danox

The way I look at it, every year, PC capabilities went up, and prices stayed the same or got lower.  You can talk all you want about Microsoft's margins, but Microsoft was selling Windows for less than 10% of the cost of a PC. The massive progress in GPUs and CPUs was the result of hyper-competition in the PC market and the legacy of that was billions plowed into semiconductor processes that Apple is now benefitting from, standing on the shoulders of all of that progress. The PowerVR GPUs in Ax chips are derived from desktop GPUs that went up against the heavy hitters of NVidia and ATI and failed, and so they pivoted to mobile where the tile-based-deferred-renderer architecture works much better from an efficiency standpoint.

If you walked into a PC shop in the 90s or early 00s, you'd see the same bewildering array of name and no-name PCs, from big brands and from uber-cheap Asian manufacturers. They'd all have roughly similar specs, and they'd all be dirt cheap, and they'd all be obsolete in a few months or a year. What's happening in Android is no different than what happened with the PC.  

The PC got commodified and vendors could only compete on price and specs. You see the same with Android, except they're also trying to "skin" things to differentiate, which Microsoft limited or prohibited for Windows. 

But the fruits are already here. The Nexus 7 2 destroys the iPad Mini. Way way better screen. More powerful. Cheaper. The only thing the iPads have going for them are the existing IOS apps market.  Honestly, if there was no iOS native apps, and all you had was a Web browser, iPad would be in deep trouble. Sooner or later the App Store's advantages in content will be eroded.

It's pretty simple. Apple has little competitive differentiation when it comes to hardware technology. Everything they use is bought and licensed from the same Asian manufacturers -- screens, ARM cores, GPUs, sensors, et al.  They have only two defenses against the pressures to commoditize: 1) iOS and 2) try to sue competitors.

As Microsoft proved in the 90s, path dependency in operating systems is a powerful factor in maintaining market share. The first mover advantage and existing apps provide powerful consumer incentives to "opt in" to where the greatest number of apps are. Remember how people used to whine about buying a Mac because it couldn't run their favorite Windows application? Apple had to fight tremendously against that to convince people they could find alternatives on OSX. 

Now Apple is in the boat that Microsoft was. A familiar whine is people discussing Android is "I can't find my app on Google Play", and Google will have to continue to work to showing there are indeed alternatives. 

What the downfall of Microsoft has shown is that, although it is difficult to unseat competitor with a large software ecosystem, it can be done. 

The reality is, mobile computing is going to be commoditized just like PCs were, just like TVs were, just like cars were. It is unstoppable.

For 20 years people shipped PCs with razor thin margins and almost no one made money except for Dell/HP/IBM selling into the enterprise market. You can keep pushing the narrative that profit == success, but eventually computing platforms get commoditized. There used to be a number of successful, vertically integrated Unix vendors, in fact, more vertically integrated than Apple, because they actually made their own CPUs, motherboards, storage, everything. They all got crushed by "unprofitable" Linux.

Microeconomics 101, the long run in a competitive market is for prices to trend towards marginal cost. The writing is on the wall and Wall Street knows it. It's absurd the way people cheerlead overpaying super-high margins to Apple, who then doesn't even reinvest the profits back into innovation, but is sitting on the cash, distributing it to investors, or buying back stock. This might sound great for investors, but it doesn't sound good for consumers.

Is this really what you want, to pay a 39% margin? Do you want into a car dealership and negotiate with the sales agent to pay MSRP or above?

Competition is supposed to drive down prices, if you're deliberating cheering for one company to win everything and set monopoly prices, you're a moron.

Clearly they feel Apples tax rate of 30% is too high.  If they can claim the sale is via the internet and not Apple's ecosystem they just found a great way not to pay the Apple tax.  They benefit from Apples ecosystem and users and don't pay to support it.  Leave that to the suckers in the ecosystem.  Brilliant!

Apple claims much of its IP is not generated in the US, but in Ireland.  Instead of paying the 35% tax rate in the US, by claiming the income is generated in Ireland rather than the US, they avoid the taxes in the US.  Never mind the expensive school systems they benefit from, or the incredible amount of taxpayer resources they use in tying up the legal system.  Let the suckers within the US pay for that and they can get the benefits for free.  Brilliant!