Apple's 4% mobile market share rakes in over half the industry's profit - Page 2

That is a total bullshit statement. Apple doesn't use anything that is any higher quality them most other companies.

I have no issue if people want to say they spend extra for Apple products because they like the experience, ecosystem or that they simply think Apple products are cool.

Its total bullshit to say they last longer or are somehow higher quality. You can go down the list of OEM's that Apple uses and it isn't any different then anyone else.

I know many people with Acer laptops that are just as old as my MBP and working just fine.

Relative market share is stagnating. Nokia also sells more every quarter than the last. In unit sales they had a blow out year. Nokia are declining in market share.

So how is Nokia doing? Seems to have increased its unit sales by 36% Y-O-Y? So a fantastic year for them?

Or are we going to judge Nokia by market share and Apple by revenue?



If it doesnt happen they will just repeat the mistakes of history. Apparently plenty of Apple fans want them in that niche. Fair enough. These things are vicious circles, however. Less market share, less apps. Less apps, less market share. Its not as if this is a difficult thing to understand.

And then, eventually, profit drops.

Apple have a potential market share at a certain price point, and obviously a larger one at a lower price point. Maintaining market share in a rapidly growing market means lots of profit. It is when the market itself it saturated that you have to grow market share to grow unit sales.

So, if you were in charge of a currency, you'd devalue it?

I'll say again, prices are set by markets not by CFOs.

The reason Dell and HP have pitifully small profitability numbers is not because they are generous.

It's because they are unable to add value.

C.

'A fool and his money are soon parted'

It all depends on your point of view.

I own a few Apple products, but none of them run iOS. I perceive them to be too expensive and lacking in value, compared to alternative products.

I think the principle reason Apple has gotten away with charging so much for the iPhone, is that for most buyers, the true cost of the device is buried in a 'plan' and since it is effectively paid for in installments, the true cost is easier to bare.

There was a nice example in another thread a few days ago where some bright Aussie was proudly declaring that in Oz you can get a IP4 for 'free'. He and others really believe they are getting a $600-700 device for free when the total cost of their plan is $2000 or so over two years.

Actually even the biggest Apple fan is a fool if they don't realize they are getting hosed on Apple hardware.

Apples products have always sold because the software ecosystem, but the hardware is what makes the money.

Children may have their parents buy them an iPhone because it is cool to have one, educated adults buy the iPhone because of iOS and we put up with the hardware price.

Better example would be the overpriced 17" MBP. I mean really 2300.00 for a Core i5 with 4GB of Samsung ram. Yeah your taking it deep on that one when it comes to hardware. Add in Applecare you get to leave the store at about 2800.00.

Perhaps you have just awoken from a deep sleep?
measured by revenue Apple is only the 110th "largest" company in the world.
But guess what? By market capitalization they are the second most valuable company in the world.
They are also one of the most profitable large companies in the world.
Seems to me that Apple is already the "largest electronic company ever" (whatever that means to you.)

You completely miss the point - If the marketshare doesn't represent profitability for developers THEN there are less apps. If you don't make revenue off your apps - it doesn't matter how many devices the OS is installed on.

Yes I would devalue it if I was an export economy. Prices are obviously set by CFO's. The market for any product is along the supply and demand curve. That price is too high which is why Apple's market share is stagnating.

Apple can continue to grow unit sales and stagnate in the market. What happens when the market matures?

If the market matures and Apple are 10% of the market, or less, then the only way to increase unit sales is to reduce prices. However if Android is the de-facto standard then that may not work, and probably will not work because the 60+% ( or more if Nokia goes Android) of people on other phones will have no incentive to jump ship as they will have a software lockin, and most apps would be developed first ( or at all ) for Android.

Time to reduce prices is now. Or become beleaguered once again.

Good man. That has no bearing on my arguments on market share, or the future direction of Apple. I thought I deflected this potential argument when I said they were amongst the most profitable computer manufacturers in the early 90's, a few years before they almost went bankrupt.

( I wonder if Nokia forums are full of denial on the decline in Market share for Nokia? )

What does that even mean? Are you saying that per-device revenue for Android phones is less than for iOS phones? If so that is true of software on the Mac VS Windows. Mac users buy more stuff. That stat is overwhelmed by the 5% market share.

The installed base for iOS is still quite high, and thus problems with apps and the platform are a year away. But it will happen. Present trends continue.

I call bullshit on your bullshit. I bought an HP laptop for my daughter. It broke down so much best buy gave us a new one. That one lasted 13 months. I said screw this, and bought a MacBook. Year and a half later still waiting for the first repair.

No. Utterly wrong.
A CFO who sets a price too high for the market, will face diminished profits as sales diminish.
A CFO who sets the price too low, will secure more sales, but profits will diminish due to the lower profit per unit.

He's therefore obliged to set a price which is fit for the market.

In other words, the market sets the price.

The reason Apple's profitability is so out of step with other electronics companies, is that its value-add is out of step with rest of the industry.


Apple's volume is increasing. And it's profit is increasing. And its share of industry profits is increasing. Just look at the bottom graph showing phone profit share.



So while other companies scramble for for market share. Their profits are squeezed, year on year in a race to the bottom.


The thing about this industry is that it is always changing and developing.
If Apple ONLY sold music playing iPods, then it would be facing a mature market - it would have to reduce prices. And you know what? It has.

But since Apple started selling iPods, it has introduced two new product categories. Categories which are not mature and have massive growth potential.

As long as Apple continues to innovate, it does not have to worry about maturity.

C.

So because you bought one laptop you represent the global market? Ive had times where I had to return 2-3 iMacs to get one that works correctly, does my experience trump yours?

Every walk up to a Genius Bar at an Apple Store on a Saturday? Think that line is there because their hardware is working great?

Hardware is hardware, you can have something that last 7 years without any problems or die out of the box.

Apple often uses Samsung memory, LG panels and Hitachi hard drives. Nothing speical about any of that.

You are trying to take a customer service issue which Apple has one of the best and warp that into good and bad hardware. Two very different situations.

"They charge too much" "They're gouging!" "Apple's ripping us off!"

Zzzzzz.

It's called Value.

Never ONCE have I bought an Apple product and felt ripped off.

I bought my dad an iPad for xmas (most I've ever spent on him). Seeing a guy who could barely use a mouse doing email, surfing the web, using netflix, playing games with my mom, using google maps, showing friends his photos and doing regular One to One lessons (ie back to school) at 68 years old = almost priceless.

If the profits made from my purchase go into more R&D for future products- I'm proud to have supported such a crackin' company. We BOTH win.

The previous story on market share refered to android. The story on profitability does not have android mentioned even once. When it comes to market share, they are all android phones, but when it comes to profitability, they break it down to handset maker. It would be interesting to see what google actually generates from these phones.

The main reason apple is so profitable is because they don't subscribe to the theory of having to compete on price. They don't give away their software, and they don't have 2 for 1 sales. This is why they will dominate the Pad market for years to come. At best the other companies might be able to produce a product that is equal, but they won't be able to sell one cheaper.

As far as apple charging too much, they aim for a 40% gross margin. When you sell 50 million phones a year, the result will be a lot of profit. Why would they lower their price? Investors want to see a return. Profits are not only looked at as an absolute ($) but as a percentage. Their margins have remained fairly consistent over the years.

In real life, more often than not, you get what you pay for.

So a one piece aluminum laptop body is the same quality as a multiple piece plastic laptop body?

Maybe you should consider wearing a helmet the next time you get on that skateboard.

So what you are saying then is the Macbook because it doesn't have an Alu body is shit?

Also making that statement do you even have a clue what an Alu case costs compared to plastic or are you just guessing? I know which one I am picking.

Your assumptions on hardware are as stupid as your assumption I skateboard.

The high profit strategy has some benefits for them because they can now afford very expensive exclusive deals with hardware manufacturers that cost billions. I do see a strong need for them to have a budget iPhone though because the Android phones are now starting at a very low price and they are decent quality and we are already seeing Google surpass Symbian now. I don't think developers will desert Apple as they have a better marketplace and still over 100 million users but it's cause for concern.

I think the best strategy for them right now is to have an iPod Touch model that has an add-on phone component. Let the carriers fight to the bottom on their own, Apple can just sell the iPod and make their profit. There's no way that Android devices would compete with a $300 iPod as it can be fully subsidised at $25 per month on a 12 month contract.

Really? Is that what you got out of my comment?

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A CFO who sets the price too high will see the market share decline, or stagnate. Both are indications of what the market think. An early adopters market is less price sensitive than a mature market. Which is where we are.


He is not obliged to anything. He could be milking margin at the expense of growth. Or lowering prices to grow market share which is essential in a software platform ( analogies with cars are thus misleading). At the moment Apple are doing the former - hence their record profits - although I admit there are supply constraints.



Nokia's volume is increasing. Here are the stats.

For the year though, Nokia remains the world's largest smartphone maker by both volume and sales, having sold 100m, up 48% on 2009, for total sales of €14.7bn.



That's right. Up 48%. Freakin' amazing, right?

Nevertheless Nokia's market share is declining. As for Apple Market share is declining in the US, and stagnant over the world.

There may be some gains from Verizon and China Mobile in 1H 2011, but that re-inforces my point that they need to grow market share. in any way possible.

Nobody is suggesting a race to the bottom, just covering most of the price points. Let ZTE sell what it sells at it's ( probably unsustainable) price point. Go above that. The iPod touch - with the same internals as the iPhone 4, and a retina type display - sells at about $200. An iPhone at that cost would be free on most contracts.

All Apple have to do is

1) Keep the 3GS ( adding CDMA) and lower the sticker price by $100 . Lower the iP4 by $100. Keep the iP5 as the high end device. That maintains the brand.
2) Keep the iPad 1 and lower it's sticker price by $100. iPad2 same price as last year, component supply willing.

I would actually be surprised if they didnt do this. Nevertheless there has never been such a change in any Market so fast. A seismic change. The Android increase last year to this. What is it? 650%.

If Apple were getting the same revenue growth and the same profits in any other era, it would be amazing. Last year, it wasn't so amazing. Same with Nokia. 48% YOY. Amazing! Just not in 2010.

So Apple need to up their game. AS a single company they are doing good - the best. Tributes all round. Handshakes. Big Hugs. Huggie wuggies.

As a platform, not so well.

I got my iPhone 4 for free on a $A59 plan which works out at $1416 over two years, of course you are basing your assumption on the rather strange notion that one would purchase a smartphone without actually using it i.e. paying for calls and data.

I was not really saying anything about the parts they were using, but I can contest the oldest mac I still use us 10 yrs old and I have one that is 6 and 5 and 3 and 3 month old. Macs do last longer and I am not basing that on my experience I am basing it on my direct knowledge of all the testing apple does and the fact they required suppliers to give them the best quality parts.

Do not kid yourself into thinking that all computer companies get the exact same part, totally not true. Those customer who have higher quality requirements get the better parts and those who do not care get what is left over. I can also tell you Apple does not pay the lowest price for parts like Dell and Acer and it has nothing to do with volume is because Dell forgoes quality over prices, they rather have the lower price over anything else.

Because applie is willing to not pay the lowest price, they can demand the higher quality products. Plus the know how to test and design such they do not use parts in a why that would cause them to fail earlier in life.

NEVER going to happen. They already completely rebuilt the iPhone 4 and they'll be building the iPhone 5. And how can they lower the price of the 3GS by $100 when it's already $49?


This I believe wholeheartedly.

Of course he is. He's obliged to maximise overall profits. Which requires picking the precise price that maximises that. The price set by the market.
Anything else would be a criminal abandonment of what shareholders demand.


Nokia has no problems with volume. It's got volume coming out of its wazoo.
Nokia's problem is that they only make 8 Euros per handset.

Why? - Because they are incapable of adding value.

C.

Its $49 on a contract. Sticker price is much higher. Also that price reduction does not apply worldwide and I mean this : reduce the worldwide price of the 3GS from last June's sticker price by $100 ( or $50 in the US). That would make the 3GS free on the standard contract.

Overcharging would most likely be indicated by demand not keeping up with supply. Since demand and supply appear to be in balance, I would say that the iPhone is priced right.

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The added value is in your head. You just repeat it like a mantra. Its an excuse for justifying lower market share and higher prices.

So go support a company with higher marketshare and lower prices.

Apple's doing just fine as they are and they don't give a crap about anyone else's business model.

Oh right. This one.

I think you should suggest to Nokia, that they could emulate Apples success by increasing prices.
Let's see how that works out eh?

C.

sigh. Higher prices reduce demand. Lower prices stimulate demand. At any price point demand can equal supply. If they had originally priced the iPhone at $2000 ( sticker) they would have some demand, and would have matched supply by producing less. Or ( since they started at zero) not ramping up production to the levels they now have ramped up to.

a company may want to keep margins high and ( thus) market share low to protect it's brand, or make higher profits from lower sales. Thats fine and indeed successful for cars. And other devices.

For a company which is competing not just as a device maker but an OS platform it isn't good enough.

Apple is a very successful mobile phone manufacturer, the platform is beginning to stagnate.

I am advocating reducing prices. Keep up.

Well they sure didnt in the 90's. and look where that got them.

The model I am suggesting for them is the model they follow in the Mp3 market. Control the low end - not the very lowest but low enough - and the high end. Amortise margins over the entire range, so the higher end models subsidise the lower end.

It may be too late in the phone market for that, but not in tablets.

Hard to see what is so controversial about this. If Apple were just margin whores they would never have any low end model, and the 3GS would be discontinued now. I am merely suggesting that they add a lower end price point to the phone ( and not discontinue until next year), and add a lower entry level to iPad line by not discontinuing the iPAd 1. That ones a certainty.

When they do this they are trading some margin for marketshare.

However, there is a type of Apple fan who likes his niche and - so to answer the first point ( really an ad hominem) - I wont "support" another company because I prefer iOS.

I will reluctantly, however, move to Android if there is better and more software for it.

I am hoping they avoid that by reducing margins.

No, You suggested that Apple's added value was a some kind of illusion.

Your comical notion is that Apple could become more profitable, by cutting prices and increasing volume. (Even though it's production capacity has been maxed since the launch of the iPhone.)

You think that if Apple cut prices enough, it could sell as many units as the mighty Nokia. What a great strategy that would be. This is Nokia we are talking about. The company that is on track to start making a loss in 2011.

Nokia buys $150 worth of components and sells it for $160.
Apple buys $240 worth of components and sells it for $500. That's the definition of value added.

But I am pleased that in you, Nokia could have found itself a new CEO. You could show them the error of their ways. They could get themselves out of this unfolding financial disaster, and mirror the miracle of Apple, if only they charged twice as much.

Please, you should suggest it to them.

C.

And that larger share likely requires increased support costs even as you lower your own margins. When the smartphone market is saturated (in probably 3 to 4 years), Apple will need to decide on a strategy to deal with this issue.

As for apps being tied to marketshare, that is only partially true. Any reasonable developer will also be looking at profit potential - addressing a market with 80% share but poor software revenues is not an attractive opportunity.

Oh, no! You're right! Apple's exactly the same company that it was in the 90s and has exactly the same product matrix!




But they don't CARE.

Ask a mobile developer.

And they'll tell you that an app on the iOS platform generates about five times the revenue of the next best platform.


C.

You are clueless
Apple already historically has been able to take most of the available profits with a small share of the market. They've done this in laptops, music players, phones, and now they'll do it with tablets too. Let the Dells, Lenovos, and HTC's fight over Apple's leftovers.

1) I clearly dont advocate Nokia increasing their prices but Apple reducing their prices by adding an additional low end model this year. This should be a totally uncontroversial demand, you would think. It is something they do already to a more limited extent. I never suggested competing with Nokia in the non-smart phone market where the prices are very low indeed.

That should have gone without saying. Unfortunately, it's a bit kindergarten here.

2) I keep mentioning the fact that Apple sells both phones and iOS as a platform ( tightly coupled) and that they also need to compete as a viable platform. Therefore market share needs to be maintained or increased. You are dealing with that argument - my main argument - by ignoring it.

I said that the higher margins lower market-share policy works for cars. It is a valid strategy for some kinds of produce.

There is no point, therefore, pointing to Apple's present day profit - which we are all aware of - as a success if they platform is stagnating. I know they are doing well as a single company, but not so well as a platform ( iOS) in smart phone market share. Having no answer to this you retreat to the only argument you have - their profit is big, innit. Never said it wasnt. You are not the CEO, innit? Never said I was.

3) The 90's argument has also passed you by.

And with that I unsubscribe, since I have made my argument, and you are not capable of taking it onboard.