I'm glad Apple is doing well and I love my Macs!!! But I wonder if having that much profit is maybe because Apple is charging too much for their phones and, in good conscience, ought to lower their prices a little bit???
Absolutely NOT!
Economics 101: Charge what the market will bear.
Economics 101: When statistics are on a steady rise, do not change successful actions.
If you can't quite afford Apple products, make more money!
Is there such a thing as a profit monopoly that the US government can start investigating Apple for?
What a ridiculous notion--as ridiculous as asking, "Is there a productivity monopoly?" or "Is there a success monopoly?" Reading too many distopian novels, are you?
The 94% is ridiculously misleading. It is 94% of the (estimated profits - estimated losses) not of the estimated profits. What if Microsoft would do a write off of its smartphone business and post a loss a of a few billion, so that the accumulated loss becomes bigger than the profit. Would Apple suddenly have -120% of the losses??
The fact that the figures of the privately owned Huawei (with unknown profits) are not included is sufficient to call this 94% absolute bullshit. Huawei has a marketshare of about 7.5%, which could be quite relevant when calculating the overall profit of the market.
Of course the fact remains that is Apple who makes the lion share of the profits, but the figure of 94% is pure speculation.
There are 1,000 companies selling Android phones. I doubt Canaccord analysts had access to Profit and Loss Statements from all 1,000 OEMs.
So did they just completely guess on the 94% ?
I always assumed they got as much data as they can.... and then extrapolated it further. I think this usually call this stuff "estimates" anyway.
There are 1,000 companies selling Android phones. I doubt Canaccord analysts had access to Profit and Loss Statements from all 1,000 OEMs.
So did they just completely guess on the 94% ?
I always assumed they got as much data as they can.... and then extrapolated it further. I think this usually call this stuff "estimates" anyway.
They only need the major ones - at a certain point the ones below the cutoff become a rounding error compared to the rest. Also as the scale of production decreases, so does does the likelihood of being profitable. There are very few companies overall that really matter (10ish - maybe 20 max).
What a ridiculous notion--as ridiculous as asking, "Is there a productivity monopoly?" or "Is there a success monopoly?" Reading too many distopian novels, are you?
Not to mention - that would be the ultimate in economy killing moves... punish success, reward failure. Sort of like buying high and selling low.
Difference in pricing has more to do with exchange rates, then potentially tax (I think Europe can be 20%+ embedded, while Canada is maybe 13 - 15% depending on province - added on after advertised price), but there is rarely any tariffs of any size in most western countries....
Many countries who had currencies inflated (or reinflated) by higher resource prices are now seeing their currencies get the sh*t kicked out of them. In addition to the move to what is seen as a safe haven during troubled times (which I find is funny moving money to the US as a safe haven when the country is basically bankrupt).
With companies other than Apple the prices of other electronics can be made much worse by local distributors that have exclusive rights in many countries -- in addition to potentially packaging, different regulatory stuff that adds costs which are passed on to the consumer (this can add up to 35% more in some countries other than the US). Of course with Apple they control their own distribution so that luckily is not the case with those devices.
They only need the major ones - at a certain point the ones below the cutoff become a rounding error compared to the rest. Also as the scale of production decreases, so does does the likelihood of being profitable. There are very few companies overall that really matter (10ish - maybe 20 max).
Ah... so it's like I said... estimates.
If they are not getting information from EVERY company in the industry... they must be estimating how the entire industry performs.
But yeah... they probably only need 10-20 of the bigger companies to get a general snapshot of the industry.
I never looked at these analysts' reports as being scientific or thorough anyway.
If they are not getting information from EVERY company in the industry... they must be estimating how the entire industry performs.
But yeah... they probably only need 10-20 of the bigger companies to get a general snapshot of the industry.
I never looked at these analysts' reports as being scientific or thorough anyway.
Oh they would likely be scientific (unless you are going to ban statistics from being science now) for the most cases - but like polls you are going to have +/- a certain percentage error potential. It won't be as accurate as bean counting, but then bean counting when it comes to profits in corporations are open for interpretation depending on how things are accounted for.
I have. You're taking the exchange rate plus VAT, but that's 1) unlikely to be accurate and 2) will always be incomplete. Since very few industries adjust their prices instantly they have to predict how they the currency will change over a given timeframe. Then you have different regulatory permits for different counties, and potentially fees for selling a foreign good in that country. These are fixed cost that are more easily spread out as you increase unit sales.
Then you have costs that will still be incurred with each sale, like the PSU, packaging changes for languages, as well as SW support for various countries. Does the 120V NEMA connector for the iPhone in the US cost the same to design and build as the 240V connector for Zamunda?
Then there is the potential of an import tax. One way around that is to produce in that country, but that also is an expense in that that might be higher than another country would be so you'd want to account for that difference. For instance, there is a Foxconn in Brazil specifically to help lessen this cost. Let's say it drops the import tax by, let's say, 500 Real, but it costs an extra 250 Real to produce in Brazil over the lower costs of the more established Foxconn in China with a lower cost per employee when converted to US currency. That would mean your net savings is 250 Real, based on those two factors.
Then you have other factors like distribution and sales outlets. In the US, there are hundreds of Apple Stores selling directly to customers. Then you have retail outlets like Walmart, Target, Amazon, B&H Camera, etc. that have negotiated directly with Apple to sell their products; but in India you don't have this. You typically have many distributors before you get to the retailer, each of which are obviously upping the price in order to make their efforts worth the trouble.
That's just a fraction of the complexity that goes into a worldwide distribution model, but there is also one important factor to consider: what the market will bear. Now, you probably think Apple is charging more in, say, Europe or India because it can and gives the discount to the US market—and maybe they are—but I think that would be counterintuitive. You want to get the highest possible profit margin from the markets you have locked in, and then give the lowest possible profit margins to you want to help make more in-roads. Apple doesn't own Europe; Android does. This tells me that despite what you think are Hot Cosby prices, Apple likely makes less profit per device in those countries where it's not dominate.
Oh they would likely be scientific (unless you are going to ban statistics from being science now) for the most cases - but like polls you are going to have +/- a certain percentage error potential. It won't be as accurate as bean counting, but then bean counting when it comes to profits in corporations are open for interpretation depending on how things are accounted for.
Oops... when I said scientific... I meant EVERY penny should be accounted for. ALL 1,000 smartphone companies would be represented. I.E. the entire industry... not just a sampling.
Sorry for my poor choice of words. I should have kept it at the word thorough. Or maybe said exhaustive or comprehensive
Anyway... I now realize that these analysts cannot possibly get information from every smartphone OEM around the world. So the best we can get is estimates.
I think, being that apple makes such a hefty margin on their devices, apple should be including some of the AppleCare features with their products. Maybe not accident replacement, but something like 1 year support, either phone/in store and 1 year warranty. Perhaps even extend the warranty up to 2 years so that for most people they are never "out of warranty" on a 2 year upgrade cycle.
While this will cost apple some money, it would further cement in people's minds that Apple is a superior product; part of why one would buy a BMW is that they get a much better buying and support experience; also extending the warranty out to 2 years might drive some people an incentive to upgrade every 2 years instead of maybe holding on to an older phone.
This is an interesting situation: 14.5% of the market but 94% of the profits. That doesn't happen often.
It's a bit like the Mercedes car. Apple can get away with charging high prices, because its products are seen by consumers as the best and their usefulness worth the added cost. Most other cell phone makers are playing a 'this is not how to do business' game of selling below cost but hoping to make it up on the volume. I would not want to be them.
Personally, I like this particularly market however weird it may be. With all that money, Apple can afford to keep its products great and by buying used, I can afford an older iPhone.
Apple's greatest danger? Probably that politicians and bureaucrats here or in Europe will demand that, with profits that great, Apple must give up a bit of those profits and assembly iPhone and iPads in their country.
For a parallel, think back to when Detroit automakers were losing money and Asia automakers were pressured to build factories here, which they did.
Most other cell phone makers are playing a 'this is not how to do business' game of selling below cost but hoping to make it up on the volume.
Selling below cost and hoping to make it up on volume? Did you mean "make it up on services"? Or "make it up on accessories"? Selling at a loss and hoping to make it up on volume is completely ridiculous. Simple multiplication would prove that losing $10/phone on 100,000 phones results in a loss of $1,000,000 - and increasing the volume increases the loss! Selling a million phones instead of 100,000 nets a loss of 10 Million dollars instead of 1 Million! Who in their right mind would be "hoping for" this!???
Most other cell phone makers are playing a 'this is not how to do business' game of selling below cost but hoping to make it up on the volume.
Selling below cost and hoping to make it up on volume? Did you mean "make it up on services"? Or "make it up on accessories"? Selling at a loss and hoping to make it up on volume is completely ridiculous. Simple multiplication would prove that losing $10/phone on 100,000 phones results in a loss of $1,000,000 - and increasing the volume increases the loss! Selling a million phones instead of 100,000 nets a loss of 10 Million dollars instead of 1 Million! Who in their right mind would be "hoping for" this!???
I don't understand how people think that's a viable business plan. I can understand selling at a low margin, and making it up in volume, but selling it at a loss never works unless it leads to purchases of another product, and/or service
This is an interesting situation: 14.5% of the market but 94% of the profits. That doesn't happen often.
It's a bit like the Mercedes car. Apple can get away with charging high prices, because its products are seen by consumers as the best and their usefulness worth the added cost. Most other cell phone makers are playing a 'this is not how to do business' game of selling below cost but hoping to make it up on the volume. I would not want to be them.
Personally, I like this particularly market however weird it may be. With all that money, Apple can afford to keep its products great and by buying used, I can afford an older iPhone.
Apple's greatest danger? Probably that politicians and bureaucrats here or in Europe will demand that, with profits that great, Apple must give up a bit of those profits and assembly iPhone and iPads in their country.
For a parallel, think back to when Detroit automakers were losing money and Asia automakers were pressured to build factories here, which they did.
Doesn't happen often? It never happens except for Apple. Companies either have low sales of a premium product at high margins, or high sales of a low margin product. Apple has high sales of a high margin product. That's never happened before.
Doesn't happen often? It never happens except for Apple. Companies either have low sales of a premium product at high margins, or high sales of a low margin product. Apple has high sales of a high margin product. That's never happened before.
Comments
Absolutely NOT!
Economics 101: Charge what the market will bear.
Economics 101: When statistics are on a steady rise, do not change successful actions.
If you can't quite afford Apple products, make more money!
What a ridiculous notion--as ridiculous as asking, "Is there a productivity monopoly?" or "Is there a success monopoly?" Reading too many distopian novels, are you?
There are 1,000 companies selling Android phones. I doubt Canaccord analysts had access to Profit and Loss Statements from all 1,000 OEMs.
So did they just completely guess on the 94% ?
I always assumed they got as much data as they can.... and then extrapolated it further. I think this usually call this stuff "estimates" anyway.
There are 1,000 companies selling Android phones. I doubt Canaccord analysts had access to Profit and Loss Statements from all 1,000 OEMs.
So did they just completely guess on the 94% ?
I always assumed they got as much data as they can.... and then extrapolated it further. I think this usually call this stuff "estimates" anyway.
They only need the major ones - at a certain point the ones below the cutoff become a rounding error compared to the rest. Also as the scale of production decreases, so does does the likelihood of being profitable. There are very few companies overall that really matter (10ish - maybe 20 max).
What a ridiculous notion--as ridiculous as asking, "Is there a productivity monopoly?" or "Is there a success monopoly?" Reading too many distopian novels, are you?
Not to mention - that would be the ultimate in economy killing moves... punish success, reward failure. Sort of like buying high and selling low.
With numbers like these now does anyone seriously think that Apple should sell cheap phones? </argument closed>
Nope.
Ah... so it's like I said... estimates.
If they are not getting information from EVERY company in the industry... they must be estimating how the entire industry performs.
But yeah... they probably only need 10-20 of the bigger companies to get a general snapshot of the industry.
I never looked at these analysts' reports as being scientific or thorough anyway.
Ah... so it's like I said... estimates.
If they are not getting information from EVERY company in the industry... they must be estimating how the entire industry performs.
But yeah... they probably only need 10-20 of the bigger companies to get a general snapshot of the industry.
I never looked at these analysts' reports as being scientific or thorough anyway.
Oh they would likely be scientific (unless you are going to ban statistics from being science now) for the most cases - but like polls you are going to have +/- a certain percentage error potential. It won't be as accurate as bean counting, but then bean counting when it comes to profits in corporations are open for interpretation depending on how things are accounted for.
I have. You're taking the exchange rate plus VAT, but that's 1) unlikely to be accurate and 2) will always be incomplete. Since very few industries adjust their prices instantly they have to predict how they the currency will change over a given timeframe. Then you have different regulatory permits for different counties, and potentially fees for selling a foreign good in that country. These are fixed cost that are more easily spread out as you increase unit sales.
Then you have costs that will still be incurred with each sale, like the PSU, packaging changes for languages, as well as SW support for various countries. Does the 120V NEMA connector for the iPhone in the US cost the same to design and build as the 240V connector for Zamunda?
Then there is the potential of an import tax. One way around that is to produce in that country, but that also is an expense in that that might be higher than another country would be so you'd want to account for that difference. For instance, there is a Foxconn in Brazil specifically to help lessen this cost. Let's say it drops the import tax by, let's say, 500 Real, but it costs an extra 250 Real to produce in Brazil over the lower costs of the more established Foxconn in China with a lower cost per employee when converted to US currency. That would mean your net savings is 250 Real, based on those two factors.
Then you have other factors like distribution and sales outlets. In the US, there are hundreds of Apple Stores selling directly to customers. Then you have retail outlets like Walmart, Target, Amazon, B&H Camera, etc. that have negotiated directly with Apple to sell their products; but in India you don't have this. You typically have many distributors before you get to the retailer, each of which are obviously upping the price in order to make their efforts worth the trouble.
That's just a fraction of the complexity that goes into a worldwide distribution model, but there is also one important factor to consider: what the market will bear. Now, you probably think Apple is charging more in, say, Europe or India because it can and gives the discount to the US market—and maybe they are—but I think that would be counterintuitive. You want to get the highest possible profit margin from the markets you have locked in, and then give the lowest possible profit margins to you want to help make more in-roads. Apple doesn't own Europe; Android does. This tells me that despite what you think are Hot Cosby prices, Apple likely makes less profit per device in those countries where it's not dominate.
Oops... when I said scientific... I meant EVERY penny should be accounted for. ALL 1,000 smartphone companies would be represented. I.E. the entire industry... not just a sampling.
Sorry for my poor choice of words. I should have kept it at the word thorough. Or maybe said exhaustive or comprehensive
Anyway... I now realize that these analysts cannot possibly get information from every smartphone OEM around the world. So the best we can get is estimates.
I think, being that apple makes such a hefty margin on their devices, apple should be including some of the AppleCare features with their products. Maybe not accident replacement, but something like 1 year support, either phone/in store and 1 year warranty. Perhaps even extend the warranty up to 2 years so that for most people they are never "out of warranty" on a 2 year upgrade cycle.
While this will cost apple some money, it would further cement in people's minds that Apple is a superior product; part of why one would buy a BMW is that they get a much better buying and support experience; also extending the warranty out to 2 years might drive some people an incentive to upgrade every 2 years instead of maybe holding on to an older phone.
It's a bit like the Mercedes car. Apple can get away with charging high prices, because its products are seen by consumers as the best and their usefulness worth the added cost. Most other cell phone makers are playing a 'this is not how to do business' game of selling below cost but hoping to make it up on the volume. I would not want to be them.
Personally, I like this particularly market however weird it may be. With all that money, Apple can afford to keep its products great and by buying used, I can afford an older iPhone.
Apple's greatest danger? Probably that politicians and bureaucrats here or in Europe will demand that, with profits that great, Apple must give up a bit of those profits and assembly iPhone and iPads in their country.
For a parallel, think back to when Detroit automakers were losing money and Asia automakers were pressured to build factories here, which they did.
Selling below cost and hoping to make it up on volume? Did you mean "make it up on services"? Or "make it up on accessories"? Selling at a loss and hoping to make it up on volume is completely ridiculous. Simple multiplication would prove that losing $10/phone on 100,000 phones results in a loss of $1,000,000 - and increasing the volume increases the loss! Selling a million phones instead of 100,000 nets a loss of 10 Million dollars instead of 1 Million! Who in their right mind would be "hoping for" this!???
I don't understand how people think that's a viable business plan. I can understand selling at a low margin, and making it up in volume, but selling it at a loss never works unless it leads to purchases of another product, and/or service
Doesn't happen often? It never happens except for Apple. Companies either have low sales of a premium product at high margins, or high sales of a low margin product. Apple has high sales of a high margin product. That's never happened before.
Coca-cola?
Marlboro?
Johnnie Walker?
Heroin? /s
Oil?
Never?
Out of curiosity: what's the margin on heroin?
I'm not sure cigarettes have a high margin, though.