Apple pulling 94% of profits while owning 14% of market.

[Artdeco]

http://www.gsmarena.com/apples_share_of_smartphone_industry_profits_now_stands_at_94-news-15042.php

Holy crap, how does that even work?

 

[master_shake_]

when you are the only one who produces your product you reap all the rewards.

look at the average price of an apple phone 670 dollars.

average samsung price 180.

 

[Mopetar]

It's been this way for a while. Apple has either gobbled up the lion's share or split it to a lesser degree with Samsung. A few years ago there was a quarter where Apple and Samsung had 102% of the profit because every other major company lost money for that particular quarter.

 

[WelshBloke]

Are Apples profits just from hardware or does that include profits from software and media sales as well?

 

[StrangerGuy]

Are Apples profits just from hardware or does that include profits from software and media sales as well?

Purely iPhone hardware.

It doesn't end there too, Apple always had a disproportionately high share of profits in market they compete in (App Store, iPad, Macbooks) when their actual marketshare is taken into account.

Downright amazing considering how good low-end Android has become, strong USD working against Apple and iPhones prices have increased outside U.S.

 

[Oyeve]

Offshore tax shelters.

 

[Dannar26]

Not surprising in the least. Apple gets away with charging an arm and a leg for 16GB phones due to their premium image.

Can't fault them though. They're killing it as a business. FWIW, the phones aren't bad either...just not the best bang-for-buck solution.

 

[Mopetar]

Not surprising in the least. Apple gets away with charging an arm and a leg for 16GB phones due to their premium image.

Nah, it's the $100 to not have a pitifully small amount of storage that's bringing in the money. No doubt they still make plenty of money on the base model, but charging an extra $100 for what probably costs them a few dollars is going to generate a staggering amount of profit.

 

[dainthomas]

Nah, it's the $100 to not have a pitifully small amount of storage that's bringing in the money. No doubt they still make plenty of money on the base model, but charging an extra $100 for what probably costs them a few dollars is going to generate a staggering amount of profit.

A few dollars? I'd be shocked if it was even a dollar. How much does 64gb of memory cost in massive volumes? And it's not like they use "super premium I-memory". It's the same stuff everyone else uses.

 

[mikegg]

A few dollars? I'd be shocked if it was even a dollar. How much does 64gb of memory cost in massive volumes? And it's not like they use "super premium I-memory". It's the same stuff everyone else uses.

I agree the 32GB is cheap for Apple but their NAND performance is far ahead of the competition.

 

[Commodus]

A few dollars? I'd be shocked if it was even a dollar. How much does 64gb of memory cost in massive volumes? And it's not like they use "super premium I-memory". It's the same stuff everyone else uses.

Actually, the iPhone 6s and 6s Plus both use NVMe storage... so yes, it definitely costs more than a dollar, and it's not just the same stuff everyone else uses. That doesn't mean that the jump from 16GB to 64GB is worth $100, just that it would cost more money than you might think.

 

[Phokus]

http://www.gsmarena.com/apples_share_of_smartphone_industry_profits_now_stands_at_94-news-15042.php

Holy crap, how does that even work?

My Nexus 6P cost me $549 while the equivalent Iphone 6+ costs $849, that's how.

Edit: Also 16 GB base models, LMAO give me a break.

 

[poofyhairguy]

The truth is such a gap exists between Android and iOS that Apple can hold punches to save margin.

No Android phone maker could get away with the screen the iPhone 6S has and call it a flagship, but Apple can. Last year no Android phone maker could even ship a midrange phone with 1GB of RAM without people complaining, but Apple did.

We know Apple could give more value if they wanted to because they do on the iPad (which is in a more competitive market). Last year the $750 iPhone 6+ had 1GB of RAM and two cores, while the $500 iPad had 2GB of RAM and three cores. This year the iPhone 6+S has a 1080p screen, 2GB of ram and 16GB of storage for $750, while the iPad Pro has 4GB of RAM, 32GB of storage, a Intel-level SoC and a much higher resolution screen for $800.

 

[Commodus]

My Nexus 6P cost me $549 while the equivalent Iphone 6+ costs $849, that's how.

To be fair, Google is selling the Nexus 6P at little profit. Remember how Google would ask $349 for the Nexus 5 on its own store, but carriers would charge around $500 for the same thing? Guess which of those two prices made significant money? I wouldn't be surprised if the 6P cost $699-749 if Google actually saw this as a profit driver.

 

[mnewsham]

The truth is such a gap exists between Android and iOS that Apple can hold punches to save margin.

No Android phone maker could get away with the screen the iPhone 6S has and call it a flagship, but Apple can. Last year no Android phone maker could even ship a midrange phone with 1GB of RAM without people complaining, but Apple did.

We know Apple could give more value if they wanted to because they do on the iPad (which is in a more competitive market). Last year the $750 iPhone 6+ had 1GB of RAM and two cores, while the $500 iPad had 2GB of RAM and three cores. This year the iPhone 6+S has a 1080p screen, 2GB of ram and 16GB of storage for $750, while the iPad Pro has 4GB of RAM, 32GB of storage, a Intel-level SoC and a much higher resolution screen for $800.

Yup, iphone hardware is stupidly over priced for the specs.

They spend maybe $200-250 at most on hardware for a $700+ sale.

 

[Thanatosis]

The truth is such a gap exists between Android and iOS that Apple can hold punches to save margin.

No Android phone maker could get away with the screen the iPhone 6S has and call it a flagship, but Apple can. Last year no Android phone maker could even ship a midrange phone with 1GB of RAM without people complaining, but Apple did.

We know Apple could give more value if they wanted to because they do on the iPad (which is in a more competitive market). Last year the $750 iPhone 6+ had 1GB of RAM and two cores, while the $500 iPad had 2GB of RAM and three cores. This year the iPhone 6+S has a 1080p screen, 2GB of ram and 16GB of storage for $750, while the iPad Pro has 4GB of RAM, 32GB of storage, a Intel-level SoC and a much higher resolution screen for $800.

It is interesting that Apple does appear to give such a good value in the iPad vs iPhone. I had never actually thought to compare the prices but you're probably right, in some ways an iPad is a much better value than an iPhone if you have only so much money to spend. Last year especially with the release of the pretty amazing Air 2 and the (imo) somewhat anemic performance increase with iphone 6/plus with, as you mentioned, only 1GB ram was an example of such a case.

This year though I don't think you can argue this, because the iphone 6s has not only a world-class SoC with A9 but also 3D Touch and a far superior camera. For $750 you get a 64GB 6s or a 16GB 6s Plus, which is why I personally consider $750 to be much closer to the median price of an iphone but for that you can't even get a 32GB Wifi Pro. Still, the A9X has amazing performance and that huge screen make up for the value. I would say that this year it is much closer to equal, but the Air 2 is a beast that will last for years.


Apple holds some punches because it can, you're def right there. If there was more pressure from android vendors they might have been forced to give the iphone 6 a tri-core SoC and 3GB ram. Who knows.

 

[Commodus]

Yup, iphone hardware is stupidly over priced for the specs.

They spend maybe $200-250 at most on hardware for a $700+ sale.

Samsung's estimated bill of materials is also $200-250 for similarly-priced hardware.

It's been said many times before, but it bears repeating: the bill of materials is only part of the cost of the phone. Apple is not making a 200% profit on each iPhone. There are all kinds of other costs (patent licensing, shipping and the like) that go into the price. Apple is even public about its gross profit margins, which tend to hover around 35-40 percent. Besides, Apple has also noted in earnings calls that these bill of materials estimates are lowballing it.

That and I'd like to know what your definition of fair pricing is. Is it a bit less than what Apple is asking, or is it that unrealistic "every phone should always be priced like a Nexus" kind of fair? Remember, one of the main reasons that most companies outside of Apple are struggling is because they listened too closely to people demanding lower prices.

 

[poofyhairguy]

Last year especially with the release of the pretty amazing Air 2 and the (imo) somewhat anemic performance increase with iphone 6/plus with, as you mentioned, only 1GB ram was an example of such a case.

That is most of the reason why I bought an iPad Air 2 last year. I don't really LIKE iOS, but is was SUCH an awesome deal compared to the 1GB ram iPhones (that I was bashing like crazy for that deficit) I felt I had to put my money where my mouth was and actually buy the only high-value iDevice they were selling last year.

This year though I don't think you can argue this, because the iphone 6s has not only a world-class SoC with A9 but also 3D Touch and a far superior camera. For $750 you get a 64GB 6s or a 16GB 6s Plus, which is why I personally consider $750 to be much closer to the median price of an iphone but for that you can't even get a 32GB Wifi Pro.

I didn't mention the 6S not + because it's even a worse value. Sure at the $750 price point you get twice the storage over the iPad Pro, but in trade you lose the OIS that helps make the 6+S camera so awesome and you drop down to a screen that just looks like garbage even compared to three year old Android devices because the PPI is so low.

I give 3D touch no bonus points because many not-tech savvy iOS users can't understand it. In fact a few people in my life have complained that it makes using their phone feel more "random" because they get two different responses from two different touches. Meanwhile the iPad Pro has a pen (for more I admit), which is a writing utensil even the most handicapped person on the short bus knows how to use. 3D touch is basically adding back the right click function to Apple products that Steve Jobs did everything he could to eliminate, we will have to see if it actually adds value long term for the average user.

Apple holds some punches because it can, you're def right there. If there was more pressure from android vendors they might have been forced to give the iphone 6 a tri-core SoC and 3GB ram. Who knows.

It has gotten to the point where I don't even think Apple sees Android as competition. I mean, the iPad Air 2 kicked ass to get people to upgrade from old iPad 2s, not because Android has this awesome tablet it competes with. The iPad Pro kicks ass because the Surface Pro does, no Android tablet comes close.

What I expect to happen is the loss of carrier subsidy will slow down the entire market and Apple will have to give more people reasons to upgrade when it's no longer $200 gets you a new iPhone. I mean those meh 1GB 2014 models will be running like molasses when iOS 10 hits, but the iPhone 6+s is all anyone will need out of a smartphone for as long as the form factor stays like it is. The iPhone 7 will be an obvious upgrade, as Apple still has more PPI to shove in screens and more bezel to cut off the device. But the 7s will be a HARD sell unless Apple stops holding back punches.

We will know next year if Apple still pays attention to Android at all. Right now the easily most behind product Apple has is the Apple Watch-its square screen is the rotary phone of smartwatches. If Apple puts a round screen on the V2 Apple Watch then Android still matters to them. If they roll out another square screen model then we just need to write Google off as competition.

 

[mnewsham]

Samsung's estimated bill of materials is also $200-250 for similarly-priced hardware.

It's been said many times before, but it bears repeating: the bill of materials is only part of the cost of the phone. Apple is not making a 200% profit on each iPhone. There are all kinds of other costs (patent licensing, shipping and the like) that go into the price. Apple is even public about its gross profit margins, which tend to hover around 35-40 percent. Besides, Apple has also noted in earnings calls that these bill of materials estimates are lowballing it.

That and I'd like to know what your definition of fair pricing is. Is it a bit less than what Apple is asking, or is it that unrealistic "every phone should always be priced like a Nexus" kind of fair? Remember, one of the main reasons that most companies outside of Apple are struggling is because they listened too closely to people demanding lower prices.

Iphone 6S plus BoM is estimated around $240.
64GB version can be found for $850+

Note5 BoM is estimated around $290.
64GB version can be found for $600+



Dont really care to address whatever else you went on about.

 

[lopri]

I agree the 32GB is cheap for Apple but their NAND performance is far ahead of the competition.

Hey, I can pick and choose graphs, too. I would also argue that random r/w performance matters as much as, if not more than, sequential r/w.

 

[poofyhairguy]

That and I'd like to know what your definition of fair pricing is.

Whatever Apple can charge IMHO. If their marketing and brand management can allow them to attach fashion industry margins to technology products more power to them. I don't mind that nearly as much as the impression they give people that every iDevice is just as good of a choice as any other one. What is obviously happening is pretty soon only Apple will be able to charge $800 for a phone, and otherwise if you are asking more than $500 it better be for a godlike device.

Apple obviously has different levels of value depending on the product line. I would put the iPhone right in the middle in terms of value compared to other product lines. It isn't giving you the bang-for-your-buck that the iPads are or the AppleTV is, but they aren't complete jokes of value like the 'new' Macbook (that just gets BLOWN AWAY by the cheaper iPad Pro). They still have a lot of wiggle room.

 

[Commodus]

Iphone 6S plus BoM is estimated around $240.
64GB version can be found for $850+

Note5 BoM is estimated around $290.
64GB version can be found for $600+

Dont really care to address whatever else you went on about.

Nice try, but that's not really true in practice. Third-party outlets like Expansys sell the unlocked 64GB Note 5 for $670, and US carriers sell their variants for closer to $800.

As it stands, I'm not sure I'd hold up Samsung as a role model for wise pricing when its profits are tumbling and it's having trouble selling high-end phones even after discounts.

 

[dawheat]

Actually, the iPhone 6s and 6s Plus both use NVMe storage... so yes, it definitely costs more than a dollar, and it's not just the same stuff everyone else uses. That doesn't mean that the jump from 16GB to 64GB is worth $100, just that it would cost more money than you might think.

I think the estimate I saw was the BOM difference between the 16GB and 64GB versions to be $17 so with a $100 increase, it's a very nice profit generator, though a bit less than last year due to the more expensive storage.

That and I'd like to know what your definition of fair pricing is.

I agree - Apple can and should charge what the market can bear. Now I certainly think Apple buyers would prefer a bit more direct competition for Apple so they don't have to keep updates in reserve and would be under some pricing pressure.

The MSRP you pay doesn't do anything besides pay the bonuses for Apple employees, result in huge offshore bank accounts, and fund the stock dividends. Yet there's almost a badge of pride in paying the better part of a $1000 for a device that if the competition was stronger, we'd either get more for your money or lower prices.

Paying $750 for my wife's 6S 64GB was irritating.

and a far superior camera.

This is one area Android has certainly caught up however - I think at best it's one of the best this year and likely soon to be outclassed by the S7 in a couple more months. I honestly thought this would remain a differentiator for another year or two for the iPhone.

 

[pcslookout]

Apple fans of course!

 

[Skurge]

Actually, the iPhone 6s and 6s Plus both use NVMe storage... so yes, it definitely costs more than a dollar, and it's not just the same stuff everyone else uses. That doesn't mean that the jump from 16GB to 64GB is worth $100, just that it would cost more money than you might think.

The Nand is the same. The controller is what gives the performance.