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On the iPhone and Apple's Meteoric Rise To the Top
zacharye writes "Friday marks five years since the world first got its hands on a smartphone that would turn the industry on its head. In five short years, Apple went from the ground floor to being the most profitable company in the smartphone business by a staggering margin. Apple and Samsung — two companies that weren't even on the smartphone industry's map a few years ago — are now the only two major global vendors making money, and the split was estimated at 80/20 in Apple's favor last quarter. That's 80% of smartphone industry profits in less than five years with just five different smartphone models under its belt during that span."
Alright gentlemen we have a fine flame war in store for you tonight.
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Apple fanbois like me can't get the batteries out to make them sail across the backyard from the bonfire pit.
if this is supposed to be a new economy, how come they still want my old fashioned money?
Steve Jobs and his team made a damn fine piece of technology: A screen large enough for web-surfing & an easy-to-use touch interface. Plus people were already thrilled with the best-selling iPod, so stepping up to an iPhone was a natural next step.
In other news: I was just reading this morning that phone sales are down for everyone (except Apple apparently). Overall retail sales in the EU have dropped 7%. Sounds like we're headed for great recession part 2. :-|
My AC stalker: " I personally agree with your posts most of the time, but that won't keep me from modding you troll"
with just five different smartphone models under its belt during that span."
That's a significant part of the reason for it, right there.
That's when I bought my unlocked Nokia smartphone (E90), which did more than the iPhone (web, VOIP, GPS, video calling etc) and had a real keyboard to boot. Still works, too (it's on its second battery pack).
Wouldn't that mean it came hurling down to earth and usually burned to nothing in the atmosphere?
"Meteoric" brings to mind "meteor" which is something that falls down very fast and tends to burn up in the sky. (Yeah, I get that "meteor" as in "meteorology" and the notion that meteors are "fast"... it's the other properties of the word that I find horribly misplaced.)
Sorry, but it seems "meteoric rise" has been used a lot lately and it's almost as if people are being tested to see how stupid they are.
I wonder if this will continue for Apple.
iOS 6 is a yawner. Yes, what we need -- more facebook integration. Already, there is a backlash against FB. The latest Android announcement had some cool items in it including another method of protecting against piracy that does not depend on if a device is not rooted.
The Retina Display Macbook Pro has a cool screen, but cannot be repaired or upgraded.
Mountain Lion?
Jobs's RDF is gone.
What Apple needs to do is start figuring out how to get themselves enterprise-friendly without losing their consumer market. Enterprises buy stuff in such large chunks that a few good contracts are a lot better than lines around the building of hipsters.
First, redo the Mac Pro. Make a chassis that works like a tower, but can have a rack drawer attached so it can be slammed into a standard enclosure. Offer not just 8Gbs FC cards, but NICs with enough packet offloading power so FCoE is workable.
Second, make something like BES but for managing iPhones. Yes, Exchange can do a lot, but having a dedicated policy management server that can handle data transmissions, perhaps even backups of phone devices would bring a lot of revenue.
Third, the ARM processor supports worlds. In this day of BYOD, offer iPhones and iPads with a "work" partition and a "home" partition. That way, the employee only needs to type in the long password when accessing the "work" side, and the Exchange erase only blows that out. It also allows for apps to only see a subset of data, so the FB app isn't able to access work contacts.
Fourth, make an antipiracy mechanism similar to Google's LVL or new encryption mechanism in Jelly Bean. That way, apps don't have to rely on the fact a device is not jailbroken. As an added bonus, more money can be spent on features, not anti-jailbreak BS.
Fifth, make a business friendly Mac desktop that can push the Dells and Compaqs out of the offices. Take an iMac, toss the camera and mic, and sell that as a business PC with service plans to follow. Lots of cash there to be made, as most companies would switch to Macs if they could, only for the artistic value of the machines.
'nuff said.
'just an industy analyst,
Everything else I've seen here on Slashdot - two bit opinions based on nothing.
If I really knew the TRUTH, I wouldn't a dumb fuck analyst but a billionaire myself. But when I see a decent analysis, I know it.
The sales and profit figures for Apple in the smart phone industry are pretty impressive. I'm surprised other companies haven't adopted a similar business model with a limited number of phones.
"Better, faster, stronger," Apple could have easily lifted those Kanye West lyrics for their press release announcing the coming of the iPhone 3GS in 2009.
*facepalm* Sorry, I know its a minor detail, but Daft Punk originally wrote "Better, faster, harder, stronger", and Kanye sampled it (with permission) for his song. They have a cameo in his video, which is an awesome tribute to Akira for those that haven't seen it.
*watches Daft Hands and Daft Bodies on youtube*
Samsung may have been under _your_ radar but they made some darned nice PalmPhones, e.g., the SHG-i300.
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It's funny how people fight over which smartphone is superior. If people from the past (even 10 years) could see people name-calling over who has what smartphone, they would think it absurd.
Let me make it simple for you. Me touch phone. It do stuff. Me make phone call. Me play game. Nice blinky lights.
It's no more complicated than that people.
Only Apple Haters care about Steve Jobs.
The rest of us just like functional devices.
The rest of us realize Jobs didn't really matter, except that he had a talent for creating teams with amazing people.
Not to belittle that talent, but since his team is the reason Apple succeeds Apple will do fine without him.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
I am a phone geek. The cell phone that I like the best. Actually the best cell phone ever made, in my opinion is the Nokia N9. Now dead, no longer made, it's corpse used to make shitty Lumia's. It could have been the 3rd leg in the cell phone triad.
But, it isn't about technology. The people that buy cell phones aren't the real customers, but the companies that suck user information and sell it.
The Nokia N9 is like the 2002 BMW E39 M5. the last of the great road cars where you could actually shift it, and trurning off the traction control really did just that.
So, long Nokia. The N9 could have been a stellar hit.
* Carthago Delenda Est *
Competition has a way of eroding fat margins. Just saying.
When all you have is a hammer, every problem starts to look like a thumb.
Steve Jobs sold his soul to become the biggest company ever to exist.... as well as giving a percentage of each of his users' souls... ... ... ...
Apple only has 30% of the Mobile OS market share compared to Android at 51%. If you want to go off a different graph Apple is at 29% so it's still pretty close despite two separate studies.
Furthermore, the top mobile OEMs are Samsung and LG. Apple is bringing in a measly measly 14%. Yes, Apple took no time at all in getting profitable in the last five years, but that's in stark contrast to global market dominance where things aren't so hot for Apple. I know it's hard to fathom but the rest of the world (not the US) doesn't seem to prefer the Apple glitz.
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I remember hackers jail breaking the thing to expose the underlying Mac UNIX. Opening it up to 3rd party developers was an uncertain but profitable move.
iOS 6 is a yawner
Spoken like someone totally ignorant of details, or lacking in vision...
iOS6 has such major, important updates for developers that going forward I will go with iOS6 support only as soon as it comes out, with no backwards support.
Finally developers will be able to display anything on the built in maps framework, without any of the limits imposed by GOOGLE on how you can use maps.
Also developers will be able to create regionally focused mapping applications that users can buy in the map itself! Android does not have nearly as open and extensible built in third-party map helper support - only what Google chooses to provide. Yes you can buy other mapping apps but you have to find them yourself, and determine if they will work where you are.
Also iOS6 has an really advanced constrait based layout engine that goes way beyond a springs/struts model, or Android's Relative layout model. It makes support for proper internationalization trivial.
Apple never needed Jobs mythical RDF, just great products... and Apple is continuing to provide that for users.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
According to ZDnet Samsung is ahead of apple in the smartphone market.
Samsung’s success in the U.S. is both a blessing and a curse. It dominates the U.S. smartphone market, even outshining Apple’s iPhone. But delays, sales injunctions, and supply chain issues are hampering Samsung’s latest efforts to crank out its Galaxy S III smartphone to the market.
Market research firm
Samsung Electronics' Galaxy series has overtaken Apple's iPhone as the number-one individual smartphone sub-brand in the world.
According to a report published by American market research firm Strategy Analystics in the first half of the year, Samsung sold 41-million units of its Galaxy series, which comprised 28 percent of the global smartphone market.
Apple was close behind, selling 35-million units of the iPhone and taking up 24 percent of the market share.
Research in Motion's Curve was the third-largest smartphone brand, but it only accounted for FOUR percent of the market.
The report said Samsung and Apple are "clear leaders," since they make up over half of the global smartphone market combined.
I've never understood the media's obsession with using "meteoric" entirely backwards. A meteor is FALLING and BURNING UP. That's not what is happening to Apple.
Most people can't figure out how to spell "Phoenixian".
And even when they can how many would understand what it meant?
Everyone knows of the fiery path of the meteor, even if as you say it's going the wrong way for what they are trying to imply.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
The summary says correctly that Apple makes 80% of the profits, not 80% of the phones. Samsung appears to be shipping the most phones, although the only numbers available are estimates of SHIPPED phones, not phones sold to consumers. For some reason, Samsung refuses to release any numbers at all.
And indeed the reason for why it is better to cocnentrate and swallow the private amrket is simple. Mostly, enterprise are cheapstake. They will buy the cheapest hardware for the job, make various hardware go in concurrence, and drop any fidelity to a mark for 10% discount. Margin are razor thin when it comes for the bulk of enterprise hardware. Sure there is the crackberry for some manager, but let us get realitst, most enterprise have 20+ worker with dumb phone and dumb PC for 1 crackberry and 1 SSD laptop shiny.
On the other hand we have the consummer market with shiny toy for the one "in", the hippster and so forth. With consumer friendly usage. And they sell like hotcake at a premium price, BECAUSE the market is willing to bear that pricwe.
Enterprise buy in bulk but are cheapo. Consumer buy in single quanity, but you can sell them hot expansive device with Facebook itnegration for 500+$. The choice is easy and apple made the right one.
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You also have to factor the profit margin for the iPhones vs. every other phone that doesn't have the heavily apple sided contracts with carriers.
make decisions independent of the mobile operators.
This is only relevant is the USA, it does not explain anything about the rest of the globe.
Excuse me, have you tried phones across the rest of the globe?
I've bought smartphones outside of the U.S... what a nightmare. Oh, your phone is region locked sir even if I try to buy a sim from the same company in another country! The phone itself riddled with carrier specific crap.
No, the iPhone lack of carrier control perfectly explains success, even in other countries. Apple can control what the user sees when they first use the phone, and since the carriers appear to lack any common sense whatsoever and want to brand the hell out of everything, it's no surprise the iPhone does well in any country.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
I think Apple's large margin on the iPhone comes from multiple things: 1) There are no "BOGO" offers for iPhones. Period. 2) According to reports, they buy larger quantities and pay ahead on so much that they get better prices than anyone else. 3) They are leveraging parts across multiple devices. For example, the A5 appears in both iPads and iPhones. 4) As demonstrated by Sprint's experience, an iPhone is required in order to be a successful carrier today, at least in the U.S. I'm sure that does allow Apple to charge the carriers more for their phones that others are able to do, at least on average.
Just guessing what comes next...maybe the hardware of the nexus 7 shrinks down to the size of a usb stick, and can be plugged into screens of any size (phone/tablet/monitor/tv/google glasses) that have their own power supply, similar to what ASUS has attempted with padfone, but a couple iterations further down where the OS dynamically adjusts to whatever display the device is plugged into. I have a desktop at work 2 laptops and a phone. Would love to just shrink all that into a little keychain.
Okay, so you're a cellphone geek? Good for you.
But the truth is that the vast majority of people don't care that much about a great big feature list. They care about "will this make me happier?" - emotional benefits, if you like.
The iPhone is regularly advertised with video chat to the hypothetical user's nearest and dearest. That's a great emotional-benefit type feature.
Opening it up to 3rd party developers was an uncertain but profitable move.
It was not uncertain at all; I have been programming on iOS since the day the SDK was released. The sheer volume of documentation ready at that point pointed to that having been a choice made probably even before release of the iPhone... they probably wanted to wait to shake out the initial API's before public consumption.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Only 2 vendors making money? PLEASE. The article trots out has-beens like aging NBA basketball players, but doesn't mention Han Hoi Precision, HTC, or any of the hundreds of fast growing Android-clone manufacturers. 30 companies on 3 continents cooperated to make the IPhone. I like Apple, but I admire how IBM gave Lenovo credit compared to how Apple shares the credit with the geeks of color in Asia who made this generation of touchscreen phones affordable, scaleable, and possible.
Gently reply
Jobs didn't want third-party code on the iPhone
This is false. The volume of documentation and the quality of it demonstrated Apple had planned for 3rd party app development all along... They just delayed initial access to shake out the API's before the public had access to them.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
It wouldn't be the first time that somebody in Apple went and did something behind Jobs' back anticipating a change of heart. The story of the Sony/Alps situation for the original Mac floppy drive is probably the most famous example.
Jobs loved the new Sony 3.5" floppy drive format, and decided seven months before the Mac was supposed to ship that he wanted to use it... and he wanted that to happen via an Apple/Alps developed-from-scratch clone. The team thought this was insane, so while grudgingly going through the motions with Alps, they secretly continued working on integrating the Sony drive. They kept all the meetings/negotiations/hardware secret from Jobs, to the extent that they would hide the Sony engineer visiting Cupertino in a closet whenever Jobs was nearby. This obviously greatly confused the Sony engineer, but he went along with it.
Later, when Alps told Apple that they needed eighteen months to get the thing ready, the team revealed to Jobs that they had gone behind his back and kept the Sony deal alive, and he ended up thanking them for their little rebellion.
I'm not saying that this is the same situation here, only that what Jobs was convinced was the right approach and what the Apple engineers working on the internal SDK were convinced was the right approach may not have aligned. It's pretty well documented from multiple sources internal to Apple that Jobs was obstinately refusing to consider third-party apps. He didn't want other people messing with his perfection, and he didn't think his team had the bandwidth to figure out how to make it work (in terms of reliability and integration) on top of their existing workload.
Only Crapple faggots are stupid enough to believe a drawback is a feature.
The volume of documentation and the quality of it demonstrated Apple had planned for 3rd party app development all along...
Kudos to the tech pubs team at Apple, but I'm afraid you're mistaken. At launch time, there was no intention to allow third-party apps on the phone. It took quite a lot of convincing to get SJ to allow it.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
They would not be shipping if there was no demand or do you not understand the concept of supply/demand based economics.
Samsung may not be able to know each and every activation like Apple, but they do know that wholesalers are ordering them because retailers are demanding them because consumers are buying them and the shelves are out and need more.
They may not get the sales direct from the consumer or know of the activation but they got the money before the consumer even bought it from the distributors.
If they didn't sell to consumers the retailers (depending on the contracts) would be eating the cost, not Samsung, Just ask about all the WM phones sitting on the shelves nobody is buying but MS/Nokia still got paid.
here
How do you make an ice cream sandwich crumble?
http://www.reuters.com/article/2012/06/29/us-apple-samsung-idUSBRE85S1J320120629
Guess what's next?
Apparently, you've never heard of channel stuffing. No one is claiming they're not selling a lot of phones, only that they might not be selling quite as many as the ESTIMATES imply.
Which brings me to one of my biggest gripes about Apple-- their prices are wayyyyy too high, but the biggest gripe of all? Hipsters in their 7th year of college, with rich parents, sipping overpriced coffee at Starbucks, animatedly discussing whether Yngwie Malmsteen has sold out to the Establishment, and marching at every Occupy rally; those are the target demographic.
You really don't get it do you? Samsung sold more Galaxy phones so clearly they manufacture even larger quantities. They are also a vertically integrated company so you can be damned sure they are able the eek more margins than others can. In fact Apple is one of their clients... Samsung also uses the same CPUs on their phones and tablets (which have been embargoed in the US by a court case with Apple). Samsung manufactures the A5 CPU for Apple as well. Only an idiot would bet on Apple winning on a battle like this. Samsung is the world's largest electronics manufacturer encompassing just about every single piece of hardware required to manufacture a phone. They are the world's leading DRAM, Flash, Display manufacturer.
Apple's margins are much higher than other companies but their company expenditure shit and stuff all gets spent on R&D. If they cleaned up their books to reflect say Google's they would be killer in the market.
The summary says correctly that Apple makes 80% of the profits, not 80% of the phones. Samsung appears to be shipping the most phones, although the only numbers available are estimates of SHIPPED phones, not phones sold to consumers. For some reason, Samsung refuses to release any numbers at all.
What Cupertino, CA based firm does that remind you of?
iPhone sales figures & market share are frequently presented as indicators of the company's success. But it's harder to find stats that correlate iPhone sales to those of the iPod. It's an interesting question: To what extent did the iPhone simply cannibalize the iPod and shift customers from one Apple product line to another? Does anybody have a source for how the sum of iPod & iPhone unit sales have trended over the last five years? Making conclusory statements about Apple that consider only iPhone shipments is a bit like citing the rise in Blu-ray shipments (ignoring a complementary drop in DVD sales) to make the case that disc-based content distribution is thriving.
I'm picturing the situation where Steve Jobs opens a supply closet and a startled asian Sony engineer yells, "supplies!"
...he says the Grim Reaper will be there between 9 and 3 tomorrow.
Apple "rises" because every other manufacturer is hamstrung by patents...witness latest with Samsung.