Will Apple become the only remaining smartphone manufacturer in the coming years?

[Commodus]

First, a quick correction: the cost of making an iPhone for Apple isn't $200. That's a common misperception based solely on the bill of materials alone, not the complete cost of getting that device to market. Apple's gross margins are typically between 35 to 40 percent. Still considerably higher than the industry average, but it's not charging five times more than it can (also: that "$200" phone sells for $650, not $1,000). Samsung's Galaxy S6 Edge was estimated to cost $290 in pure parts, for reference, and the regular version costs considerably less.

As for the core question: no, it won't be. The tricky bit is determining who will actually make the cut in the Android world. I suspect that the companies which aren't focused exclusively on mobile will survive (LG, Samsung), as will the better Chinese OEMs selling at razor-thin margins (although Xiaomi might not make its sales target this year). The biggest danger is for those mid-tier companies that depend heavily on mobile, and have neither a cushion to fall back on nor the design chops needed to charge a premium.

One of the biggest myths about Apple is that it's playing the market share game like everyone else, that it's as obsessed with numbers as Dell or Samsung. But it's not. While it obviously wants healthy sales, it's more concerned with being a profitable business and sticking to its values. That's why it's funny when people complain about Apple being overpriced, yet wonder why their favourite OEM is in dire straits -- it's like they've forgotten that companies survive by making money. While Android and Windows vendors rush to kill themselves in the name of a little more market share, Apple just sits quietly knowing that it'll be the one still standing a decade from now.

 

[Artdeco]

Once people have to pay full price for phones, they will stop buying iPhones. Subsidies for most have carriers have gone away. One can "lease" a phone still, but why spend $800 when I can spend $200-300 & be done. That is why Android sells so well in other parts of the World.

I've been paying full price for iPhones for years, the carriers have lease/finance plans, and Apple just started financing it's own phones, so I really don't think that's as big an issue as you suspect it will be.

 

[poofyhairguy]

While Android and Windows vendors rush to kill themselves in the name of a little more market share, Apple just sits quietly knowing that it'll be the one still standing a decade from now.

Apple has spend a ton on marketing and store footprints to create the moat around their brand that allows them to charge premium prices. No one else can replicate their brand value, and no one else can create a new custom OS that the public will accept. Amazon tried and it flopped hard.

It kills me when people knock Android OEMs for their margins, as if they get to decide what they charge in the open market. For a while there was this almost collusion among Android OEMs to charge flagship prices for flagship phones, but that got shattered when companies like OnePlus were willing to compete on price. There is no option but to race to the bottom, even Samsung isn't immune to competition within the Android ecosystem.

If someone like Samsung or LG or HTC tried to put a 720p-ish screen in their flagship phone we would laugh them off the planet. But that is what the iPhone 6s has. If someone tried to put 1GB of ram in a flagship phone in 2014 we would have laughed them off the planet. But that is what the iPhone 6 had.

 

[Artdeco]

edited for brevity

Don't forget the ecosystem, it's nice to have everything tied together and work fairly well, my laptop just rang a few minutes ago.

Apple's made a pretty good moat.

 

[Commodus]

Apple has spend a ton on marketing and store footprints to create the moat around their brand that allows them to charge premium prices. No one else can replicate their brand value, and no one else can create a new custom OS that the public will accept. Amazon tried and it flopped hard.

It kills me when people knock Android OEMs for their margins, as if they get to decide what they charge in the open market. For a while there was this almost collusion among Android OEMs to charge flagship prices for flagship phones, but that got shattered when companies like OnePlus were willing to compete on price. There is no option but to race to the bottom, even Samsung isn't immune to competition within the Android ecosystem.

If someone like Samsung or LG or HTC tried to put a 720p-ish screen in their flagship phone we would laugh them off the planet. But that is what the iPhone 6s has. If someone tried to put 1GB of ram in a flagship phone in 2014 we would have laughed them off the planet. But that is what the iPhone 6 had.

Well, to be fair, Apple can afford to use 1GB of RAM and its 750p screen due to specific factors like OS efficiency and screen size (you'd notice 1080p on a 4.7-inch screen, but it wouldn't be as useful as on a larger display), but I see what you mean. Apple is using the specs that it can manage while retaining its profit margin.

The hilarious bit is the people who look at Nexus pricing on Google Play (or OnePlus' pricing, for that matter) and then insist that every phone with higher profit margins is overpriced. No, Google charges what it does because it doesn't intend to make money on the hardware (LG and Huawei do, of course). If every Android OEM followed their path, you really would see Apple gaining share as its rivals crashed and burned.

 

[poofyhairguy]

Don't forget the ecosystem, it's nice to have everything tied together and work fairly well

I think the Apple ecosystem is overrated honestly:

-Apple laptops and OSX are nice, but Windows crap still dominates the desktop/laptop space. If ties to your computer OS mattered then Windows phones would have done better. Hell Microsoft can tie to your game console too, something Apple can't do.

-The AppleTV isn't a huge hit, and wasn't even really a competitive offering until the update. Anyone who wasn't ass-deep in iTunes did better with a Roku until very recently.

-The Apple Watch isn't a huge hit, and already looks like dated technology next to the equivalently priced Huawei watch

-The iPad is a leader in the consumption tablet market, but that market is almost saturated as people are happy with old iPad 2s and Minis. The real money is in productivity tablets that get replaced at regular intervals with corporate IT budgets, and in that segment the iPad is playing catch-up.

All together there isn't some killer piece of the ecosystem that is massively better than the competition like the iPhone is massively better than Android phones. Apple's sales show this, their value is built mostly on the back of the iPhone product line. All the other product lines have an advantage over their competition because they are in the same ecosystem as the iPhone, not the other way around.

 

[poofyhairguy]

Well, to be fair, Apple can afford to use 1GB of RAM and its 750p screen due to specific factors like OS efficiency and screen size (you'd notice 1080p on a 4.7-inch screen, but it wouldn't be as useful as on a larger display)

No offense but that is the biggest BS line in the mobile industry. The iPhone 6s is a MUCH better device for web browsing than the 6 was because of the 2GB of RAM, and the fonts on the iPhone 6s screen look like crap compared to my 2013 Galaxy S4. iOS isn't this magic OS that makes fonts look better on a lower PPI screen (I would argue that all the small text makes things look worse), nor does it handle web pages in some magic way where tabs don't eat RAM.

These are all excuses that are easily disproven the second you look at a iPhone 6+ screen or the second you use an iPhone with 2GB of RAM. People constantly make excuses for the iPhone's lack of cutting edge hardware because they feel like they have no other option but to buy an iPhone so they jump through mental hoops to justify the purchase. I wish people would be honest with themselves and everyone by saying "yes I know the device I am buying is lacking in some areas compared to the competition, but it is the product that best fits my needs."

The hilarious bit is the people who look at Nexus pricing on Google Play (or OnePlus' pricing, for that matter) and then insist that every phone with higher profit margins is overpriced. No, Google charges what it does because it doesn't intend to make money on the hardware (LG and Huawei do, of course). If every Android OEM followed their path, you really would see Apple gaining share as its rivals crashed and burned.

That is the direction the market is going. The Moto X Play or the LG G4 are all in the same ballpark. The race to the bottom has begun, and it is going to hurt choosy Android users (aka a lot of this forum) more than anyone.

 

[Mondozei]

As the smartphone space slows down in growth we will have consolidation.

This means that a lot of Android players will simply die out or just change strategy like Sony has with their renewed focus on senors, cameras and the like. Samsung's playing this game, too, with their focus to push displays, SoCs and LPDDR4 memory for other OEMs.

But it also means that the remaining players will have more margins.

Also, the share of users worldwide of iOS is declining. It will likely settle for 10% or so over the long term, just like it has in the PC space. This means that it will always remain secondary in importance. It has an increased visibility in key rich markets, but on a world-wide basis, it's very niche. People on enthusiast forums are often blinded by their own experiences and forget that as long as Apple can't make a sub-$150 phone off contract, they simply won't even exist on the map for the vast majority of smartphone users world-wide.

 

[theeedude]

Well, to be fair, Apple can afford to use 1GB of RAM and its 750p screen due to specific factors like OS efficiency and screen size (you'd notice 1080p on a 4.7-inch screen, but it wouldn't be as useful as on a larger display), but I see what you mean. Apple is using the specs that it can manage while retaining its profit margin.

The hilarious bit is the people who look at Nexus pricing on Google Play (or OnePlus' pricing, for that matter) and then insist that every phone with higher profit margins is overpriced. No, Google charges what it does because it doesn't intend to make money on the hardware (LG and Huawei do, of course). If every Android OEM followed their path, you really would see Apple gaining share as its rivals crashed and burned.

It's not just Nexus though. Android flagship phone prices are collapsing.
Google is actually charging pretty steep price for the spec and build, especially on the Nexus 5X.
I got a new Samsung Galaxy S6, wireless charger, external battery, and case, for $400 on Black Friday, and there are other online promotions on it like some extra goodies (headphones and more wireless chargers) from Samsung and $50 Samsung Pay credit. So it's effectively same price as Nexus 5X for better spec. That's what you get from competition.

 

[mikegg]

I have to agree with dawheat. Two family members of mine bought a z3 compact (~350$) and a OPO (~300$?) instead of their previous iPhones - because the Androids were good enough for their usage (texting/whataspp/phone/baby pics/emails) while costing 1/2 or 1/3 of a new iPhone.

Did they factor in resale value down the line?

 

[ControlD]

Did they factor in resale value down the line?

Assuming we are talking about normal people that aren't flipping their phones every year, the resale value is going to be a wash. After a couple of years you probably aren't going to get more than $350 for your $700 (original price) iPhone. So, even if you get nothing for your $350 original price phone, it is at worst a wash.

 

[Artdeco]

"Apple is doomed"

wash, rinse, repeat

 

[ControlD]

"Apple is doomed"

wash, rinse, repeat

So, a thread speculating that Apple will end up as the only remaining smartphone maker is code for "Apple is doomed"?.

 

[Dulanic]

So, a thread speculating that Apple will end up as the only remaining smartphone maker is code for "Apple is doomed"?.

Don't feel bad he's at "The corner of Denial and Desperation"

 

[Ns1]

Assuming we are talking about normal people that aren't flipping their phones every year, the resale value is going to be a wash. After a couple of years you probably aren't going to get more than $350 for your $700 (original price) iPhone. So, even if you get nothing for your $350 original price phone, it is at worst a wash.

Except 1 person uses top of the line iphone and the other one uses mid-tier android

 

[Artdeco]

So, a thread speculating that Apple will end up as the only remaining smartphone maker is code for "Apple is doomed"?.

Did you not post immediately before my post?

Sort of looks like you posted that the resale value of the iPhone is a wash.

And multiple other posts by others say the iPhone market is unsustainable.

Apple has proven over and over that isn't the case.

 

[Zivic]

LG makes a profit of one cent on every phone they sell.
HTC makes a loss on every phone they sell (they're literally paying you to buy their phones)
Sammy doesn't want to do anymore phones, they just want to manufacture the chips for others.

Meanwhile Apple produces a phone with $200 and sells it for $1000.

I personally don't care about apple/sammy/lg/htc.

only phones I will currently consider for my own use are motorola and nexus. I did kind of give up on the nexus line after the n5... what a POS, but supposed the 6, 6p and 5x are decent...

 

[cronos]

Except 1 person uses top of the line iphone and the other one uses mid-tier android

Well that's because one person spent $700 and the other one spent $200, so everyone gets what they paid for, right?

 

[ControlD]

Did you not post immediately before my post?

Sort of looks like you posted that the resale value of the iPhone is a wash.

And multiple other posts by others say the iPhone market is unsustainable.

Apple has proven over and over that isn't the case.

I don't think my example of the resale value being a wash in any way equates to Apple being doomed. In fact I think the truth is quite the opposite. I think Apple will be fine for a long time to come.

As has been said numerous times in numerous threads, Apple is fine with a small market share / high margin market. That market will probably exist for a long time assuming the product still continues to deliver.

 

[Artdeco]

I don't think my example of the resale value being a wash in any way equates to Apple being doomed. In fact I think the truth is quite the opposite. I think Apple will be fine for a long time to come.

As has been said numerous times in numerous threads, Apple is fine with a small market share / high margin market. That market will probably exist for a long time assuming the product still continues to deliver.

Fair enough.

 

[jpeyton]

And yet, we see more and more Android phones and manufacturers by the day.

So either everyone likes losing money, or there is actually some money to be made in the smartphone business.

 

[biostud]

Nah, Microsoft will crush Apple and Google

 

[DealODay]

This seems like a troll thread given your past threads but I'll bite.
As long as Apple keeps adopting new technology first, keeps it's brand as something of luxury and makes sure everything works and isn't slow then it'll be leading the way as it had in the past. It's kind of a civic vs mercedes type thread.

 

[ericlp]

I look at it like this...

Apple really isn't selling a phone, but selling a service. A service that can be upgraded from ATT and Verizon. Most people in the USA are happy to pay 100-150 for cell service, and buy a shiny new apple phone for 99 cents.

Even tho, the profits of the cell and apple, the user is getting soaked. They (the majority) do not care. Where I prefer to buy a phone out right after it has hit the market a 6 months to a year later (250-300)... and pay the 30 bucks a month for the same service the sheeple are getting.

My bill (360) a year... the others are twice to triple that and locked in on a 2 year contract... They are making some pretty good profits.

As will apple be the only one? Hell NO... China is just beginning to come out with some decent phones. It's only a matter of time before we will probably all be buying phones from China, especially when you will be able to get a Samsung S6 quality phone for under a couple of hundred bucks. This will shake the new service model and the major carriers will be undercut as people will be jumping on "other" carriers as people start to wake up that they are paying 2-3X as much as everyone else.

 

[lakedude]

I look at it like this...

Apple really isn't selling a phone, but selling a service. A service that can be upgraded from ATT and Verizon. Most people in the USA are happy to pay 100-150 for cell service, and buy a shiny new apple phone for 99 cents.

Even tho, the profits of the cell and apple, the user is getting soaked. They (the majority) do not care. Where I prefer to buy a phone out right after it has hit the market a 6 months to a year later (250-300)... and pay the 30 bucks a month for the same service the sheeple are getting.

This

I paid for my Moto G up front and now pay only $10 a month for unlimited talk, text and pictures (no data). Data was an additional $15 for "unlimited" (throttled after 5G) but they changed their plan so I said "screw the data", I'll manage on WiFi.