I'm pretty sure if you can sell something for twice as much as it's worth, you only have to sell half as many.
Got a tip for us?
Let us know
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
iPhone X Responsible for 35% of Total Worldwide Phone Profits in Q4 2017
- Thread starter MacRumors
- Start date
- Sort by reaction score
Markups in the high 30% range are very common and hardly "massive." Try and educate yourself on that before criticizing.
My last job as a design engineer for a Fortune 200 company targeted 80% GPM. If I proposed a product that did not have a path to get there, or at least very close under some circumstances, the project I proposed would not move forward. Simple as that.
I hear you.
Luckily for me I've never had a case that needed extra insurance. I put my phone in a case as soon as it comes out the box and pray for the best. lol
So you are saying that if Samsung raised the prices on their phones they'd sell more.
It should be obvious that 'standard' GPM varies wildly by industry. Clearly automakers aren't anywhere close to 80%, or even 30% for that matter. As far as it relates here to the smartphone industry, 30% is higher than everyone else, judging by the data in the article.
Yeah, most reports suggested that the 8 Plus is, or at least was, outselling the 8. Maybe the 8 Plus is a lot more costly to produce than the 8? Who knows.
Yes, gross profit margins - thus the "G" in GPM.
Apples gross margins are 64%.
That's incorrect. They have been in the high 30% range, peaking to 41% in 2015 and currently around 37%
There was a previous quarter where Apple was estimated to have more than 100% of the profit margin, back when Samsung was taking losses from the Note 7 issues.
This is NOT proof that Apple phones are overpriced. "Overpriced" is a subjective measure that some of you seem to hold and others not. This is proof, rather, that Apple is pricing their phones at prices the market will bear that also happen to yield huge profits. Samsung wishes they could do this. And they probably do in at least one non-mobile phone market; e.g. memory chips.
This is NOT proof that Apple phones are overpriced. "Overpriced" is a subjective measure that some of you seem to hold and others not. This is proof, rather, that Apple is pricing their phones at prices the market will bear that also happen to yield huge profits. Samsung wishes they could do this. And they probably do in at least one non-mobile phone market; e.g. memory chips.
The tech that Apple puts into them may cost more but I'm going to guess probably not substantially more.
Profit is based on Margin. Clearly Apple does not account for 85% of smartphone sales worldwide but made up 85% of profit. I think iphones might account for about 40ish% of sales? Too lazy to look it up but if my math is right, which it probably isn't, they are making twice the profit margin that the rest of the industry is averaging.
Now business is business and if they can still get the demand that they forecast in their financials they actually have less liability (inventory) and more profit per unit. Great for the company and investors.
Not so great for the consumers paying what could be considered a premium but as long as their target market is willing to pay a premium and they can sell the amount of units they want to sell than supply=demand economics 101.
If a consumer doesn't like that Apple is making more money off them, than other companies are, then they simply have to buy another brand or suck it up and pay the premium.
Can't really blame Apple for pricing if you willing pay it all the time.
Of course...
With respect to other smartphone makers and industry in general, especially when considering premium models, it's hard to tell. You also need to factor in that for a particular "latest" model, it's not unusual for Apple to sell 2-3X the number of units Samsung sells.
As a datapoint, the GPM for Samsung Electronics (which covers a wide range of electronic products, including smartphones), is currently around 45%, with an average over the last five years ranging between 36% and 40%. Again, not unusual.
You guys really need to change up the wording. How many posts is that so far with almost identical wording. It's so funny to watch. Story comes out... someone comes up with an anti-Apple spin, sends out the memo... and all the shills quickly spit it out word for word. Try some creativity!
Which is an analyst's conjecture, based upon another's guess at the BOM.
The math doesn’t support your claims of “greedy”, “absurd”, “crazy price level”, “massive markup” etc.
By your own accounting, if Apple had sold the X for $943 instead of $999, it would have had the same 19% profit share as the 8.
No, because every other iPhone Apple sold—the SE, 6, 6 Plus, 6S, 6S Plus, 7, 7 Plus 32GB and even 7 Plus 128GB at $769—all sold for less than Apple’s reported ASP of $796. That’s tens of millions of iPhones, all pulling down ASP.
The X sold well, probably even better than Apple themselves thought it would, considering they beat even the upper end of their $87 billion revenue guidance for Q1.
It doesn't show that at all. You're making an assumption (to fit your narrative) that the profit is made up on markup and not on volume, and adjusted your numbers to fit your theory. You have absolutely ZERO evidence to back up what you just said.
The US accounted for 40% of Apple revenues last quarter. So you're taking numbers from a study done on 40% of the market and assuming it applies to the other 60% as well?
Wow. So you're conveniently forgetting that Apple also sold the 7 (starting at $549), the 6S (starting at $449) and the SE (starting at $349) to come up with that ridiculous ASP? You think Apple ONLY sold those 3 models?
Let's say Apple sold equal volumes of the 8, 8 Plus and X. And they sold one 7 as well. That brings our ASP down to $762. Replace that 7 with a 6S and ASP drops down to $737. Replace that with an SE and it's down to $712.
Amazing how much of an impact a single cheaper iPhone can have on your ASP.
What I find really funny is all the naysayers trying to claim Apple sold a ton of their cheaper models to try and diminish the sales of the X. It's impossible to have a significant number of sales of the cheaper models and also an ASP of $800. It doesn't matter how you try to spin the numbers, there's no magical combination of iPhones sold that can give you an ASP of $800 AND also poor iPhone X sales. That said, I'd LOOOOOVE to see you come up with a mix that shows that and prove me wrong.
Exactly. They even offer the iPhone SE unlocked for $349 and $449. These are a bargain for an A9 iPhone with more than decent camera and a beautiful design. Basically a 6s in the 5/5s enclosure without 3D Touch with 4" display which they will either update to an A10 or bring out a redesigned SE with a 4.7" display.
Things are not overpriced just because someone can't afford them unless they're something like a Vertu phone which tacky people pay north of $10k for "status."
Did you miss my earlier reply to you that showed Samsung had a gross margin of 45.8% last quarter, beating Apple at 38.4%?
So ... this simply confirms what we already knew: Apple made a lot of money on the iPhone X but Apple did not sell as many as they anticipated (cut OLED order from Samsung).
So what is success?
Market share or profit?
So what is success?
Market share or profit?
While I don't at all disagree with this report, it made me think - why would other makers accept lower profit so easily? Obviously they hope to sell more than Apple does, so they want to make up for lower profit per device by selling more devices, but is that enough? Then I thought about it more - in the Android world - don't handset manufacturers preload some shovelware onto each device? Is there long-term profit in that? The software add-ons they install - many won't uninstall, and that has to give each company a good amount of long-term money for each hand set, right?
They didn’t just say it, I thought it. I was prepared to hate the X but I preordered one to test or to return/resell if I didn’t like it. I thought Face ID was there because they couldn’t get Touch ID to work on the new display. I thought there was no way Face ID could work in a low light or dark environment. I thought the notch was a terrible design. I thought I wouldn’t care about the OLED display because I’m not a videophile and wouldn’t care about the camera because I don’t take many photos or videos on my phone. Oops ... I was wrong on every single one of the above assumptions. In fact I loved it so much that I convinced my wife to buy one.
I couldn’t be happier and it was worth every penny. It reminds me of the value proposition of the original iPhone. When it first shipped AT&T didn’t kick in a cent. I was one of those users who tossed out my old Verizon flip phone and bought the original iPhone for over $700 with no option for carrier financing. The original at over $700 was worth it to me then and the the X with 0% carrier financing was worth it to me last fall. Obviously your mileage will vary depending on your disposable income. My wife and I, having decided not to have children, have a lot more of it than most couples our age who have kids.
Last edited:
But, supposedly everyone hated that damn iPhone because of the price and that horrible notch. They hated the notch so much that smartphones that don't even require a notch are adding the notch just to not be left out of the hate party.
I'm fairly certain that iPhone X was considered a failure on so many levels and yet it was one of the most profitable smartphones available. It's to be expected that an expensive iPhone is considered a failure because it doesn't have the most important metric that matters to analysts and critics which is known as market share percentage. Any Apple product that doesn't have extremely high sales is automatically labeled as a failure. For that reason, costly, high-end products from all companies must be considered failures simply because their sales volumes aren't high enough. Market share really seems like an unfair way to measure a product's appeal but I suppose that's just how it is.
I'm fairly certain that iPhone X was considered a failure on so many levels and yet it was one of the most profitable smartphones available. It's to be expected that an expensive iPhone is considered a failure because it doesn't have the most important metric that matters to analysts and critics which is known as market share percentage. Any Apple product that doesn't have extremely high sales is automatically labeled as a failure. For that reason, costly, high-end products from all companies must be considered failures simply because their sales volumes aren't high enough. Market share really seems like an unfair way to measure a product's appeal but I suppose that's just how it is.
