective countries, including getting owed back pay when the workers' actual employer is discovered to be shorting them in some way.
Not bad though, 0 for 2 on your main points.
You *do know* that I was making a comparison with their labor prices versus their profit margins. Rolling eyes indeed. Apple is where it's at due to the exploitation of Chinese workers. If they cared about those people they wouldn't pay them what amounts to what a modern slave would be paid. It doesn't matter to you that they exploit these labor practices in sole pursuit of insane profit margins? You're okay with that? If they cared about those people they wouldn't exploit them.
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They still won't be able to control the supply chain and maintain their profit margins. Which is the exact point you ignored. Apple cannot and will not be able to make the same profit margins they do now. It's easy to exploit basically slave labor in China, the car industry doesn't work that way. They quit paying them like slaves decades ago. You can argue that they get paid too much but they don't hurl themselves off the roof of their plants due to overwork and underpayment. Apple can't emulate their success there and they certainly won't maintain them even if they contract the work out to another company. Profit margins exist in the markets they are in because they can use what is basically slave labor, the auto industry will never tolerate that.
Haha. That's like saying people on here aren't computer/tech people.
I live and breathe cars my friend. Probably more than you.
Uhm...No
Sorry I didn't notice your question earlier, but No, I am actually a fan of Apple products. The only think MS ever came out with that I cared for was the Zune/Marketplace, which they did away with shortly thereafter. My point was simply that there's plenty of room for improvement in the current products. Never said their products were garbage, but thanks for paying attention.
Sorry I didn't notice your question earlier, but No, I am actually a fan of Apple products. The only think MS ever came out with that I cared for was the Zune/Marketplace, which they did away with shortly thereafter. My point was simply that there's plenty of room for improvement in the current products. Never said their products were garbage, but thanks for paying attention.