I thought Samsung still made good coin from smartphones. I guess the flaming Notes burned up profits too.
They still make money from components but they carried most of the loss from Note in that quarter. They'll probably be back to profit in Q4. I also wonder if they actually make more profit on handsets than the analysts think. My guess is that they sell components to the mobile division at full price then book a lot of the profit in the component division.
As a former industrial accountant and analyst I can say that there are a ton of ways to different measure 'profit' -- particularly 'operating profit'. It all depends on what you throw into the mix both on the cost and the revenue sides...
But that is particularly true when comparing Apple to other smartphone vendors: The other vendors are, for the most part, simply making a hardware gadget and installing a free operating system on it. When it's shipped, they wash their hands of it and move on. Apple however, is selling much more than a hardware gadget. When you buy an IPhone you are buying their operating system, imbedded apps, support structure, security, ecosystem, etc., etc., etc.,..
From an accounting point of view, you are comparing apples & oranges...
Doesn't mean they sold more, just that they make more profit off of what they sell. People are willing to pay more for Apple devices because of the user friendliness, the "sex," the pop culture appeal, the software and hardware integration that makes for a uniform experience, etc.
Well that’s the point. Critics have been after Apple for decades to go for market share rather than profits. The smartphone market has been declared a commodity market for years now and the mantra for commodity markets is market share, sell a lot for a little to survive. Make it as cheap as you can to sell more. Apple refused to go that route and stuck with the premium business model. You’re right, enough people are willing to pay a premium for Apple products to maintain a good margin. Yet even though Apple is raking on most of the profits in this market they are still declared to be failing because of market share. All we ever hear about is how growth is slowing and Apple is doomed. It all seems irrational to me but what do I know about the stock market.
Tim Cook: Team, I want you to get out there and give it 110%!!
Team (internally): Does he want us to get 110% of the profits or is that just motivation talk??
I've never understood why we would celebrate the fact that our preferred brand makes more money than the competition in margins on the product that we are paying for. If we are shareholders, sure. But as a consumer, it's not something I'm ever proud of.
For one, this metric does not serve me in any way. Then again, I'm a fan of the product more than the brand. Personally I want the best product. The day that this is no longer the case, I would give something else a try. I suppose as fans of Apple products, we fall into one of two camps. Brand loyalists and product enthusiasts. I'm a bit more of the latter.
Doesn't mean they sold more, just that they make more profit off of what they sell. People are willing to pay more for Apple devices because of the user friendliness, the "sex," the pop culture appeal, the software and hardware integration that makes for a uniform experience, etc.
But under the current crop of Apple executives, and too many investors, Apples cash hoard is the key measure of this company. The real fact is that cash hoard is doing nothing to expand the quality and products and synergies with the lines. As Apple drops product lines to increase their overall margins and look good for Wall Street, they are becoming a one trick pony, much like Microsoft in the past.
Comments
Waits on Sog to come in and beat another dead horse somehow...
As a former industrial accountant and analyst I can say that there are a ton of ways to different measure 'profit' -- particularly 'operating profit'. It all depends on what you throw into the mix both on the cost and the revenue sides...
But that is particularly true when comparing Apple to other smartphone vendors: The other vendors are, for the most part, simply making a hardware gadget and installing a free operating system on it. When it's shipped, they wash their hands of it and move on. Apple however, is selling much more than a hardware gadget. When you buy an IPhone you are buying their operating system, imbedded apps, support structure, security, ecosystem, etc., etc., etc.,..
From an accounting point of view, you are comparing apples & oranges...
Well that’s the point. Critics have been after Apple for decades to go for market share rather than profits. The smartphone market has been declared a commodity market for years now and the mantra for commodity markets is market share, sell a lot for a little to survive. Make it as cheap as you can to sell more. Apple refused to go that route and stuck with the premium business model. You’re right, enough people are willing to pay a premium for Apple products to maintain a good margin. Yet even though Apple is raking on most of the profits in this market they are still declared to be failing because of market share. All we ever hear about is how growth is slowing and Apple is doomed. It all seems irrational to me but what do I know about the stock market.
IMHO the head line should be 'The entire Smart Phone Industry has to share only 9% of the global profits as Apple takes all the rest."
For one, this metric does not serve me in any way. Then again, I'm a fan of the product more than the brand. Personally I want the best product. The day that this is no longer the case, I would give something else a try. I suppose as fans of Apple products, we fall into one of two camps. Brand loyalists and product enthusiasts. I'm a bit more of the latter.
Unheard of in any industry.
Nobel prize?
Apple needs someone like Nadella at the helm.
Your own observation would appear to put the figure into the obscene category but yes, it's great for Apple.
When sales drop things might change, but only a little.