Apple's 44.7% gross margins are highest in at least 15 years

24

Comments

  • Reply 21 of 61
    Quote:
    Originally Posted by xtrmtrk View Post


    When do they start turning the pricing screws on their competition?



    When sales drop. Since they've been increasing every single quarter, this is unnecessary.



    Quote:

    At what point would it be best to give customers a price break?



    If sales drop or someone actually creates meaningful competition to one of their products.



    Quote:

    Is there something better they could do with their idle money than expand their market through price reductions?



    Yes, and that's what they're doing now.
  • Reply 22 of 61
    Quote:
    Originally Posted by island hermit View Post


    From here forward any negative outlook on Apple will be known as a "Slappy".



    Apple is Slapppyed™
  • Reply 23 of 61
    Quote:
    Originally Posted by Tallest Skil View Post


    When sales drop. Since they've been increasing every single quarter, this is unnecessary.







    If sales drop or someone actually creates meaningful competition to one of their products.







    Yes, and that's what they're doing now.



    So respond from a position of weakness rather than strength? Hmmm....
  • Reply 24 of 61
    Quote:
    Originally Posted by mausz View Post


    I find it quite astounding why so many people keep paying the apple tax. It might be worth it in some cases, but in any other business consumers would not accept such high margins for stuff they buy.



    Only product without any real 'apple tax' is the iPad in my opinion, but with the iPhone costing almost double (without contract) as an Galaxy S2 in my country it's hard to justify this price difference (even if you say ios is superior to Android, which I find debatable)



    Quote:
    Originally Posted by tjwal View Post


    With a margin of 44% the apple tax is alive and well.



    Quote:
    Originally Posted by jragosta View Post


    Nonsense.



    "Apple Tax" is a phrase used to suggest that consumers are paying too much for an Apple product merely because of the name. Let's look at the major product lines:



    iPhone. The iPhone is roughly the same price as many high end phones from other suppliers. And with contract, the price is also about the same. No Apple Tax here.



    iPad. No one else has a comparable (10") tablet that significantly beats the iPad on price.



    iPod Touch. Marginal. Roughly the same price as a cheapo 7" tablet, but the iPod ecosystem is superior, so you could argue this one either way.



    iPod. You could argue that the iPod fetches a significant premium.



    MacBook Air. Intel had to subsidize the other vendors for them to even come close. Even with Intel's subsidy, competitor's ultralights are not that different in price - sometimes higher, sometimes lower.



    MacBook Pro. Like the iPod, you could argue that this fetches a premium, but there are other high end PCs that are in the same price range. Realistically, the 'premium' is simply a matter of Apple only producing high end laptops and not the $499 junk that you see at Walmart.



    Mac Pro. Try comparing a comparable dual core Xeon machine from HP or Dell and you'll see that Apple is not overpriced. In fact, they're generally LESS expensive.



    iMac. Like the MBP, if you compare the iMac to all other computers, it looks high. But when you compare it to COMPARABLE computers, it's well in line. Try pricing an i7 with 27" screen from someone else.



    The Apple Tax is largely a myth.



    The Apple Tax is Slapppyed™



  • Reply 25 of 61
    nagrommenagromme Posts: 2,834member
    Apple prices (from phones to computers) are in line with the rest of the industry. (Not by CPU average but when compared fairly by specs and bundles—since Apple makes no low-end disposable computers; and of course iOS is where most of Apple’s profits come from. Compare an Apple and a non-Apple device of similar price, and you’ll find each has some higher specs and some lower, but on average reasonably close.)



    Meanwhile Apple’s build quality, customer service, and attention to detail (metal instead of cheap plastic, etc.) are above average.



    And they develop their own OS—nobody gives it to them free to feed users to advertisers!



    And they spend big on marketing compared to most hardware-makers.



    So they ought to be tightly squeezed on margins... yet their margins are still this good.



    Conclusion: Tim Cook earns his paycheck! Great negotiating, great foresight, great efficiencies.
  • Reply 26 of 61
    Quote:
    Originally Posted by xtrmtrk View Post


    So respond from a position of weakness rather than strength? Hmmm....



    Sorry, maybe I've misinterpreted the purpose of a business. I was under the impression that they exist to make money, but that's obviously wrong since everyone seems to want to demand Apple make less money and have a worse time of meeting demand for absolutely no reason.
  • Reply 27 of 61
    citycity Posts: 522member
    Quote:
    Originally Posted by jragosta View Post


    Nonsense.



    "Apple Tax" is a phrase used to suggest that consumers are paying too much for an Apple product merely because of the name. Let's look at the major product lines:



    iPhone. The iPhone is roughly the same price as many high end phones from other suppliers. And with contract, the price is also about the same. No Apple Tax here.



    iPad. No one else has a comparable (10") tablet that significantly beats the iPad on price.



    iPod Touch. Marginal. Roughly the same price as a cheapo 7" tablet, but the iPod ecosystem is superior, so you could argue this one either way.



    iPod. You could argue that the iPod fetches a significant premium.



    MacBook Air. Intel had to subsidize the other vendors for them to even come close. Even with Intel's subsidy, competitor's ultralights are not that different in price - sometimes higher, sometimes lower.



    MacBook Pro. Like the iPod, you could argue that this fetches a premium, but there are other high end PCs that are in the same price range. Realistically, the 'premium' is simply a matter of Apple only producing high end laptops and not the $499 junk that you see at Walmart.



    Mac Pro. Try comparing a comparable dual core Xeon machine from HP or Dell and you'll see that Apple is not overpriced. In fact, they're generally LESS expensive.



    iMac. Like the MBP, if you compare the iMac to all other computers, it looks high. But when you compare it to COMPARABLE computers, it's well in line. Try pricing an i7 with 27" screen from someone else.



    The Apple Tax is largely a myth.



    Apple is also a retailer of its products, so we should expect a higher margin. They have expensive locations and expensive build outs.
  • Reply 28 of 61
    When I heard that part of the analyst call, it reminded me of the only other time I remember Apple having similar margins. Way back in the Scully era between 1987-1990, Apple had similar margins in the 45-50% range. I was an employee at Apple back then fresh out of college. Mac SEs were selling strongly and Mac IIs were the most powerful computer by far. During this time, Apple management was telling the field troops that they were looking to get 25% marketshare in the PC market (they had 10% at the time) and really make an assault on enterprise customers.



    Apple the company was very healthy after the bad 1985 period when Steve Jobs was ousted. The company paid dividends back then and even had profit sharing for employees. Of course, we all know that in 1990, Windows 3.0 debuted and Apple really had no answer. The increased competition from Windows through the early 90's exposed Apple's weak spots....software engineering that couldn't match the power of Windows NT...horrible forecasting and even worse logistics for building new product....finally a management team who couldn't change fast enough.



    It's unbelievable how different Apple is now from where it was back then on all levels.
  • Reply 29 of 61
    MacProMacPro Posts: 19,590member
    Quote:
    Originally Posted by Sevenfeet View Post


    When I heard that part of the analyst call, it reminded me of the only other time I remember Apple having similar margins. Way back in the Scully era between 1987-1990, Apple had similar margins in the 45-50% range. I was an employee at Apple back then fresh out of college. Mac SEs were selling strongly and Mac IIs were the most powerful computer by far. During this time, Apple management was telling the field troops that they were looking to get 25% marketshare in the PC market (they had 10% at the time) and really make an assault on enterprise customers.



    Apple the company was very healthy after the bad 1985 period when Steve Jobs was ousted. The company paid dividends back then and even had profit sharing for employees. Of course, we all know that in 1990, Windows 3.0 debuted and Apple really had no answer. The increased competition from Windows through the early 90's exposed Apple's weak spots....software engineering that couldn't match the power of Windows NT...horrible forecasting and even worse logistics for building new product....finally a management team who couldn't change fast enough.



    It's unbelievable how different Apple is now from where it was back then on all levels.



    There was an end to innovation at Apple with Scully and post Steve, they ran out of steam and their crown jewels were being deployed on PCs as Windows. It was a bad few years after that era.
  • Reply 30 of 61
    paxmanpaxman Posts: 4,725member
    Quote:
    Originally Posted by island hermit View Post


    From here forward any negative outlook on Apple will be known as a "Slappy".



    Too general. It's never black and white. It's a question of degrees - degrees of Slappy.
  • Reply 31 of 61
    \
    Quote:
    Originally Posted by tjwal View Post


    With a margin of 44% the apple tax is alive and well.



    I think tjwal and Slappy are related somehow
  • Reply 32 of 61
    paxmanpaxman Posts: 4,725member
    Quote:
    Originally Posted by Tallest Skil View Post


    Sorry, maybe I've misinterpreted the purpose of a business. I was under the impression that they exist to make money, but that's obviously wrong since everyone seems to want to demand Apple make less money and have a worse time of meeting demand for absolutely no reason.



    Apple could afford to drop their prices by 5%. But I am not sure it would make much of a difference to many people. If they cut prices by a 3'rd it would be a big deal. It would also be a very silly thing to do. Instead it would be nice if they gave us all extended warranties They already give us an amazing customer service IMO so I am not complaining but rather than dropping prices I'd like to see more incentives to come aboard for prospective switchers and for the rest of us to feel even more smug about our choice of computing platform.
  • Reply 33 of 61
    I love Apple products and have at least a dozen Macs and other computers. That said, I understand that using Chinese slave labor does save on costs in manufacturing. I think Apple has t come clean on this issue. Yes, the Chinese workers "earn" about $2/day working 12-14hr shifts and living in dorms on the Foxconn City campus. But, face it, Apple is using these people to make record profits at the expense of American workers.
  • Reply 34 of 61
    Quote:
    Originally Posted by Bruceedits View Post


    China



    How about we have just ONE THREAD where this doesn't come up for absolutely no reason.
  • Reply 35 of 61
    Quote:
    Originally Posted by Tallest Skil View Post


    How about we have just ONE THREAD where this doesn't come up for absolutely no reason.



    You have to admit... Apple has high margins and record profits only because it is the only company that uses Chinese factories to produce its goods.



    [/s]
  • Reply 36 of 61
    Quote:
    Originally Posted by paxman View Post


    Apple could afford to drop their prices by 5%. But I am not sure it would make much of a difference to many people. If they cut prices by a 3'rd it would be a big deal. It would also be a very silly thing to do. Instead it would be nice if they gave us all extended warranties They already give us an amazing customer service IMO so I am not complaining but rather than dropping prices I'd like to see more incentives to come aboard for prospective switchers and for the rest of us to feel even more smug about our choice of computing platform.





    Apple is doing something even better with the iPhones. They are keeping the older phones around longer and offering then free with a contract. If 5% would make a difference, free should seal the deal.
  • Reply 37 of 61
    Quote:
    Originally Posted by paxman View Post


    Too general. It's never black and white. It's a question of degrees - degrees of Slappy.



    Maybe Slapppy Seconds?
  • Reply 38 of 61
    christophbchristophb Posts: 1,482member
    Quote:
    Originally Posted by Bruceedits View Post


    I love Apple products and have at least a dozen Macs and other computers. That said, I understand that using Chinese slave labor does save on costs in manufacturing. I think Apple has t come clean on this issue. Yes, the Chinese workers "earn" about $2/day working 12-14hr shifts and living in dorms on the Foxconn City campus. But, face it, Apple is using these people to make record profits at the expense of American workers.



    And when the PRC wants to solve it the PRC can. They aren't the PRA(pple); they are a sovereign nation. At that point many companies will see their margins shrink or the price of the product rise until a different country comes along and decides to undercut another.
  • Reply 39 of 61
    christophbchristophb Posts: 1,482member
    Quote:
    Originally Posted by island hermit View Post


    You have to admit... Apple has high margins and record profits only because it is the only company that uses Chinese factories to produce its goods.



    [/s]



    I read and reread. Then again - before I noticed the /s. Well done.
  • Reply 40 of 61
    Quote:
    Originally Posted by tjwal View Post


    With a margin of 44% the apple tax is alive and well.



    apple makes money on hardware + os + retail + support, so of course their margin is going to be big.



    in the cloner world you have many mouths to feed: hardware <cloner maker> + os (microsoft tax) + retail (best buy, etc...) + support (firedog/geek squad/etc..)



    so yeah, the individual slices will be small.
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