“Each year’s iPhone has to satisfy consumer demand and maintain Apple’s income and profit,” Ewan Spence writes for Forbes. “Changes such as finally increasing the storage in the upcoming iPhone may be driven by market conditions and aggressive moves by the competition, but it also lowers the profit margin on each handset.”

“That’s why the claims that Apple is squeezing its suppliers to provide components at lower cost for this September’s smartphone not only ring true, but also highlight Apple’s ability to extract every drop of profit out of the iPhone ecosystem,” Spence writes. “Which in turn allows it to claim the lion’s share of the profits in the smartphone world.”

“There are reports that a number of existing component suppliers are having to lower quotes to Apple to compete with other companies looking to get in on the action,” Spence writes. “It naturally makes good business sense for Apple to play these two attitudes against each other. It creates competition, it drives down prices, and it forces the bidding companies to provide more innovative solutions to Apple in the hopes of being attractive enough to get, or keep, Cupertino’s business. The iPhone’s history has many instances of Apple playing two suppliers off against each other. The ultimate winner in all of this is Apple.”

Read more in the full article here.

MacDailyNews Take: Competition. It’s a beautiful thing.

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