The 16GB iPhone is NOT a ripoff

[terraphantm]

You still don't get it. It doesn't matter how you allocate expenses or split expenses it is impossible for the iPhone to have a 45% profit margin.

Again below are FACTS that cannot be disputed. They come straight from Apple filings with the SEC

FACT: iPhone had $102 billion in revenue last year
FACT: Apple as a company had $39 billion in profit last year

So if you say the iPhone's profit margin was 45% then:

$102 billion in iPhone revenue x 45% profit margin = $46 billion in iPhone profit last year

Only one problem with the iPhone making $46 billion in profit last year.
THE ENTIRE COMPANY ONLY MADE $39 BILLION IN PROFIT LAST YEAR SO IT IS IMPOSSIBLE THAT THE IPHONE MADE $46 BILLION BY ITSELF. THE ONLY WAY THAT IS TRUE IS IF THE OTHER PRODUCTS LOST $7 BILLION LAST YEAR.

It's not completely impossible that some of their products lost money. And I bet some of that $7 billion was spent in developing and manufacturing products that were not yet for sale (apple watch for example). They also spent $3B on beats last year iirc.

This whole argument is tangent to the original issue anyway. Your thesis is that bumping the base from 16GB to 32GB (a move that would cost apple probably $1-5 per phone at most) would cause their profits to shrink enough to cause Apple's stock to drop and to take away resources from the development of other products. But the reality is the difference would be lost in the noise.

 

[Fl0r!an]

Warrior, you didn't even read my post, did you? In non of my posts I mentioned a specific iPhone profit margin, because the calculation of such a thing has very little importance for this discussion and in general. It's just a virtual number because of the reasons I explained.

 

[warrior2000]

It's not completely impossible that some of their products lost money. And I bet some of that $7 billion was spent in developing and manufacturing products that were not yet for sale (apple watch for example). They also spent $3B on beats last year iirc.

Wrong.

The $3B spent on Beats is not EXPENSED. It is recorded as an Asset on the balance sheet. This is all accounting stuff but acquisitions are not expensed when they happen. The only way they are expensed is when they are written off or sold. Like how Google wrote off Motorola and Microsoft wrote off Nokia. When that happens they show large losses. Apple showed $0 loss on the Beats acquisition last year. You can check the SEC report if you want.

Apple spent a total of $2 Billion on R&D in 2014.

So you are telling me iPad, Mac, App store lost $5 billion last year? Are you serious!

 

[warrior2000]

Warrior, you didn't even read my post, did you? In non of my posts I mentioned a specific iPhone profit margin, because the calculation of such a thing has very little importance for this discussion and in general. It's just a virtual number because of the reasons I explained.

The reason I say it is important is because the media spreads all kinds of lies that say the iPhone makes profit margins of 45-60% on iPhone. That makes Apple look GREEDY.

While in reality the iPhone profit margins are realisticially 25%-28%. That is a HUGE difference. And company wide Apple's profit margins are at 21%.

My whole point was to show that a 45% profit margin is impossible for the iPhone when you look at all the facts.

 

[agentunited]

I wouldn't say this as a rip-off rather I would say its very unsatisfactory customer experience from a phone which I thought is premium after paying £500+. I currently use iPhone 5 16GB (pre-ordered 64 GB 6S) and it's a constant nightmare to manage the space with my 5.

Again, it it's not a rip-off in any means but it's very unsatisfactory experience and always felt handicapped due to space space constraints, it's still bloody fast, the only issue is space though I'm a light user. What premium you talking about, iOS 8 is a piece of crap and doesn't deserved to be named premium and killed millions of iPhone 4S which was a top notch device till iOS 7. Windows 10 runs amazingly well even with PCs which has 512MB RAM and decade old Pentiums. These days iPhone is not only BMW in the town and all Androids are not Kia(s), there will be a revolutionary Tesla from someone soon.

To me, long term customer satisfaction is more important for repeated purchase than short term stock market gains and I'm buying iPhone mainly because of as a fully satisfied Macbook Pro owner not coz of iOS 8/iPhone premium you talking about. Anyway, I'm sure in a year or two, Apple for sure will move to 32GB/128GB/256GB for iPhones perhaps in 7S.

 

[sunking101]

Did you even read my post?

If Apple's profits shrink the stock price will crash. If the stock price crashes they WILL LOSE TOP TALENT. All the top employees get 90% of their compensation from stock options.

Do you really want Apple to lose its top employees?

Judging by the lacklustre products released since Jobs died I would wager that Apple have already lost their top talent.

 

[warrior2000]

I wouldn't say this as a rip-off rather I would say its very unsatisfactory customer experience from a phone which I thought is premium after paying £500+. I currently use iPhone 5 16GB (pre-ordered 64 GB 6S) and it's a constant nightmare to manage the space with my 5.

Again, it it's not a rip-off in any means but it's very unsatisfactory experience and always felt handicapped due to space space constraints, it's still bloody fast, the only issue is space though I'm a light user. What premium you talking about, iOS 8 is a piece of my crap and doesn't deserved to be named premium and killed millions of iPhone 4S which was a top notch device till iOS 7. Windows 10 runs amazingly well even with PCs which has 512MB RAM and decade old Pentiums. These days iPhone is not only BMW in the town and all Androids are not Kia(s), there will be a revolutionary Tesla from someone soon.

To me, long term customer satisfaction is more important for repeated purchase than short term stock market gains and I'm buying iPhone mainly because of as a fully satisfied Macbook Pro owner not coz of iOS 8/iPhone premium you talking about. Anyway, I'm sure in a year or two, Apple for sure will move to 32GB/128GB/256GB for iPhones perhaps in 7S.

Its very simple.

Buy the phone capacity that fits your life style. Be it 16, 64, or 128. Its not Apple's fault that someone bought the wrong size. No one can blame Apple for their lack of planning and foresight.

That's like someone buying a Porsche 911 and saying he's unsatisfied because it was very difficult to fit his family of 5 into the car. Or someone buying a pair of jeans that is 2 sizes too small and bitching that the jeans are as tight as hell.

 

[warrior2000]

Judging by the lacklustre products released since Jobs died I would wager that Apple have already lost their top talent.

Nice joke son.

Apple is more powerful, successful, wealthy, influential, and global than when Jobs was alive.

In your world they may be a failure. But in the real world Apple is more powerful, successful, and respected than ever before.

When Jobs died the stock was at $50 (Oct 2011)
The stock is up 130%-160% since then

When Jobs died total revenue for 2011 was $108 billion
This year revenue will be $232 billion

When Jobs died total profit was $25 billion in 2011
This year total profit will be over $50 billion

When Jobs died they sold 72 million iPhones in 2011
This year they will sell over 230 million iPhones

 

[C DM]

No I'm not wrong. You just don't understand. Which is fine. You probably are not a finance professional.

Not to worry, it doesn't take one to know that the arguments didn't hold any water all the way back in the beginning of the thread. Especially when the very person who was making them was also making counter-arguments that were undermining the original arguments.

 

[warrior2000]

Not to worry, it doesn't take one to know that the arguments didn't hold any water all the way back in the beginning of the thread. Especially when the very person who was making them was also making counter-arguments that were undermining the original arguments.

you need to learn how to write more clearly. I have no idea what you are talking about.

 

[sunking101]

Nice joke son.

Apple is more powerful, successful, wealthy, influential, and global than when Jobs was alive.

In your world they may be a failure. But in the real world Apple is more powerful, successful, and respected than ever before.

I'll agree, they're big as a big thing.
I didn't say they were a failure, far from it. They are an indisputable success but how much of that is down to the footprint Jobs left? I haven't seen one 'wow' product since and I have seen some duds. Sure Jobs lauched duds too but he regularly spilled some gold dust.

 

[sunking101]

Its very simple.

Buy the phone capacity that fits your life style. Be it 16, 64, or 128. Its not Apple's fault that someone bought the wrong size. No one can blame Apple for their lack of planning and foresight.

That's like someone buying a Porsche 911 and saying he's unsatisfied because it was very difficult to fit his family of 5 into the car. Or someone buying a pair of jeans that is 2 sizes too small and bitching that the jeans are as tight as hell.

You spectacularly missed the point there.
(Some) people are saying that we shouldn't have to pay extra to get what should be the base level of storage on a premium smartphone in late 2015. We're well aware that we should buy the correct amount but we're arguing that we shouldn't have to do so.

 

[agentunited]

Its very simple.

Buy the phone capacity that fits your life style. Be it 16, 64, or 128. Its not Apple's fault that someone bought the wrong size. No one can blame Apple for their lack of planning and foresight.

That's like someone buying a Porsche 911 and saying he's unsatisfied because it was very difficult to fit his family of 5 into the car. Or someone buying a pair of jeans that is 2 sizes too small and bitching that the jeans are as tight as hell.

That's why I bought 64GB this time and I could afford it, no big deal. But I also knew people who save one year to buy an iPhone, for them the price of 16GB itself is already very high, they are severely handicapped by 16GB experience it provides, their data like 1/2GB a month to use any iCloud however cheap it is. Not everyone is born with enormous disposable income/rich in the world. Most people talk 16GB in general not for themselves here, but for the whole experience it provides.

The only way Apple will do is moving to 32/128/256 in the future which is reasonable and it's even more tempting for everyone to move 128GB, but that will take couple of years but for now the experience is very limited for those who buys 16GB and who couldn't afford 64GB.

 

[Fl0r!an]

My whole point was to show that a 45% profit margin is impossible for the iPhone when you look at all the facts.

And my point is that virtually any profit margin can be calculated by making certain assumptions and applying 3rd grade maths
Btw, Apples company-wide profit margin is still very big compared with other OEMs.

 

[bkends35]

FY 2015
Q1 - 74.5 million
Q2 - 61.1
Q3 - 47.5
Estimate for Q4 - 49.0

Total for FY 2015 = 232 million

They will sell close to 250 million FY 2016

They've never sold that many. I bet the average from 2007 is about 70 million per year

 

[C DM]

you need to learn how to write more clearly. I have no idea what you are talking about.

We've established that, as unsurprising as that is. Not that it matters, but I'll put it in the form of a car analogy since apparently doing that makes something true and proven: it's like constantly talking about BMW having the greatest cars, and that no other cars are good enough in comparison, and then going for a drive in a Mercedes.

 

[potassium404]

Nice joke son.

Apple is more powerful, successful, wealthy, influential, and global than when Jobs was alive.

In your world they may be a failure. But in the real world Apple is more powerful, successful, and respected than ever before.

When Jobs died the stock was at $50 (Oct 2011)
The stock is up 130%-160% since then

When Jobs died total revenue for 2011 was $108 billion
This year revenue will be $232 billion

When Jobs died total profit was $25 billion in 2011
This year total profit will be over $50 billion

When Jobs died they sold 72 million iPhones in 2011
This year they will sell over 230 million iPhones

Your ignorance is staggering especially since you consider yourself to be some sort of "finance expert". Their volume has increased substantially due to the natural increase in popularity of the device, the availability of more devices and particularly in opening the market to China. Clearly you should be able to understand this if you're a said expert in this area. But then again, you've been giving terrible car comparisons in your argument so I really shouldn't be surprised in your ignorance in 19 pages of baseless facts.

 

[warrior2000]

I'll agree, they're big as a big thing.
I didn't say they were a failure, far from it. They are an indisputable success but how much of that is down to the footprint Jobs left? I haven't seen one 'wow' product since and I have seen some duds. Sure Jobs lauched duds too but he regularly spilled some gold dust.

You need to understand that Jobs was in power at Apple during two of the critical times in computing.

First in the early 80's with the AppleII and the Mac.
And then with mobile computing with the iPhone.

In both era's there was a massive hole that had to be filed. Personal computing in the 80's and mobile computing in the mid 2000's. What hole needs to be filled now? Until wearables take off the smartphone will continue to dominate mobile computing. At this point it is really hard to bring out a smartphone that blows the mind. IMO, the Watch is a good first stab at wearable computing which is the future.

During this transition period between smartphone and the next mobile computing device it will all come down to ecosystem. And IMO Cook is doing an outstanding job making Apple's ecosystem more powerful than ever: TouchID, ApplePay, AppleMusic, AppleMaps, AppStore, iTunes, Games, Handoff, and soon LiveTV packages.

 

[warrior2000]

Your ignorance is staggering especially since you consider yourself to be some sort of "finance expert". Their volume has increased substantially due to the natural increase in popularity of the device, the availability of more devices and particularly in opening the market to China. Clearly you should be able to understand this if you're a said expert in this area. But then again, you've been giving terrible car comparisons in your argument so I really shouldn't be surprised in your ignorance in 19 pages of baseless facts.

Nice simplification of fact.

So opening up China was an easy deal? Then why couldn't Jobs figure out how to do it? It was Cook that opened up China. In fact it seemed like Jobs had little interest in opening up China. Cook did an amazing job opening up China and closing the ChinaMobile deal. Soon China will be Apple's largest market = thanks to Cook.

So you call Apple's DOUBLING REVENUE and DOUBLING PROFIT as a natural increase? LOL. Where is that natural increase with Dell, HP, Microsoft, Samsung, LG, HTC, ect? Bullsheet. You don't double profits from $25 billion to $50 billion a year by accident. Give me a break. Show me another company that wasn't a monopoly that increase profit by $25 BILLION in 4 years by 'natural' progression. There isn't any.

Bottom line is Cook is doing an AMAZING JOB.

 

[warrior2000]

We've established that, as unsurprising as that is. Not that it matters, but I'll put it in the form of a car analogy since apparently doing that makes something true and proven: it's like constantly talking about BMW having the greatest cars, and that no other cars are good enough in comparison, and then going for a drive in a Mercedes.

My car analogies are simple.

1. iPhone is a premium product just like BMW. So you can expect to pay MORE for an iPhone than an Android. Just like you expect to pay more for a BMW than a Kia.

2. Like cars you need to plan for CAPACITY. You won't buy a car that sits 4 people and then get mad at the car maker when you have a family of 6. Same with the iPhone. If you need more than 16GB of storage buy the larger phones. Its not Apple's fault that you didn't think things through.

 

[C DM]

My car analogies are simple.

1. iPhone is a premium product just like BMW. So you can expect to pay MORE for an iPhone than an Android. Just like you expect to pay more for a BMW than a Kia.

2. Like cars you need to plan for CAPACITY. You won't buy a car that sits 4 people and then get mad at the car maker when you have a family of 6. Same with the iPhone. If you need more than 16GB of storage buy the larger phones. Its not Apple's fault that you didn't think things through.

Mine is even simpler and thus proves things that much better.

 

[potassium404]

Nice simplification of fact.

So opening up China was an easy deal? Then why couldn't Jobs figure out how to do it? It was Cook that opened up China. In fact it seemed like Jobs had little interest in opening up China. Cook did an amazing job opening up China and closing the ChinaMobile deal. Soon China will be Apple's largest market = thanks to Cook.

So you call Apple's DOUBLING REVENUE and DOUBLING PROFIT as a natural increase? LOL. Where is that natural increase with Dell, HP, Microsoft, Samsung, LG, HTC, ect? Bullsheet. You don't double profits from $25 billion to $50 billion a year by accident. Give me a break. Show me another company that wasn't a monopoly that increase profit by $25 BILLION in 4 years by 'natural' progression. There isn't any.

Bottom line is Cook is doing an AMAZING JOB.

You don't think Jobs was negotiating that in the background and that only started with Cook? LOLOLOLOLOL! For such an expert you really see the big picture.

Apple is considered a valuable company because historically you bought the experience and ecosystem that Jobs had demanded and helped to build. Cook is a bean counter and that's all you seem to care about, maximizing profit but lacking a vision of why they got to where they did with those innovations.

I know it's hard to do for you but when Jobs came back he turned the company around from the breaking point. You probably don't understand this because you probably weren't born when that occurred. All those companies you referenced aren't particularly selling the experience that Apple has built. Which is why when the iPhone came out, it was considered reveloutionaly. It took down the old ways of Windows Mobile and Blackberry and introduced a device for everybody. Part of that was building a device that was an experience for everybody. That caused word of mouth and the natural growth of popularity. Cook's vision is to maximize profits because he does not have the same vision as Jobs.

But thank you for proving mine and everybody else's point about your ignorance. If the Apple loyalists here are calling you out, you should probably take your ball and go home.

 

[oldmacs]

My car analogies are simple.

1. iPhone is a premium product just like BMW. So you can expect to pay MORE for an iPhone than an Android. Just like you expect to pay more for a BMW than a Kia.

2. Like cars you need to plan for CAPACITY. You won't buy a car that sits 4 people and then get mad at the car maker when you have a family of 6. Same with the iPhone. If you need more than 16GB of storage buy the larger phones. Its not Apple's fault that you didn't think things through.

However when you buy a BMW you expect BMW to have kept up with the rest of the motor industry, e.g. that it won't be putting 10 year olds technology in a brand new car, when everyone else including the cheap cars have it.

Its is Apple's fault that they have been slack in bumping the base model storage of the iPhone. The plain and simple fact is that it is 2015. Phones that are far cheaper than the iPhone have 32GB of storage. Apple needs to move with the times and sacrifice a small amount of its profit margins. I'm far more inclined to believe what the media has to say on iPhone profit margins, than you who can't string an argument together.

You can swap your argument out for many other things. EG. Apple could improve its profit margins by reverting to for example ( 512MB of RAM/ an A5 chip/ 3G not 4G/ No retina display) as a lot of people who buy the iPhone don't need any of those, because those who do want it should plan and pay more. It is a fairly hollow argument, and it makes no sense. The iPhone should have a reasonable mix between being technologically advanced and being so apple can make some money off it. Given that the rest of the specifications of the iPhone have moved with the times and that 16GB has been the standard capacity since 2009(?), its truly time for them to move on. They've milked that cow for long enough, just like they managed to milk the 1Gb of ram cow for long enough.

But anyway, this argument has gone round and round in circles, and while I accept that a) 16GB is good for many, b) 16GB does save Apple Money I can not accept your overall argument.

 

[Number-Six]

My car analogies are simple.

1. iPhone is a premium product just like BMW. So you can expect to pay MORE for an iPhone than an Android. Just like you expect to pay more for a BMW than a Kia.

2. Like cars you need to plan for CAPACITY. You won't buy a car that sits 4 people and then get mad at the car maker when you have a family of 6. Same with the iPhone. If you need more than 16GB of storage buy the larger phones. Its not Apple's fault that you didn't think things through.

You car analogies are flawed in the way you're making comparisons.

If I were to want to buy a BMW, I would expect a certain number of options/craftsmanship to be in the baseline model, no matter what my needs are. Only after I've made certain of this then do I make my choice of the number of seats that I need (to re-use your comparison).

What everyone is saying is that Apple is no longer living up to expectations by offering 16gb as a baseline model.

 

[warrior2000]

You spectacularly missed the point there.
(Some) people are saying that we shouldn't have to pay extra to get what should be the base level of storage on a premium smartphone in late 2015. We're well aware that we should buy the correct amount but we're arguing that we shouldn't have to do so.

iPhone is a premium product.
You need to expect to pay more for an iPhone than the competition.

iPhone 6s - 64GB - $750
Samsung S6 - 32GB - $650

So you will pay $100 more for the iPhone than the Samsung. Thats the price to pay to get the best.