# Apple & Samsung take massive 109% of mobile industry profits while competitors lose money

Posts: 182member
Quote:

In fact, when tablets, notebooks and other mobile devices are included, Apple earned more than Samsung, LG, Nokia, Huawei, Lenovo and Motorola's mobile divisions combined, according to separate data released last month by Strategy Analytics.

Comparing numbers from companies that lost money to profitable companies this way can make for some interesting headlines to grab attention.  How about this headline:  "Samsung makes more profits in the mobile industry than Apple, Blackberry, LG, HTC, and Nokia combined".  Technically it's true according to their logic, no matter how absurd.

Posts: 5,042member

The math is simple people, You add together the profit each company makes so that is the total (Company A + Company B + Company C+ ect) then you take each companies profits and divide by the total, and you get a %.

You are saying since some companies numbers are below zero they should not be added or negative numbers should not be allow when adding up the total. There is nothing in the math that said you are not allow to add a negative number to a bunch or positive numbers. There is nothing in financial analysis where it say negative numbers should be excluded as well.

If you are an engineer you all hear of imaginary numbers (i) which comes about trying to take a square root of a negative number. The fact people are arguing whether 109% make sense means you fail to understand the math and financial concepts. The issue at hand is the fact we generally never see 2 companies making all the money and all the competitors loosing money to this level.

If the markets were extremely efficient, the companies loosing money would be out of business today and we would only have two supplier in this market. It would not be a good thing since the governments would step in and not allow only 2 big suppliers who control the entire market.

I bet you folks when you look at your net worth you only consider the positive money  in the bank you do not add the debt (negative) you owe to your mortgage company or the money lost in an investment you still own.

Posts: 1,182member
a two horse race, with one of the horses riding the design/success coat-tails of the other%u2026

where would the market, and specifically Apple, be today if Samsung had played by the rules and only iPhones were %u201Cjust like iPhones%u201D? Since that is clearly the winning design (both the original and the copy).

that%u2019s what should inform the settlement discussions too, in my view.
Posts: 2,649member
Quote:

Originally Posted by Maestro64

The math is simple people, You add together the profit each company makes so that is the total (Company A + Company B + Company C+ ect) then you take each companies profits and divide by the total, and you get a %.

You are saying since some companies numbers are below zero they should not be added or negative numbers should not be allow when adding up the total. There is nothing in the math that said you are not allow to add a negative number to a bunch or positive numbers. There is nothing in financial analysis where it say negative numbers should be excluded as well.

If you are an engineer you all hear of imaginary numbers (i) which comes about trying to take a square root of a negative number. The fact people are arguing whether 109% make sense means you fail to understand the math and financial concepts. The issue at hand is the fact we generally never see 2 companies making all the money and all the competitors loosing money to this level.

If the markets were extremely efficient, the companies loosing money would be out of business today and we would only have two supplier in this market. It would not be a good thing since the governments would step in and not allow only 2 big suppliers who control the entire market.

I bet you folks when you look at your net worth you only consider the positive money  in the bank you do not add the debt (negative) you owe to your mortgage company or the money lost in an investment you still own.

Although non-intuitive, you're absolutely right.   Here's an example.

Company 1  Profit: \$10,000

Company 2  Profit: \$12,000

Company 3  Profit: \$2,000

Company 4  Profit -\$10,000

Company 5  Profit -\$300

Company 6  Profit -\$200

Total industry profit is \$13,500.     Company 1 has \$10,000/\$13,500 = 74.1% of industry profits.

Company 2 has \$12,000/\$13,500 = 89.9% of industry profits.  Together, they have 163% of industry profits.

Posts: 744member
Short term, I'd put my money on Apple. At this point, innovation matters. But when the smartphone technology matures, the advantage will shift to Samsung. Then its lower cost of design and production will matter more. It can sell a better product for less.

Keep in mind that everyone builds in the same factories, so no one can benefit there. Apple's jingoism about "Designed in California" will be its undoing. It's spending billions to design products in the state that's rated 50th out of 50 in the cost of doing business. Long term, that's going to hurt.
Posts: 4,799member
pscooter63 wrote: »
You know, I hear folks mention this modest-1% thing time and time again, and when I went back and listened to the keynote earlier this year, I heard it differently.

Jobs said their goal was to have one percent of the market in its first year.  Nowhere can I find a statement that one percent would be fine indefinitely... in fact, I thought he alluded to growing that one percent significantly in the future.

And, if I may add, Steve Jobs was speaking about the USA market only and was reaching for 1% using only one service provider (Cingular) at the time. All things considered at the time, 1% was a reasonable goal.
Posts: 800member
Quote:

To all those saying no 109%.. thats not how the market usually looks at it. They generally assume each competitor with a % of market profits.. when you have dominating competitors, and losses form the others are considered taken by those with the profit. Think about it this way.. 4 competitors, all things being equal, would normally take 25% each. If one is in the negative, you can't ignore in the numbers, it has to be accounted for, and in the overall scheme that negative is SOMEONES positive. In this case, Samsung and Apple.

Basically, it means that Apple and Samsung are producing more profit than the market would expect and those not making money are losing more than they should be. That voids difference is the 9%

It's weird, I know..

Except this is not how the financial world looks at this.  It's usually stated as two figures with any individual company falling into one or the other:  % of industry profits and % of industry losses.

Besides, if Apple made money but the industry as a whole lost money, how would state Apple's share of industry profits?  Well, you couldn't if you go by the way AppleInsider expressed it.

Posts: 4,799member
inkling wrote: »
Short term, I'd put my money on Apple. At this point, innovation matters. But when the smartphone technology matures, the advantage will shift to Samsung. Then its lower cost of design and production will matter more. It can sell a better product for less.

Keep in mind that everyone builds in the same factories, so no one can benefit there. Apple's jingoism about "Designed in California" will be its undoing. It's spending billions to design products in the state that's rated 50th out of 50 in the cost of doing business. Long term, that's going to hurt.

While Apple has its headquarters in CA, They are building their data centers in AZ and NC, and have other research and assembly sites around the USA. I don't think CA is much of an influence on their product costs. However, Apple is protective of their product designs and is vigorous in keeping their products from being commoditized. As long as the iPhone is considered by the buyers as being in a class of its own, Apple will considered as a prestige product. In a world where wrist watches sell for \$19.95, there is still a market for a Rolex™.

Finally, you have not figured in the cost to market the devices to the public. Apple has their own highly visible stores as well as third party retailers and service providers. Currently Samsung spends billions more than Apple to get their message out. The more the Samsung devices become commoditized, the less effective their advertising dollar becomes.
Posts: 115member

The caveat, "Walkley noted that the share controlled by Apple and Samsung is likely lower when the profits of Chinese vendors such as Lenovo, ZTE, Huawei and Coolpad are included" is rather important to this story.

Lenovo just moved into third place overall in smartphone market share according to the release today from Gartner.  By not including their (unavailable) data in this report, the headline is somewhat meaningless.

Posts: 38member
"the banks just don't understand basic math"

LOL. It is not like there is a 100% barrier. Numbers greater than 100% occur all the time in all kinds of contexts. Also, the financial industry, like any other, often uses terminology slightly differently that its used outside the industry. The terminology of this article is not unusual.

109% just means "1.09 times". Apple and Samsung made 1.09 times the net profit of the whole industry = Apple and Samsung made 109% of the industry profit.
Posts: 506member
Quote:

Originally Posted by Nevermark

"the banks just don't understand basic math"

LOL. It is not like there is a 100% barrier. Numbers greater than 100% occur all the time in all kinds of contexts. Also, the financial industry, like any other, often uses terminology slightly differently that its used outside the industry. The terminology of this article is not unusual.

109% just means "1.09 times". Apple and Samsung made 1.09 times the net profit of the whole industry = Apple and Samsung made 109% of the industry profit.

Except odds are they made much more than 1.09 times the profit of the rest of the market.  Indeed it does seem as though they're trying to allocate 109% of the proverbial pie to Apple/Samsung...

Posts: 744member
Quote:

Originally Posted by Macky the Macky

While Apple has its headquarters in CA, They are building their data centers in AZ and NC, and have other research and assembly sites around the USA. I don't think CA is much of an influence on their product costs.

No, I suspect these data centers employ, at most, a few dozen people. They're often located where electrical costs are lowest, and I wonder if those communities are making a wise choice. They might be better off attracting businesses that would provide more jobs per cheap megawatt-hour.

California's problems have been growing for a long time. In the eighties, I can remember non-profits leaving the state. They simply could not afford to pay their staff enough to buy a home there. That problem has now expanded into the commercial sector, with companies freezing their growth in California and expanding elsewhere. Someone who works for Google (in Seattle) even told me that's Google's policy.

What's troubling about Apple is that it's rah-rah "Made in California" is jingoistic. It's a bit like the Brits a century ago who were described as saying, "My country, right or wrong." G. K. Chesterton blasted that point of view by comparing it to someone saying, "My mother, drunk or sober." Jingoism talks about their place as being great, but isn't interested in discussion, much less solving, its problems. It's cheap patriotism of the sort that thinks California is great because their upscale neighborhood is fine and the surfing (at Mavericks) is great. Problems are ignored unless they become personal.

And California's problems are too numerous to list in their entirety. A state that once had some of the country's best public schools now ranks 47th. A state that pioneered smart infrastructure (water canals and the first superhighways) now has decaying roads and will be wasting perhaps \$100 billion on a rail system that's unlikely to ever be finished. It's got a hideous crime rate and overcrowded prisons. It has a little more that 10% of the country's population but 30% of those on welfare. The retirement funds for state and local employees is so badly run, several major cities have filed for a Detroit-like bankruptcy. And on and on and on.

In short, if California were someone's mother, she wouldn't be a drunk, she'd be a crack cocaine addict. That's why there's something just a little flawed in being proud of that "Designed in California."

--Michael W. Perry, Chesterton on War and Peace: Battling the Ideas that Led to Nazism and World War II

Posts: 563member
SAMI owes a lot more \$\$ to Apple for that!
Posts: 3,613member

So Samsung is making vast sums of money from selling piles of junk with negligible profit margins...

... or all those claiming that to be the case were full of it.

Posts: 235member
This just proves analyst's can make up any number they want using other numbers.
Posts: 385member
Quote:

Originally Posted by Inkling

Short term, I'd put my money on Apple. At this point, innovation matters. But when the smartphone technology matures, the advantage will shift to Samsung. Then its lower cost of design and production will matter more. It can sell a better product for less.

Keep in mind that everyone builds in the same factories, so no one can benefit there. Apple's jingoism about "Designed in California" will be its undoing. It's spending billions to design products in the state that's rated 50th out of 50 in the cost of doing business. Long term, that's going to hurt.

That's a false premise.  The "cost of doing business" is high in California precisely because the type of innovation that Apple creates takes a highly skilled labor force with a high concentration of technology development and venture capital.  You can't just transplant Apple's design and engineering operations into some low cost backwater region and expect the same results.

Technology is a very high value-added sector, and depends on the types of resources and assets that exist in California and only a handful of other places.  Yes, it's a high cost of doing business, but there's a reason why so many technology companies (INCLUDING Samsung) are willing to pay that price to locate in a place like Silicon Valley.  It's the same reason why Apple will locate data centers (which do not employ a lot of workers and depend more on access to cheap power than anything else) in North Carolina and Nevada, but pay ~\$5 billion to keep their headquarters in Cupertino.  Same story goes for companies like Google, Yahoo, Twitter, Intel, and Facebook -- they might locate some of their lower margin and cost-sensitive activities in lower cost states, but their high-value operations and engineering and design centers remain concentrated in Silicon Valley.

Posts: 744member
Quote:

Originally Posted by Woochifer

That's a false premise.  The "cost of doing business" is high in California precisely because the type of innovation that Apple creates takes a highly skilled labor force with a high concentration of technology development and venture capital.  You can't just transplant Apple's design and engineering operations into some low cost backwater region and expect the same results.

You can't maintain a highly skilled workforce in state that ranks near the bottom in schools. And you can't maintain the sort of place a skilled work force from elsewhere wants to move to when the state has huge budget deficits, corrupt, single-party politics, out of control state and local unions etc. Yes, for a time Apple can afford to pay its new workers enough to live where even a modestly middle-class income cost \$1 million plus. But only for a time. Eventually, those high costs and poor public services mean potential workers start saying, "Thanks but no thanks."

What the Silicon Valley has now is what Detroit once had. A mutually reinforcing network of skills and resources that made the Great Lakes region the place for manufacturing. In the early 1950s, some 70% of the world's manufacturing took place in the nine-state region around the Great Lakes. Now it's called the Rust Belt. Industry has fled. Detroit is bankrupt. And for the why, see what I said about the California of today. What was happening in 60s Detroit is happening in today's California. California isn't even being very creative in its folly.

Manufacturing hasn't died. It's moved. Drive I-85 from Atlanta to just south of Montgomery and you'll see some of the most sophisticated auto manufacturing factories on the planet. Mile after mile of factories and subcontractors all located along a convenient freeway and rail line. The ecosystem for making cars has moved to the South. Boeing is in South Carolina. Airbus in settling in Mobile. And those jobs in highly automated factories are better places to work than anything Detroit ever had to offer.

Don't kid yourself. There's no 'always and forever' in history, culture or economics. The Greeks called it hubris, meaning the sort of over-weaning pride that thinks you're exempt from failure and disaster. That's California's coastal elite. That's Apple's upper management. That's the folly of putting all your corporate design and development eggs into a extremely expensive spaceship that can't fly.

Check on the Internet for photographs of today's Detroit. You'll discover what were once marvelous and beautiful buildings now abandoned, covered in graffiti, and turning to rubble. There's no law in any universe that says that can't happen to Silicon Valley. There's nothing that says that the broken windows in Detroit can't come to Apple's new building.

Long ago, G. K. Chesterton defended the England of his day by noting that, "There was never and English wrong without an English protest." He meant that, while things had not always gone right in England, someone always raised a voice against that evil. When slavery almost came to England, a court ruled that the moment a slave's foot touched English soil, he became a free man. And in a speech before Parliament, William Pitt asserted a principle we'd do well to remember today, with Apple cooperating with the NSA to spy on us. He said:

The poorest man may in his cottage bid defiance to all the force of the Crown. It may be frail; its roof may shake; the wind may blow through it; the storms may enter, the rain may enter,—but the King of England cannot enter; all his forces dare not cross the threshold of the ruined tenement.

And yes, today's England does seem filled with English wrongs not being countered by English protests. And that's my complaint about California. Those who praise it aren't raising their voice against its wrongs. The issue isn't that California has problems. It's that so little is being done to fix those problems. As long as the 'surf's up' at Mavericks, Apple's executives will avert their eyes to what's happening around them.

--Michael W. Perry, Chesterton on War and Peace: Battling the Ideas and Movements that Led to Nazism and World War II

Posts: 385member

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California's problems have been growing for a long time. In the eighties, I can remember non-profits leaving the state. They simply could not afford to pay their staff enough to buy a home there. That problem has now expanded into the commercial sector, with companies freezing their growth in California and expanding elsewhere. Someone who works for Google (in Seattle) even told me that's Google's policy.

I can tell you first hand (from someone who actually works in Mountain View) that the Google anecdote is categorically false.  There are indeed commercial sectors that are getting priced out, and that has more to do with the hyper growth of technology companies and other venture-funded startups pricing more mature sectors out of certain markets.

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What's troubling about Apple is that it's rah-rah "Made in California" is jingoistic. It's a bit like the Brits a century ago who were described as saying, "My country, right or wrong." G. K. Chesterton blasted that point of view by comparing it to someone saying, "My mother, drunk or sober." Jingoism talks about their place as being great, but isn't interested in discussion, much less solving, its problems. It's cheap patriotism of the sort that thinks California is great because their upscale neighborhood is fine and the surfing (at Mavericks) is great. Problems are ignored unless they become personal.

Why is it "jingoistic" to reference a slogan that Apple has printed onto their devices for more than a decade?  (and BTW, the slogan actually says "Designed in California")  I see nothing wrong with pride in place, and keep in mind that Apple is a global company.  To much of the rest of the world, California has an aspirational image and Apple is an aspirational brand that has always played up its roots as a California company.  It's not "cheap patriotism" because part of what helped create the economic colossus that is Silicon Valley has been its open culture and lifestyle, and willingness to indeed "Think Different."  Celebrating something like Mavericks is tying Apple to a region where someone can ride big waves in the morning and then go straight to work in a R&D lab.

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And California's problems are too numerous to list in their entirety. A state that once had some of the country's best public schools now ranks 47th. A state that pioneered smart infrastructure (water canals and the first superhighways) now has decaying roads and will be wasting perhaps \$100 billion on a rail system that's unlikely to ever be finished. It's got a hideous crime rate and overcrowded prisons. It has a little more that 10% of the country's population but 30% of those on welfare. The retirement funds for state and local employees is so badly run, several major cities have filed for a Detroit-like bankruptcy. And on and on and on.

And to a lot of that, I will agree.  A lot of issues have been kicked down the road over the past few decades.  Yet, at the same time, you choose to focus on the negative (and BTW, only Stockton, Vallejo, and San Bernardino have actually gone bankrupt, hardly what I would call "several major cities").  California also accounts for more than half of all the venture capital investment in the U.S.  Six out of the top 20 ranked universities in the world (Stanford, UC Berkeley, Cal Tech, UCLA, UC San Diego, and UC San Francisco) are located in California.  Job growth over the past year has outpaced the rest of the country.  And the state's finances have stabilized for the first time in nearly a decade, allowing more badly needed funding for education and infrastructure.  No question, there are a lot of problems in California, but there are also many reasons why Apple and many of the other large technology companies choose to focus their highest value operations in California.

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In short, if California were someone's mother, she wouldn't be a drunk, she'd be a crack cocaine addict. That's why there's something just a little flawed in being proud of that "Designed in California."

So, what's the antonym for jingoism?