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

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.

[Archtech]

Yep, you are right. The U.S. should cede control of the world to those nice Russians and Chinese. They'll have your best interests at heart.

I am pleased (and rather amused) to note that you begin, even if unintentionally, by admitting that the USA has indeed seized control of the world. Next you allege, without the slightest shred of supporting evidence, that if the USA relinquished control of the world, the Russians and Chinese would seize it. But when did they ever do anything like that before? (Disclaimer: I am a historian, so I tend to think about the historical record when I see such allegations).

Perhaps you will talk about the Warsaw Pact, the Iron Curtain, the "Domino Theory", the Chinese annexation of Tibet, and so on. 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. That attack was repelled, with the deaths of one in seven of the people of the USSR - men, women and children. (The equivalent number of deaths for the USA today would be about 45 million - that is about 15,000 times as many as those who died on 9/11). Reasoning, logically enough, that the German attack had nearly succeeded - German soldiers actually reached the Moscow tramlines before winter and fresh Soviet armies stabilized the front - the Soviet leaders decided to push the "starting line" for any future war of extermination by the West back as far as they could. That was the Iron Curtain. Any nation that has lost one-seventh of its entire population to a vicious attack will be qualified to argue whether this strategy was justified. Otherwise, not so much.

The "Domino Theory" was the ridiculous thesis that, if "the communists" managed to take over any one nation, it would be followed by all the surrounding nations. 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. This was the story in Vietnam. After a horrible war that killed over 3 million people, most of them innocent of any wrongdoing, American forces were driven from Vietnam in headlong, ignominious defeat. How many surrounding nations "went communist" as a result? Not a single one. (Although a hideous tyranny was set up in Cambodia as a direct result of the US intervention).

While the USSR existed, it was at least possible to argue that it had an ideology that it might try to spread by force. Since 1991, of course, the USSR has not existed. 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 (which had been integral parts of Russia for much longer than the USA has existed). Still, Russia has a land area twice that of the USA, China or Canada - much of which is under-utilized or even completely unused. Its population is quite small for such a vast territory, so the last thing it needs is more territory. All Russia wants is to be left alone to develop quietly in peace.

China is just as peacefully inclined, although it went through a near-death experience every bit as bad as the Soviet one, when it was invaded by Japan in 1937-45. Unlike Russia, it did not have the possibility of "pushing back the starting line", but it does have every intention of keeping its borders intact and preventing any foreign invasion or interference.

The leaders of China and Russia have repeatedly explained, in public and with a wealth of detail, that they prefer a multi-polar world in which different peoples, nations, religions, cultures and economic systems coexist peacefully and interact willingly through trade and other forms of exchange. They do not seek to take over other people's countries and run them exclusively for their own benefi

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:50% from tax dodges TANSTAAFL

[__aaclcg7560]

Should I want to hire someone at a PO box in some lax country to assign my income around - it'd be legal for me too.

Actually, Apple's PO box is in Nevada to avoid paying corporate taxes in California and 20 states.

Yet, with a handful of employees in a small office here in Reno, Apple has done something central to its corporate strategy: it has avoided millions of dollars in taxes in California and 20 other states. Apple's headquarters are in Cupertino, Calif. By putting an office in Reno, just 200 miles away, to collect and invest the company's profits, Apple sidesteps state income taxes on some of those gains. California's corporate tax rate is 8.84 percent. Nevada's? Zero.

http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html

Re:Let's call taxation as contribution

[Xabraxas]

No offense but I don't think you know how taxation works. You can't just say well i'm in the 33% tax bracket federally and 10% locally so add those together and that's 43%. Throw in some Medicare and Social Security and that should be about 50% right? Wrong. First you're not paying an effective tax rate of 33% or 10% either because tax rates are only effective on income over the threshold. So say you make $189,301, the minimum amount for the 33% tax bracket, you will pay an effective rate of something like 22%. Just quickly looking at a tax calculator online it looks like California would be a little less than 8% effective rate. So that puts you at 30% without Medicare and Social Security. From the calculator that is about another 5%. So without ANY deductions for anything your effective rate would be about 35%. Considering the wealth of deductions available and your salary it shouldn't be hard to find an accountant that can probably get you under 30% or lower.

Re:50% from tax dodges TANSTAAFL

[__aaclcg7560]

The point is, the normal taxpayer can't afford them - it's not gain at the margin for the taxes a little guy saves, but is for the big guys.

The little guy can do a variation of this. For example, start a Nevada corporation and open a corporate brokerage account (day trade or load up dividend-paying stocks) or own rental properties. Once the corporation makes a significant amount of money each year, you can draw a salary and open a qualified retirement to put away $54,000 each year (a combination of salary contributions plus corporate matching). Do that for a few decades, you will have a retirement account that will greatly exceed whatever you can put into an IRA/401K.

That's the real problem in my mind.

You need to change your thinking. The tax laws will never change to favor the small guy, so why not use them to your own advantage? The trick comes from converting earned income (taxed at highest rate) to portfolio (stocks) and/or passive (real estate) income (taxed at a lower rate). When portfolio/passive income exceeds earned income, you can stop working for someone else and work for yourself.

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.