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Apple's 44.7% gross margins are highest in at least 15 years - Page 2

post #41 of 62
Quote:
Originally Posted by tjwal View Post

With a margin of 44% the apple tax is alive and well.

apple makes money on hardware + os + retail + support, so of course their margin is going to be big.

in the cloner world you have many mouths to feed: hardware <cloner maker> + os (microsoft tax) + retail (best buy, etc...) + support (firedog/geek squad/etc..)

so yeah, the individual slices will be small.
post #42 of 62
Quote:
Originally Posted by bullhead View Post

apple makes money on hardware + os + retail + support, so of course their margin is going to be big.

in the cloner world you have many mouths to feed: hardware <cloner maker> + os (microsoft tax) + retail (best buy, etc...) + support (firedog/geek squad/etc..)

so yeah, the individual slices will be small.

Or in the case of the WINTEL business MSFT is at 73% Gross Profit Margin and the PC hardware and retail eat each other alive.
post #43 of 62
Quote:
Originally Posted by thegreatbosan View Post

\

I think tjwal and Slappy are related somehow

Nope, I only commented on the margin which is extremely high for a hardware maker. You can call it a profit, tax or anything you like. Whether it is good or bad is a matter of opinion.

I'm a satisfied user of a number of apple products and would like to have a few more but just can't afford to pay up to twice as much for a similar specs. I admit that the lifetime cost for an apple computer may well be less than a windows one, but the upfront cost can be impossible to overcome.
post #44 of 62
Quote:
Originally Posted by eswinson View Post

Apple is doing something even better with the iPhones. They are keeping the older phones around longer and offering then free with a contract. If 5% would make a difference, free should seal the deal.

Apple isn't giving the phones away for free - the carriers do that. I am not sure how much Apple is selling the phones for. Anybody?
post #45 of 62
Quote:
Originally Posted by island hermit View Post

You have to admit... Apple has high margins and record profits only because it is the only company that uses Chinese factories to produce its goods.

[/s]

Not during the mid 1980s. Apple was churning out Macs with a healthy profit margin from a factory in California. Made the USA was stamped on the back of every Mac, baby!

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #46 of 62
Quote:
Originally Posted by tjwal View Post

Nope, I only commented on the margin which is extremely high for a hardware maker. You can call it a profit, tax or anything you like. Whether it is good or bad is a matter of opinion.

I'm a satisfied user of a number of apple products and would like to have a few more but just can't afford to pay up to twice as much for a similar specs. I admit that the lifetime cost for an apple computer may well be less than a windows one, but the upfront cost can be impossible to overcome.

No, you can't call it a tax. A tax is something different (http://en.wikipedia.org/wiki/Tax) By calling it a Tax you are misrepresenting and by implication expressing an opinion.
post #47 of 62
Quote:
Originally Posted by tjwal View Post

Nope, I only commented on the margin which is extremely high for a hardware maker. You can call it a profit, tax or anything you like. Whether it is good or bad is a matter of opinion.

I'm a satisfied user of a number of apple products and would like to have a few more but just can't afford to pay up to twice as much for a similar specs. I admit that the lifetime cost for an apple computer may well be less than a windows one, but the upfront cost can be impossible to overcome.

But they aren't just a hardware maker so comparing them to an HP, an Acer, an HTC or Motorola isn't a good match. bullhead pointed out above, which I think is accurate, "apple makes money on hardware + os + retail + support, so of course their margin is going to be big." I'd add services and content provider to that list given things like iTunes content and iTunes in the cloud.
post #48 of 62
Quote:
Originally Posted by Suddenly Newton View Post

Not during the mid 1980s. Apple was churning out Macs with a healthy profit margin from a factory in California. Made the USA was stamped on the back of every Mac, baby!

... and they were not cheap, but damn they were fun to use.
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post #49 of 62
Quote:
Originally Posted by paxman View Post

Apple isn't giving the phones away for free - the carriers do that. I am not sure how much Apple is selling the phones for. Anybody?

$350 for the 3GS, $499 for the 4, and $599 for the low-end 4S, I believe, though I'm not sure.

Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
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Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
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post #50 of 62
Quote:
Originally Posted by island hermit View Post

... and they were not cheap, but damn they were fun to use.

I have fond memories of a Mac Plus. Dark Castle and Aldus PageMaker. Good times.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #51 of 62
Quote:
Originally Posted by Tallest Skil View Post

How about we have just ONE THREAD where this doesn't come up for absolutely no reason.

This is totally related. High margins is the thread. Slave labor provides Apple with high gross margins.
post #52 of 62
Quote:
Originally Posted by Bruceedits View Post

I love Apple products and have at least a dozen Macs and other computers. That said, I understand that using Chinese slave labor does save on costs in manufacturing. I think Apple has t come clean on this issue. Yes, the Chinese workers "earn" about $2/day working 12-14hr shifts and living in dorms on the Foxconn City campus. But, face it, Apple is using these people to make record profits at the expense of American workers.

This stupidity always comes up. First, Apple products costs too much, hence the "Apple tax". But, Apple shouldn't use cheap labor in China. Raise of hands of the haters on here. Who is willing to pay $1200 for an iPad so it can be produced here in the USA? I didn't think so...... move along now.
post #53 of 62
Quote:
Originally Posted by Bruceedits View Post

This is totally related. High margins is the thread. Slave labor provides Apple with high gross margins.

They are a people freed by a glorious revolution who choose serfdom. Slaves aren't paid.
post #54 of 62
Quote:
Originally Posted by Bruceedits View Post

I love Apple products and have at least a dozen Macs and other computers. That said, I understand that using Chinese slave labor does save on costs in manufacturing. I think Apple has t come clean on this issue. Yes, the Chinese workers "earn" about $2/day working 12-14hr shifts and living in dorms on the Foxconn City campus. But, face it, Apple is using these people to make record profits at the expense of American workers.

Last I checked, Chinese workers wanted the job and were thankful to have work. Standards of living and costs of living aren't the same everywhere. If you brought the jobs back, it would be at the expense of Chinese workers. The world doesn't revolve around America.
post #55 of 62
Quote:
Originally Posted by Suddenly Newton View Post

Not during the mid 1980s. Apple was churning out Macs with a healthy profit margin from a factory in California. Made the USA was stamped on the back of every Mac, baby!

And people were also willing to pay more for products. People aren't willing to pay more these days, as consumers have become accustomed to cheap Chinese-labor-based pricing.

It's a cultural problem enabled by political problems. Corporations are like lava and will follow the path of least resistance towards maximum profits; their creed is to maximize shareholder value. Blame society.
post #56 of 62
Quote:
Originally Posted by Pendergast View Post

And people were also willing to pay more for products. People aren't willing to pay more these days, as consumers have become accustomed to cheap Chinese-labor-based pricing.

It's a cultural problem enabled by political problems. Corporations are like lava and will follow the path of least resistance towards maximum profits; their creed is to maximize shareholder value. Blame society.

The Chinese are willing to work for $2/day. The "owners" of Foxconn are billionaires. Fine. All I'm saying is that this is one of the main reasons Apple's margins are so high and why they are sitting on over $80 Billion in cash-on-hand. While I do believe US workers could be doing this work and it might not increase the price of the iPad unless Apple is wedded to this high margin. By one estimate, the price would be $65 per unit higher if made in the US. But, if Apple had to, they could lower their margins and the cost could be equalized. I am only saying this because the US needs jobs and I am a US citizen who supports "made in the USA" products. I really do not give a rat's ass about Chinese workers having jobs if it means US workers are out on the streets.
post #57 of 62
Quote:
Originally Posted by ChristophB View Post

Or in the case of the WINTEL business MSFT is at 73% Gross Profit Margin and the PC hardware and retail eat each other alive.

Despite the rampant comparisons to Apple's Mac HW sales to Windows OS the one that is never compared by the Apple hating dissenters is the excessive profit margins MS gets.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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post #58 of 62
Quote:
Originally Posted by Tallest Skil View Post

$350 for the 3GS, $499 for the 4, and $599 for the low-end 4S, I believe, though I'm not sure.

What we know from Apple's 10Q made public yesterday is that it had an iPhone segment revenue of $24,417 million and sold 37.044 million iPhones.

The average revenue per iPhone is therefore $659.

That is the number that the market is so impressively reacting to!
post #59 of 62
Quote:
Originally Posted by SolipsismX View Post

Despite the rampant comparisons to Apple's Mac HW sales to Windows OS the one that is never compared by the Apple hating dissenters is the excessive profit margins MS gets.

Probably has a lot more to do with the simple fact that the two aren't comparable. Software gross margins do not include development costs and the actual cost to manufacture each copy of a software program is comparatively low compared.
post #60 of 62
Quote:
Originally Posted by bongo View Post

Probably has a lot more to do with the simple fact that the two aren't comparable. Software gross margins do not include development costs and the actual cost to manufacture each copy of a software program is comparatively low compared.

That is my point. They aren't comparable.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

Reply
post #61 of 62
Quote:
Originally Posted by city View Post

Apple is also a retailer of its products, so we should expect a higher margin. They have expensive locations and expensive build outs.

For the last quarter, Apple retail was $6 B of the total $46 B in revenue - so 13% of sales were through Apple retail.

Considering that retail margins are typically relatively low (or, at least, lower than Apple's average 44% margin), this probably had only a modest impact on the total margin figure.

I had to change my numbers - originally, I said that if the retail store had a lower gross margin than Apple that it would bring down the total GM. That's not the case:

Let's use an average retail margin of 33%.

Say Apple sells $1 M worth of product at 40%. That's $400 K in gross margin and $600 K in cost.

Now, let's say that they sell that product through an Apple store which gets 33% gross margin. The total selling price would be $1.5 M and Apple would make $900 K - or 60% gross margin based on the same $600 K in cost.

If those numbers are typical and if retail is 13% of the total, then retail would have added just over 1% to Apple's gross margin last quarter.
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Gatorguy 5/31/13
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Gatorguy 5/31/13
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post #62 of 62
Quote:
Originally Posted by SolipsismX View Post

That is my point. They aren't comparable.

I do agree. My comparison to MSFT was made to point out that there are tech companies that sustain margins much higher than Apple's 2011 and there's no endless shouts about a [fictional] "tax" or calls for them to stop being greedy and give their customers a break or their labor force more of their fair share. And it's interesting that people are content with comparing Apple to just PC manufacturers. A more proper comparison, albeit a different industry, would be a Cisco Systems who is OS, hardware, service, services, mostly direct sales, some channel distribution. Around 60% I think.
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