Very true. In the same vein, Samsung and other Android based phone vendors don't HAVE to sell low end phones that contribute absolutely no margin. I frankly don't know why they do it at all.
And yet, should these companies stop selling low-end-no-margin phones and concentrate on high end models, would they be able to get similar margins and overall results as Apple? I sincerely doubt it, as the current flagship phones from the major vendors are at best meager successes.
Apple charges what they think is a fair price for a unique product. They are the only one making "iOS phones"
But there are over 60 companies making "Android phones" and the competition is fierce among them all.
If one OEM sells $600 Android phones... someone else will have them for $500. And another for $400... and $300... $200... $100 and so on. They are forced to either slash prices and lose margin... or simply make cheap phones from the start (again with almost no margin)
It's the same sorta thing that happened in the computer market. Apple is the only company offering "OSX computers" and they can command a hefty price with margins to match. Meanwhile... there are a dozen vendors selling "Windows computers" who are all fighting with each other.
One Windows vendor can't charge
too much... because there will be someone else selling the same basic product for a cheaper price. A price war ensues... it's the classic "race to the bottom"... and eventually no one can make any money because the margins are basically gone for everybody.
Look at how many Windows OEMs are either completely gone or have been acquired by another company. There's simply not enough room for so many companies selling virtually the same product... especially if there is no money in it.
There's not
that much difference between the average HP laptop and the average Dell laptop... so people simply go for the cheaper one. Unfortunately for the vendors... their margins were already below sustainable levels. So they have to make money elsewhere.
Look at how many accessories and warranties that they push when you buy the average Windows PC. Those are the ONLY things they actually make money on. And then there's the crapware. I hear the vendor usually loses money on the hardware... but they hope to make it up with the cut the get from anti-virus subscriptions.
It's the same story in TVs too. Many companies... the same basic product... and fierce competition that has driven the profits to basically ZERO.
I predict the same thing will happen to Android OEMs. There can't continue to be 60 Android vendors if only a handful make money. The economics simply won't allow that.
