IDC: Apple iPhone was No. 3 smartphone in 2009 with 14.4% of market - Page 4

So why is Nokia making less profits that Apple?

I don't suppose that has anything to do with the desirability of their products?

C.

So we're being screwed with the iPhone pricing here! (Or you are with the Nokia's, don't really know).

I was looking at a price comparison site (http://hintaseuranta.fi/tuote.aspx/26392). There the N97 is 465€, X6 450€ and N900 is 539€. And the iPhone prices as mentioned.

Usually over here, the subsidised phones end up being much more expensive than getting a separate subscription and a separate phone. This at least is what I remember most studies pointing out (no link and completely based on my memory, sorry).

Personally I don't like long contracts and plans which hide the true cost. I rather buy the phone and the contract separately, then I can also change the contract at will.

But your Finnish skills seem good or you are good at deducing figures since you could read Sonera's site that well.

On top of the prices that you pointed, you have to still get a subscription. So the price for the iPhone 3GS 16GB in this case would become 456 €, which is cheaper, but I still have to have a contract with Sonera and minimum contract prices for 24 months would become around 25€/month (no voice, SMS or data bundles to see the price of the phone + subscr). That would increase the iPhone price to 1016€ (unsubs. 840€) . Also Sonera's prices for services are not the cheapest except for the current deal on data (24 month deal, 9,90€/mo for 3.6Mbps) so that would increase the price furter. There may be flaws in my calculation, but I tried my best.

So buying the iPhone unsubsidised would make the most sense. The Nokia N97s I can get for around 470€s. Or the 5800 for 230€. So in this case, the question for a layman becomes in places where contracts aren't favoured: 230€ for a touchscreen Nokia that seems pretty similar, or 540-840€ for an iPhone. In poor countries that's a huge difference. Even the 465€ for N97 vs. 550-840€ for an iPhone is significant. But it's of course again very different for us technogeeks where a few hundred € isn't as big a deal as it is in India or Africa for instance.

Regs, Jarkko

Enter, the C-Series.

Which means that Nokia will sell even more smartphones for less per unit.

It depends. The most recent data shows a decline in market share in the fourth quarter, compared to the third, but an increase YOY.

"The iPhone accounted for 16.6% of global smartphone shipments in the fourth quarter, compared to 18.1% in the third quarter, ABI Research said."

http://www.informationweek.com/news/...leID=222600940

One quarter does not a trend make, and nobody knows the future.

It may or may not have anything to do with desirability of product. There's about ten gazillion other reasons which may account for it.

There are?

Name just one!

(I am sure Nokia would appreciate your analysis.)



Being able to make profits is what business is about.

I wonder why Nokia, despite it's gigantic market share is not able to create and sell products which are similarly profitable?

C.

Why as consumers do we even care about how much money these businesses or making? I'd be inclined to think I'd been ripped off looking at the sheer size of profit Apple make from the iPhone. Regardless, all that matters to us as consumers is that these companies make desirable products at attractive price points. Figures show that both Apple and Nokia are more than capable of doing this. Leave worrying about how much profit is made to the people who actually care about that sort of thing; it is completely irrelivant here.

Maybe it is due to Apple making a lot of different products with very large margins, or maybe it is due to Nokia selling their products with a lower margin to enable everyone to afford one, after all their vision starts with "Our vision is a world where everyone is connected"

I used American pricing because we need a single point for reference to use for comparison, and that was most convenient for me. But we could've used any country.

And thanks for the pricing data.

In this other thread about pricing and profits, we need to recognize retail prices (including any taxes) are set at what the market will bear if the mfr wants to really sell the product. The more desirable your product, the higher the price you can set, regardless of how little it cost to make. As even samab (with whom I'm almost in continual disagreement) said, it's supply and demand.

Now if your product isn't that desirable, so that you can't sell your product for more than it costs you to make (the hardware and software for the product), you can either stop selling the product (and cut your losses), sell profitable accessories or services alongside it, or keep taking losses until you run out of capital.

If this were the case, it would be a reasonable argument.

Nokia DO make its N-Series devices with the same sort of margins as the iPhone. The un-subsidised prices are certainly the same.

But the market is not buying them. Nokia sold only 4 million N-series devices last quarter. Half as many as in the previous year.

Nokia would like those fat margins too. But the market, she say, no.

C.

I am sorry, I was under the impression this was a discussion about the relative performance of the iPhone versus other devices. I took this to be a business discussion.

If we disregard business performance and simply compare compare products from a consumer point-of-view, we have to look somewhere else than profits or market-share.

We'd need to look at customer satisfaction data.
or
How frequently users actually use the internet functionality of the devices?
or
How often do customers actually buy applications?

I think if you took the time to look at comparative data, you might find the iPhone to be dramatically ahead of its peers in all these categories.

I would argue that these metric indicate that consumer approve of the iPhone. They consider the iPhone to be so desirable, they tolerate the price of the device.
I would argue, it is this desirability which is at the force driving the high profits. Not showmanship, or marketing or some massive rip-off con perpetrated on a stupid public.

And let's not fool ourselves, if Nokia could match those profits with the N900, they would be delighted!

C.

Yes, that must be it. Nokia is in the business of altruism, because corporate slogans are to be taken literally.

I have no doubt they would reorganize as a non-profit and simply give away their wares, if only they could figure out how to do it. On account of the connectedness.

You are aware that the majority of the world cannot afford, or choose not to afford these high end models from Apple, Nokia, SE etc? Could this be the reason why Nokia sells 364 million non-smartphones a year?

No one is contesting that. Nokia's business strategy is to carpet the earth with dirt cheap phones, and I guess they hope to make up in volume what they're missing in margins. However, that may not be a tenable strategy going forward, and talk of Nokia's generosity of spirit pretty much misses the point.

Run out of valid arguments I take it?

...says the kid who has never made a valid argument.

Go away Apple shareholder, nothing you say has any value as you are too biased.

And if I am a kid, what does that make you? 3?

Valid arguments for what? I was responding to a specific statement of yours, in which you ascribe altruistic motivations for Nokia's high volume/low margin sales profile.

Is that something you actually want defend?

I sense you have a kind of elitist attitude, and you don't seem to understand that the majority of the world is not in the same financial position as you. You see the majority of the world cannot afford Apple products, they cannot afford the Nokia smartphones, or the smartphones from other companies. Now are you saying that Nokia should walk away from these people and not supply them something they can afford (and still make a profit for themselves), or would you just like to forget that these people exist?

So holding NOK and AAPL makes me biased about discussions about them. Great Logic! Perhaps you should read up on these companies a bit more so you can make informed comments about them. Eventually, you may learn enough about technology to invest in such companies.

Is this forum for consumers only? I thought it was people who are interested in any aspect of Apple.

Every company wants to create products/services that some number of consumers value so highly that they are willing to pay much more money for it than it actually costs the company to make/provide it. That difference is known as margin, a portion of which becomes profit.

When the value of something is inflated (due to whatever reason) beyond the real benefit to the consumer, then the consumer is ripped off. But different consumers see different benefits. So what is rip off to one consumer is not to another.

Consumers balance several "value" factors. One consumer may primarily value being the first to own something, or value the "cool" factor. Others may value "beauty", while others may value productivity, and others, low price. Not everyone is looking for the cheapest price over all other factors. Not everyone wants to shop at the dollar store, or pawn shop.

As for Nokia and its lower profits, from what I can gather from their conference call transcripts and filings, their products aren't attractive in the lucrative US market because they won't give in to the US carriers in order to be subsidized; so distribution is very limited.

Outside of the US, SMS and now MMS is booming (even among the lower-income groups), and the Internet and Apps aren't as highly valued (yet). So Nokia's E-series and other medium-priced smartphones, which have good keyboards and high quality cameras, are highly valued. (RIM is benefiting from this too but to a lesser extent because they don't have as good a distribution network as Nokia outside of North America.) And Nokia just made them more attractive with its free Maps.

Without the Internet as a driver, large touch-screens and multi-touch are less highly valued (for now), so less people are willing to pay the higher prices for them. The manufacturers like Apple and Nokia N-series are willing to not sell these touch screen models rather than sell at a lower precedent-setting price because they believe over time, as the Internet and other services/Apps become more valuable, people will eventually pay more. (Thus Nokia also feels it has time to get its OS and touch and Apps to work great at the high-end.)

Note that most of the world can't afford anything from Nokia and, despite your previous comment, Nokia makes more products than Apple. Nokia is not altruistic. They are for-profit, publicly traded company, just like Apple. They would sell more high-end devices with high profit margins, LIKE THEY USED TO, if they could. They are working on getting back up there. You're hatred for Apple and the US are misguided.

PS: it would be great for you to stay on point for once. Having you jump to different topics with every post you get schooled on really throws these threads out of whack.

Well said.

I have no idea what you're talking about.

I am saying that imagining that Nokia's business strategy of high volume/low margin is motivated by a deep concern for the less fortunate is absurd, just as imagining that Dell or Walmart or some anonymous Chinese widget factory are doing charitable work is absurd.

You'll notice there's nothing in there about demanding that these companies cease and desist and abandon their markets because I'm an elitist who hates poor people.

Selling devices at a smidgin above the cost of their components is impressive why exactly?

Anyone can glue together components and sell them at cost.
The real magic of business is to perform some alchemy, add some value and sell the parts for more than you bought them for.

That value-added magic is why some companies are more profitable than others.

C.

I'm not an elitist but most people are too stupid to realize that.

This is true too, but it misses the point. Which was that Nokia is not dominant at the high end (N-series) of the market, altho they are in every other market segment.

Thus Nokia's ASPs and profit margins are less than Apple, who only sells high-priced and high-margin products at the high end of the market.

And Apple is being very successful at it, in terms of customer satisfaction and desirability. Because of this and the fact that the high-end market is yet to be saturated, Apple is not yet under significant pressure to reduce prices and margins.

Yup to both parts.

Why did you invest in Nokia?

Is it a hedge around Apple (i.e., if Apple fails, it will most likely be Nokia that's benefitting)? Or do you think NOK will still capture most of the profits from the mobile boom?

I've thought about investing in NOK many times but haven't been able to pull the trigger.

If mobile phone manufacturers should be clammering only to make high end phones with huge profit margins, who exactly is supposed to be making phones for everyone else? What would the world be like if only the iPhone existed? Do some of you really think that would be a better world? There'd be billions of people who wouldn't be able to buy a mobile phone. I just can't fathom this apparent desire for other companies to be 'dead' and for only Apple to be left. How would that benefit anyone in anyway?

I really don't understand this tone of "because I notice that Nokia is making most of its money on low margin phones, and have opinions about what that suggests for Nokia's business over time, I must be demanding that everyone refuse to sell affordable phones to poor folk, which puts me in league with the devil."

Actually, I do understand that tone, because it's much easier argue against than what's actually being said.

Oh, hai there big fella:

Becaus their stock fell below $10/share, their profit drop looked to have bottommed out, and they were losing mindshare at the time. I've done well so far but I don't think $18/share sometime this year is unrealistic.

Nokia as had a lot of problems. The iPhone was certainly a wrench in the way they do business but this would have happened anyway if the iPhone hadn't come on the scene, though not nearly as quickly. Despite all that has happened they are a solid company with a lot of experience and IP under ther belt. They can wait out a restructuring and technology shift. I don't think we should underestimate Nokia as a mobile company.

Plus, any company's CEO that publically states they've been bested by another shows me a company that knows it's shortcomings and is working on resolovinh them. They've since made some odd comments about their business model but nothing that will scare me away from doubling my money with 2 years. Recessions are a great time to invest.

So what does it suggest about Nokia's business over time? Are they suddenly going to fall from grace? Are poor people going to be banned from owning mobile phones? Selling massive volume, low margin products is just as valid as selling low volume, high margin products. What is it about one of those methods that is so bad? I really don't understand this tendency towards only the low volume, high margin method being the only valid one, and why doing anything different is wrong.

This whole thread has been about market share and the indicators used to define it, in order to gauge how well companies are performing.

No-one is saying Nokia or others should stop selling high volumes of low value phones, it's in the way that these high volumes skew the data and don't give a true indication of how well a company is doing.

Exactly. Somehow we've wandered from the idea that Nokia having an overwhelming percentage of the global cell phone market might not mean all that much if the lion's share of that market is based on selling razor thin margin dumb phones (at least when compared to Apple's share of the smart phone market) to claiming that we're trying to snatch the phones out of hands of the world's poor.

As amusing as it is to yell about that, the fact remains that Nokia's share of the smart phone market is plummeting, and that the smart phone market is where most of the profits are, right now. If Nokia could field a hugely successful smart phone they would, their concern for poor folk notwithstanding.

And I guess I'm obliged to add I have nothing against Nokia, poor people, or dumb phones. I'm just stating the facts.

I know a lot about technology, but I am sure sure why you think that someone that has a knowledge of technology needs to purchase tech stock

Most of us have just been trying to understand what the ground truth is about Apple and Nokia in the smartphone market. We all know Apple has most often been low volume, high margin but wonder if they really have an interest in higher volume, lower margin due to what we've seen with iPod. Nokia was managing both for cellphones but has become more high volume, lower margin as their high-end has struggled since the end of 2007.

Most of us aren't making a value judgment on which is better or worse. What we know is that the pressures on/threats to a company differ depending on which path they take. The high volume, low margin route runs the risk of becoming a commodity and getting undercut by companies who have even lower costs because they invest little in R&D and quality. Dell is an example of this. The low volume, high margin route runs the risk of a disappearing market (due to too high prices) or a quickly-saturating niche market.

From where I sit, I thought most of us were simply debating what the real risks are to Apple (because that's what this site is about) and Nokia (because they are the top dog).

This thread demands that you do so. So I'll echo addabox here: I have nothing against Nokia, poor people, or dumb phones (really these are now called featurephones but Jetz called them dumb phones earlier in this thread and well, it kinda stuck.)

That really depends on what you define as 'how well a company is doing'. If you're talking about making the most profit, Apple is clearly the best in that regard. If you're talking about having the most prolific product, Nokia are doing the best. There is more to a company being successful than just making the most profit, which I think a lot of people forget around here.

I didn't say they had a deep concern for those people, I said they saw a business opportunity and adjusted to meet that market segment. I just don't understand why you, or anyone else here finds that an issue, if they are meeting a market need, and are making money from it, that seems to be a perfectly ok business practice.