Apple’s Share of Smartphone Industry’s Profits Soars to 92%(on.wsj.com)
on.wsj.com
Apple’s Share of Smartphone Industry’s Profits Soars to 92%
http://on.wsj.com/1M4WXQx
17 comments
Because of Apple stores, iPhones have an enormous amount of good support. In Manhattan there are 6 stores including one open 365/24/7. You could make a Genius Bar appointment at 3 AM if you wanted. The people are nice and the support is good including 1-800-MyApple.
I use iPhone's FaceTime Audio a lot domestically and internationally since it has better audio quality (HD audio) then the regular network. Verizon is now offering HD audio but only on their newer phones and only within the Verizon network.
On the iPhone 6, FaceTime Video over cellular uses half the bandwidth of previous models.
I use iPhone's FaceTime Audio a lot domestically and internationally since it has better audio quality (HD audio) then the regular network. Verizon is now offering HD audio but only on their newer phones and only within the Verizon network.
On the iPhone 6, FaceTime Video over cellular uses half the bandwidth of previous models.
If anyone else is curious about the bandwidth thing, it's becasue the new phones have a h265 chip, and use that codec.
http://www.phonearena.com/news/New-Apple-iPhone-models-use-h...
If anyone else is curious, this does a decent job of explaining it. http://www.digitaltrends.com/computing/h-265-hevc-encoding-e...
http://www.phonearena.com/news/New-Apple-iPhone-models-use-h...
If anyone else is curious, this does a decent job of explaining it. http://www.digitaltrends.com/computing/h-265-hevc-encoding-e...
Alternate title: "20% of people paid waaaay too much for their cellphone".
What a curious thought, that i seem to see repeated over and over.
What exactly is more expensive about the apple product here:
Apple iphone 6 - $649.92 full retail price
Samsung galaxy s6 edge - $779.76 full retail price
LG G4 - $599.76 full retail price (on sale)
HTC One M9 - $649.92 full retail price
This puts the iphone as the second least expensive flagship phone currently available, prices are all straight from tmobiles site.
If we expand the storage and bump to the top models:
Samsung galaxy s6 edge - $959.83 full retail price
Apple iPhone 6+ - $949.99 full retail price
Was your point only that everyone who buys a flagship smartphone is paying 'waaay too much' for their cellphone?
If your point was that Apple's smartphones are somehow the most expensive ones, then you are simply incorrect; this is the belief i was trying to counter with these numbers.
edit: formatting
What exactly is more expensive about the apple product here:
Apple iphone 6 - $649.92 full retail price
Samsung galaxy s6 edge - $779.76 full retail price
LG G4 - $599.76 full retail price (on sale)
HTC One M9 - $649.92 full retail price
This puts the iphone as the second least expensive flagship phone currently available, prices are all straight from tmobiles site.
If we expand the storage and bump to the top models:
Samsung galaxy s6 edge - $959.83 full retail price
Apple iPhone 6+ - $949.99 full retail price
Was your point only that everyone who buys a flagship smartphone is paying 'waaay too much' for their cellphone?
If your point was that Apple's smartphones are somehow the most expensive ones, then you are simply incorrect; this is the belief i was trying to counter with these numbers.
edit: formatting
I paid $1 for my Galaxy S5 upgrade, with a two year contract extension. Essentially I got the phone for free because I planned on keeping my carrier for the next two years anyway. That cost was subsidized by my carrier, and probably indirectly by Samsung also. I've never paid sticker price for an Android phone, and I don't know anyone who has.
"One key to Apple’s profit dominance: higher prices. Apple’s iPhone last year sold for a global average of $624, compared with $185 for smartphones running Android, according to Strategy Analytics. "
You can't say the same when buying an iPhone. There's more complexity to this than sticker price. The numbers don't like, Apple pulls in 92% of the market's profits while selling less than 20% of the phones. Use logic and tell me what that means.
"One key to Apple’s profit dominance: higher prices. Apple’s iPhone last year sold for a global average of $624, compared with $185 for smartphones running Android, according to Strategy Analytics. "
You can't say the same when buying an iPhone. There's more complexity to this than sticker price. The numbers don't like, Apple pulls in 92% of the market's profits while selling less than 20% of the phones. Use logic and tell me what that means.
As I said in my first comment,
>Was your point only that everyone who buys a flagship smartphone is paying 'waaay too much' for their cellphone?
Your statistic only shows that android serves all market segments, and does nothing to show that Apple phones are more expensive than the phones with which they compete. Yeah the Moto G is less expensive than the iPhone, if thats your point the discussion should stop there, because we are comparing a budget segment phone to a flagship segment phone.
>I paid $1 for my Galaxy S5 upgrade, with a two year contract extension. Essentially I got the phone for free because I planned on keeping my carrier for the next two years anyway. That cost was subsidized by my carrier, and probably indirectly by Samsung also. I've never paid sticker price for an Android phone, and I don't know anyone who has.
Ok, so lets do a price comparison that way
With a 2-year contract on verizon (couldnt find contract prices on tmobile):
LG G4 - $199.99
HTC One M9 - $199.99
Samsung Galaxy s6 - $199.99 (after $50 mail in rebate)
Samsung Galaxy s6 edge - $299.99 (after $50 mail in rebate)
iphone 6 - $199.99
iphone 6+ - $299.99
The galaxy s 5 is the same price as the 5S, both last years flagships
>Was your point only that everyone who buys a flagship smartphone is paying 'waaay too much' for their cellphone?
Your statistic only shows that android serves all market segments, and does nothing to show that Apple phones are more expensive than the phones with which they compete. Yeah the Moto G is less expensive than the iPhone, if thats your point the discussion should stop there, because we are comparing a budget segment phone to a flagship segment phone.
>I paid $1 for my Galaxy S5 upgrade, with a two year contract extension. Essentially I got the phone for free because I planned on keeping my carrier for the next two years anyway. That cost was subsidized by my carrier, and probably indirectly by Samsung also. I've never paid sticker price for an Android phone, and I don't know anyone who has.
Ok, so lets do a price comparison that way
With a 2-year contract on verizon (couldnt find contract prices on tmobile):
LG G4 - $199.99
HTC One M9 - $199.99
Samsung Galaxy s6 - $199.99 (after $50 mail in rebate)
Samsung Galaxy s6 edge - $299.99 (after $50 mail in rebate)
iphone 6 - $199.99
iphone 6+ - $299.99
The galaxy s 5 is the same price as the 5S, both last years flagships
The carrier doesn't subsidize the price, its cost is amortized over the life of the contract. You are paying for the phone whether you know it or not.
"20% of people paid waaaay too much for their cellphone"
This seems, to me, to be saying that people are overpaying given Apple's huge profit margins.
This seems, to me, to be saying that people are overpaying given Apple's huge profit margins.
Wouldn't it make more sense to say that Samsung et al are paying waaaay too much for cost of goods sold?
If the prices are the same to the consumer, and Apple is able to extract greater profit, how is that a poor reflection on the consumer?
If the prices are the same to the consumer, and Apple is able to extract greater profit, how is that a poor reflection on the consumer?
Because they are buying cheaply made, cookie-cutter phones packaged into shiny aluminum bodies made en masse at Foxconn, often with severe disregard for safety.
There are endless issues with iPhones(screens, wifi, battery, cameras, etc), but in USA they at least will replace it withouth hassle. (And often "refurbish" it and sell it in "less important markes"). Possibly that's why outside few countries iPhones are nearly non-existent. They simply do not stand up to competition, given mid-range features, extreme price and obstructionism to replacing defective units).
Apple and Beats by Dr. Dre fit very nicely.
So why are so many companies jumping in if there were not much profits? I see variety of low end Android sold in India, surely they would exit if they don't make a profit.But many are now upping the specs and releasing good quality mobiles. I checkout out a 400ppi mobile with Android 5 which seemed better then my N4. It seems at least in India the mid to high level mobiles sales might fall back.
You really have to wonder why any one would even want to consider getting into this business at this point. It's a blood bath and there is only one winner it seems.
It's weird how Samsung, LG, and HTC are struggling to make a profit on their phones (some have very good phones like the LG G4 which even Chris Pirillo said it was a good phone), but Apple just keeps growing their profits. I wonder if it has to do with how they've limited number of phone models or is it purely brand recognition that's driving this growth.
Is it possible--not saying it's so, just asking a hypothetical question--that Apple just makes more desirable phones?
[Edit] Wow, everybody, I meant more desirable as in; people are willing to pay more. I know FTA that they are only 20% by volume.
[Edit] Wow, everybody, I meant more desirable as in; people are willing to pay more. I know FTA that they are only 20% by volume.
Apple's actual market share is less than 20% of all smartphones worldwide, though their share of profits is at 92%. This is not about their phone selling more than other phones (they aren't necessarily), but rather how Apple manages profit margins. Their phones are much more expensive than the competition, command premium prices and thus yield premium profits.
Yet, in at least North America, equivalent "high end" Android smartphones cost the same on contract and even off contract than iPhones. I can get an older iPhone 5c for free (probably a 5S is I go with a smaller carrier). Where are people paying a "premium" for the iPhone?
Is is that not enough people choose the flagship Android devices to move the needle? I'm genuinely curious/asking because it seems/appears there's some parity (price) between the current flagship Android devices and Apple's newest.
Is is that not enough people choose the flagship Android devices to move the needle? I'm genuinely curious/asking because it seems/appears there's some parity (price) between the current flagship Android devices and Apple's newest.
Also, profit formulas aren't that simple. You have consider Apple's costs vs their revenue for each phone, and also their contract terms with providers vs other phones. I don't know the details. But perhaps Apple earns more for their phone contracts even if consumers pay the same. One thing we do know is that Apple leads the world in an extremely well-oiled production pipeline and network of suppliers that no doubt also helps keep their costs down and thus their profits high. I doubt Android manufacturers are operating at that same margin.
Good points. I would imagine that Apple has a better supply chain, and more aggressive/favorable terms with each provider than competing smartphone makers. I'm not sure it accounts for the entire difference. I wonder if there's a middle area or marketplace where people pay disproportionally more on average which helps this figure (92%) climb so high.
> But perhaps Apple earns more for their phone contracts even if consumers pay the same.
Considering the demand for iPhones a few years ago I'd be amazed if this wasn't the case, I suspect the carriers also pay a chunk of the advertising if it's an exclusive deal.
Considering the demand for iPhones a few years ago I'd be amazed if this wasn't the case, I suspect the carriers also pay a chunk of the advertising if it's an exclusive deal.
I think this is it exactly. The number of people who buy high end Android phones is a tiny slice of the total Android market. The vast majority are the same people who bought Nokia candybars in the past--people looking for whatever they get for "free" on contract.
This is also why the Apple app store sells so well compared to the Google Play store. People with crap low end Android phones struggle to run many apps, and their phone didn't come with enough storage for them.
This is also why the Apple app store sells so well compared to the Google Play store. People with crap low end Android phones struggle to run many apps, and their phone didn't come with enough storage for them.
"...their (crap low end Android) phone didn't come with enough storage for them"
My brand new iPhone 6 only has 12 GB of usable storage. I'm currently using more than half with only a small selection of apps, photos and music. IMHO that's pretty crap - and I paid a premium for it (doh!)
My brand new iPhone 6 only has 12 GB of usable storage. I'm currently using more than half with only a small selection of apps, photos and music. IMHO that's pretty crap - and I paid a premium for it (doh!)
Android phones for some reason rarely come with enough storage. It's easy to buy 8GB phones, and Android is less space efficient than iOS. The only saving grace is that they often include uSD slots, although convincing your apps to use that space can be difficult sometimes.
Well I paid $1000 including Apple Care for my iphone, so that's a pretty hefty profit to Apple!
Those really are incredible figures when you think about it. 20% of market share reaping 92% of the profits. Is there any comparable in any other industry? Ever? I'm currently in the android camp but I have to say I'm astounded how Apple consistently pulls off these kinds of numbers.
And would that not mean that their phone is more desirable? Lots of things are desirable that are not affordable and are not, therefore, purchased in vast quantities.
Depends how you quantify "desirable" but since there are many more Android phones in the world than iPhones, some would say that means Android phones are more desirable. But either way, that really has little to do with profits. If I sell just one item in my entire life for a million bucks, something that cost me ten bucks to make, that is pretty impressive profits, even though it was not desirable since only one person bought it.
I think you can only associate desirability with units if you hold other things equal: price, availability, etc.
I wonder if someone has done marketshare numbers with respect to flagship phones. I thought the Nexus 5 was a great phone for $350, but then the Nexus 6 went back to full flagship price and pushed me back to an iPhone for that amount of money.
My thought is, if Apple is pulling all of the profits then they are the flagship to buy if someone is in the market for a flagship phone. Otherwise, if someone is buying on price it is Android all the way.
My thought is, if Apple is pulling all of the profits then they are the flagship to buy if someone is in the market for a flagship phone. Otherwise, if someone is buying on price it is Android all the way.
Hardware is nothing without software.
They make more desirable phones because they make iOS.
People don't so much care about the iPhone; they want iOS and the safety, convenience, and integration with the Apple software ecosystem.
Apple has leveraged this into a hugely profitable position by making the only hardware supported by this OS.
The iPhone is crap when evaluated on battery life or camera quality, for example.
It's software that's eating the world.
They make more desirable phones because they make iOS.
People don't so much care about the iPhone; they want iOS and the safety, convenience, and integration with the Apple software ecosystem.
Apple has leveraged this into a hugely profitable position by making the only hardware supported by this OS.
The iPhone is crap when evaluated on battery life or camera quality, for example.
It's software that's eating the world.
I would kind of agree with you. I use android because I can simply plug it in and drag and drop any file I want. Yes, there's dropbox, etc. Those aren't options for me. Also, I love the way Android allows data to be shared between apps. I find it very intuitive.
If iOS had those things, I think I'd try switching, just to get something new.
If iOS had those things, I think I'd try switching, just to get something new.
AirDrop - you don't even have to plug it in.
Not sure this would cover my requirement.
[deleted]
It seems based on the tech site reviews that I've read, flagship Android phones have only now caught up to or surpassed iPhones with regards to camera quality with the latest iterations of flagship Samsung and LG phones.
In 2015, not proportional to that profit difference, no. iPhones are not dozens of times better than all Android phones. There's something else to it, the construction of some sort of successful moat that allows them to charge more.
More desirable as in; people are willing to pay more.
Yes, that's my point. There has to be more to it than just "they're better", because no matter how Apple fanboy someone may want to be today, there's no conceivable way they are that much better. There must be some kind of moat. Full stack integration or some sort of big savings from owning the OS or something, because it has to be more than just "they're better". Besides, if it were just a raw "they're better" they'd have a much bigger market share, too.
If it were that simple, wouldn't they have more than 20% market share? It seems clear to me that iPhone owners are paying a premium for the branding, which is pure profit from Apple's perspective.
Why is it so hard to accept the notion that people are paying a premium for a premium product?
Premium products usually cost more to make justifying the price. The point being made is that the cost to manufacture the iphone isn't any more than say an android device, so your just paying apples exclusivity tax.
Because, having used both, there's nothing "premium" about the iPhone experience except the perception in iPhone users' heads.
But that's just it. "Premium" is a subject term. I’ve used both (you mean Android, right? there's other platforms) and found that Android is garbage. So I'm paying good money for a good product. You're free to disagree about the quality but don't tell me I'm brainwashed without offering to pay for a psychiatric evaluation.
I suspect that this is a motte and bailey trick. Users of the iPhone claim that they use a better product, where by better they mean "objectively better", but when challenged on what it is exactly that makes it so much better, retreat to, "Well it's just my preference", and then as soon as the critics say, "That's fine if it's just your preference, but recognize that you're paying a massive tax for what you've admitted is just a subjective preference," they move back to, "Apple makes better products so they make more money." As if it's some kind of objective truth, even though they've admitted that it's not.
"People pay premium for a premium product" doesn't signify to me a subjective difference. Especially when it's used to argue that the premium paid has nothing to do with Apple's branding, an objective and extremely common reason that people pay premium prices for products that are objectively identical to their competitors.
"People pay premium for a premium product" doesn't signify to me a subjective difference. Especially when it's used to argue that the premium paid has nothing to do with Apple's branding, an objective and extremely common reason that people pay premium prices for products that are objectively identical to their competitors.
Most people would consider a Ferrari to be more desirable than a Toyota, yet Toyota sells many magnitudes more cars than Ferraris because Ferraris are out of reach for most consumers. If money were no object, many more people would own Ferraris in lieu of Toyotas (but not all, given that Toyotas may be more practical, more reliable, easier to maintain, etc.).
Why is it clear to you that the premium is purely a function of branding, and that physical attributes of the product are not also factored in somehow?
This is not a rhetorical question: I could imagine a study that would explore the influence of brand vs. size, density, materials, etc.
This is not a rhetorical question: I could imagine a study that would explore the influence of brand vs. size, density, materials, etc.
Which would indicate desirability, no?
For that 20% of the market, sure. For the 80% that buy non-Apple phones, they are clearly more "desirable" to them.
ObBadCarAnalogy: Well, a Ferrari Enzo is more desirable to me than a Skoda Octavia, but I own a bicycle, so there's that.
How many people that bought a Corolla would have taken a Camry for the same price? (Again, not saying that Apple is better.)
This is very close to correct. The better analogy is something like Tesla vs the generic commuter subcompact field. The generic consumer subcompact marketplace is extremely competitive and therefore there are approximately zero profits to be made, whereas the Tesla has one model at one price and basically no competitors.
Want an iPhone, you'll buy THE iPhone for whatever Apple wants to charge.
Want an Android phone, you'll select from a zillion basically identical competitors all more or less profit free (because competitor A can't extract an extra 5% profit if that would drive 100% of competitor A's sales to sellers B thru Z)
This shows the fallacy of "the smartphone market", there's the non-competitive iphone market with about 20% sales and the hypercompetitive confuseopoly market the other 80% buy into.
Want an iPhone, you'll buy THE iPhone for whatever Apple wants to charge.
Want an Android phone, you'll select from a zillion basically identical competitors all more or less profit free (because competitor A can't extract an extra 5% profit if that would drive 100% of competitor A's sales to sellers B thru Z)
This shows the fallacy of "the smartphone market", there's the non-competitive iphone market with about 20% sales and the hypercompetitive confuseopoly market the other 80% buy into.
Even with price parity through on-contract upgrades, apparently not that many. We should expect Apple marketshare to be much higher if the iPhone really is so clearly superior and more "desirable" to any rational consumer.
I do not disagree; but keep in mind that I've never spoken of "clearly superior", only desirable.
Also, since when did rationality enter the discussion? A beloved wants diamonds so their partner buys them. But diamonds are not worth anywhere near what's commonly paid for them.
There is a far mix of rational/irrational behavior in most luxury purchases--it's not an Apple exclusive trait.
Also, since when did rationality enter the discussion? A beloved wants diamonds so their partner buys them. But diamonds are not worth anywhere near what's commonly paid for them.
There is a far mix of rational/irrational behavior in most luxury purchases--it's not an Apple exclusive trait.
It's probably a mix, they have only a few phones so they're easy to understand ("I have the bigger iPhone from last year" or "I have the HTC One M9" - the former is easier to remember and understand for non savvy people), and better brand recognition - despite being expensive is HTC considered luxury like Apply is?
This is true, fewer models make buying easier. Plus if you buy the current generation you are getting "top of the line", last generations still on sale is still usable.
Plus with just 2-3 models apple only has to pay for engineering and designing 2-3 models. Plus it saves on the software testing (which despite that still is a bit buggy).
As long as your use-case meshes with apples things are good.
Plus with just 2-3 models apple only has to pay for engineering and designing 2-3 models. Plus it saves on the software testing (which despite that still is a bit buggy).
As long as your use-case meshes with apples things are good.
This is pretty relevant:
"When Jobs returned to Apple in 1997, it was producing a random array of computers and peripherals, including a dozen different versions of the Macintosh. After a few weeks of product review sessions, he’d finally had enough. “Stop!” he shouted. “This is crazy.” He grabbed a Magic Marker, padded in his bare feet to a whiteboard, and drew a two-by-two grid. “Here’s what we need,” he declared. Atop the two columns, he wrote “Consumer” and “Pro.” He labeled the two rows “Desktop” and “Portable.” Their job, he told his team members, was to focus on four great products, one for each quadrant. All other products should be canceled."
https://hbr.org/2012/04/the-real-leadership-lessons-of-steve...
"When Jobs returned to Apple in 1997, it was producing a random array of computers and peripherals, including a dozen different versions of the Macintosh. After a few weeks of product review sessions, he’d finally had enough. “Stop!” he shouted. “This is crazy.” He grabbed a Magic Marker, padded in his bare feet to a whiteboard, and drew a two-by-two grid. “Here’s what we need,” he declared. Atop the two columns, he wrote “Consumer” and “Pro.” He labeled the two rows “Desktop” and “Portable.” Their job, he told his team members, was to focus on four great products, one for each quadrant. All other products should be canceled."
https://hbr.org/2012/04/the-real-leadership-lessons-of-steve...
Apple has for a while excelled at market striation, they tend to enter the market with 2-4 of any one product, it removes the Paradox of choice.
Laptops are horrible at this, do I want the MX50S, MX50X, MX51, MX51S and on and on.
With Apple it's Macbook, Macbook Pro, Macbook Air.
It's a smarter strategy and I wish more manufacturers did it.
Laptops are horrible at this, do I want the MX50S, MX50X, MX51, MX51S and on and on.
With Apple it's Macbook, Macbook Pro, Macbook Air.
It's a smarter strategy and I wish more manufacturers did it.
I'd consider the HTC One series and the new Galaxy S6 to be luxury phones on par with the iPhone or even better in some respects. The build quality and refinement is top notch.
Are they really good phones? All the android devices I've owned have lots of fairly glaring usability problems.
Most recent example: My nexus 7 periodically does something that kills the battery, and the touch/tap responsiveness is quite laggy.
I could go on and on. Apple devices have significantly better usability and many fewer warts than Android devices.
IMHO the only people who think the two platforms are on par are people who look only at hardware specs.
Most recent example: My nexus 7 periodically does something that kills the battery, and the touch/tap responsiveness is quite laggy.
I could go on and on. Apple devices have significantly better usability and many fewer warts than Android devices.
IMHO the only people who think the two platforms are on par are people who look only at hardware specs.
That's what happens when you compete on price. Nobody is going to pay an extra $50 for an Android phone over another comparable Android phone.
Samsung alone outspends Apple on marketing. Samsung needs to continuous battle against the other Android phones.
If you want an Apple phone either you pay what they are asking or you don't get it.
Samsung alone outspends Apple on marketing. Samsung needs to continuous battle against the other Android phones.
If you want an Apple phone either you pay what they are asking or you don't get it.
Apart from Apple, the other company that was doing well at capturing profit from Android phones was Samsung -- e.g. this link from 2012 when the S2/S3 were selling well [1].
I believe the rise of Apple's profit share correlates with the rise of cheaper Chinese phone manufacturers like Xiaomi who operate on much thinner margins than Samsung.
[1] http://www.digitaltrends.com/mobile/how-apple-and-samsung-co...
Post-Xiaomi, a potential Samsung buyer could think about a cheaper replacement -- functionally Xiaomi is still Android, after all. Sure, an Apple owner can "go Android" too, but imho p(Samsung to Cheaper Android) > p(Apple to Android).
I believe the rise of Apple's profit share correlates with the rise of cheaper Chinese phone manufacturers like Xiaomi who operate on much thinner margins than Samsung.
[1] http://www.digitaltrends.com/mobile/how-apple-and-samsung-co...
Post-Xiaomi, a potential Samsung buyer could think about a cheaper replacement -- functionally Xiaomi is still Android, after all. Sure, an Apple owner can "go Android" too, but imho p(Samsung to Cheaper Android) > p(Apple to Android).
Apple captured the top 10% of world's population in terms of discretionary income, and so they are making massive profits. Their key demographic is well-to-do in developed countries and rich in developing/middle-income countries. There is a NYU Professor who mapped iOS and Android devices, and the map of LA showed really rich parts dominated by IPhone.
I am not sure if you are talking about the same but this may be the source[1]. Also the blog discusses about the relation between device usage to the degree of affluent neighbourhood[2].
[1]. https://www.mapbox.com/labs/twitter-gnip/brands/#5/36.280/-2...
[2]. https://www.mapbox.com/blog/visualizing-3-billion-tweets/
[1]. https://www.mapbox.com/labs/twitter-gnip/brands/#5/36.280/-2...
[2]. https://www.mapbox.com/blog/visualizing-3-billion-tweets/
Perhaps it's related to the distribution channels. Apple sells through their stores and website, where they must take in a significantly better portion of the sale than through sales by carriers.
Google sells through a website, but I'm not aware of other manufacturers selling direct to consumer like this.
Google sells through a website, but I'm not aware of other manufacturers selling direct to consumer like this.
All the money is in the flagship phones. If Apple has a good year for flagships (like finally releasing larger phones), and the others have a bad year (like the underwhelming Galaxy S5), Apple is going to make most of the money.
And that kids is what you get when you deal with carrier update plans for your devices, allow bundling of crapware with the phones and do your best to kill your operating system with fragmentation ...
A political decision that was bad is keeping on giving.
Apple victory was given to them
A political decision that was bad is keeping on giving.
Apple victory was given to them
This is about Apple's massive profit margins, not some vendors inferior ecosystem which still does a decent job of making billions.
North America is accustomed to overpaying for their mobile phones and services so much that they can get the most expensive device for next to nothing because they sign a 2 year contract with a telecommunications provider who's plans are nothing short of gouging.
Now the real question is, how come no one is competing with iPhone dollar wise? I would love to see someone come out with a top-end $900 Android phone that is as stunning as an iPhone. It seems Android hardware vendors are more tuned in to bloating the OS with gimmicky features rather than creating tier 1 hardware.
North America is accustomed to overpaying for their mobile phones and services so much that they can get the most expensive device for next to nothing because they sign a 2 year contract with a telecommunications provider who's plans are nothing short of gouging.
Now the real question is, how come no one is competing with iPhone dollar wise? I would love to see someone come out with a top-end $900 Android phone that is as stunning as an iPhone. It seems Android hardware vendors are more tuned in to bloating the OS with gimmicky features rather than creating tier 1 hardware.
Except that Android phones sell great, they just don't make much money for their makers.
The point stands. People who have a choice (have enough money) choose iPhone rather than allow crapware and not having access to timely updates. I am very pissed with Samsung for not upgrading my Android from 4.4.2 yet. I used to be an iPhone user and while using iPhone I didn't have problems upgrading my phone to the latest version.
But there are "pure Android" options (e.g. Nexus and Moto X) that get timely updates that don't have any of those problems.
However, even those great phones still have the problem of having to compete against one another, and there is very little differentiation since Google owns the experience. I get some key innovations on Moto X that I don't get on iPhone (the ability to redden the screen at night is key for me, plus nice things like automatically detecting when you're driving so incoming texts and voice calls are read to you), but Moto X still has to compete with other high end Android devices so they are limited in the premium they can charge.
However, even those great phones still have the problem of having to compete against one another, and there is very little differentiation since Google owns the experience. I get some key innovations on Moto X that I don't get on iPhone (the ability to redden the screen at night is key for me, plus nice things like automatically detecting when you're driving so incoming texts and voice calls are read to you), but Moto X still has to compete with other high end Android devices so they are limited in the premium they can charge.
> The point stands. People who have a choice (have enough money) choose iPhone rather than allow crapware.
Not all people, I could easily afford an iPhone yet I stick with my Nexus 4 (which is currently Android 5.1.1 and noticeably quicker than 4 was on the same phone), it does everything I want from a smartphone and was a third the price of the equivalent iPhone at the time.
Not all people, I could easily afford an iPhone yet I stick with my Nexus 4 (which is currently Android 5.1.1 and noticeably quicker than 4 was on the same phone), it does everything I want from a smartphone and was a third the price of the equivalent iPhone at the time.
Buy a device with stock Android.
The selection is low, but the Nexus lines have served many well. I'm super excited to see some new phones later this year. (i hope)
The selection is low, but the Nexus lines have served many well. I'm super excited to see some new phones later this year. (i hope)
Of course. Because at the high end phone where the high margins are, the case for non ios device is weaker.
I prefer Androids for 2 reasons:
1. Unlocked bootloader 2. Root 3. Screen size
But the fragmentation of the ecosystem since 2.2 still hurts (and seems like 4.2 is the new gingerbread)
I prefer Androids for 2 reasons:
1. Unlocked bootloader 2. Root 3. Screen size
But the fragmentation of the ecosystem since 2.2 still hurts (and seems like 4.2 is the new gingerbread)
You can move units of most things if you slice the price enough.
Isn't this similar to the PC market? The beige boxes became a commodity, and all profits went to Intel and Microsoft. Dell, Compaq, Gateway, HP, etc. all barely made money in the consumer market. How will Samsung, HTC, et. al differentiate their devices?
Not exactly. The profits went to Intel and Microsoft because they were figuratively selling ALL the computers. Apple is gobbling the profits in a different way.
Samsung/HTC/others aren't failing to make money because their products aren't differentiated, it's because they're selling large numbers of low-end, low-margin products. The question is how they can compete with Apple on the high-end. Nobody's managed to do that.
Samsung/HTC/others aren't failing to make money because their products aren't differentiated, it's because they're selling large numbers of low-end, low-margin products. The question is how they can compete with Apple on the high-end. Nobody's managed to do that.
None of the other companies have a repeatably successful flagship phone that comes anywhere close to the iPhone in terms of brand recognition and prestige.
Some might argue the Samsung Galaxy, but the image associated with the galaxy is not one of luxury, but of practicality and a sacrifice in usability in exchange for for customization; the general Android vs. IOS argument.
Luxury breeds profit by turning users into silent evangelists/role models. Combine this with Apple's extremely strong ability to [1] set prices (Android is not a direct competitor, it's a whole different marketplace with its own internal competition) and [2] force costs onto partners (who wouldn't want to work with Apple and see that volume of business with those nice margins?) and it's no surprise that the iPhone is destroying competition on the profitability metric.
Some might argue the Samsung Galaxy, but the image associated with the galaxy is not one of luxury, but of practicality and a sacrifice in usability in exchange for for customization; the general Android vs. IOS argument.
Luxury breeds profit by turning users into silent evangelists/role models. Combine this with Apple's extremely strong ability to [1] set prices (Android is not a direct competitor, it's a whole different marketplace with its own internal competition) and [2] force costs onto partners (who wouldn't want to work with Apple and see that volume of business with those nice margins?) and it's no surprise that the iPhone is destroying competition on the profitability metric.
I don't understand why people say that IOS is more usable than android. Android phones tend to have a much better "phone" usability in my mind. For instance, I can go to my recent calls on an android device and just swipe to the right to send a text to someone. In IOS, I have to click the i icon to go to that contact, click send a message, then click the phone number. Or the built on "swype" keyboard on my old note 2 is much better than the default apple keyboard on my current i6+. Really, the only thing that I would call noticeably better on my iphone over my note 2 is the camera functionality.
I got a nexus 6 last night-simple things like pinch to zoom and animations tend to stutter, tapping small touch targets in chrome is very hard (iOS has a nice assist there), Firefox freaks out and fails to render HN with nontrivial frequency, etc. Android does seem to support more customization but iOS but iOS's existing features actually work.
I have none of these issues on my Nexus 6. Firefox on Android is rather buggy, but that's not the fault of the OS. A real Firefox on iOS doesn't exist and likely never will other than the Firefox-ish browser they're working on that will be stuck using Mobile Safari for rendering.
I had a Nexus 6 for about 6 months, it's pretty terrible, as you describe. I just bought an LG G4, it's great. No lag, it just works.
Not arguing that one is more usable than the other (although I have an iPhone so I suppose that is a tacit argument), just stating a general opinion.
Maybe before, but the S6 screams luxury IMO, and is very clearly attacking the iPhone head-on.
I would still argue that Android does not compete directly with IOS. People who are purchasing the iPhone are buying into more than just a phone: they are buying into the Apple lifestyle and joining the iPhone/Macbook/Apple Store experience.
People who are purchasing the S6 aren't buying into any lifestyle as far as I can tell. Maybe they'll share a common bond with some other S6 users, but I wouldn't call the Samsung ecosystem (what is the Samsung experience even?) luxurious. It takes more than just one product to build luxury and desirability.
People who are purchasing the S6 aren't buying into any lifestyle as far as I can tell. Maybe they'll share a common bond with some other S6 users, but I wouldn't call the Samsung ecosystem (what is the Samsung experience even?) luxurious. It takes more than just one product to build luxury and desirability.
>People who are purchasing the S6 aren't buying into any lifestyle as far as I can tell.
Nothing wrong with it, of course, but the perception that you "aren't buying into a lifestyle" is EXACTLY the lifestyle you're buying into.
Maybe not S6 users in particular, but buyers of high-end Android phones in general absolutely are: that of being too smart for Apple and better than all those iSheeple. That's just as much a part of the Android experience as cult membership is of the iOS experience.
Nothing wrong with it, of course, but the perception that you "aren't buying into a lifestyle" is EXACTLY the lifestyle you're buying into.
Maybe not S6 users in particular, but buyers of high-end Android phones in general absolutely are: that of being too smart for Apple and better than all those iSheeple. That's just as much a part of the Android experience as cult membership is of the iOS experience.
In this case desirability is tied to fashion, people buy an iPhone because they see other people with an iPhone.
None of the Android phones has ever really gotten the same cachet that the iPhone does (Samsung nearly got it right with the S3) but it's down to perception and marketing.
In terms of device capability Android phones are considerably higher spec and just as usable (5.x is a big improvement) but it doesn't really matter, fashion and marketing wins out.
You see this in other areas, Sennheiser headphones are demonstrably higher quality (in sound and construction) than "Beats by dre" but if the difference is small enough then fashion wins out again.
None of the Android phones has ever really gotten the same cachet that the iPhone does (Samsung nearly got it right with the S3) but it's down to perception and marketing.
In terms of device capability Android phones are considerably higher spec and just as usable (5.x is a big improvement) but it doesn't really matter, fashion and marketing wins out.
You see this in other areas, Sennheiser headphones are demonstrably higher quality (in sound and construction) than "Beats by dre" but if the difference is small enough then fashion wins out again.
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Such a tired, tired argument.
More cores != better usable specs.
If you prefer security and privacy, there's a strong case for iOS.
If you prefer day-of-release software updates, there's a strong case for iOS.
If you prefer robust photography solutions, there's a strong case for Apple's camera hardware and software.
If you want to create audio, there's a strong case for the low latency of Apple's stack.
More cores != better usable specs.
If you prefer security and privacy, there's a strong case for iOS.
If you prefer day-of-release software updates, there's a strong case for iOS.
If you prefer robust photography solutions, there's a strong case for Apple's camera hardware and software.
If you want to create audio, there's a strong case for the low latency of Apple's stack.
Who said anything about cores?
Android phones equivalent to the price of an iPhone have higher resolution screens, more storage and RAM.
Android phones half the price of the iPhone have equivalent screens, storage and RAM.
I have Nexus devices so I get day-of-release software updates (even my Nexus 7 2012 is running 5.1.1)
I couldn't care less about photography solutions or audio so that really doesn't apply.
Privacy, agreed, Android is a data hoover out the box.
Android phones equivalent to the price of an iPhone have higher resolution screens, more storage and RAM.
Android phones half the price of the iPhone have equivalent screens, storage and RAM.
I have Nexus devices so I get day-of-release software updates (even my Nexus 7 2012 is running 5.1.1)
I couldn't care less about photography solutions or audio so that really doesn't apply.
Privacy, agreed, Android is a data hoover out the box.
... and yet, with all that horsepower, they still stutter and lag like crazy. An iPhone might be a less powerful computer, but you wouldn't know it from the UX (if you are upgrading every 2 years and running the iOS release that was designed for your phone - running too many versions ahead can produce a similar experience).
I guess it's different for different people. My wife's Nexus 5 that she purchased a couple of months after I got my iPhone 4S has held up much, much better than the iPhone did. I was so frustrated with how laggy and crash-prone my iPhone was (especially next to my wife's still-awesome Nexus) that I ended up buying a G4.
It may be worth noting that the Nexus 5 came out more than two years after the iPhone 4S (Oct 31, 2013 vs Oct 14, 2011), and as of now it hasn't even been 2 years since the Nexus 5 was released.
That said, it has been less than 4 years since the iPhone 4S was released; they shouldn't be failing yet, and that reflects poorly on the iPhone (as well as iOS) in your case. However, I'm also not yet convinced that the Nexus 5 will be operating well in late 2017 - that's yet to be determined.
That said, it has been less than 4 years since the iPhone 4S was released; they shouldn't be failing yet, and that reflects poorly on the iPhone (as well as iOS) in your case. However, I'm also not yet convinced that the Nexus 5 will be operating well in late 2017 - that's yet to be determined.
Interesting, I didn't realize that. We bought both of them new from the carrier a few months apart. We each just asked for an inexpensive model of the respective brands, so I guess that is largely down to the Nexus 5 being crazy cheap and Apple keeping the 4S in circulation for a long time.
My Nexus 4 doesn't stutter or lag and it's two generations back, other manufacturers do seem to have more issues depending on what they did to the stock ROM.
I see people switch or contemplate switching pretty regularly. There are a lot of people that don't really buy into the whole Apple experience or even run mixed environments (iPad + Android smartphone being the most common one that I see).
But roymurdock's point about Android not really being a direct competitor to iPhone is pretty much true. It is EXTREMELY rare, outside of the tech/developer set, for someone who has an iPhone to consider switching to Android, especially once they have a decent app investment.
I see a lot fewer iPhones among the non-tech/developer set than I used to. A lot of them are former iPhone users who have switched for one reason or another. I'm not saying they are a majority (they are not), but it is far from rare.
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Whenever I see people use ios devices near me it's pretty funny. Androids voice command abilities makes Siri look like a Speak & Spell from the 80s.
edit: agreed with sibling comment that camera appears to be the only technically superior offering.
edit: agreed with sibling comment that camera appears to be the only technically superior offering.
This is called a "Winner takes it all market". What is interesting is that smartphone became such a market considering the profits, because when considering the revenue it is much more fragmented.
This quote stands out the most, "One key to Apple’s profit dominance: higher prices. Apple’s iPhone last year sold for a global average of $624, compared with $185 for smartphones running Android"
Literally Apple can command a 3x price premium in the same product category. I'd like to see Android flagships broken out from this number, however.
The issue of Apple profit dominance is pretty complex and I'm sure there are really smart people looking to understand and attack it.
Literally Apple can command a 3x price premium in the same product category. I'd like to see Android flagships broken out from this number, however.
The issue of Apple profit dominance is pretty complex and I'm sure there are really smart people looking to understand and attack it.
As a consumer, I'm glad other companies aren't extracting as much profit this way. I'm quite happy with my Moto G which I got for a small fraction of what I would have paid for an iPhone, and it's just as good for my use.
That average price includes phones of low specs and high specs, while Apple only does high(ish) spec. The Samsung Galaxy is similarly priced to the iPhone.
There is plenty of price premium built in there though, that's for sure.
There is plenty of price premium built in there though, that's for sure.
Apple only does premium phones whereas Samsung et al do premium as well as mid-market as well as down-market devices.
The iPhone is basically always more expensive than the equivalent Samsung Galaxy device. The Galaxy S6 is currently $549 for a 32GB version with a high-res 5.1" QHD screen (better than 1080p). The semi-equivalent iPhone 6 is $649 for a 16GB version with a mid-resolution 4.7" screen (approximately 720p) is a full $100 more expensive than the S6. Upgrading the iPhone to the next memory size up (64GB) adds $100. Upgrading to a high def screen (6 Plus with a 5.5" 1080p screen) is another $100.
One big reason Apple makes so much more profit than everyone else is that they sell lesser specced phones for a higher price than the competition's higher specced phones. Most people think of the iPhone 6 as being equivalent to the Galaxy S6 despite having a smaller, lower resolution screen, 1/2 the storage space for music and pictures, slower processor, etc.
The iPhone is basically always more expensive than the equivalent Samsung Galaxy device. The Galaxy S6 is currently $549 for a 32GB version with a high-res 5.1" QHD screen (better than 1080p). The semi-equivalent iPhone 6 is $649 for a 16GB version with a mid-resolution 4.7" screen (approximately 720p) is a full $100 more expensive than the S6. Upgrading the iPhone to the next memory size up (64GB) adds $100. Upgrading to a high def screen (6 Plus with a 5.5" 1080p screen) is another $100.
One big reason Apple makes so much more profit than everyone else is that they sell lesser specced phones for a higher price than the competition's higher specced phones. Most people think of the iPhone 6 as being equivalent to the Galaxy S6 despite having a smaller, lower resolution screen, 1/2 the storage space for music and pictures, slower processor, etc.
It helps that most consumers can "sweep" the price of their phone under their 2 year service contract. Especially considering that cost of services don't fluctuate when not in a contract, or when you get a cheaper phone.
Damn, I wish the FCC or CRTC would put the ban hammer down and force mobile service contracts to be adjusted based on the retail price of the phone. I just don't understand how they stand to gain so much when a customer chooses to get a cheaper device.
Damn, I wish the FCC or CRTC would put the ban hammer down and force mobile service contracts to be adjusted based on the retail price of the phone. I just don't understand how they stand to gain so much when a customer chooses to get a cheaper device.
I see Nokia got around 2/3 the profits in 2007 when the iPhone started. I guess the profits tend to flow to those who have the best designed phones. I wonder if it'll still be Apple in another 8 years.
(http://9to5mac.com/2015/07/13/apple-smartphone-profit-share/)
(http://9to5mac.com/2015/07/13/apple-smartphone-profit-share/)
The comparison is extraordinarily apt.
Apple invests only a small proportion of its profit into R&D. http://appleinsider.com/articles/15/01/28/apples-rd-spending...
Samsung invests more absolutely and more proportionally. http://www.strategyand.pwc.com/global/home/what-we-think/glo...
Of course, much of an iPhone is also made by Samsung. Not sure why creaming off profits is considered a good thing or sustainable . . .
Apple invests only a small proportion of its profit into R&D. http://appleinsider.com/articles/15/01/28/apples-rd-spending...
Samsung invests more absolutely and more proportionally. http://www.strategyand.pwc.com/global/home/what-we-think/glo...
Of course, much of an iPhone is also made by Samsung. Not sure why creaming off profits is considered a good thing or sustainable . . .
But 2007 was really before the whole app ecosystem took off. For anyone who has invested a significant amount in apps, there are much higher switching costs now than there were in 2007. Plus, besides just the actual monetary costs, people USE their smartphones MUCH MUCH more than in 2007, so there is a much greater cost in just having to learn a different OS.
The costs for switching isn't that high. Most people don't spend a lot of money on apps. More than half of the money is spent on games anyway. These are played for a while and then new games are purchased.
The handful of productivity apps won't exceed 20$ for the vast majority of users.
I buy lots of apps and games. Every time I switched platforms (webOS -> Android -> iPhone -> WP), I spent around 15$ to cover my initial needs. Compared to what I pay for a phone, it's negligible.
The handful of productivity apps won't exceed 20$ for the vast majority of users.
I buy lots of apps and games. Every time I switched platforms (webOS -> Android -> iPhone -> WP), I spent around 15$ to cover my initial needs. Compared to what I pay for a phone, it's negligible.
I probably spent more on Palm OS apps than I ever have on my newer smartphones. I remembering buying CD's for $10-$20 to get stuff like word processors and dictionaries.
I'm going to suggest why Apple are successful at phones:
1) Timing/Being First (remeber before apple when everything had a hardware keyboard?)
2) Branding and Advertising
3) Product Hardware (features are all just right - camera, battery, performance, screen etc.)
4) iOS + App Store (no-one wants to change their apps)
5) New features first (consistently first with new features - iphone, retina, gorilla glass, siri, touch id)
6) Android + whatever seems inferior (and largely is)
7) They charge lots more money
8) They have fewer products and so can drive down the cost of manufacturing.
9) They are run by smarter people not marketing departments.
10) They do all of the above TOGETHER and all of the above support each other. If they start missing one the others start to be less desirable/possible too.
1) Timing/Being First (remeber before apple when everything had a hardware keyboard?)
2) Branding and Advertising
3) Product Hardware (features are all just right - camera, battery, performance, screen etc.)
4) iOS + App Store (no-one wants to change their apps)
5) New features first (consistently first with new features - iphone, retina, gorilla glass, siri, touch id)
6) Android + whatever seems inferior (and largely is)
7) They charge lots more money
8) They have fewer products and so can drive down the cost of manufacturing.
9) They are run by smarter people not marketing departments.
10) They do all of the above TOGETHER and all of the above support each other. If they start missing one the others start to be less desirable/possible too.
1) No.
2) Yes.
3) Battery life is not "just right" Ask ... anyone.
... this is boring...
9) Wait, what? Did you really just say that?
... this is boring...
9) Wait, what? Did you really just say that?
1) Who else had 60fps smooth UI on a phone/tablet before Apple?
9) Marketing drives gimmicky features and empty specs - Samsung's hover touch and gaze detect that is off by default because using them is a pain, 4 slow cores instead of 2 fast ones, OS defaults that favor energy burning features (location services, true multi-tasking), screens with higher res that are indistinguishable to retina screens but with worse color profile.
Some companies have fixed some of those pain points with their recent models, but it's too little too late for the existing consumer base who buys flagship products.
Some companies have fixed some of those pain points with their recent models, but it's too little too late for the existing consumer base who buys flagship products.
1) What are you on about? Who said anything about 60fps UI? OP mentioned physical keyboards. That was what my comment was directed towards. There were touchscreen only phones before iPhone that didn't have physical keyboards.
60 fps... That's like jumping in and saying, who had true HD phones first? We could spend all day telling each other who had what before who.
60 fps... That's like jumping in and saying, who had true HD phones first? We could spend all day telling each other who had what before who.
Battery life is just right to mean you'll upgrade.
If Samsung had Tim Cooke in charge they would produce much better phones. Not even slightly contovertial IMO.
You left out point 10 which was the whole point of the comment. Glad you liked it ;-)
If Samsung had Tim Cooke in charge they would produce much better phones. Not even slightly contovertial IMO.
You left out point 10 which was the whole point of the comment. Glad you liked it ;-)
> An Apple spokeswoman declined to comment
But the huge, smug grin on her face was probably telling...
I tend to have Apple devices nowadays but I have to say this is a bit concerning. One would hope that there's enough money to go around to encourage innovation and competition. If it stays this dominant for one vendor, it surely will cause things to stagnate.
But the huge, smug grin on her face was probably telling...
I tend to have Apple devices nowadays but I have to say this is a bit concerning. One would hope that there's enough money to go around to encourage innovation and competition. If it stays this dominant for one vendor, it surely will cause things to stagnate.
> If it stays this dominant for one vendor, it surely will cause things to stagnate.
It might, although I could also see the opposite: if everyone is doing okay, selling enough to get by and grow with the market, there might be less push to get out there and try new things. Instead, companies would compete on price, on advertising, on superficial design. But if there are lots of companies struggling to find a foothold, then they'll be lots of motivation for trying new things, in search of anything that'll work, and give them an advantage. There's no margin for them to be complacent.
It might, although I could also see the opposite: if everyone is doing okay, selling enough to get by and grow with the market, there might be less push to get out there and try new things. Instead, companies would compete on price, on advertising, on superficial design. But if there are lots of companies struggling to find a foothold, then they'll be lots of motivation for trying new things, in search of anything that'll work, and give them an advantage. There's no margin for them to be complacent.
The headline makes it sound like Apple is doing better compared to Samsung than it really is -- as the article details, Samsung makes 15% of the profits. Apple and Samsung's share of the profits combined exceeds 100% because some manufacturers are losing money.
Yeah, it's an odd stat. For instance, if someone new enters the phone market, and spends a ton of money and loses a LOT of money, the total profits for the industry go down, and if Apple makes the same dollar profit as the year before, their profit share number goes up. If the next year, that new competitor goes out of business, their loss is not included in the total profits of the industry, and Apple's share of the profits goes down.
So you could make a pretty convincing argument that this profit percentage number is kinda meaningless. Why not just look at gross profit? Dollars compare to dollars pretty well.
So you could make a pretty convincing argument that this profit percentage number is kinda meaningless. Why not just look at gross profit? Dollars compare to dollars pretty well.
> For instance, if someone new enters the phone market, and spends a ton of money and loses a LOT of money, the total profits for the industry go down, and if Apple makes the same dollar profit as the year before, their profit share number goes up.
I think it said that the 92% figure was based on the top 8 manufacturers, which are mostly stable in terms of who they are from year to year.
I think it said that the 92% figure was based on the top 8 manufacturers, which are mostly stable in terms of who they are from year to year.
The article also notes that Microsoft took a huge loss on Windows Phone writing down the acquisition of Nokia. That's not a loss they're going to repeat -- Windows Phone may well continue to lose money, but not that level of money.
Funny how this news makes me think i may have a better deal buying an android phone next time, since they're making less margin over me.
This also means that they care about you less. It's a numbers game for these high-volume, low profit companies.
I do have a theory: I see some people install hundreds of crappy apps on the Android devices; perhaps that hurts performance? I use my Androids as is, except for a very small number of additional apps.