I take ur point...but not really that surprising when u consider most businesses follow the "Walmart" business model....sell "crap" at a low cost, but sell a lot of it. Americans seem to equate good value to low cost...
Largest retailer, Walmart. What do they sell? Crap!
Largest beverage company, Coke. What do they sell? Crap!
Largest restaurant company, McDonald's. What do they sell? Crap!
Largest software company, Microsoft. What do they sell? Crap!
Largest PC manufacturer, (by volume), HP. What do they sell? Crap!
Largest auto company, (until recently), GM. What do they sell? Crap!
Largest food company, General Mills-(?). What do they sell? Crap!
Etc., etc....
P.S. Anyone have some more examples I can add to the list?
Apple is estimated to have taken in 52 percent of the handset industry's operating profits last quarter, despite only having a 4.2 percent global handset market share.
Analyst T. Michael Walkley with Canaccord Genuity issued a note to investors on Friday in which he estimated Apple took more than half of the industry's operating profits in the third quarter of calendar 2011. That's a 5 percent increase from the third quarter of 2010, when Apple's share of industry operating profits was 47 percent.
An increase from 47% to 52% isn't a 5% increase. A 5% increase of 47% is only 49%. It's just over a 10% increase from the same period previous year, or a 500 basis points increase.
Even assuming this is true, it's unsustainable. Eventually, something has to change.
Possible changes the industry might adopt:
- Low profit companies stop selling phones
- Companies reduce the range of product offerings to reduce cost
- Companies improve their products enough to gain market share and profits
Right now, Apple makes an average of 25 times as much per phone as the rest of the industry. SOMEONE has to make a change.
I don't see why it has to change. The premium brands typically make a lot more per unit than the low end brands. Apple has sustained profit dominance in every facet of its structure. Macs were reported to take 1/3rd of the world's PC profits back in 2007(?). I have to assume that has gone up.
- If low-end companies stop producing Apple could easily lose profit share, but typically that's not how we see these markets work. With the PC industry we're still seeing a race to the bottom even as they beg Intel to give them breaks so they can compete with Apple. I bet Samsung and a couple others are making near what Apple makes on a couple models of smartphones, but they simply aren't selling enough to make it viable. Seems like a big risk to cut their product line to boutique size.
- Reducing range could happen, but that also would be unusual for the majority. I think for Apple to falter here we'll have to see someone really compete with Apple head one with a premium product that has substantial mindshare. That means we'll see it coming.
- I don't that last one will happen. They'll get cheaper components but so will others which will make their market even more of a struggle. Free dumb-phones become free feature-phones, but the market dynamics will remain the same.
An increase from 47% to 52% isn't a 5% increase. A 5% increase of 47% is only 49%. It's just over a 10% increase from the same period previous year, or a 500 basis points increase.
5% increase of the entire world's handset profits, not 5% increase over their previous quarter's handset profits. Simple math: 52 − 47 = 5
5% increase of the entire world's handset profits, not 5% increase over their previous quarter's handset profits. Simple math: 50 − 47 = 5
But it's not simple math. If it was then a 5% increase of your $7.25 hourly salary would be $12.25 but it's really only $7.61 ( i.e. $7.25 * 5% or $7.25 * 0.05 if you don't understand percentages, is $0.36 not $5.00 )
But it's not simple math. If it was then a 5% increase of your $7.25 hourly salary would be $12.25 but it's really only $7.61 ( i.e. $7.25 * 5% or $7.25 * 0.05 if you don't understand percentages, is $0.36 not $5.00 )
It's simple. They specified a 5% increase of the all handset profits, not the increase in Apple's profits. You wrote "your" hourly salary, when you need to see how that change in per hour rate affects the example companies total hourly payout then you'll understand what is being measured.
To reiterate, there is 100% that can be taken from any stated market. Apple was taking 47% of the handset market, now they are taking 52% of the handset market. How much of an increase of the handset market did they gain? If you can't figure out that is 5% I feel bad for when you hit 3rd grade.
I take ur point...but not really that surprising when u consider most businesses follow the "Walmart" business model....sell "crap" at a low cost, but sell a lot of it. Americans seem to equate good value to low cost...
Largest retailer, Walmart. What do they sell? Crap!
Largest beverage company, Coke. What do they sell? Crap!
Largest restaurant company, McDonald's. What do they sell? Crap!
Largest software company, Microsoft. What do they sell? Crap!
Largest PC manufacturer, (by volume), HP. What do they sell? Crap!
Largest auto company, (until recently), GM. What do they sell? Crap!
Largest food company, General Mills-(?). What do they sell? Crap!
Etc., etc....
P.S. Anyone have some more examples I can add to the list?
Largest so former 4G network, Sprint-(?). What do they sell? Crap!
Off topic, but how can you disagree with Coke being crap when its ingredients are water, sugar, caffeine, a tiny bit of flavoring and coloring, and carbon dioxide. Not a whole lot of good stuff in there. Also Coke's founder was famous for saying something to the effect that his goal was to sell something to the masses that cost a few pennies to make, that he could sell for a quarter, and that was addicting. Which is why Coke is named Coke, because it originally had cocaine as an addicting ingredient. Now the replacement addicting ingredient is caffeine.
On topic, and yet, the media keeps trumpeting the triumph of Android over iOS. If I were in the smartphone business I would want the profit end of the spectrum rather than the market share end. However, I hope that Apple keeps inovating and doesn't rest on its laurels. Because I believe that Google's strategy is very Mircosoftian in that they and their partners are willing to risk low profits if they can saturate the market to the point were they become the de facto standard. By the way the list really makes you think doesn't it?
I agree on all your points. Something strange has happened though of late... Apple seems to have got through to many in the tablet market and more every day on the Mac and iPhone markets, that quality is worth paying for. A welcome change after so many years of Microsoft et al.
To reiterate, there is 100% that can be taken from any stated market. Apple was taking 47% of the handset market, now they are taking 52% of the handset market. How much of an increase of the handset market did they gain? If you can't figure out that is 5% I feel bad for when you hit 3rd grade.
Still that isn't a 5% increase. That is a 500 basis points increase. You can't subtract percentages to get the percent increase. 47% * X% = 52%. I'll let you do the math from there.
Even assuming this is true, it's unsustainable. Eventually, something has to change.
...
Right now, Apple makes an average of 25 times as much per phone as the rest of the industry. SOMEONE has to make a change.
What you are missing though is the percentage revenue share Apple has. If I were to SWAG it, I would estimate Apple has about 25-30% revenue share, which puts them roughly at twice the profit margin as the rest of the industry. If you further said that the smart phone segment was 25% of the total, they likely only have a small improvement in profit margin over Samsung.
The low-cost phones are already a race to the bottom. The Android market is going closer to there as well; you can pick up 100 Android phones for almost nothing.
What happens to the Android "Brand" players is another story though, one not yet written.
. . . Something strange has happened though of late... Apple seems to have got through to many in the tablet market and more every day on the Mac and iPhone markets, that quality is worth paying for. A welcome change after so many years of Microsoft et al.
This, what Apple has wrought. Quality and design are desirable enough to pay for, and smart manufacturing can keep the costs down enough so you don't have to pay all that much more.
As Christopher126 points out, this is new in American business.
Even assuming this is true, it's unsustainable. Eventually, something has to change.
Possible changes the industry might adopt:
- Low profit companies stop selling phones
- Companies reduce the range of product offerings to reduce cost
- Companies improve their products enough to gain market share and profits
Right now, Apple makes an average of 25 times as much per phone as the rest of the industry. SOMEONE has to make a change.
I see another solution and it would be very bad for Apple. Companies could simply forge on and not need to pay Apple disproportionate profits, hit lower price points and then force the market down to a commodity price level.
I feel like we are really close to this happening. Everyone can chase one profit model but there is no way it is sustainable. It was like housing with everyone building McMansions. You can't force everyone to buy a 3000 sq ft home and you can't force everyone to buy a $600 smartphone.
Much like how housing mistakes were covered with financing, the smartphone explosion has been covered with the subsidy model. On the prepaid side of things though, the price points are getting close to being less than half what the cost of post paid will be.
Right now Apple is so powerful they are essentually stealing the entire subsidy and part of the data profits, I'd argue even from Android handsets. It seems like when the iPhone arrives, unlimited data and a number of other premium services end. It looks like the costs of these types of services are being given to Apple for access to the iPhone. So as an example Sprint was charging a 4G premium but they still charge it with the iPhone as a 3G device. Yearly upgrades, have disappeared from Verizon and data caps have appeared on most services. Another example is iMessage where it is clear Apple was hoping to scoop up messaging costs and transfer them from carriers to their own pockets.
Quote:
Originally Posted by jragosta
Huh? Apple already leaves the commoditized markets to the bottom dwellers. Why would that be a change?
It would be a change from what they did with the iPod which I consider to have been a real game changer for them.
Quote:
Originally Posted by solipsism
I don't see why it has to change. The premium brands typically make a lot more per unit than the low end brands. Apple has sustained profit dominance in every facet of its structure. Macs were reported to take 1/3rd of the world's PC profits back in 2007(?). I have to assume that has gone up.
- If low-end companies stop producing Apple could easily lose profit share, but typically that's not how we see these markets work. With the PC industry we're still seeing a race to the bottom even as they beg Intel to give them breaks so they can compete with Apple. I bet Samsung and a couple others are making near what Apple makes on a couple models of smartphones, but they simply aren't selling enough to make it viable. Seems like a big risk to cut their product line to boutique size.
- Reducing range could happen, but that also would be unusual for the majority. I think for Apple to falter here we'll have to see someone really compete with Apple head one with a premium product that has substantial mindshare. That means we'll see it coming.
- I don't that last one will happen. They'll get cheaper components but so will others which will make their market even more of a struggle. Free dumb-phones become free feature-phones, but the market dynamics will remain the same.
I think it is possible for someone to be innovate but also be cheaper than Apple. I suspect this will happen soon in the smartphone market. There is talk of a provider offering unlimited talk/text and data from the phone using home WIFI for the majority of those services for as little as $15 a month total. If someone gets to a good enough price point and with Nokia and Windows phones and also various Android handset makers, it is pretty clear this would be $200 for an iPhone 4 type device, the cost difference will be too large to ignore.
Not sure about the last one anymore (at least on a monthly basis, I believe Android app downloads have surpassed iOS). The *list* is looking sillier and sillier by the second.
All this just goes to show you how things change. Anyone who complacently predicts Apple will dominate forever would probably fail to find a single historical example as backup.
This, what Apple has wrought. Quality and design are desirable enough to pay for, and smart manufacturing can keep the costs down enough so you don't have to pay all that much more.
As Christopher126 points out, this is new in American business.
Anyone who complacently predicts Apple will dominate forever would probably fail to find a single historical example as backup.
An historical example of a company dominating forever? For fuck's sake!
What we can look at it the four cores business segments Apple operates: PC, PMP, handset, tablet. They dominate profits in each. That should at least make you consider that Apple is pretty good company at understanding their core markets? but and ConradJoe and go right ahead and spin it into Apple is somehow lucky or that other companies aren't really in it for the money.
Comments
I take ur point...but not really that surprising when u consider most businesses follow the "Walmart" business model....sell "crap" at a low cost, but sell a lot of it. Americans seem to equate good value to low cost...
Largest retailer, Walmart. What do they sell? Crap!
Largest beverage company, Coke. What do they sell? Crap!
Largest restaurant company, McDonald's. What do they sell? Crap!
Largest software company, Microsoft. What do they sell? Crap!
Largest PC manufacturer, (by volume), HP. What do they sell? Crap!
Largest auto company, (until recently), GM. What do they sell? Crap!
Largest food company, General Mills-(?). What do they sell? Crap!
Etc., etc....
P.S. Anyone have some more examples I can add to the list?
Except Apple does not sell crap.
Apple is estimated to have taken in 52 percent of the handset industry's operating profits last quarter, despite only having a 4.2 percent global handset market share.
Analyst T. Michael Walkley with Canaccord Genuity issued a note to investors on Friday in which he estimated Apple took more than half of the industry's operating profits in the third quarter of calendar 2011. That's a 5 percent increase from the third quarter of 2010, when Apple's share of industry operating profits was 47 percent.
An increase from 47% to 52% isn't a 5% increase. A 5% increase of 47% is only 49%. It's just over a 10% increase from the same period previous year, or a 500 basis points increase.
Even assuming this is true, it's unsustainable. Eventually, something has to change.
Possible changes the industry might adopt:
- Low profit companies stop selling phones
- Companies reduce the range of product offerings to reduce cost
- Companies improve their products enough to gain market share and profits
Right now, Apple makes an average of 25 times as much per phone as the rest of the industry. SOMEONE has to make a change.
I don't see why it has to change. The premium brands typically make a lot more per unit than the low end brands. Apple has sustained profit dominance in every facet of its structure. Macs were reported to take 1/3rd of the world's PC profits back in 2007(?). I have to assume that has gone up.
- If low-end companies stop producing Apple could easily lose profit share, but typically that's not how we see these markets work. With the PC industry we're still seeing a race to the bottom even as they beg Intel to give them breaks so they can compete with Apple. I bet Samsung and a couple others are making near what Apple makes on a couple models of smartphones, but they simply aren't selling enough to make it viable. Seems like a big risk to cut their product line to boutique size.
- Reducing range could happen, but that also would be unusual for the majority. I think for Apple to falter here we'll have to see someone really compete with Apple head one with a premium product that has substantial mindshare. That means we'll see it coming.
- I don't that last one will happen. They'll get cheaper components but so will others which will make their market even more of a struggle. Free dumb-phones become free feature-phones, but the market dynamics will remain the same.
An increase from 47% to 52% isn't a 5% increase. A 5% increase of 47% is only 49%. It's just over a 10% increase from the same period previous year, or a 500 basis points increase.
5% increase of the entire world's handset profits, not 5% increase over their previous quarter's handset profits. Simple math: 52 − 47 = 5
Largest porn producer, Vivid. What do they sell? Well, it's er, not that bad.
5% increase of the entire world's handset profits, not 5% increase over their previous quarter's handset profits. Simple math: 50 − 47 = 5
But it's not simple math. If it was then a 5% increase of your $7.25 hourly salary would be $12.25 but it's really only $7.61 ( i.e. $7.25 * 5% or $7.25 * 0.05 if you don't understand percentages, is $0.36 not $5.00 )
But it's not simple math. If it was then a 5% increase of your $7.25 hourly salary would be $12.25 but it's really only $7.61 ( i.e. $7.25 * 5% or $7.25 * 0.05 if you don't understand percentages, is $0.36 not $5.00 )
It's simple. They specified a 5% increase of the all handset profits, not the increase in Apple's profits. You wrote "your" hourly salary, when you need to see how that change in per hour rate affects the example companies total hourly payout then you'll understand what is being measured.
To reiterate, there is 100% that can be taken from any stated market. Apple was taking 47% of the handset market, now they are taking 52% of the handset market. How much of an increase of the handset market did they gain? If you can't figure out that is 5% I feel bad for when you hit 3rd grade.
I take ur point...but not really that surprising when u consider most businesses follow the "Walmart" business model....sell "crap" at a low cost, but sell a lot of it. Americans seem to equate good value to low cost...
Largest retailer, Walmart. What do they sell? Crap!
Largest beverage company, Coke. What do they sell? Crap!
Largest restaurant company, McDonald's. What do they sell? Crap!
Largest software company, Microsoft. What do they sell? Crap!
Largest PC manufacturer, (by volume), HP. What do they sell? Crap!
Largest auto company, (until recently), GM. What do they sell? Crap!
Largest food company, General Mills-(?). What do they sell? Crap!
Etc., etc....
P.S. Anyone have some more examples I can add to the list?
Largest so former 4G network, Sprint-(?). What do they sell? Crap!
Off topic, but how can you disagree with Coke being crap when its ingredients are water, sugar, caffeine, a tiny bit of flavoring and coloring, and carbon dioxide. Not a whole lot of good stuff in there. Also Coke's founder was famous for saying something to the effect that his goal was to sell something to the masses that cost a few pennies to make, that he could sell for a quarter, and that was addicting. Which is why Coke is named Coke, because it originally had cocaine as an addicting ingredient. Now the replacement addicting ingredient is caffeine.
On topic, and yet, the media keeps trumpeting the triumph of Android over iOS. If I were in the smartphone business I would want the profit end of the spectrum rather than the market share end. However, I hope that Apple keeps inovating and doesn't rest on its laurels. Because I believe that Google's strategy is very Mircosoftian in that they and their partners are willing to risk low profits if they can saturate the market to the point were they become the de facto standard. By the way the list really makes you think doesn't it?
I agree on all your points. Something strange has happened though of late... Apple seems to have got through to many in the tablet market and more every day on the Mac and iPhone markets, that quality is worth paying for. A welcome change after so many years of Microsoft et al.
Largest smartphone vendor, Apple.
And largest tablet vendor.
(Some arguments just don't have a chance, do they?)
Largest so former 4G network, Sprint-(?). What do they sell? Crap!
Sprint have 100 Mb/s?
Largest smartphone vendor, Apple.
That's not really correct.
But some others are:
Largest digital music seller, Apple.
Largest mobile app seller, Apple.
To reiterate, there is 100% that can be taken from any stated market. Apple was taking 47% of the handset market, now they are taking 52% of the handset market. How much of an increase of the handset market did they gain? If you can't figure out that is 5% I feel bad for when you hit 3rd grade.
Still that isn't a 5% increase. That is a 500 basis points increase. You can't subtract percentages to get the percent increase. 47% * X% = 52%. I'll let you do the math from there.
Even assuming this is true, it's unsustainable. Eventually, something has to change.
...
Right now, Apple makes an average of 25 times as much per phone as the rest of the industry. SOMEONE has to make a change.
What you are missing though is the percentage revenue share Apple has. If I were to SWAG it, I would estimate Apple has about 25-30% revenue share, which puts them roughly at twice the profit margin as the rest of the industry. If you further said that the smart phone segment was 25% of the total, they likely only have a small improvement in profit margin over Samsung.
The low-cost phones are already a race to the bottom. The Android market is going closer to there as well; you can pick up 100 Android phones for almost nothing.
What happens to the Android "Brand" players is another story though, one not yet written.
On topic, and yet, the media keeps trumpeting the triumph of Android over iOS.
As well they should.
But the topic here is not OS market share, but instead, hardware profits.
. . . Something strange has happened though of late... Apple seems to have got through to many in the tablet market and more every day on the Mac and iPhone markets, that quality is worth paying for. A welcome change after so many years of Microsoft et al.
This, what Apple has wrought. Quality and design are desirable enough to pay for, and smart manufacturing can keep the costs down enough so you don't have to pay all that much more.
As Christopher126 points out, this is new in American business.
Even assuming this is true, it's unsustainable. Eventually, something has to change.
Possible changes the industry might adopt:
- Low profit companies stop selling phones
- Companies reduce the range of product offerings to reduce cost
- Companies improve their products enough to gain market share and profits
Right now, Apple makes an average of 25 times as much per phone as the rest of the industry. SOMEONE has to make a change.
I see another solution and it would be very bad for Apple. Companies could simply forge on and not need to pay Apple disproportionate profits, hit lower price points and then force the market down to a commodity price level.
I feel like we are really close to this happening. Everyone can chase one profit model but there is no way it is sustainable. It was like housing with everyone building McMansions. You can't force everyone to buy a 3000 sq ft home and you can't force everyone to buy a $600 smartphone.
Much like how housing mistakes were covered with financing, the smartphone explosion has been covered with the subsidy model. On the prepaid side of things though, the price points are getting close to being less than half what the cost of post paid will be.
Right now Apple is so powerful they are essentually stealing the entire subsidy and part of the data profits, I'd argue even from Android handsets. It seems like when the iPhone arrives, unlimited data and a number of other premium services end. It looks like the costs of these types of services are being given to Apple for access to the iPhone. So as an example Sprint was charging a 4G premium but they still charge it with the iPhone as a 3G device. Yearly upgrades, have disappeared from Verizon and data caps have appeared on most services. Another example is iMessage where it is clear Apple was hoping to scoop up messaging costs and transfer them from carriers to their own pockets.
Huh? Apple already leaves the commoditized markets to the bottom dwellers. Why would that be a change?
It would be a change from what they did with the iPod which I consider to have been a real game changer for them.
I don't see why it has to change. The premium brands typically make a lot more per unit than the low end brands. Apple has sustained profit dominance in every facet of its structure. Macs were reported to take 1/3rd of the world's PC profits back in 2007(?). I have to assume that has gone up.
- If low-end companies stop producing Apple could easily lose profit share, but typically that's not how we see these markets work. With the PC industry we're still seeing a race to the bottom even as they beg Intel to give them breaks so they can compete with Apple. I bet Samsung and a couple others are making near what Apple makes on a couple models of smartphones, but they simply aren't selling enough to make it viable. Seems like a big risk to cut their product line to boutique size.
- Reducing range could happen, but that also would be unusual for the majority. I think for Apple to falter here we'll have to see someone really compete with Apple head one with a premium product that has substantial mindshare. That means we'll see it coming.
- I don't that last one will happen. They'll get cheaper components but so will others which will make their market even more of a struggle. Free dumb-phones become free feature-phones, but the market dynamics will remain the same.
I think it is possible for someone to be innovate but also be cheaper than Apple. I suspect this will happen soon in the smartphone market. There is talk of a provider offering unlimited talk/text and data from the phone using home WIFI for the majority of those services for as little as $15 a month total. If someone gets to a good enough price point and with Nokia and Windows phones and also various Android handset makers, it is pretty clear this would be $200 for an iPhone 4 type device, the cost difference will be too large to ignore.
That's not really correct.
But some others are:
Largest digital music seller, Apple.
Largest mobile app seller, Apple.
Not sure about the last one anymore (at least on a monthly basis, I believe Android app downloads have surpassed iOS). The *list* is looking sillier and sillier by the second.
All this just goes to show you how things change. Anyone who complacently predicts Apple will dominate forever would probably fail to find a single historical example as backup.
This, what Apple has wrought. Quality and design are desirable enough to pay for, and smart manufacturing can keep the costs down enough so you don't have to pay all that much more.
As Christopher126 points out, this is new in American business.
It is new in American business?
Anyone who complacently predicts Apple will dominate forever would probably fail to find a single historical example as backup.
An historical example of a company dominating forever? For fuck's sake!
What we can look at it the four cores business segments Apple operates: PC, PMP, handset, tablet. They dominate profits in each. That should at least make you consider that Apple is pretty good company at understanding their core markets? but and ConradJoe and go right ahead and spin it into Apple is somehow lucky or that other companies aren't really in it for the money.