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50% of Apple's Revenue Comes From the iPhone
BogenDorpher writes "A new report indicates that 50% of Apple's revenue comes from its iPhone product. Not 5%, not 20%, but 50%. In just three months from December 2010 to March 2011, Apple has raked in a total of 24.6 billion dollars. 50% of that came from the iPhone."
Apple has products other than the iPhone?
What I want to know is how much of that 50% is from hardware sales and what is from app store revenue.
Time to offend someone
the banana phone?
Apple is now the largest cellphone manufacturer on Earth by revenue.
Don't blame me, I voted for Baltar.
http://arstechnica.com/microsoft/news/2007/04/ballmer-says-iphone-has-no-chance-to-gain-significant-market-share.ars
I concur, and I've been short since $340. Crude oil and the plunging US dollar will do away with expensive shiny toys.
Seven puppies were harmed during the making of this post.
So will the chance to get a decent phone from anyone else who doesn't want to exert draconian control on my phone. 3 years ago the iPhone 3g was pretty much the only smartphone worth having in most of the world. Not so much anymore. Now it's a matter of how locked in people are to their itunes account and apps or if they're willing to abandon ship and re-buy.
The submitter appears to be the same person who wrote the blog entry...
If I used a sig over again, would anyone notice?
I know it's kind of laughable right now, but imagine if Windows Phone or Android make a big dent into Apple's iPhone marketshare.
That's 50% of their revenue they are cutting into, at high percentages. Just food for thought folks...
The price is always right if someone else is paying.
Something I've learned in investing: overdogs win.
Why not buy oil, short treasuries and dollar?
Feed the beast sucka's
I think they should buy bellsouth. And if you have an iPhone on a Apple carrier network, then you would be able to get features available in no other way. Maybe the phone could use a special protocol when talking with an Apple carrier. But I guess the cell towers are still privately owned right?
Apple is a public company. It is in their financial statements.
iPhone and related products and services (d) 12,298. Total net sales $24,667. Numbers are in millions
I find this very interesting. In particular, I've had a number of people talk to me about how awesome Macs are, in particular discussing the adoption rate of OSX, etc. One of the things that continually gets pointed to is Apple's growth as evidence of this. While I don't pretend to have a strong grasp on the various numbers bandied about, if such a large percentage of Apple's revenue is solely from the iPhone, it really puts a damper on the idea that "based on Apple's growth, everyone will be using a Mac in just a few months" (hyperbole mine). Don't get me wrong, OSX market share may be increasing (possibly by large numbers), but my anecdotal examination of the world around me didn't seem to jive with what everyone was claiming.
Take it to the limit, everybody to the limit, come on, everybody fhqwhgads.
Incredibly 80% of their profits come just from apps for middle managers, hairdressers and telephone sanitizers.
Some drink at the fountain of knowledge. Others just gargle.
personal communication devices like his ``Knowledge Navigator'' (which eventually became the Newton MessagePad) --- looks like he was right.
William
Sphinx of black quartz, judge my vow.
And people wonder why the stock price jitters w/ the phones feature set.
I would disagree. At the rate they're going, they'll have as much cash on hand as their market cap within a few years assuming the stock price doesn't go up. Also, unless the tablet market withers to nothing, they'll continue to have room to grow. Their PC market share also continues to slowly rise, adding even more growth.
They will be solid for the next three years at the very least, even if Steve Jobs were to retire as CEO. Eventually they will reach a point where they need another massively successful product line in order to continue growing, but the smart phone and tablet markets are still incredibly young and it will be many years before they become saturated.
I see a fairly safe bet rather than a gamble. Android isn't hurting Apple's sales much if at all, as Apple is selling all that it can produce. If Android were to vanish from the market overnight, Apple's sales would not likely see a large increase. If there's cause for concern, it might be supply chain disruption due to the disaster in Japan, but with Apple's massive cash reserve, they can easily acquire the parts they need. In a certain sense, the tsunami is probably much worse for Apple's competitors than it is for Apple.
My informal statistical sampling of sitting on a bench in a mall near Atlanta, GA, told me that at least 75% of the people that walked by me talking on/texting on a phone had an iPhone. Admittedly, that area is rather affluent, but we are talking about a ton of people I took notice of. I often make a game of doing this while people watching; not necessarily cellphones, but other traits. I just happened to notice that a lot of people, even though they were with a group, were all paying attention to their phones and not each other. Depressing actually. Anyway, once I started tracking the phones I saw, the vast majority were iPhones. I was probably there close to an hour, and took a lot of samples.
My thinking at the time, was that if you just spent time at this mall, you'd think Apple had completely killed the cellphone market. I know that's not the case reading elsewhere, but purely on appearance, it seemed that way. Now I know that it simply could be that the people more likely to always be on their phones might like the iPhone more. Younger crowd maybe. I wasn't really paying attention to age. Blackberry users had to work on the weekend, etc. All kinds of ways the stats could be skewed.
WWJD -- What Would Jimi Do?
(Smash amp, burn guitar, take home the groupies)
I've been using the iPhone 4 since it came out, and I'm re-prioritizing along these lines.
With inflation being what it is (for everything except salaries and the dollar), I am switching to a dumbphone with a full keyboard for messaging. $30-40 off my monthly phone bill will be nice, flipping the phone for most of what I paid for it will be nicer.
Right. If I wanted to read that gobblydegook I'd subscribe to the Wall Street Journal. How about English? Or at least, an automobile analogy.
Faster! Faster! Faster would be better!
But I did forget to thank you for the link. It's in there as you mention. Just in econbabble.
Faster! Faster! Faster would be better!
Even if it doesn't, the iPad is going to face serious competition from the latest Android 3 tablets this summer.
GCHQ Quantum Insert installed. If only our tongues were made of glass, how much more careful we would be when we speak
Yes, just look at the huge dent the Galaxy & Xoom tabs have made! It's INCONCEIVABLE that the iPad will continue selling well in the face of this competition!
Asking for this information is like asking what color, make and model my car is when it's parked right there in front of you!
(Does that help?)
Funny, that's what everyone said about the first iPad.
"Any time now!"
"Soon!"
"Just around the corner"
"Ok, well *now* it'll get serious with Honeycomb..."
In the meantime, Apple released the iPad 2.
I've no doubt that there will be strong competitors to the iPad, but the supposed "cheaper, better, faster" Android tablet that was meant to appear months ago still hasn't arrived.
If you're short at $340, you're a bit over ten bucks out of the money as of today's close: AAPL 350.7 +8.29
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
Interesting stats, got a link to the cite?
Assuming your numbers are true, there's another big part of the story there, though, that's missing from your analysis. Most of the Android innovation comes not from the individual manufacturers but from Google. Google manages to finance its innovation in smartphones by leveraging its highly profitable search division, which isn't included in your analysis.
In fact, many would argue that the "innovation" that comes from Android handset manufacturers is in fact harmful, creating fragmentation and poorly designed add-ons to Android that damage the Android brand. Many of the best reviewed Android devices are, in fact, just running vanilla Android on fairly interchangeable hardware.
Profits are important obviously but even if certain Android handset manufacturers perish there are others who will fill the void. Apple is all or nothing iPhone. If there is a misstep with iOS it's all they have. And considering the missteps Apple made in the 90s there is nothing saying it can't happen again - especially after Jobs leaves.
Apple is a public company. RTFM
For Q2 2011, Apple paid $1.9 billion in taxes on $7.9 billion on profit
Actually, the tables are fairly readable, but they're a bit tedious to find.
Not a shock.... they supposedly made almost as much on the iPad last year as the Macintosh PC. And the iPad wasn't even around the whole year.
The Mac has experienced a bit of the "iPhone coattails" boost in the USA recently, but not world-wide. It's been stuck at about 5% of the global PC market for years, and even after this boost, it's still usually listed as less than 6%. But the iOS devices have been growing like crazy.
And it's a very smart market to have that kind of chunk in. Apple's getting revenue from every software and hardware product sold for all iOS devices. The iPhone, being a "Phone", is tossed out and replaced every year or two... people sometimes hang on their PCs for a decade.
Apple may not be top dog on unit sales, but they're winning on profits... just what they did on PCs. That will continue to keep them in a unique position in the business.
-Dave Haynie
Crude oil and the plunging US dollar will do away with expensive shiny toys.
Not while people still have access to cheap credit they won't.
Just the iphone and probably accessories. Apps fall under itunes sales.
It only goes to show Ballmer has no vision. He's all bluster. You say: "He was right based on the state of things at that time." which is why MicroSoft is always behind the 8 ball. A successful company wants a CEO who can envision the future correctly, not one who predicts the future and fails every time. Apple predicted the future correctly (and is repeating its self with the iPad) based upon "...what was known at the time" of the prediction.
True, I misread the numbers. Apple "only" made 6 billion after taxes in Q2. I wonder where that profit went? From their call:
"Turning to cash. Our cash for short-term and long-term marketable securities totaled $65.8 billion at the end of the March quarter compared to $59.7 billion at the end of the December quarter, a sequential increase of $6.1 billion."
http://seekingalpha.com/article/264616-apple-management-discusses-q2-2011-results-earnings-call-transcript
In other words, the profits went into the bank.
Nah, it's a comic crossing Teenage Mutant Ninja Turtles and the Hitchhiker's Guide to the Galaxy.
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
>I've no doubt that there will be strong competitors to the iPad, but the supposed "cheaper, better, faster" Android tablet that was meant to appear months ago still hasn't arrived.
These same "Wait till next year" noises have been coming from the Android camp since the iPad was first unveiled.
The Xoom might be the first credible iPad competitor looking at the device itself, but how many products ever come in ABOVE apple on price and succeed? The average consumer will consider Android when it's functionally equivalent and cheaper. People see the price tag on the Xoom and say "Well I could just get an iPad for that much."
I disagree. It's not a matter of how locked in people are to their itunes account and apps, it is whether the majority of the people *care*. I don't know many techies. All the people I know that have iPhones like them precisely because everything works together - iPhone, iTunes, the Apple "app" store. When I talk to them they like the way everything "just works" and how they all fit together. Phrases like "lock in" aren't in their vocabulary.
When I read 50% in the title, I wasn't sure if they meant 5%, 20% or 50%. I'm glad they clarified right away in the second line.
They're making all the profit.
The risk to Apple from Android is that smartphones (and other devices) get commoditized thereby sucking significant profits out of their devices. Apple is a company build on selling differentiated hardware at higher prices - they cannot compete on low prices and when they tried in the past it nearly put them out of business. Android is a defensive play for Google since much internet use (and thus ad dollars) is moving to mobile devices and away from PCs. Android and iOs don't bring in money directly for either company - both exist to keep their main revenue streams viable (mostly hardware for Apple and mostly advertising for Google) and both are essentially given away. The big difference is that Google can (theoretically) make just as much money from a low priced smartphone as a high priced one whereas Apple cannot. Apple will likely have to move downmarket at some point to protect their high end sales in much the same way they did with their iPods. I doubt they can forever compete only at the high end of the market.
The bigger risk to Apple is simply that they drop the ball majorly with some future iPhone release. It's not a diverse revenue stream and if they can't keep the iPhone ahead of the pack and in demand, they could be in serious trouble very quickly. It's something of a high wire act - high risk and high reward.
AT&T did not buy bellsouth.
Profits are important obviously but even if certain Android handset manufacturers perish there are others who will fill the void. Apple is all or nothing iPhone. If there is a misstep with iOS it's all they have. And considering the missteps Apple made in the 90s there is nothing saying it can't happen again - especially after Jobs leaves.
How is that any different with Android? How is it more likely that Apple will "misstep with iOS" than Google will "misstep with Android"?
And, you're right that "there is nothing saying it can't happen", but there is no reason to expect it. What sort of "misstep" do you have in mind, other than as a nebulous and undefined "ooh, scary!" idea without any substance behind it?
It's one of the few things they sell that's actually worth the price. Heck, even the mouse pads are overly expensive.
If Android missteps the manufacturers switch to Windows or something else. If Apple missteps then what?
And by misstep I mean something along the lines of OS6 through OS8. Years of putting out the most disastrously bad operating system that it would have driving Apple out of business if Microsoft didn't invest $150M in them in 97.
What you think I only have one trade?
Seven puppies were harmed during the making of this post.
So? Never trade what you can't afford to lose. Also hedging with call options or futures can help...
Seven puppies were harmed during the making of this post.
Right. You would have thought that sub-prime would have taught us that at the end of the day, SOMEONE has to pay the bill. Oh no wait, the US government paid it. Not going to happen again though - there is no longer any wiggle room left in US monetary policy. The exchange rates and commodity prices bear witness to that. It's going to be hard enough for America to pay for its imports (crude oil) as it is...
Seven puppies were harmed during the making of this post.
"Most of the Android innovation comes not from the individual manufacturers but from Google. Google manages to finance its innovation in smartphones by leveraging its highly profitable search division, which isn't included in your analysis."
And that's a good thing? Basically, Google is doing ALL of this in order to drive mobile eyeballs to its ads. If that doesn't work, or if ad revenues fall off... then Android support and development becomes little more than a drag on the companies profits. And if that happens...
Any sect, cult, or religion will legislate its creed into law if it acquires the political power to do so.
Logic would indeed suggest a short, however don't assume that the market reads it the same way we geeks do. It is probable that earnings will continue to increase another quarter or two before the inevitable happens. Sure, an efficient market is not supposed to trade on last quarter's results, it is supposed to trade on discounted earnings for the next 20 years or so. But.
I am certainly with you that AAPL is a prime short for no other reason than Android. But when? Getting in early could be a little stressful.
Have you got your LWN subscription yet?
I hope you can instead run it prepaid, in New Zealand, and pretty much any other country, you can OWN your phone, its yours, my iPhone 4 is mine, it cost about $1042 USD according to a Google conversion, its MINE. I can put in any SIM I like, from any of our three main carriers, and my phone costs me about 10-20 USD a month max. I mostly use it for 3G use only, I forget the last time I ever wanted to RING someone... its 2011! :-)
I couldnt imagine *not* having a smartphone, and I've only had one since 2008
---
ASUS Eeepad. T-Mobile G-Pad.
Laugh while you can, iPad fanboys.
GCHQ Quantum Insert installed. If only our tongues were made of glass, how much more careful we would be when we speak
I haven't seen any sales figures for the Galaxy and Xoom, perhaps you could link to them?
GCHQ Quantum Insert installed. If only our tongues were made of glass, how much more careful we would be when we speak
If Android missteps the manufacturers switch to Windows or something else. If Apple missteps then what?
What's Windows Phone have to do with comparing Android with iOS? Are you sure you want to switch the argument to the hardware side? Because if you do, you do realize the iPhone is the top selling smartphone model.
And by misstep I mean something along the lines of OS6 through OS8. Years of putting out the most disastrously bad operating system that it would have driving Apple out of business if Microsoft didn't invest $150M in them in 97.
Apple had billions of dollars in cash when MS invested $150M. The investment wasn't about helping Apple, it was a settlement to end their ongoing legal dispute. System 6 and System 7, then Mac OS 7 through Mac OS 9, were great systems, they just weren't modern. None of them were a "misstep".
Good thing? Who said anything about a good thing. That is a good additional insight of yours, though.
The Android market's oxygen for innovation, to use the OP's metaphor, seems to hinge mainly on the profitability of Google's search and advertisement business. Good thing for Android, though, that so far that seems fairly secure.
It's hard to link to nothing at all...
I kid. Sorta.
Are you sad you didn't get to laugh yet, Apple hater?
You have a point about the keyboard, but the iPhone is "globally ready" - I've used it many times when traveling internationally.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Really, you are publicly saying a stock you are shorting is a bad investment, and people should sell it.
I find your ideas intriguing and would, wait, no I don't.
If you don't cover ,you will have a margin call within 60 days.
You obviously never shorted s stock, and are clearly full of crap. There is no limit to the downside on a short, the only thing that will save you from total ruin will be your broker pulling the rug out.
It is clear you know a lot of words and equally clear you have no practical experience.
Could also be Samsung selling an iPhone clone. ...
Well I need a phone so if iPhone got a look in.
The iPad is just stupid.
That depends on what you use it for. It's certainly stupid as a hat or as a drinks tray (any spills just fall right off the edge).
It does make a very good casual use device for the living room though; good for checking the odd email or facebook or playing a couple of casual games. It's also great for catching up on BBC iPlayer or watching other TV.
It's very good at filling that role where netbooks are a little awkward (but still useful) and less good at filling in in areas where netbooks (or other computers) are excellent.
It has a niche, and it seems people are seeing that - hence the enormous sales that have show no sign of slowing down in over 9 months since release.
Dude, if you're really sure AAPL's going to be under $340 in a month, then buy some puts. Shorting AAPL is just begging for pain.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
And you've never obviously bought a call option - you know, the one that covers your losses on a short if the stock goes up within a certain timeframe? There is no unlimited loss on a short if you HEDGE YOUR POSITION. You trade a potential limited loss for reduced profit when you hedge. Now I don't make money at $339.99, I need to pay the cost of my options first, but I'm covered on the upside. Go back to your 25k day-trading account and let the big boys play, yes?
Seven puppies were harmed during the making of this post.
When I am home I have my PC and a 24 inch display. For now. I will get better in time.
When I am at work I have my phone and my work PC.
iPad fits in somewhere when no one is looking and I gut it like a little fat pig.
I know apple love to play with kids. But we grow up and there selling crap. iPad bins will now need to be in male toilets as well it seems.
as in...
so?
A trivial google search suggests (and the first two links are to *ANDROID* community sites, so please no whining about this being "apple press releases") that:
-- Xoom has sold ~100,000 units: http://phandroid.com/2011/04/06/more-insight-on-xoom-sales-100000-since-feb-24th/
-- Samsung have claimed, then backtracked, then clarified, then re-clarified that they've sold 2 million Galaxy tablets. Of course, that's sales to the retailers & carriers, not sales to customers: http://androidcommunity.com/samsung-backtracks-on-galaxy-tab-sales-figures-shipments-not-sales-20110131/
-- Samsung went on to say that they need to "seriously rethink" their tablet strategy & pricing in the face of the iPad 2, which certainly suggests that sales are far lower than anything they would have liked to see: http://news.cnet.com/8301-17938_105-20040072-1.html
The simple fact is, if either of these devices were legitimately selling as well as the iPad, we'd hear it trumpeted from every rooftop. Samsung & Motorola would NOT be bashful about saying, "We're selling as many as Apple! Our device is great and you should buy it!" Or did you think that Motorola and Samsung were trying to keep their fabulously successful tablets a secret, because they want people to give their money to Apple?
Lol, so now your short has magically turned into a call option. What's next it is really a long position. Oh wait maybe you own a mutual fund that owns some AAPL. Go ask your teacher for details, you are looking silly.
Unless you have Warren Buffett money cash backing your account, you will not be able to hold an AAPL short of any reasonable size, say 250 shares, beyond the next 60 days. The fact that your short became an option does not change that. It just means you wil be losing whatever you paid for your option contract :). The good news is you can keep your house.
Which contract did you buy, I want to enjoy your misery.
Just realized what you said :). Fair enough, hope your call is big enough to cover the big loss you are getting on the short.
What did you pay for 340?
I bought the call options a while back, and am well in the money at the current price. If it goes up, I make less. If it goes down, I make a killing.
Seven puppies were harmed during the making of this post.
Apple's computer sells have been outpacing the market for years since it went to "commodity" PC hardware.
Apple is fifth in market share (around 10%) behind 4 other companies in terms of units sold. Their market share has doubled in the last five years but it's relatively easy to grow from 5% compared with HP's nearly 30% or Dell's 20+%. They've grown but they've only taken a fraction of the market share and almost all at the high end of the consumer market. Apple does not seriously compete in corporate PC sales nor do they compete at the lowest end of the consumer market.
Demonstrably incorrect. There are tablets out there for equal or less money from (potentially) serious competitors like Research In Motion and Motorola. Somewhat misleading though since tablets are essentially a new market so there has been little time for competitors to bring competing products to market, regardless of price.
Apple can compete on price because it has $60 billion in the bank to buy up components raising the price for everyone else.
Having a lot of money in the bank does not mean they can (or should) compete on price. Competing on price means low margins and high volumes with undifferentiated products - exactly the opposite of what Apple sells. Apple does not try to maximize volume and their margins are among the highest in the industry. Their costs are quite high - developing all that software and their fancy designs is not cheap and you can see the cost in their financial statements. They tried to compete on cost in the 1990s and it nearly bankrupted them.
BTW your logic is not right. They have $60 billion in the bank because they DIDN"T buy inventory with it - that money is retained profit. Yes they could buy more inventory but they would be less profitable and drive up the price on themselves as well. No point in purchasing inventory you can't sell.
At one point Apple was buying 75% of the worlds capacity of flash memory. Apple still buys 25% of the world's supply.
Flash memory is not generally purchased in large quantities on a spot market. You can't just run to Toshiba and say I'd like 3 million flash memory chips delivered tomorrow. They have to purchase in advance and only then do the manufacturers produce the products. Buying market moving percentages of anything does not always result in lower prices if other people want that commodity too. If you buy 75% of the world's supply of anything, by definition you paid more than others were willing meaning you moved the price up, not down. There are numerous suppliers of flash memory and they adjust supply as demand shifts. Apple is a big player in this market but hardly the only one.
Apple can make money off of low priced iOS devices by selling its own software
The vast majority of the profit Apple makes is from selling hardware. Yes they make some money on the side from software and music sales and the rest it's a fraction of their overall revenue. Any profit Apple makes from software sales is simply gravy. Itunes exists to keep people buying iPods and iPads and iPhones. It is widely known that Apple does not make huge amounts of money from music sales. They do pretty well with App Store sales but those still are a fraction of their hardware sales. Don't take my word for it, look at Apple's financial statements.
Google makes their money selling advertising. Anything else they do is simply to keep the ad engine rolling.
What can an Android OEM make money from besides the phone?
Doesn't matter if they are willing to take a lower profit. There are plenty of companies who compete with Apple who are willing to take lower profits. Apple has big fat margins so there is a lot of room to compete on price. Furthermore since Google is bankrolling the software development for them (Apple has to eat those software development costs themselves) the Android OEMs have a theoretically lower price floor than Apple. Conceivably they could sell the Android device for less than Apple's cost and still be profitable.
And HTC using Apple patents without a license...
~~~~~ BigLig2? You mean there's another one of me?