40% of Silicon Valley's Profits (But Not Sales) Came from Apple (siliconvalley.com)

An anonymous reader writes:The San Jose Mercury News reports that last year 40% of Silicon Valley's profits came from one company -- Apple. "The iPhone maker accounted for 28 percent of the Bay Area tech industry's $833 billion in 2015 sales," while "Its profits were a jaw-dropping 40 percent of the region's $133 billion total." Meanwhile, Google's parent company Alphabet racked up $75 billion in sales, representing nearly 57% of the total for all Silicon Valley internet companies, followed by eBay and PayPal.

But while sales grew, internet-company profits fell by 29% as more companies focused on growth. "Profits are nice, sure, but becoming profitable isn't the top priority around here, particularly for younger firms," wrote the newspaper, noting that investors are paying 18 times Facebook's annual sales for its stock. In fact, 29% of Silicon Valley's top companies didn't have sales growth in 2015 (an increase from 17% the previous year), and five of the top 10 companies saw a drop in sales in 2015 (including Intel). "The numbers are telling the story," one analyst tells the newspaper. "There is growth, but it is slowing."
The Mercury News adds that "The question for those with the biggest sales drops is how much time do they have left if the trend continues..."

Comments

Fashion, more particularly

[Sycraft-fu]

The reason Apple can charge so much and reap such large profit margins is that they sell fashion, more than electronics. The consumer electronics market tends to be pretty price sensitive and competitive, so you need to keep price, and thus margins, down to compete. However fashion doesn't work like that. High prices can actually be seen as a good thing as they confer status, and people don't shop on price, they want the fashionable brand.

Well, Apple made their stuff stylish. It is fashionable to be seen with a shiny Mac laptop. It is fashionable to be seen with an iPod, with white visible earbuds and the cord hanging out in front of your shirt so everyone knows you have one. They are status symbols. As such, people tolerate and even embrace higher prices. That lets Apple make great margins where other companies can't.

Re:We are overtaxed

[roman_mir]

Nah, I am very well versed in following conversations, you on the other hand, cannot even follow one train of thought in your own head. You are the one who should read the shit that you wrote and think about it a little more than your primitive miniscule brain allows.