Apple tries to force its suppliers to reduce prices, which is fine, but what is not fine is it charges so much for it stuff to us. Hypocrisy. Can dish it out, but can't be on recieving end of its own tactics. Good for QCOM
No is forcing you or anyone to buy Apple products.
^^^Exactly^^^
Paul, not doubt Apple makes literally tons of money in profits every quarter. They use the money to boost stock prices with buy backs (whether that is good or bad) but also dumps countless dollars into data centers (which it is building themselves due in part to privacy concerns from governments), R&D, as well as design and parts. When iFixIt says the parts to build an iPhone only come out to lets say $250, for some reason everyone things it shouldn't cost more than say $300 for the phone. BUT in order for Apple to have some of the best engineers, designers, and coders they NEED to pay these people, otherwise they go to Google or Tesla, which happens. R&D of new tech and new products is NOT CHEAP. You often get what you pay for and on grand scale what Apple charges for their products is not outside the same price range of other manufacturers. Yes there are cheaper phones, and computers, but a person pays more for a BMW or Audi, Tesla, or "X" Luxury car because more goes into it, and you expect more out of it. A person could also buy a Toyota Yaris if they don't care, have the money for a BMW, or EVEN LIKES and PREFERS the Yaris. Full disclosure I drive a cheap Yaris.
Something wrong here. Yes. R&D is expensive. And wages. But Apple has somehow managed to amass around 250 billion dollars in cash in ten years. After taxes and wages and R&D. There seems to be plenty of room for lower prices.
Something is "wrong" because Apple has a runaway hit and is successful? That's absurd. The iPhone is the most successful single product in human history -- why shouldn't their bank account get bigger? A product is worth what people will pay for it. iPhone and high-end Samsungs and Google phones all cost about the same. Is something wrong with them too? Or just Apple, because they're doing better?
People seem to assume Apple would have more clients if they only had their prices a bit lower... Well, hell no, they'd be leaving money on the table and likely gain very little in return in market share. This lower profit would starve them and allow the competition to gain on them eventually.
How would it starve them if they aren't using the vast majority of the profits? They are hoarding.
Lower prices would sell more units (but still with healthy profits).
More unit sales would open up more potential services revenue. Could we see lower prices as an investment in itself?
Where do you see the next ten years growth? Hardware or services? Both? Fresh revenue streams? Cars?
"Qualcomm is abusing its market position to charge high royalties on standards-essential patents"
And Apple doesn't abuse it own market position of course!
What market position of Apple's would that be? 18% of the smartphone market hardly gives Apple the basis to overcharge consumers. iPhones are actually quite reasonably priced when longevity and resale value are taken into consideration, and that's exactly what consumers should consider. After all, it's total cost of ownership that is meaningful, not retail price.
Apple tries to force its suppliers to reduce prices, which is fine, but what is not fine is it charges so much for it stuff to us. Hypocrisy. Can dish it out, but can't be on recieving end of its own tactics. Good for QCOM
No is forcing you or anyone to buy Apple products.
^^^Exactly^^^
Paul, not doubt Apple makes literally tons of money in profits every quarter. They use the money to boost stock prices with buy backs (whether that is good or bad) but also dumps countless dollars into data centers (which it is building themselves due in part to privacy concerns from governments), R&D, as well as design and parts. When iFixIt says the parts to build an iPhone only come out to lets say $250, for some reason everyone things it shouldn't cost more than say $300 for the phone. BUT in order for Apple to have some of the best engineers, designers, and coders they NEED to pay these people, otherwise they go to Google or Tesla, which happens. R&D of new tech and new products is NOT CHEAP. You often get what you pay for and on grand scale what Apple charges for their products is not outside the same price range of other manufacturers. Yes there are cheaper phones, and computers, but a person pays more for a BMW or Audi, Tesla, or "X" Luxury car because more goes into it, and you expect more out of it. A person could also buy a Toyota Yaris if they don't care, have the money for a BMW, or EVEN LIKES and PREFERS the Yaris. Full disclosure I drive a cheap Yaris.
Something wrong here. Yes. R&D is expensive. And wages. But Apple has somehow managed to amass around 250 billion dollars in cash in ten years. After taxes and wages and R&D. There seems to be plenty of room for lower prices.
Something is "wrong" because Apple has a runaway hit and is successful? That's absurd. The iPhone is the most successful single product in human history -- why shouldn't their bank account get bigger? A product is worth what people will pay for it. iPhone and high-end Samsungs and Google phones all cost about the same. Is something wrong with them too? Or just Apple, because they're doing better?
Totally agree, StrangeDays. People also don't take into account that the Apple of today, being as vertically integrated as it is, is equivalent to the entire PC industry of years past, say, back in 1999 and 2000, when Microsoft ruled and took tons of profits out of that sector just by supplying the operating systems and productivity software.
The smartphone industry is far larger today, Apple owns the high end where most of the profits originate, and it provides the whole stack, including designing its own silicon, right up to the App Store model which has revolutionized how software is developed, marketed and delivered, and has provided far better security and user experience. Yes, indeed, such a business should profit handsomely.
Oh, and by the way, to those who moan and groan about Apple's outsized profits based upon the absolute dollar size of its cash hoard, better go complain to someone about Microsoft. Microsoft's gross profit have been for many years, and remain, far higher than Apple's, meaning they pocketed far more of each of a consumer's dollars from each sale than has Apple. Where's the moaning about that among these folks?
Apple tries to force its suppliers to reduce prices, which is fine, but what is not fine is it charges so much for it stuff to us. Hypocrisy. Can dish it out, but can't be on recieving end of its own tactics. Good for QCOM
No is forcing you or anyone to buy Apple products.
^^^Exactly^^^
Paul, not doubt Apple makes literally tons of money in profits every quarter. They use the money to boost stock prices with buy backs (whether that is good or bad) but also dumps countless dollars into data centers (which it is building themselves due in part to privacy concerns from governments), R&D, as well as design and parts. When iFixIt says the parts to build an iPhone only come out to lets say $250, for some reason everyone things it shouldn't cost more than say $300 for the phone. BUT in order for Apple to have some of the best engineers, designers, and coders they NEED to pay these people, otherwise they go to Google or Tesla, which happens. R&D of new tech and new products is NOT CHEAP. You often get what you pay for and on grand scale what Apple charges for their products is not outside the same price range of other manufacturers. Yes there are cheaper phones, and computers, but a person pays more for a BMW or Audi, Tesla, or "X" Luxury car because more goes into it, and you expect more out of it. A person could also buy a Toyota Yaris if they don't care, have the money for a BMW, or EVEN LIKES and PREFERS the Yaris. Full disclosure I drive a cheap Yaris.
Something wrong here. Yes. R&D is expensive. And wages. But Apple has somehow managed to amass around 250 billion dollars in cash in ten years. After taxes and wages and R&D. There seems to be plenty of room for lower prices.
Something is "wrong" because Apple has a runaway hit and is successful? That's absurd. The iPhone is the most successful single product in human history -- why shouldn't their bank account get bigger? A product is worth what people will pay for it. iPhone and high-end Samsungs and Google phones all cost about the same. Is something wrong with them too? Or just Apple, because they're doing better?
People seem to assume Apple would have more clients if they only had their prices a bit lower... Well, hell no, they'd be leaving money on the table and likely gain very little in return in market share. This lower profit would starve them and allow the competition to gain on them eventually.
It can be argued that the iPhone is already priced too low since they can't keep up demand for many months after a launch.
Apple tries to force its suppliers to reduce prices, which is fine, but what is not fine is it charges so much for it stuff to us. Hypocrisy. Can dish it out, but can't be on recieving end of its own tactics. Good for QCOM
No is forcing you or anyone to buy Apple products.
^^^Exactly^^^
Paul, not doubt Apple makes literally tons of money in profits every quarter. They use the money to boost stock prices with buy backs (whether that is good or bad) but also dumps countless dollars into data centers (which it is building themselves due in part to privacy concerns from governments), R&D, as well as design and parts. When iFixIt says the parts to build an iPhone only come out to lets say $250, for some reason everyone things it shouldn't cost more than say $300 for the phone. BUT in order for Apple to have some of the best engineers, designers, and coders they NEED to pay these people, otherwise they go to Google or Tesla, which happens. R&D of new tech and new products is NOT CHEAP. You often get what you pay for and on grand scale what Apple charges for their products is not outside the same price range of other manufacturers. Yes there are cheaper phones, and computers, but a person pays more for a BMW or Audi, Tesla, or "X" Luxury car because more goes into it, and you expect more out of it. A person could also buy a Toyota Yaris if they don't care, have the money for a BMW, or EVEN LIKES and PREFERS the Yaris. Full disclosure I drive a cheap Yaris.
Something wrong here. Yes. R&D is expensive. And wages. But Apple has somehow managed to amass around 250 billion dollars in cash in ten years. After taxes and wages and R&D. There seems to be plenty of room for lower prices.
Something is "wrong" because Apple has a runaway hit and is successful? That's absurd. The iPhone is the most successful single product in human history -- why shouldn't their bank account get bigger? A product is worth what people will pay for it. iPhone and high-end Samsungs and Google phones all cost about the same. Is something wrong with them too? Or just Apple, because they're doing better?
People seem to assume Apple would have more clients if they only had their prices a bit lower... Well, hell no, they'd be leaving money on the table and likely gain very little in return in market share. This lower profit would starve them and allow the competition to gain on them eventually.
How would it starve them if they aren't using the vast majority of the profits? They are hoarding.
Lower prices would sell more units (but still with healthy profits).
More unit sales would open up more potential services revenue. Could we see lower prices as an investment in itself?
Where do you see the next ten years growth? Hardware or services? Both? Fresh revenue streams? Cars?
They're not hoarding, not making shit deals and having your money locked in various market is not hoarding.
No, no, no, no, what your saying is basically all wrong. There is an optimal price that gives an optimal profit for the current product/service mix.
The profit you lose is much much quicker than the market share you gain. Those illusory service revenues may or may not occur while your taking a big hits in profits in the short to medium term. Building up services to replace hardware sales is a long haul thing and cannot be sped up substantially without courting disaster (that's why there are so few companies that are good at it).
Cutting profits without a short to medium term fallback makes makes your company more vulnerable to a downturn cause your fixed expenses are not changing no matter what.
Apple has undoubtedly run scenarios up the wazoo with all sorts of strategic decisions and their impact on sales and profits. I trust they know what their doing.
First, a lot of people dont realize Apple is the 2nd largest Mobile Phone maker on the planet, despite their "niche". And by now, they may be the single largest buyer of Mobile Modem technology. Samsung is using more and more of their own SoC ( Exynos) with their own Modem technology Integrated.
So not only is Apple the largest buyer in modem tech, their are also the highest end in Market Selling Price, so they have lots of purchasing power.
The last thing Intel want is profit from their Modem business from Apple. After they wrote off billions in their Mobile SoC Atom, Intel has literally nothing in the Mobile Game and shareholders are not very pleased. Compared to Qualcomm getting a $20 per chip after rebate. Intel could afford to sell it at $10. And not to mention Empty Fab space is extremely expensive, Intel recently announce their Mobile / DC first for every new node. Leaving 14nm for desktop CPU only, they will need to fill those 14nm fab space with something. And Modem, or precisely 200M+ baseband modem sounds like a good fit.
Apple tries to force its suppliers to reduce prices, which is fine, but what is not fine is it charges so much for it stuff to us. Hypocrisy. Can dish it out, but can't be on recieving end of its own tactics. Good for QCOM
What a lot of people dont realize, is the BOM cost continue to rise, DRAM, NAND, SoC Manufacturing cost etc. It is the reason why you dont see super cheap Smartphone from China anymore, the floor for Smartphone price has risen, they are still very cheap compared to Apple. But much less $69- $99 Smartphone on the market. Apple has manage to offset a lot of these cost by bringing technology in house, prepaid contract etc. But there is only so much you can do, especially when patents are now one of the largest cost of Smartphone.
So for Apple to maintain its margin as it has over the years, it have to find cost cutting somewhere.
Apple tries to force its suppliers to reduce prices, which is fine, but what is not fine is it charges so much for it stuff to us. Hypocrisy. Can dish it out, but can't be on recieving end of its own tactics. Good for QCOM
No is forcing you or anyone to buy Apple products.
^^^Exactly^^^
Paul, not doubt Apple makes literally tons of money in profits every quarter. They use the money to boost stock prices with buy backs (whether that is good or bad) but also dumps countless dollars into data centers (which it is building themselves due in part to privacy concerns from governments), R&D, as well as design and parts. When iFixIt says the parts to build an iPhone only come out to lets say $250, for some reason everyone things it shouldn't cost more than say $300 for the phone. BUT in order for Apple to have some of the best engineers, designers, and coders they NEED to pay these people, otherwise they go to Google or Tesla, which happens. R&D of new tech and new products is NOT CHEAP. You often get what you pay for and on grand scale what Apple charges for their products is not outside the same price range of other manufacturers. Yes there are cheaper phones, and computers, but a person pays more for a BMW or Audi, Tesla, or "X" Luxury car because more goes into it, and you expect more out of it. A person could also buy a Toyota Yaris if they don't care, have the money for a BMW, or EVEN LIKES and PREFERS the Yaris. Full disclosure I drive a cheap Yaris.
Something wrong here. Yes. R&D is expensive. And wages. But Apple has somehow managed to amass around 250 billion dollars in cash in ten years. After taxes and wages and R&D. There seems to be plenty of room for lower prices.
Something is "wrong" because Apple has a runaway hit and is successful? That's absurd. The iPhone is the most successful single product in human history -- why shouldn't their bank account get bigger? A product is worth what people will pay for it. iPhone and high-end Samsungs and Google phones all cost about the same. Is something wrong with them too? Or just Apple, because they're doing better?
People seem to assume Apple would have more clients if they only had their prices a bit lower... Well, hell no, they'd be leaving money on the table and likely gain very little in return in market share. This lower profit would starve them and allow the competition to gain on them eventually.
How would it starve them if they aren't using the vast majority of the profits? They are hoarding.
Lower prices would sell more units (but still with healthy profits).
More unit sales would open up more potential services revenue. Could we see lower prices as an investment in itself?
Where do you see the next ten years growth? Hardware or services? Both? Fresh revenue streams? Cars?
They're not hoarding, not making shit deals and having your money locked in various market is not hoarding.
No, no, no, no, what your saying is basically all wrong. There is an optimal price that gives an optimal profit for the current product/service mix.
The profit you lose is much much quicker than the market share you gain. Those illusory service revenues may or may not occur while your taking a big hits in profits in the short to medium term. Building up services to replace hardware sales is a long haul thing and cannot be sped up substantially without courting disaster (that's why there are so few companies that are good at it).
Cutting profits without a short to medium term fallback makes makes your company more vulnerable to a downturn cause your fixed expenses are not changing no matter what.
Apple has undoubtedly run scenarios up the wazoo with all sorts of strategic decisions and their impact on sales and profits. I trust they know what their doing on.
"No, no, no, no"?
I'm sorry to insist but Apple is hoarding and has been for many years. It makes business sense, but to say they are not hoarding is not true. They do not have the money 'locked up' either. They have an investment portfolio just like most operations and part of their wealth is there. They also have strategic investments.
"Optimal price"?
Does that actually have a definition? If they had spent the last ten years selling lower priced phones and had 150 billion sitting in the bank as a result, I suppose that would also count as optimal.
Why are you equating cutting profits to vulnerability? I suppose when you say cutting profits you mean lowering prices. Is it not possible that cutting prices could actually lead to an increase in profits?
Of course services is long haul thing. It has not met its potential yet but Apple sees revenue growth there for sure. That makes all the sense in the world but to fully take advantage of services you should be arriving to widen your user base.
I really don't think we will see spectacular growth in the premium market. The opposite could be true with a slight trend downwards.after iPhone 8. As for downturns, I think very few scenarios could be worse than the last decade.
Is there room for growth? In unit sales for sure and with that, more potential revenue sales from services. In profits I have my doubts. The cow has been milked.
"I trust they know what their doing"
There is always an element of risk and luck but even knowing what you are doing doesn't mean you will succeed.
Apple tries to force its suppliers to reduce prices, which is fine, but what is not fine is it charges so much for it stuff to us. Hypocrisy. Can dish it out, but can't be on recieving end of its own tactics. Good for QCOM
No is forcing you or anyone to buy Apple products.
^^^Exactly^^^
Paul, not doubt Apple makes literally tons of money in profits every quarter. They use the money to boost stock prices with buy backs (whether that is good or bad) but also dumps countless dollars into data centers (which it is building themselves due in part to privacy concerns from governments), R&D, as well as design and parts. When iFixIt says the parts to build an iPhone only come out to lets say $250, for some reason everyone things it shouldn't cost more than say $300 for the phone. BUT in order for Apple to have some of the best engineers, designers, and coders they NEED to pay these people, otherwise they go to Google or Tesla, which happens. R&D of new tech and new products is NOT CHEAP. You often get what you pay for and on grand scale what Apple charges for their products is not outside the same price range of other manufacturers. Yes there are cheaper phones, and computers, but a person pays more for a BMW or Audi, Tesla, or "X" Luxury car because more goes into it, and you expect more out of it. A person could also buy a Toyota Yaris if they don't care, have the money for a BMW, or EVEN LIKES and PREFERS the Yaris. Full disclosure I drive a cheap Yaris.
Something wrong here. Yes. R&D is expensive. And wages. But Apple has somehow managed to amass around 250 billion dollars in cash in ten years. After taxes and wages and R&D. There seems to be plenty of room for lower prices.
Something is "wrong" because Apple has a runaway hit and is successful? That's absurd. The iPhone is the most successful single product in human history -- why shouldn't their bank account get bigger? A product is worth what people will pay for it. iPhone and high-end Samsungs and Google phones all cost about the same. Is something wrong with them too? Or just Apple, because they're doing better?
People seem to assume Apple would have more clients if they only had their prices a bit lower... Well, hell no, they'd be leaving money on the table and likely gain very little in return in market share. This lower profit would starve them and allow the competition to gain on them eventually.
How would it starve them if they aren't using the vast majority of the profits? They are hoarding.
Lower prices would sell more units (but still with healthy profits).
More unit sales would open up more potential services revenue. Could we see lower prices as an investment in itself?
Where do you see the next ten years growth? Hardware or services? Both? Fresh revenue streams? Cars?
They're not hoarding, not making shit deals and having your money locked in various market is not hoarding.
No, no, no, no, what your saying is basically all wrong. There is an optimal price that gives an optimal profit for the current product/service mix.
The profit you lose is much much quicker than the market share you gain. Those illusory service revenues may or may not occur while your taking a big hits in profits in the short to medium term. Building up services to replace hardware sales is a long haul thing and cannot be sped up substantially without courting disaster (that's why there are so few companies that are good at it).
Cutting profits without a short to medium term fallback makes makes your company more vulnerable to a downturn cause your fixed expenses are not changing no matter what.
Apple has undoubtedly run scenarios up the wazoo with all sorts of strategic decisions and their impact on sales and profits. I trust they know what their doing on.
"No, no, no, no"?
I'm sorry to insist but Apple is hoarding and has been for many years. It makes business sense, but to say they are not hoarding is not true. They do not have the money 'locked up' either. They have an investment portfolio just like most operations and part of their wealth is there. They also have strategic investments.
"Optimal price"?
Does that actually have a definition? If they had spent the last ten years selling lower priced phones and had 150 billion sitting in the bank as a result, I suppose that would also count as optimal.
Why are you equating cutting profits to vulnerability? I suppose when you say cutting profits you mean lowering prices. Is it not possible that cutting prices could actually lead to an increase in profits?
Of course services is long haul thing. It has not met its potential yet but Apple sees revenue growth there for sure. That makes all the sense in the world but to fully take advantage of services you should be arriving to widen your user base.
I really don't think we will see spectacular growth in the premium market. The opposite could be true with a slight trend downwards.after iPhone 8. As for downturns, I think very few scenarios could be worse than the last decade.
Is there room for growth? In unit sales for sure and with that, more potential revenue sales from services. In profits I have my doubts. The cow has been milked.
"I trust they know what their doing"
There is always an element of risk and luck but even knowing what you are doing doesn't mean you will succeed.
You're obviously not involved in any business. Optimal means highest level of profits mid term; since in tech the horizon beyond 3 years is pretty ify, that mid term is about 3 years.
Leaving money on the table to gain market share to sell more "stuff" in the future is ignoring the fact that people may, and probably will, buy most of this stuff from somewhere else. Not only that, people that currently that don't buy Apple phones may not be big service users anyway; this is born out by the stats on spendings per users on the Android platform.
So, you lose guaranteed profits for potential service profits from people who currently don't actually spend much on services at all.
That's why it's always a bad idea to leave money on the table (not price in regards to demand); They want your product and they're ready to sign on the dotted line, so you sell it at the price the buyer thinks its worth compared to the competition, not one cent below.
If you charge too much, they'll tell you by going somewhere else. There are ways to test for this pricing and Apple has done it.
The profits is used to transition towards the next 3 year period to a
business model that is both complementary to existing business strengths
and to emerging market trends.
Currently, there are not enough service profits in the whole industry to even cover Apple's current profits from hardware sales. So, what on earth would Apple be gaining in going full tilt in the service area RIGHT NOW. The key of Apple is entering a market strongly when they can provide a product/service that's strongly differentiated from the rest while hopefully keeping the current cash flow going.
Considering the money returned to stock holders, if Apple had 150B, it would mean they actually left 200B on the table by charging less! Pretty sure current stock holders wouldn't be open to something like that. Apple doesn't owe anyone a cheaper phone. It's price reflects demand for its product.
Even if Apple cut it's margins in half, its prices would still be higher than most Android phones, except the top end ones. So, Apple would gain a bit more in a market they already own (losing the profits they have there) and gain a bit in the more competitive mid range but likely not making up all the profits lost above (since what people buy is mostly constrained by amount of money they have, not just what's available and how it costs (supply vs demand)).
Support costs would increase considerably and the costs of ramping up manufacturing to an even bigger volume would also ramp up even more than now. That's not even including all the cloud services Apple offers which would also need to ramp up without any boost short term in profitability.
Growth without profit is not growth, simple as that. When you cut profits from direct sales and hope for the best that these will made up from more volume and more services, that's basically a pipe dream; that NEVER works in the short to medium term.
Services could build up to a substantial and equivalent profit, but it's not guaranteed.
Comments
Lower prices would sell more units (but still with healthy profits).
More unit sales would open up more potential services revenue. Could we see lower prices as an investment in itself?
Where do you see the next ten years growth? Hardware or services? Both? Fresh revenue streams? Cars?
What market position of Apple's would that be? 18% of the smartphone market hardly gives Apple the basis to overcharge consumers. iPhones are actually quite reasonably priced when longevity and resale value are taken into consideration, and that's exactly what consumers should consider. After all, it's total cost of ownership that is meaningful, not retail price.
Totally agree, StrangeDays. People also don't take into account that the Apple of today, being as vertically integrated as it is, is equivalent to the entire PC industry of years past, say, back in 1999 and 2000, when Microsoft ruled and took tons of profits out of that sector just by supplying the operating systems and productivity software.
The smartphone industry is far larger today, Apple owns the high end where most of the profits originate, and it provides the whole stack, including designing its own silicon, right up to the App Store model which has revolutionized how software is developed, marketed and delivered, and has provided far better security and user experience. Yes, indeed, such a business should profit handsomely.
Oh, and by the way, to those who moan and groan about Apple's outsized profits based upon the absolute dollar size of its cash hoard, better go complain to someone about Microsoft. Microsoft's gross profit have been for many years, and remain, far higher than Apple's, meaning they pocketed far more of each of a consumer's dollars from each sale than has Apple. Where's the moaning about that among these folks?
No, no, no, no, what your saying is basically all wrong. There is an optimal price that gives an optimal profit for the current product/service mix.
The profit you lose is much much quicker than the market share you gain.
Those illusory service revenues may or may not occur while your taking a big hits in profits in the short to medium term.
Building up services to replace hardware sales is a long haul thing and cannot be sped up substantially without courting disaster
(that's why there are so few companies that are good at it).
Cutting profits without a short to medium term fallback makes makes your company more vulnerable to a downturn
cause your fixed expenses are not changing no matter what.
Apple has undoubtedly run scenarios up the wazoo with all sorts of strategic decisions and their impact on sales and profits.
I trust they know what their doing.
So not only is Apple the largest buyer in modem tech, their are also the highest end in Market Selling Price, so they have lots of purchasing power.
The last thing Intel want is profit from their Modem business from Apple. After they wrote off billions in their Mobile SoC Atom, Intel has literally nothing in the Mobile Game and shareholders are not very pleased. Compared to Qualcomm getting a $20 per chip after rebate. Intel could afford to sell it at $10. And not to mention Empty Fab space is extremely expensive, Intel recently announce their Mobile / DC first for every new node. Leaving 14nm for desktop CPU only, they will need to fill those 14nm fab space with something. And Modem, or precisely 200M+ baseband modem sounds like a good fit.
What a lot of people dont realize, is the BOM cost continue to rise, DRAM, NAND, SoC Manufacturing cost etc. It is the reason why you dont see super cheap Smartphone from China anymore, the floor for Smartphone price has risen, they are still very cheap compared to Apple. But much less $69- $99 Smartphone on the market.
Apple has manage to offset a lot of these cost by bringing technology in house, prepaid contract etc. But there is only so much you can do, especially when patents are now one of the largest cost of Smartphone.
So for Apple to maintain its margin as it has over the years, it have to find cost cutting somewhere.
I'm sorry to insist but Apple is hoarding and has been for many years. It makes business sense, but to say they are not hoarding is not true. They do not have the money 'locked up' either. They have an investment portfolio just like most operations and part of their wealth is there. They also have strategic investments.
"Optimal price"?
Does that actually have a definition? If they had spent the last ten years selling lower priced phones and had 150 billion sitting in the bank as a result, I suppose that would also count as optimal.
Why are you equating cutting profits to vulnerability? I suppose when you say cutting profits you mean lowering prices. Is it not possible that cutting prices could actually lead to an increase in profits?
Of course services is long haul thing. It has not met its potential yet but Apple sees revenue growth there for sure. That makes all the sense in the world but to fully take advantage of services you should be arriving to widen your user base.
I really don't think we will see spectacular growth in the premium market. The opposite could be true with a slight trend downwards.after iPhone 8. As for downturns, I think very few scenarios could be worse than the last decade.
Is there room for growth? In unit sales for sure and with that, more potential revenue sales from services. In profits I have my doubts. The cow has been milked.
"I trust they know what their doing"
There is always an element of risk and luck but even knowing what you are doing doesn't mean you will succeed.
Optimal means highest level of profits mid term; since in tech the horizon beyond 3 years is pretty ify, that mid term is about 3 years.
Leaving money on the table to gain market share to sell more "stuff" in the future is ignoring the fact that people may, and probably will, buy most of this stuff from somewhere else. Not only that, people that currently that don't buy Apple phones may not be big service users anyway; this is born out by the stats on spendings per users on the Android platform.
So, you lose guaranteed profits for potential service profits from people who currently don't actually spend much on services at all.
That's why it's always a bad idea to leave money on the table (not price in regards to demand);
They want your product and they're ready to sign on the dotted line, so you sell it at the price the buyer thinks its worth compared to the competition, not one cent below.
If you charge too much, they'll tell you by going somewhere else. There are ways to test for this pricing and Apple has done it.
The profits is used to transition towards the next 3 year period to a business model that is both complementary to existing business strengths and to emerging market trends.
Currently, there are not enough service profits in the whole industry to even cover Apple's current profits from hardware sales.
So, what on earth would Apple be gaining in going full tilt in the service area RIGHT NOW.
The key of Apple is entering a market strongly when they can provide a product/service that's strongly differentiated from the rest while hopefully keeping the current cash flow going.
Considering the money returned to stock holders, if Apple had 150B, it would mean they actually left 200B on the table by charging less!
Pretty sure current stock holders wouldn't be open to something like that.
Apple doesn't owe anyone a cheaper phone. It's price reflects demand for its product.
Even if Apple cut it's margins in half, its prices would still be higher than most Android phones, except the top end ones.
So, Apple would gain a bit more in a market they already own (losing the profits they have there) and gain a bit in the more competitive mid range but likely not making up all the profits lost above (since what people buy is mostly constrained by amount of money they have, not just what's available and how it costs (supply vs demand)).
Support costs would increase considerably and the costs of ramping up manufacturing to an even bigger volume would also ramp up even more than now.
That's not even including all the cloud services Apple offers which would also need to ramp up without any boost short term in profitability.
Growth without profit is not growth, simple as that.
When you cut profits from direct sales and hope for the best that these will made up from more volume and more services, that's basically a pipe dream; that NEVER works in the short to medium term.
Services could build up to a substantial and equivalent profit, but it's not guaranteed.