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

It's even more pronounced in smartphones ...

[Anonymous Coward]

... where Apple has 92% of the all global smartphone profits.

Re:It's even more pronounced in smartphones ...

[TheRaven64]

In other words, your $650 iPhone isn't a $650 phone. It's a $400 phone that Apple is selling to you for $650

Not necessarily true. The Apple figure likely also includes Apple's 30% cut on all apps that are sold over the lifetime of the device. In contrast, when Samsung sells a phone, they get the sale price of the phone. That's also the reason that Apple devices keep getting updates for longer. If a new app doesn't work on an old iPhone, then Apple potentially loses revenue from not making a sale of that app. If a new app doesn't work on an old Samsung phone, then Samsung doesn't lose any revenue and might gain revenue from having the user buy a new Samsung phone.

It's also worth noting that just because Apple can build an iPhone for $400 doesn't mean that anyone else can. Having a huge cash reserve means that Apple often enters into deals with companies where they build the factory for a key part (flash chips, screens) and then get huge discounts on the parts for the first couple of years. They're effectively taking the risk in exchange for lower prices, but there isn't actually much risk because they're going to buy all of the output anyway. For a while, iPod Shuffles were the cheapest way of getting USB flash drives because Apple charged about the same for them as anyone else could buy the flash chips wholesale.

That's the sound of the bubble bursting.

[Anonymous Coward]

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."

Finally, we're hearing the start of the so-called "Web 2.0" bubble bursting. And you know what? This is probably the best thing that could happen to society at large.

What has the "Web 2.0" bubble brought us? Not much of value!

Computers today aren't that much different than computers of a decade ago, in terms of hardware and software. Even smart phones really aren't all that different from the PalmPilots we used in the late 1990s. We've seen little innovation, really. In fact, we've actually seen a lot of regression. So much software, from Linux distributions (thanks to systemd, PulseAudio and NetworkManager), desktop environments (GNOME 3, Windows 8 and 10), web browsers (Firefox, Chrome) are worse than what we had before this bubble started. We even saw regression when it comes to programming languages, with absolutely terrible languages like JavaScript and Ruby becoming widely used, and debacles like Rust created.

Where we have seen innovation, it has not been positive. For example, advertising has become so much more pervasive and invasive. Along with this has been far more pervasive and invasive data collection. This is culminating with the rise of the "Internet of Things", which is basically all about giving Internet access to every single device in one's home so that advertisers can collect far more personal and private information about consumers than the advertisers could hope to do before.

Social media has been awful to us. It's pretty much just an extension of advertising, except it isn't limited to commercial entities. We've seen it used for nefarious political means, including but not limited to forcing the flawed concept of "social justice" (which in reality involves bias, racism, intolerance, injustice and bullying) upon our societies.

Luckily, we're now coming to the end of this bubble. We are beginning to hear it pop. Let's hope that the bursting is swift, because that's exactly what our society needs at this point.

Re:That's the sound of the bubble bursting.

[Junta]

smart phones really aren't all that different from the PalmPilots we used in the late 1990s

Well, aside from the full color displays, orders of magnitude more storage, memory, speed, resolution, full fledged multi-tasking operating systems with web browsers that can render sites like desktops, weighing less, lasting a lot longer on a charge, actually having internet connectivity, and some other stuff. But other than that, yeah, not that different...

we've actually seen a lot of regression

Whatever the opinion of those things may be, I don't think 'regression' is the right word. Regression would suggest things collapsed and went back the way they were (e.g. people gave up on the concept of 'DE', Gnome devolved into a barely related set of applications, that sort of thing.

desktop environments

I'll agree that Gnome has gone off the reservation without any sign of being out there, and I'm not a fan of Unity or Win8, but Win10 is actually a decent step up in functionality (there are problems around their release management and privacy), KDE has gotten their act back together, and all the other DEs have been true to their mission throughout.

We even saw regression when it comes to programming languages

Again, not so much a regression as it is, if anything, a weird direction. I'd say while Ruby got a whole lot of attention and loudness, I think in practice it really didn't get as pervasive as the talk about ruby got, and even that has pretty well died down. NodeJS does mean JS has surprisingly seen some use beyond the browser, but in practice I don't think that has staying power. Inside the browser, Javascript is better now than it was in the 90s by a long shot, and those still so inclined may use 90s sensibilities in their site design (incidentally, a lot of Chinese websites I've seen stylistically do remind me of the old geocities/angelfire days).

Internet of Things

I think that's all in the name, or rather the lack of direction indicated in the name. It's a lot of companies wishing to manufacture a market from nothing, but without a good specific vision of what might work, so they shotgun crazy ideas that no one asked for nor really want.

Re:The problem with America.

[religionofpeas]

Most of the work is done by Chinese slave labor and so has no contribution to the US economy.

But most of the profits go to the US.

Re:The problem with America.

[Xabraxas]

Your knowledge of history is short. The entire middle east was carved up into pieces by the Brits and the French forcing unlike people together. This was always a ticking time bomb. The US involvement didn't help but pretending all of the middle east's problems are strictly because of US involvement belies a lack of knowledge of the region and its history.

Re: The problem with America.

[Archtech]

Just because one side happens to lose a lot of people during war (your 1 in 7 number) doesn't mean the intent of the war was actually to kill everyone.

"After the invasion of the Soviet Union, Hitler expressed his future plans for the Slavs:

        "'As for the ridiculous hundred million Slavs, we will mould the best of them as we see fit, and we will isolate the rest of them in their own pig-styes; and anyone who talks about cherishing the local inhabitants and civilising them, goes straight off into a concentration camp![62]'"

https://en.wikipedia.org/wiki/...

Re:The problem with America.

[Xabraxas]

Well, the Iron Curtain and the Warsaw Pact arose after a European nation (Germany), with what the Soviets believed to be support from the USA and Britain, launched a war of extermination against all Slavs in 1941.

Considering the Germans were the US and UK's sworn enemy in WWII the Russians would have to be fucking idiots to believe that by the time each nation entered the war.

Eventually the USA would stand alone as the last place where billionaires could feast while the poor starved in gutters. To avert this horrible threat, the billionaires decreed that all "communist takeovers" must be fought to the last local soldier.

Wow. Just wow. You have to be fucking kidding me. Now I know you're either a troll or just fucking clueless. You're honestly arguing that both Communist Russia was a better system than the Capitalist US during the 20th century and the US is the only place where billionaires feast and the poor starve? That is just blatant ignorance. I heard it's great being a migrant worker in Qatar. Communist North Korea sounds great too. Maybe you should move there. It's a great system and no one starves.

The USSR, and then Russia, agreed with no argument at all to give up control of East Germany, Poland, Hungary, Czechoslovakia, Rumania, Bulgaria, Latvia, Lithuania and Estonia, and even Belarus and Ukraine

Places they took by FORCE. Places that had different cultures and languages. I had ancestors that left Poland because they didn't want to be a part of Communist Russia. Many left those countries for the same reason. You are whitewashing Russian history.

Does Apple operate under different tax laws?

[Brannon]

All these big companies are playing by the same rules. You'll have to find another reason to rationalize why some of them are way more successful than others.