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???
What you don't understand is that Apple is selling the iPhones at very nearly the cost that other manufacturers pay for their components and other expenses. Apple is killing it because of their scale of business. If Apple were to reduce their sale prices they could be sued for predatory pricing.
Apple also is careful to not let their products become commodity products—so lowering pricing to increase market share is not in the cards. Besides, market share is not a metric Apple desires to chase.
While some analysts are predicting that Apple has nowhere to go but down....
Those are the stupid analysts. Fire them immediately.
With only 15% of the market share, and nearly 100% of the market profit, Apple will almost certainly see their share increase--which will bring in even more revenue. In fact, there is a LOT of room for Apple to sell more phones, as the 85% of the market share which is non-Apple will gradually see that there is something better to strive for it--and they will.
What's remarkable is that Apple's product is so attractive that they need not even buy-out, or machinate against, competing smart phones to garner all the profit. Typically you can't have such price & profit disparity until you are near-monopoly. Apple has found a way around that need. And everyone knows what the secret is: awesome, near-magical, products.
I suppose you could argue that because Apple is operating as a monopoly (garnering 94% of market profit), that there is in fact NO competition; that there is no other equal; that there is nothing else properly classified as a "smart phone". If that were the case, and if Apple had no record of innovation, then those nay-saying analysts might have something worth hearing. BUT since it is evident that the other 85% of smartphones are owned by people who would largely prefer the Apple product, that alternative argument falls apart. Apple has lots of room to grow. And those analysts are either stupid, blind, or intentionally misleading their clients. They seem to think that when you win, you fail. That success is loss. And logically, the inverse: You can lead by following. I think I figured out who those analysts are working for....
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???
Apple's products are not life-necessities. Apple charges what people are willing to pay. Market is the arbiter, as it should be in a free society for non-essential goods and services. I'm all for social conscience and economic justice, but to suggest that Apple charges too much simply because your small mind can't deal with such big numbers is... well, I will simply say I believe you are wrong, instead of getting into namecalling.
It's a combination of both things...Apple making better products AND Apple making ridiculous profits. How many other companies make the kind of profit margin Apple does? Apple is the 1% in the corporate world.
Lots.... Soft Drink companies, cigarette companies, designer companies such as Luis Vuitton and Burberry to name just a few....
Here a quote I found in a Burberry stock market filing:
"During the past 13 years, the highest Gross Margin of Burberry Group PLC was 100.00%. The lowest was 50.30%. And the median was 63.15%."
Apples products are not overpriced compared to the rest of the market. Apple just has better supply chain agreements in place that some very smart people have built over several years. They also make a quality, desirable product and deserve to reap the rewards of the efficiencies they have built. It's silly to think that those savings should be passed on to the consumer "just because"...! They should be passed on to the shareholders! Some of the supply chain moves Apple has instituted have been risky and had the potential to backfire and cost the company a great deal of money... If they had, would that be justification in your mind for Apple to appeal to all their customers to send in a few dollars to make up for the misstep? LOL! I don't think so... So there's no reason or obligation for them to pass on the savings...!
When the rest of the industry is treating the mobile device as a loss-leader, I wonder what they're hoping to get by letting Apple dominate profits in this space?
Basically, the only people who can afford to compete are those whose profits come from other products. Their phones become, in effect, loss leaders.
This is a very insightful statement. When the rest of the industry is treating the mobile device as a loss-leader, I wonder what they're hoping to get by letting Apple dominate profits in this space?
Is everyone hoping for commodity 64-core 10Ghz processors that charge using body movement to save them someday in the future?
How are they letting Apple do anything? What do you suggest they do to get some profit share? The smartphone war is over. There's literally nothing they can do. A new player would have to emerge, and it would take them at least a decade to put a dent in Apple.
In other words for every $1 they sell they get 25 cents of profit. IMO, that is not charging too much. Also keep in mind Apple has ridiculous revenue, at about $150 billion a year.
FY 2015:
revenue = $233.7 billion
net profit = $53.4 billion
net profit margin = 22.8%
Quote:
Originally Posted by sog35
I meant it would destroy all of Androids profits.
Any phone sold for under $350 is not making any profit.
Companies are in the business of making money. If you are not making money you are being 'destroyed'
There are companies who can live with razor thin profits and others that can't.
Samsung can because they are so big (and we are talking about $2.1 billion operating profit in Q3 which is still much more than all other Android phone makers combined).
Examples for others that can't is HTC and the likes. They need a good chunk of profit to survive - and they don't get it. A lot of well known names will leave the market in the next few years.
And remember just a few years ago the phone industry was dominated by companies from north america, europe and japan. Most of them are gone...
I'm in dire need of a new iPhone, but there's no way I'm going to pay the hefty prices being charged by my carrier, in addition to 24 more hefty payments after that. So my trusty iPhone 4 will need to hold on a while longer.
I'm in dire need of a new iPhone, but there's no way I'm going to pay the hefty prices being charged by my carrier, in addition to 24 more hefty payments after that. So my trusty iPhone 4 will need to hold on a while longer.
In other words for every $1 they sell they get 25 cents of profit. IMO, that is not charging too much. Also keep in mind Apple has ridiculous revenue, at about $150 billion a year. If they had less revenue their profit margin would be below 20%. All those profits are needed to hire and retain top talent, R&D, new buildings, new products, and maintaining services and software.
Its not that Apple is making ridiculous profit. Its that the competitors are all selling the same crappy product (Android phones) and don't make enough profit to invest in their own ecosystem.
That's true. The standard markup for retailer is 30% added to wholesale, so an average margin of 25% across all of Apple's products is not extreme. But I do call into question such accessories as $100 CAD for a new power adapter for my Mac simply because the MagSafe connector has frayed. The rest of the cord is perfectly fine, and yet I need to replace the whole thing because of Apple's poor design for that product? Why am I on the hook for paying Apple a 25% margin (probably much more for power adapters) when it's simply due to poor design? I guess I need to exercise my right to shop around and bypass giving my money directly to Apple.
I'm in dire need of a new iPhone, but there's no way I'm going to pay the hefty prices being charged by my carrier, in addition to 24 more hefty payments after that. So my trusty iPhone 4 will need to hold on a while longer.
What are you expecting Apple to do? Lower prices?
Apple makes relatively expensive smartphones. They always have. It's their thing.
How did you get your iPhone 4 anyway? At one time the iPhone 4 was the $650+ flagship phone.
Let's see... $529 CAD for a 64GB iPhone 6s, plus $80 per month on a 2-year plan that includes only 2GB of data. Currently, I'm paying $100 a month for my current plan using my iPhone 4, and that includes 6GB of data. So I end up paying close to the same for 1/3 of the data simply for the privilege of using the latest-generation phone? Hard pill to swallow....
Let's see... $529 CAD for a 64GB iPhone 6s, plus $80 per month on a 2-year plan that includes only 2GB of data. Currently, I'm paying $100 a month for my current plan using my iPhone 4, and that includes 6GB of data. So I end up paying close to the same for 1/3 of the data simply for the privilege of using the latest-generation phone? Hard pill to swallow....
Comments
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???
What you don't understand is that Apple is selling the iPhones at very nearly the cost that other manufacturers pay for their components and other expenses. Apple is killing it because of their scale of business. If Apple were to reduce their sale prices they could be sued for predatory pricing.
Apple also is careful to not let their products become commodity products—so lowering pricing to increase market share is not in the cards. Besides, market share is not a metric Apple desires to chase.
Stick a fork in it already, Microsoft!
Jeezuss... don't do a Zune on this, too! Kill it before it just sits there withering embarrassingly.
The iPhone 7 will have such built-in desirability that next year Apple will be releasing it onto the market with the name, "the Kraken,"
The iPhone 7 will have such built-in desirability that next year Apple will be releasing it onto the market with the name, "the Kraken,"
Those are the stupid analysts. Fire them immediately.
With only 15% of the market share, and nearly 100% of the market profit, Apple will almost certainly see their share increase--which will bring in even more revenue. In fact, there is a LOT of room for Apple to sell more phones, as the 85% of the market share which is non-Apple will gradually see that there is something better to strive for it--and they will.
What's remarkable is that Apple's product is so attractive that they need not even buy-out, or machinate against, competing smart phones to garner all the profit. Typically you can't have such price & profit disparity until you are near-monopoly. Apple has found a way around that need. And everyone knows what the secret is: awesome, near-magical, products.
I suppose you could argue that because Apple is operating as a monopoly (garnering 94% of market profit), that there is in fact NO competition; that there is no other equal; that there is nothing else properly classified as a "smart phone". If that were the case, and if Apple had no record of innovation, then those nay-saying analysts might have something worth hearing. BUT since it is evident that the other 85% of smartphones are owned by people who would largely prefer the Apple product, that alternative argument falls apart. Apple has lots of room to grow. And those analysts are either stupid, blind, or intentionally misleading their clients. They seem to think that when you win, you fail. That success is loss. And logically, the inverse: You can lead by following. I think I figured out who those analysts are working for....
is that enough money to keep apple from falling into obscurity?
Is there such a thing as a profit monopoly that the US government can start investigating Apple for?
Why would you even suggest such a thing? Only the lawyers would win.
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???
Apple's products are not life-necessities. Apple charges what people are willing to pay. Market is the arbiter, as it should be in a free society for non-essential goods and services. I'm all for social conscience and economic justice, but to suggest that Apple charges too much simply because your small mind can't deal with such big numbers is... well, I will simply say I believe you are wrong, instead of getting into namecalling.
Lots.... Soft Drink companies, cigarette companies, designer companies such as Luis Vuitton and Burberry to name just a few....
Here a quote I found in a Burberry stock market filing:
"During the past 13 years, the highest Gross Margin of Burberry Group PLC was 100.00%. The lowest was 50.30%. And the median was 63.15%."
Apples products are not overpriced compared to the rest of the market. Apple just has better supply chain agreements in place that some very smart people have built over several years. They also make a quality, desirable product and deserve to reap the rewards of the efficiencies they have built. It's silly to think that those savings should be passed on to the consumer "just because"...! They should be passed on to the shareholders! Some of the supply chain moves Apple has instituted have been risky and had the potential to backfire and cost the company a great deal of money... If they had, would that be justification in your mind for Apple to appeal to all their customers to send in a few dollars to make up for the misstep? LOL! I don't think so... So there's no reason or obligation for them to pass on the savings...!
When the rest of the industry is treating the mobile device as a loss-leader, I wonder what they're hoping to get by letting Apple dominate profits in this space?
Now THERE is the insight... and the puzzle.
How are they letting Apple do anything? What do you suggest they do to get some profit share? The smartphone war is over. There's literally nothing they can do. A new player would have to emerge, and it would take them at least a decade to put a dent in Apple.
Apple's company wide profit margin is 25%
In other words for every $1 they sell they get 25 cents of profit. IMO, that is not charging too much. Also keep in mind Apple has ridiculous revenue, at about $150 billion a year.
FY 2015:
revenue = $233.7 billion
net profit = $53.4 billion
net profit margin = 22.8%
I meant it would destroy all of Androids profits.
Any phone sold for under $350 is not making any profit.
Companies are in the business of making money. If you are not making money you are being 'destroyed'
There are companies who can live with razor thin profits and others that can't.
Samsung can because they are so big (and we are talking about $2.1 billion operating profit in Q3 which is still much more than all other Android phone makers combined).
Examples for others that can't is HTC and the likes. They need a good chunk of profit to survive - and they don't get it. A lot of well known names will leave the market in the next few years.
And remember just a few years ago the phone industry was dominated by companies from north america, europe and japan. Most of them are gone...
I'm in dire need of a new iPhone, but there's no way I'm going to pay the hefty prices being charged by my carrier, in addition to 24 more hefty payments after that. So my trusty iPhone 4 will need to hold on a while longer.
What hefty charges are those?
Apple's company wide profit margin is 25%
In other words for every $1 they sell they get 25 cents of profit. IMO, that is not charging too much. Also keep in mind Apple has ridiculous revenue, at about $150 billion a year. If they had less revenue their profit margin would be below 20%. All those profits are needed to hire and retain top talent, R&D, new buildings, new products, and maintaining services and software.
Its not that Apple is making ridiculous profit. Its that the competitors are all selling the same crappy product (Android phones) and don't make enough profit to invest in their own ecosystem.
That's true. The standard markup for retailer is 30% added to wholesale, so an average margin of 25% across all of Apple's products is not extreme. But I do call into question such accessories as $100 CAD for a new power adapter for my Mac simply because the MagSafe connector has frayed. The rest of the cord is perfectly fine, and yet I need to replace the whole thing because of Apple's poor design for that product? Why am I on the hook for paying Apple a 25% margin (probably much more for power adapters) when it's simply due to poor design? I guess I need to exercise my right to shop around and bypass giving my money directly to Apple.
What are you expecting Apple to do? Lower prices?
Apple makes relatively expensive smartphones. They always have. It's their thing.
How did you get your iPhone 4 anyway? At one time the iPhone 4 was the $650+ flagship phone.
What hefty charges are those?
Let's see... $529 CAD for a 64GB iPhone 6s, plus $80 per month on a 2-year plan that includes only 2GB of data. Currently, I'm paying $100 a month for my current plan using my iPhone 4, and that includes 6GB of data. So I end up paying close to the same for 1/3 of the data simply for the privilege of using the latest-generation phone? Hard pill to swallow....
So the issue is with your carrier... not Apple.