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Apple Takes 104 Percent of All Smartphone Profits Following Galaxy Note 7 Recall (macrumors.com)
Apple accounted for over 100 percent of smartphone industry profits in the third quarter of this year, according to estimates published by BMO Capital Markets on Thursday. From a report on MacRumors: Analyst Tim Long, quoted in the Investor's Business Daily, said Apple's staggering 103.6 percent profit share in Q3 2016 came largely as a result of significant losses posted by rival vendors including LG and HTC, and despite Apple continuing to shift fewer handsets year on year. Based on units alone, Samsung accounted for 21.7 percent of all smartphones sold, with Apple coming in second with a 13.2 percent share. In terms of profits however, Samsung came a distant second to Apple, capturing only a 0.9 percent share.
I am 150% sure that they can't have more than 100% of the profit share. Thank you to math teachers everywhere for at least trying, but some can not be reached!
How are they doing this so long without profit?
In the case of Samsung, they are in a position where they make a number of components for the iPhone. So when Apple wins, Samsung gets paid. When Apple looses, Samsung gets paid.
Simple -
Total profit made by all smartphone companies combined: $100
Profit made by Apple: $103.60
Profit made by Samsung: $0.90
Profit made by LG: -$1.00*
Profit made by HTC: -$3.50*
* Actual numbers made up on the spot.
Profits and losses are the same type of thing with financials. Its all reported on the P and L.
Let's say you, Ron Jeremy, and Lena Dunham are in a room comparing dick sizes. Your dick is 4 inches. Ron's dick is 8 inches. Lena's dick is -6 inches (because it's actually a vagina). Total dick size is 6 inches. Ron Jeremy has 133% of the dick in the room.
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I concur 105.5% ...
No, it goes to show that a lot of companies are operating on razor thin margins or lose money pursuing this business in an attempt to gain customers.
Here's a business tip: if you lose money on every phone sold, you can't make it up in volume.
It's not sustainable. Everyone wants a cheap phone, but you know why so many Android phones never get updates? Because it costs too much. The company has already lost money selling you the phone--you think they're going to support it, too?
Apple, and to a lesser extent Samsung, have the money from the profits to drive the parts of the business that don't seem like they're part of the sale price. You get support at Apple stores, for instance. R&D--whether you think Apple's priorities are good or not is irrelevant, they spend that money on R&D for materials, software, etc. All that is factored into the cost of the iPhone (in addition to the profit margin).
World-wide, Apple accounts for something like 13% of sales, Android accounts for nearly 100% of the rest. But that 87% is split among a lot of manufacturers fighting for the same slice of pie, and Samsung is the top of the heap there, being basically the only one that consistently makes a profit on its phone division.
With the kind of losing strategy that is being pursued by most manufacturers, Apple could make a lot less profit per phone and STILL walk away with nearly 100% of the profits this year.
I think Android counts for more than 85% of smartphone sales now, more like 99%. Which just goes to show what a price-gouger Apple is.
Apple does what any business would like to do: Sell a product to maximize profits. If they thought they could get more profit by selling iPhones for $1,000 apiece, they would. They're selling a premium item, not a necessity. There's plenty of cheap phones out there if you don't want to pay a premium.
Taking guns away from the 99% gives the 1% 100% of the power.
If you believe that, you will never get an MBA!
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most smartphone manufacturers barely break even or operate at a loss. add the losses to apple's share of the profits and you get over 100%
until a little while ago only apple and samsung took home something like 95% or 99% of all profits. samsung's loss pushes apple over 100% in profits
all those cheap android phones sold all over the world that make up for 85% of all phones sold don't really make any money
I think Android counts for more than 85% of smartphone sales now, more like 99%. Which just goes to show what a price-gouger Apple is.
In other words, when they added up all of the P&L from all of the phone manufacturers Apple's share was 104% of the industry total.
For example, Samsung makes $1 in profits, Company Y has a loss of $5, and Apple makes $104. The industry total would be $100.
- Apple would have made 104% of the overall industry P&L.
- Samsung would have made 1% of the overall industry P&L.
- Company Y would have made -5% of the overall industry P&L.
It's a way to trend which company in a sector is making most of the profits and can be a way to develop an investment strategy.
Cell Phones is a $425 Billion dollar industry. Even making tiny profits can make it worth it.
https://www.statista.com/topic...
I think Android counts for more than 85% of smartphone sales now, more like 99%. Which just goes to show what a price-gouger Apple is.
You may want to rethink those percentages.
Also, selling a high-priced item at a profit does not mean you're price gouging. Most of their competition has adopted a business plan that involves operating at a loss in an effort to gain market share that will provide a foundation for future profits, but which has so far resulted in several of them putting themselves out of business. Apple has opted to sell their products at a profit. Samsung does the same, which was why earlier reports stated that Samsung + Apple got "over 100%" of the profits, but because of Samsung's recent recalls putting them into the red, it left Apple to claim "over 100%" of the profits for themselves.
Now, if Apple had a monopoly on smartphones and took advantage of their control over the supply to jack the prices way up, that would be price gouging. But since you seem to think that 99% of smartphones are Androids, it's pretty clear you don't think Apple has a monopoly, so what leverage do you think they have? This isn't like the price of fuel going up right before a hurricane hits, with people having no choice but to pay the price. If people don't like Apple's prices, they'll simply buy a competitor's product.
Instead, what you're calling "price gouging" is actually an example of how pricing works with luxury items. Veblen goods tends to behave differently than the stuff you're used to seeing, so the pricing effects can be a bit odd. Which is a long way of saying that high-priced doesn't necessarily mean price gouging. It just means that someone apparently thinks the market can bear that price.
I think Android counts for more than 85% of smartphone sales now, more like 99%. Which just goes to show what a price-gouger Apple is.
Apple does what any business would like to do: Sell a product to maximize profits. If they thought they could get more profit by selling iPhones for $1,000 apiece, they would. They're selling a premium item, not a necessity. There's plenty of cheap phones out there if you don't want to pay a premium.
And considering the fact that the Galaxy Note 7 costs MORE than a similar-memory-size iPhone 7 PLUS, it tells you a few things:
1. Apple and Samsung are competitively-priced
2. Since Samsung actually MANUFACTURES some of the most costly components in the product THEMSELVES (Display, SoC, Memory, Final Assembly(?)), and yet STILL charges MORE than Apple, either Apple isn't so "greedy" afterall; or Samsung is MORE GREEDY THAN APPLE (and yet, for some reason, no "Samsung Haters").
3. Maybe the gross profits on these high-priced phones aren't so big afterall...
They trot this shit out every once in a while.
They count losses as negative profits, then claim Apple made > 100% of all profits.
It's bad math for dumb people.
Profits are positive, by definition. Anyone saying anything else is trying to cheat somebody. Probably you.
That's because it is possible to loose money on each item and make it up in volume. However this is only possible the variable costs of your product or service are less than your price (if variable costs are higher than price, then you are truely screwed). On the other hand if your variable costs are lower, then it's about amortizing your fixed costs across more units until your total cost drops below your price. E.g I have a factory that costs me $100 a month to operate (and can make 1000 widgets). It costs $.75 in supplies to make each widget. I sell my widget for $1. If I sell 100 widgets a month I loose $.75 on each widget (total sales is $100, total cost is $175). However if i sell 1000 widgets a month, then I make $.15 a widget ($1000 in sales, $850 in costs). This isn't unusual for companies in high growth mode to over invest in capacity so that they can scale quickly to their break even point.
Profits are positive, by definition.
Not so; profits are revenue minus cost. Sometimes this is negative, in which case it is usually called a loss. However, people would get very angry at you if you told them the profit one year was zero when actually it was a negative number. Suppose a company's profits were 100 in 2014, and -5 in 2015. For all that people will insist the -5 profit was really a 5 loss, when asked what was the 2-year profit of the company none of them are going to say it was 100 rather than 95, and when asked the profit in 2015 none would say zero.
Furthermore, no one bothered making a special word for when each of various definitions of profit turn negative, such as gross profit, earnings before interest, taxes, depreciation, and amortization (EBITDA), earnings before interest and taxes (EBIT), earnings before taxes (EBT), net income.
Don't waste your vote! Vote for whoever you want, unless you live in a swing state it won't matter anyways
Invention, my dear friends, is 93 percent perspiration, 6 percent electricity, 4 percent evaporation and 2 percent butterscotch ripple.
No, a negative profit is a "not profit". Just like a negative bank balance is "not money". And this story is "not sense."
Would it make sense if there were losers and winners such that Apple had 99% of the profits of the industry?
OK now we have established they were first with that crucial triple. I think you are still wrong on both months and "crappier". But I wanted to argue the dates first.
1) Everyone uses glass. Presumably if plastic were better and easy to manufacture (in 2007) we'd be seeing phones with it now.
2) As far as high speed web rendering. Remember the iphone supported wifi. It also was sold exclusively with AT&T's unlimited data 3G plan. The whole point of the device was to drive up the demand for data usage.
3) Finally on high speed animations I think you would be hard pressed to find a phone remotely less laggy. This has remained true more or less to this day using a comparable interface. Vertical integration has particularly paid off here as Apple has often been able to use objectively slower hardware combined with customized OS and applications to achieve much less lag. Nokia who you have pointed to many times had horrific lag problems.
As for Nokia being the competition. In the United States Nokia wasn't the competition. Nokia USA was dismal. Nokia did not focus on the USA market. Even when the USA became interesting Nokia wasn't able to integrate Nokia USA (the sales division) into their corporate decision making many years later. As for Maemo, Maemo used a resistive touch screen and required a stylus. It did not involve the critical triple and couldn't. Nokia internally had engineers who saw the advantage of the triple but couldn't get the changes into Gnome fast enough. A failure that both the Gnome community and Nokia reacted strongly too by restructuring. Could an alternative universe Nokia have won, absolutely. But in this one they dithered didn't make critical choices when there still were two sides lost their lead, then fell behind then died. I was working with Nokia USA during those last years when they couldn't either execute or not on exploiting the gap that Apple created in enterprise phones. In the end the hardware guys ignored Elop advice on ecosystems and they focused instead on a few hardware features.
Nokia is a perfect example of how good Apple is in developing a total package that is often unappreciated by technical people. Hardwarewise even when Nokia was hemorrhaging share to Apple they were quite often from a hardware perspective better phones. They were however vastly inferior phones from a software (OS in particular) and then from ecosystem perspective. The company was directionless.
Nokia also disproves your marketing theory. Nokia lost enterprise to Apple at a time when Apple was doing anti-marketing in enterprise phones. Apple wanted RIM or Nokia/Microsoft to take the enterprise market, they refused to make the concessions that enterprise customers wanted, and still the iphone's total experience was so much superior that even when anti-marketing Apple ended up winning with the move to BYOD.
As an aside on dates, the N900 came out 2 1/2 years after the iPhone 1 and still had a keyboard and resistive touchscreen. As an aside one of the things on ecosystems that caught Nokia off guard was the power of a closed ecosystem. They had never seriously considered what a closed ecosystem done well would look like when they focused so heavily on an open ecosystem
Finally on the claim that Apple's choices were obvious let me just point you to another of your comments, "And a quality hard keyboard is still the only sane input method for people who are serious about things. A lack of a keyboard was a money saving measure, that's all." You yourself a decade after Apple's approach still don't appreciate how important lack of a keyboard is. RIM was the primary vendor who was devastated by failing to appre