You don't seem to complain about HTC, Samsung, and more?
Actually, when he says "... It's true that everyone else does the same thing..." that is seen by most rational people as complaining " about HTC, Samsung, and more".
Given that these profits are achieved at the cost of insanely inhuman working conditions for the Chinese who actually fabricate the phones, and that Apple has obscene amounts of cash on hand with which they could actually do something about unemployment in the US tech industry, this is just the reason I'm reluctant to buy new Apple products. It's true that everyone else does the same thing, but Apple could be using their leverage in positive ways, not just to make more money (and as an Apple stockholder, I have an interest in the money they make...). Remember when Jobs said he hoped Apple would never lose its soul? They have.
A few things:
1) I don't think that Foxconn has "inhuman working conditions". You hear a lot about the number of suicides there, but the fact of the matter is that China, itself, has a very high suicide rate. The suicide rate at Foxconn is actually somewhere around 1/2 to 1/3 of China's rate. Life at Foxconn is actually pretty good compared to the rest of China.
2) How do you raise up the standard of living in third-world countries? You invest money there. You build factories and hire workers. It's a long, slow process. If you think the salaries that Apple is paying are substandard, ask yourself how much those workers would be making if Apple wasn't there. Then ask yourself what the aggregate effect of all American companies withdrawing their investment dollars would be on that economy. It would be an economic disaster for China.
3) Apple is not a government agency; they don't need to do anything about unemployment per se. They are a for-profit business, and the best thing that they can do for the economy is to be successful. A whole industry has sprung up around smartphone and tablet app development, many thanks to Apple. In fact, that industry is expected to hit $100 billion dollars by 2015. Apple is also expected to hire a ton of construction workers here in the near future when work starts on their new campus, and the California construction industry needs that work badly.
4) Apple is very focused, financially. They're sitting on a huge pile of cash because they don't squander it on vanity acquisitions. And they don't have it all sitting in the iVault, either. They have it invested in stocks and bonds and other short term investments that can be converted to cash very quickly when they need it. Investing in the market is investing in other businesses -- again, spurring employment and economic growth.
All that said, I just bought a 64 GB iPhone 4S. Was I aware that Apple was making an obscene profit on it? I've been around long enough to know that, yes. Apple's profit margin didn't factor into my decision, though. I bought the phone because I believe it's worth that much.
Even mentioning the price of the iPhone as 199$ or 299$ is completely irrelevant as that has Nothing to do with what you pay.
Cost of ownership is the only number usable when comparing models.
Sure it does if your the one paying for it. $299>$199>$0, How simple can it be? Its part of the TCO. The monthly cost is a factor but initial costs are real and relevant.
The monthly cost of ownership of a 16,32 and 64GB phone on the same data/voice plan is going to be the same.
Sure it does if your the one paying for it. $299>$199>$0, How simple can it be? Its part of the TCO. The monthly cost is a factor but initial costs are real and relevant.
The monthly cost of ownership of a 16,32 and 64GB phone on the same data/voice plan is going to be the same.
True. But since Apple does not say how much they charge the Provider the cost does not mean much.
How much do Apple charge ATT or Verizon for a 16GB?, A 32GB?. That would be interesting.
Are you certain it is 400$+99$. 400$+199$ etc?
Maybe it is like you say, that you can get the exact same contract on all models and pay the same amount monthly + the initial cost.
We always pay for the phone up front, the total cost of the phone. Around 700.. Then apply the best contracts we can find with no termination fees or bindings.
I also feel they charge to much for the device. Average selling price of the iPhone is north of 600$ if I'm not mistaken.
Say it costs Apple 200$ to get it from nothing, to a customer. Thats 400$ profit on a 600$ device. They are making gold. Simple as that.
But the price is set for what people pay. If they feel that the price is keeping people away, they have ALOT of margin to bite from.
It's not Starbucks fault a cup of coffee is 5 dollars. It's yours.
First off, I believe whole heartedly that a device is worth what the buyer will sell it for and the customer will pay. At over $600 each (subsidized at $200 and up) people stand in line and drive up new records for sales for it. Must be worth it...
Second, it doesn't just cost $200 to make. People use iSupply numbers all the time, but that's just the cost of the sum of parts. They never factor in the cost of R&D, marketing, etc. Now, the iPhone 4S, since it's little more than an upgrade to the iPhone 4 didn't get a change in form factor and there was little retooling. Also, I guarantee Apple doesn't pay the same price as others. They've negotiated sweetheart deals on manufacturing and parts. That's because they have scale. They dwarf the nest biggest selling single phone by a wide margin. That improves their margins quite a bit.
Wow, I know Apple tend to make around 30-35% margin usually, but 70%....... Does make me feel that Apple just shafted me on my £499 aquisition for a 16gb iPhone 4S. \
Oh well, as only Apple makes the iPhone and that's the platform I want I guess I should not complain too much I am afterall paying for it.
Apple have on average a bit over 25% margin. (a large part of Apples margin is income from their money pile that is added to the overall profit).
The BoM is wrong in this article. The screen and the flash memory cost about 200 dollar. So something is wrong with his assessment.
It is also fun that people think these products does not have and R&D cost, manufacturing cost, shipping cost and so on. The 70% figure is just to continue the myth that Apple has larger margins than others. (Many tech companies have much larger margins then Apple. The different is that 25% margin on a 1000 dollar computer is more then 80% margin on a 200 dollar CPU)
It is far from irrelevant. For many people, a cash flow analysis is supremely important.
Ok. I give up.
I'm just trying to say that the pricetag does not represent the cost of the device. Being stuck in a contract for 24 months and paying extra fees for bills and handling etc will most likely cost you more than buying the phone up front.
Then you can apply a contract with no device costs etc. But maybe you don't have that in the US.
I'm not sure what you're comparing it to? What do you mean by cost of ownership? The amount payed by the end of the contract?
Yes. He's talking TCO - Total Cost of Ownership. It is a very relevant thing to look at if you have the luxury of doing so.
In fact, many people fail to do so, and end up paying a lot more for things like cars than they might otherwise pay. Few people realize, for example, that depreciation is often the biggest single expense of car ownership. Figuring out how many thousand the car costs per year of ownership is not something that many people do. Instead, they look at the easily calculable cash-flow numbers like down payment, monthly payments and gas costs.
Cars that cost many tens of thousands can actually be relatively cheap, assuming that their resale value remains high. For example, one could buy a Ferrari, drive it moderately for a year or two, and sell it for tens of thousands more than the purchase price.
One could also buy a brand new econobox for <$20,000, drive it moderately for a year or two, and lose many, many thousands of dollars by trading it in against a new econobox.
There's everything in the middle of those extremes as well. But it often costs more in cash flow to realize huge TCO savings. Not so much in the cell phone market, however. Anybody with a few hundred disposable bucks should think carefully about cellphone TCO.
Yes. He's talking TCO - Total Cost of Ownership. It is a very relevant thing to look at if you have the luxury of doing so.
In fact, many people fail to do so, and end up paying a lot more for things like cars than they might otherwise pay. Few people realize, for example, that depreciation is often the biggest single expense of car ownership. Figuring out how many thousand the car costs per year of ownership is not something that many people do. Instead, they look at the easily calculable cash-flow numbers like down payment, monthly payments and gas costs.
Cars that cost many tens of thousands can actually be relatively cheap, assuming that their resale value remains high. For example, one could buy a Ferrari, drive it moderately for a year or two, and sell it for tens of thousands more than the purchase price.
One could also buy a brand new econobox for <$20,000, drive it moderately for a year or two, and lose many, many thousands of dollars by trading it in against a new econobox.
There's everything in the middle of those extremes as well. But it often costs more in cash flow to realize huge TCO savings. Not so much in the cell phone market, however. Anybody with a few hundred disposable bucks should think carefully about cellphone TCO.
Yeah, I was just confirming. I realized that when I canceled my Tmobile contract and realized how much I can sell the Vibrant for on ebay (it would cover my term fees).
Apple products tend to not lose much value. I'm pretty sure you can get about $299 for the 3GS online.
I like thinking like that though. My business classes have gotten to me.
Of course iPhone 4S 16GB gets higher subsidy than Galaxy S2 because it's more expensive phone!
Unlocked, non-contract iPhone 4S 16GB costs 629 ? here against Galaxy S2's 530 ? price tag.
Engadget listed that with a 900 minutes, texting and 2GB data plan for the iPhone 4S costs about $2500 in the US. Add the $299 for 32 GB iPhone 4S and the total for two years is around $2800.
We don't have similar plan available but using 3000 minutes, 300 texts and unlimited hspa+ data the subscription is 545 ?, or $732, for 24 months. $940 upfront for an unlocked, non-contract iPhone 4S 32 GB and the total for two years is around $1700.
No wonder the subsidizing carriers are excited about $199 iPhones .. and customers pay a hefty premium for their two year deal.
Very interesting that carriers are willing to pay such a larger subsidy for iPhones, given that the data contracts are presumably identical or at least very similar to other smartphones.
My guess is the reason for this is lower iPhone support costs for the carriers, including fewer returns.
Yeah, I was just confirming. I realized that when I canceled my Tmobile contract and realized how much I can sell the Vibrant for on ebay (it would cover my term fees).
Apple products tend to not lose much value. I'm pretty sure you can get about $299 for the 3GS online.
I like thinking like that though. My business classes have gotten to me.
I just checked Gazelle. They will buy my iPhone 3GS for $143. A Motorola Droid, which came out at roughly the same time, is only worth $32.
RnD and iCloud built-in? you think that is all free?
No one is saying this. All I said was, that my guess is that it is covered by the first million or so phones. Apple sell about 10-20 million phones every quarter.
Of course iPhone 4S 16GB gets higher subsidy than Galaxy S2 because it's more expensive phone!
Unlocked, non-contract iPhone 4S 16GB costs 629 ? here against Galaxy S2's 530 ? price tag.
Engadget listed that with a 900 minutes, texting and 2GB data plan for the iPhone 4S costs about $2500 in the US. Add the $299 for 32 GB iPhone 4S and the total for two years is around $2800.
We don't have similar plan available but using 3000 minutes, 300 texts and unlimited hspa+ data the subscription is 545 ?, or $732, for 24 months. $940 upfront for an unlocked, non-contract iPhone 4S 32 GB and the total for two years is around $1700.
No wonder the subsidizing carriers are excited about $199 iPhones .. and customers pay a hefty premium for their two year deal.
I so wish I could buy the phones outright. One day.
Wow, I know Apple tend to make around 30-35% margin usually, but 70%....... Does make me feel that Apple just shafted me on my £499 aquisition for a 16gb iPhone 4S. \
Oh well, as only Apple makes the iPhone and that's the platform I want I guess I should not complain too much I am afterall paying for it.
You really need a lesson in margins, e.g., the difference between manufacturing, gross and net.
I don't know about you, but I see a lot of tangable and intangible things that are not accounted for to sell, bring and keep a product to/on the market.
Amazing that although the general consensus is that Apple is extremely secret, yet somehow there are those that accept unverified or unpublished references on a media blog as the gospel truth.
Wow, I know Apple tend to make around 30-35% margin usually, but 70%....... Does make me feel that Apple just shafted me on my £499 aquisition for a 16gb iPhone 4S. \
Oh well, as only Apple makes the iPhone and that's the platform I want I guess I should not complain too much I am afterall paying for it.
Manufacturing margin is different from operating margin. That's just the cost of the parts, once you add in all the other costs like shipping, marketing, engineering, etc the margin probably falls to around 35%. Still a very healthy profit. In the end something is really only worth what enough people are willing to pay for it.
Comments
You don't seem to complain about HTC, Samsung, and more?
Actually, when he says "... It's true that everyone else does the same thing..." that is seen by most rational people as complaining " about HTC, Samsung, and more".
Sincerely,
Dim
p.s. Reading is fundamental.
Given that these profits are achieved at the cost of insanely inhuman working conditions for the Chinese who actually fabricate the phones, and that Apple has obscene amounts of cash on hand with which they could actually do something about unemployment in the US tech industry, this is just the reason I'm reluctant to buy new Apple products. It's true that everyone else does the same thing, but Apple could be using their leverage in positive ways, not just to make more money (and as an Apple stockholder, I have an interest in the money they make...). Remember when Jobs said he hoped Apple would never lose its soul? They have.
A few things:
1) I don't think that Foxconn has "inhuman working conditions". You hear a lot about the number of suicides there, but the fact of the matter is that China, itself, has a very high suicide rate. The suicide rate at Foxconn is actually somewhere around 1/2 to 1/3 of China's rate. Life at Foxconn is actually pretty good compared to the rest of China.
2) How do you raise up the standard of living in third-world countries? You invest money there. You build factories and hire workers. It's a long, slow process. If you think the salaries that Apple is paying are substandard, ask yourself how much those workers would be making if Apple wasn't there. Then ask yourself what the aggregate effect of all American companies withdrawing their investment dollars would be on that economy. It would be an economic disaster for China.
3) Apple is not a government agency; they don't need to do anything about unemployment per se. They are a for-profit business, and the best thing that they can do for the economy is to be successful. A whole industry has sprung up around smartphone and tablet app development, many thanks to Apple. In fact, that industry is expected to hit $100 billion dollars by 2015. Apple is also expected to hire a ton of construction workers here in the near future when work starts on their new campus, and the California construction industry needs that work badly.
4) Apple is very focused, financially. They're sitting on a huge pile of cash because they don't squander it on vanity acquisitions. And they don't have it all sitting in the iVault, either. They have it invested in stocks and bonds and other short term investments that can be converted to cash very quickly when they need it. Investing in the market is investing in other businesses -- again, spurring employment and economic growth.
All that said, I just bought a 64 GB iPhone 4S. Was I aware that Apple was making an obscene profit on it? I've been around long enough to know that, yes. Apple's profit margin didn't factor into my decision, though. I bought the phone because I believe it's worth that much.
One more thing.
Even mentioning the price of the iPhone as 199$ or 299$ is completely irrelevant as that has Nothing to do with what you pay.
Cost of ownership is the only number usable when comparing models.
Sure it does if your the one paying for it. $299>$199>$0, How simple can it be? Its part of the TCO. The monthly cost is a factor but initial costs are real and relevant.
The monthly cost of ownership of a 16,32 and 64GB phone on the same data/voice plan is going to be the same.
Sure it does if your the one paying for it. $299>$199>$0, How simple can it be? Its part of the TCO. The monthly cost is a factor but initial costs are real and relevant.
The monthly cost of ownership of a 16,32 and 64GB phone on the same data/voice plan is going to be the same.
True. But since Apple does not say how much they charge the Provider the cost does not mean much.
How much do Apple charge ATT or Verizon for a 16GB?, A 32GB?. That would be interesting.
Are you certain it is 400$+99$. 400$+199$ etc?
Maybe it is like you say, that you can get the exact same contract on all models and pay the same amount monthly + the initial cost.
We always pay for the phone up front, the total cost of the phone. Around 700.. Then apply the best contracts we can find with no termination fees or bindings.
I also feel they charge to much for the device. Average selling price of the iPhone is north of 600$ if I'm not mistaken.
Say it costs Apple 200$ to get it from nothing, to a customer. Thats 400$ profit on a 600$ device. They are making gold. Simple as that.
But the price is set for what people pay. If they feel that the price is keeping people away, they have ALOT of margin to bite from.
It's not Starbucks fault a cup of coffee is 5 dollars. It's yours.
First off, I believe whole heartedly that a device is worth what the buyer will sell it for and the customer will pay. At over $600 each (subsidized at $200 and up) people stand in line and drive up new records for sales for it. Must be worth it...
Second, it doesn't just cost $200 to make. People use iSupply numbers all the time, but that's just the cost of the sum of parts. They never factor in the cost of R&D, marketing, etc. Now, the iPhone 4S, since it's little more than an upgrade to the iPhone 4 didn't get a change in form factor and there was little retooling. Also, I guarantee Apple doesn't pay the same price as others. They've negotiated sweetheart deals on manufacturing and parts. That's because they have scale. They dwarf the nest biggest selling single phone by a wide margin. That improves their margins quite a bit.
Wow, I know Apple tend to make around 30-35% margin usually, but 70%....... Does make me feel that Apple just shafted me on my £499 aquisition for a 16gb iPhone 4S.
Oh well, as only Apple makes the iPhone and that's the platform I want I guess I should not complain too much I am afterall paying for it.
Apple have on average a bit over 25% margin. (a large part of Apples margin is income from their money pile that is added to the overall profit).
The BoM is wrong in this article. The screen and the flash memory cost about 200 dollar. So something is wrong with his assessment.
It is also fun that people think these products does not have and R&D cost, manufacturing cost, shipping cost and so on. The 70% figure is just to continue the myth that Apple has larger margins than others. (Many tech companies have much larger margins then Apple. The different is that 25% margin on a 1000 dollar computer is more then 80% margin on a 200 dollar CPU)
It is far from irrelevant. For many people, a cash flow analysis is supremely important.
Ok. I give up.
I'm just trying to say that the pricetag does not represent the cost of the device. Being stuck in a contract for 24 months and paying extra fees for bills and handling etc will most likely cost you more than buying the phone up front.
Then you can apply a contract with no device costs etc. But maybe you don't have that in the US.
I'm not sure what you're comparing it to? What do you mean by cost of ownership? The amount payed by the end of the contract?
Yes. He's talking TCO - Total Cost of Ownership. It is a very relevant thing to look at if you have the luxury of doing so.
In fact, many people fail to do so, and end up paying a lot more for things like cars than they might otherwise pay. Few people realize, for example, that depreciation is often the biggest single expense of car ownership. Figuring out how many thousand the car costs per year of ownership is not something that many people do. Instead, they look at the easily calculable cash-flow numbers like down payment, monthly payments and gas costs.
Cars that cost many tens of thousands can actually be relatively cheap, assuming that their resale value remains high. For example, one could buy a Ferrari, drive it moderately for a year or two, and sell it for tens of thousands more than the purchase price.
One could also buy a brand new econobox for <$20,000, drive it moderately for a year or two, and lose many, many thousands of dollars by trading it in against a new econobox.
There's everything in the middle of those extremes as well. But it often costs more in cash flow to realize huge TCO savings. Not so much in the cell phone market, however. Anybody with a few hundred disposable bucks should think carefully about cellphone TCO.
Yes. He's talking TCO - Total Cost of Ownership. It is a very relevant thing to look at if you have the luxury of doing so.
In fact, many people fail to do so, and end up paying a lot more for things like cars than they might otherwise pay. Few people realize, for example, that depreciation is often the biggest single expense of car ownership. Figuring out how many thousand the car costs per year of ownership is not something that many people do. Instead, they look at the easily calculable cash-flow numbers like down payment, monthly payments and gas costs.
Cars that cost many tens of thousands can actually be relatively cheap, assuming that their resale value remains high. For example, one could buy a Ferrari, drive it moderately for a year or two, and sell it for tens of thousands more than the purchase price.
One could also buy a brand new econobox for <$20,000, drive it moderately for a year or two, and lose many, many thousands of dollars by trading it in against a new econobox.
There's everything in the middle of those extremes as well. But it often costs more in cash flow to realize huge TCO savings. Not so much in the cell phone market, however. Anybody with a few hundred disposable bucks should think carefully about cellphone TCO.
Yeah, I was just confirming. I realized that when I canceled my Tmobile contract and realized how much I can sell the Vibrant for on ebay (it would cover my term fees).
Apple products tend to not lose much value. I'm pretty sure you can get about $299 for the 3GS online.
I like thinking like that though.
Unlocked, non-contract iPhone 4S 16GB costs 629 ? here against Galaxy S2's 530 ? price tag.
Engadget listed that with a 900 minutes, texting and 2GB data plan for the iPhone 4S costs about $2500 in the US. Add the $299 for 32 GB iPhone 4S and the total for two years is around $2800.
We don't have similar plan available but using 3000 minutes, 300 texts and unlimited hspa+ data the subscription is 545 ?, or $732, for 24 months. $940 upfront for an unlocked, non-contract iPhone 4S 32 GB and the total for two years is around $1700.
No wonder the subsidizing carriers are excited about $199 iPhones
Remember when Jobs said he hoped Apple would never lose its soul? They have.
Because you're saying?
It is far from irrelevant. For many people, a cash flow analysis is supremely important.
I'd say so in a way. Especially when you're getting a family plan. The intial cost can be a lot.
My guess is the reason for this is lower iPhone support costs for the carriers, including fewer returns.
Yeah, I was just confirming. I realized that when I canceled my Tmobile contract and realized how much I can sell the Vibrant for on ebay (it would cover my term fees).
Apple products tend to not lose much value. I'm pretty sure you can get about $299 for the 3GS online.
I like thinking like that though.
I just checked Gazelle. They will buy my iPhone 3GS for $143. A Motorola Droid, which came out at roughly the same time, is only worth $32.
RnD and iCloud built-in? you think that is all free?
No one is saying this. All I said was, that my guess is that it is covered by the first million or so phones. Apple sell about 10-20 million phones every quarter.
I just checked Gazelle. They will buy my iPhone 3GS for $143. A Motorola Droid, which came out at roughly the same time, is only worth $32.
The hell. What about ebay? I was more talking about direct selling than a 3rd party (they rip you off). Then again, I could just be wrong.
Lolz, $32 droid!
Of course iPhone 4S 16GB gets higher subsidy than Galaxy S2 because it's more expensive phone!
Unlocked, non-contract iPhone 4S 16GB costs 629 ? here against Galaxy S2's 530 ? price tag.
Engadget listed that with a 900 minutes, texting and 2GB data plan for the iPhone 4S costs about $2500 in the US. Add the $299 for 32 GB iPhone 4S and the total for two years is around $2800.
We don't have similar plan available but using 3000 minutes, 300 texts and unlimited hspa+ data the subscription is 545 ?, or $732, for 24 months. $940 upfront for an unlocked, non-contract iPhone 4S 32 GB and the total for two years is around $1700.
No wonder the subsidizing carriers are excited about $199 iPhones
I so wish I could buy the phones outright. One day.
Wow, I know Apple tend to make around 30-35% margin usually, but 70%....... Does make me feel that Apple just shafted me on my £499 aquisition for a 16gb iPhone 4S.
Oh well, as only Apple makes the iPhone and that's the platform I want I guess I should not complain too much I am afterall paying for it.
You really need a lesson in margins, e.g., the difference between manufacturing, gross and net.
In the meantime, let me point out you to Whitmore's predictions dated June 28, 2011 in which he said the same thing. http://m.ibtimes.com/apple-iphone-5-...rr-170502.html
I don't know about you, but I see a lot of tangable and intangible things that are not accounted for to sell, bring and keep a product to/on the market.
Amazing that although the general consensus is that Apple is extremely secret, yet somehow there are those that accept unverified or unpublished references on a media blog as the gospel truth.
Maybe I should change religions.
Wow, I know Apple tend to make around 30-35% margin usually, but 70%....... Does make me feel that Apple just shafted me on my £499 aquisition for a 16gb iPhone 4S.
Oh well, as only Apple makes the iPhone and that's the platform I want I guess I should not complain too much I am afterall paying for it.
Manufacturing margin is different from operating margin. That's just the cost of the parts, once you add in all the other costs like shipping, marketing, engineering, etc the margin probably falls to around 35%. Still a very healthy profit. In the end something is really only worth what enough people are willing to pay for it.