Apple took two-thirds of available mobile phone profits in Q211

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Comment Feed

26 Comments

YoMama

Friday, July 29, 2011 - 10:34 am · Reply

Of course Apple took more profits from the iPhone, it costs 30% more than its average competitor. When you gouge on prices the net result is higher profit margins. Greedy Jobs and company learned that lesson in the computer arena a long time ago. He would rather have lower sales and higher profit margins and that’s exactly what has happened under his tenure. Apple limps along with 8% marketshare, but they’re making gobs of money off their over priced Chinese made products.
- OpenMind
  
  Friday, July 29, 2011 - 10:39 am · Reply
  
  @YoMama is such a f*ck up fool. Apple commands big profits because they sell what people want, not like other sell what people be fooled.
- Ned
  
  Friday, July 29, 2011 - 10:46 am · Reply
  
  The ignorance displayed in this comment is astounding. A quick look at Verizon’s current prices shows that many of the latest Droid phones are price at or higher than the price of the iPhone. Droid X2 – 199, Droid 3 – 199, Droid Incredible 2 – 199. Apple’s iPhone is competitively priced with the knockoffs and it is a superior product with a much greater ecosystem of applications and content.
  
  And if you consider $80 billion in cash and the second highest market cap limping along you need a new definition of limping.
- Jersey_Trader
  
  Friday, July 29, 2011 - 10:50 am · Reply
  
  Clueless. Apple charges what the market will bear. Profits keep stacking up and Apple reinvests as they create new markets. As the world’s economy collapses this and next year, they will have the CASH to lock in what ever resources are needed to make their products. They will be able to PREPAY venders to keep their vendor’s production a float. If those vendors fail, Apple can buy they vendor and keep their lines going.
  
  You will see that “Cash is King”. and Apple is King of Cash now! Watch the others without cash die off due to their lack of money.
  - j.eric
    
    Friday, July 29, 2011 - 1:18 pm · Reply
    
    JT
    
    Normally I would agree with you, but, I think the economy will be such that the government will ‘bail out’ the flounderers just as they did GM et al.
    - Jax44
      
      Friday, July 29, 2011 - 2:54 pm · Reply
      
      Bail out Nokia, Rim, Chinese assemblers?. Our government?.
    - JWSC
      
      Friday, July 29, 2011 - 2:59 pm · Reply
      
      But who is going to bail out the US government?
      - j.eric
        
        Friday, July 29, 2011 - 3:25 pm · Reply
        
        Sad to say, probably the Ayatollah Khomeini
      - Tablet Guy
        
        Saturday, July 30, 2011 - 3:44 am · Reply
        
        @JWSC
        Friday, July 29, 2011
        
        “But who is going to bail out the US government?”
        
        Apple?
- MrFlish
  
  Friday, July 29, 2011 - 10:50 am · Reply
  
  …and the problem with this is what?
  
  Hmmm…Let’s see, (1) you own a business (2) your purpose or business plan is, make profit or “crow” about your worthless, BS marketshare number?
  
  Seems simple enough to me and probably everyone else but I bet this simple, straight forward concept is above and beyond your intellectual capacity….
- Ballmer's left nut
  
  Friday, July 29, 2011 - 10:54 am · Reply
  
  I think you don’t understand the philosophy behind Steve Jobs and Apple. I used to think like you, in the sense that cheap equated to best use. I’m now past that period which was in a way caused by the constraints I felt on financial grounds. You can’t be a student forever. At some point you need to find a job that allows you the luxuries of life.
  
  As a discerning consumer I judge products not so much based on price but rather on the value I’m prepared to pay for. In other words the experience of using the product measures my decision. What is the point of being trapped in Windows-land with all the teeth gnashing frustration when I can glide through my computing experience with a Mac and not be bothered by an unintuitive user interface and all the hassles that that brings. If you truly cannot afford a Mac mini for $600 then it’s best you eat food extracted from the dumpster on my front lawn because you’re a believer in eating rubbish.
  
  As for the iPhone, if you compare like for like then the initial cost of purchase isn’t that different from a high end Android phone but the ease of use, the availability of well designed apps trumps any rival offerings from the Android camp any day of the week.
  
  You simply have no taste, and taste is an acquired characteristic.
- Predrag
  
  Friday, July 29, 2011 - 10:54 am · Reply
  
  Let me try and put it a different way.
  
  Apple makes hardware. It puts up all that hardware (Macs, iPods, iPhones, iPads) for sale, in hope people would buy it. It sets prices based on their expectations (hopes) that people would buy that hardware at those prices.
  
  Well, apparently, those prices are right, since Apple can’t make their hardware fast enough — they have the lowest sales channel inventory in the industry. (A week or two at most).
  
  You see, the free market is a curious thing: people are free to buy whatever they want at whatever price they deem is correct. Since there is no government (or other) entity that regulates prices in that free market, those who offer goods (or services) for sale are free to set their prices however they see fit. Based on the reactions of the market place (i.e. people buying, or not buying, your goods/services), prices get adjusted. This is how you get “Buy-one-get-one-free” offers for Blackberries (on Verizon, as well as other carriers), and this is why the deepest discount you’ll ever see on ANY Apple hardware will be the educational store discount (no more than 10%). Not even on the ‘Black Friday’ (kick-off to the Christmas sale season in America) do you see more than 10% off on Apple stuff.
  
  So, apparently, Apple is NOT overpriced; it is priced exactly right, since they sell everything they make at those prices.
  - kingmel
    
    Friday, July 29, 2011 - 1:56 pm · Reply
    
    And they like BOGO rather than 50% off because it forces you to buy two to get the discount – thus clearing the excess inventory a little faster.
- auren
  
  Friday, July 29, 2011 - 11:03 am · Reply
  
  Oooo…. someone fell off their meds
  - j.eric
    
    Friday, July 29, 2011 - 1:26 pm · Reply
    
    You must have the emotional sensitivity (minus the accuracy) of a Richter monitor.
    
    I thought Predrag gave an intelligent and well-measured response, considering the intentional provocation of YoMama’s
    non-sequitur.
    - Richter Monitor
      
      Friday, July 29, 2011 - 10:45 pm · Reply
      
      hey, that hurt.
- krquet
  
  Friday, July 29, 2011 - 11:19 am · Reply
  
  You’re right, Apple does charge premium pricing on some/many of their products. I’m not sure about 30% pricing gap over their competition; it is true, however, subsidised pricing aside, Apple exacts more for their phones from the carriers.
  
  Having said that, here are few points out of many why Apple is so profitable while the rest aren’t.
  
  1. Apple has built a fine reputation and brand value of quality over the years. Branding costs time and money, you can’t just waltz in and claim it. Other companies need to deliver quality year after year, decades even before they too can create that value that customers will line up the blocks for and wouldn’t mind paying the additional fees.
  
  2. Apple is now in a position where they can order in massive quantity and monopolise/assume price advantages (nothing unethical). Apple includes quality components while maintaining bulk rates; competition can’t match and Apple doesn’t feel the need to pass on the savings to the users every time (iPad’s an exception maybe). Apple builds up good profit margin, quarter after quarter. Nothing stopping the competition the follow the 1st point (earn brand value) and then execute point 2 (demand special pricing with a guarantee of customer loyalty in hordes).
  
  3. Apple’s R&D cost and earning is the most efficient in the industry. It’s called business innovation, not patent required competitors should try growing brains for a change.
  
  4. Apple’s R&D though one of the slimmest (1/8 th that of MS’s), it’s also incredibly innovating. Again, nothing Google etc. can’t preach on and not follow.
  
  It appears, HTC, Samsung, MS, Googles etc. of this world is comfortable spending on copy-machines for R&D than actually work on that innovation thing for a change, and they too might once in awhile come up with disruptive technology once in their combined lifetimes and rip hefty profits from grateful consumers.
  
  HTH.
Jersey_Trader

Friday, July 29, 2011 - 10:41 am · Reply

Please keep in mind as Apple gets a larger unit share of the mobile phone market, their profit share will swallow up the rest of the chart. Apple is not fighting to sell what they make, they can’t make enough units. Apple repeatably states, “If we could have made more we would have sold more.”
jarrettdailynews

Friday, July 29, 2011 - 10:48 am · Reply

Where does the iPhone cost 30% more? It’s $199 and $299. Much the same as any competing phone. Apple’s ASP’s to carriers are close to $600 where as Android ASP’s are around $375. Carriers can beat Android OEM down on price because if a company won’t budge then another one will. Apple doesn’t have to budge on price. If carriers want iOS devices there is only one place to get them, Apple.
- Predrag
  
  Friday, July 29, 2011 - 11:01 am · Reply
  
  See, that’s the point, and therein lies the beauty. While Apple gets subsidy of around $450 for the iPhone, many Android makers get lower subsidy. In the end, it translates for an upfront price of between $0 to $200. Meanwhile, the actual wholesale price of those phones varies from $150 (for cheap androids) all the way to $600 and more for iPhones. The wholesale price range is in fact significantly greater than the that of the up-front pricing that consumer pays when they sign the contract.
TimD

Friday, July 29, 2011 - 10:59 am · Reply

Frightening stuff, and that’s with a 12 month old phone. God help the competition when the iPhones come out.
Jake

Friday, July 29, 2011 - 11:26 am · Reply

Jeez does no one understand a free market anymore?? The headline itself indicates a complete misconception. Apple didn’t take “two-thirds of available … profits”. profits aren’t reserved or guaranteed to be split between players — whole markets can create minimal profits. Apple went into a market with relatively low margins with a product consumers liked enough to support much higher margins. Apple *created* 2/3 of profits.

Setting a price for your product which is high enough to match demand to your ability to supply is what the free market is all about. Anything else is either foolish or part of a larger plan to control a market for some other end.
David A Fenton

Friday, July 29, 2011 - 11:43 am · Reply

Kind of insane. What happens when iPhone 5 is truly untethered from computers and is available on all carriers?
- Muad'dib
  
  Friday, July 29, 2011 - 12:20 pm · Reply
  
  Game over man! Game over!
Double07

Friday, July 29, 2011 - 1:14 pm · Reply

The problem with the hate comment is simple; the haters are very aware that Apple customers are super loyal and educated so what do they do? Seeing how knowledge is power and they obviously lack the understanding and the knowledge to understand the scope and the depth of how Steve Jobs and Apple operate, they just keep hating. As they continue to hate on Apple, Apple continues to do only what it knows best which is to make fantastic products that we all love. Let them be guys, ignorance, JEALOUSY, and stupidity is a disease! Go Apple fans; Go Steve Jobs!
FE

Saturday, July 30, 2011 - 12:02 am · Reply

I used to think that Apple’s legal team didn’t go after Moto because they both are US companies. I felt I was too navie after I saw the pie chart. The Apple’s legal team is going after the HTC’s 7% profits.