Apple captures 79 percent of global smartphone profits with 14.5 percent market share

[Totoro]

By most definitions: if it has a touchscreen and a connection to an app store, you are holding a smartphone.

Multimedia phone I guess sounded pretty silly, but that's more or less it.

 

[ERD50]

What used to be true a few years back, not sure about now:

• Apple has fewer models, makes stuff cheaper
• They locked up the cheap sources of certain components years ahead, so others have a structural disadvantage
• No discount programs
• Higher retail prices, $70 - $100
• Lots of insane margins on accessories
• Own app store (Android is google play) - is that counted?
• Apple product mix is more expensive. Samsung has really cheap low-end models.

... .

Plus, how much of what Apple sells goes directly through their B&M stores or their online stores? Eliminating a middle-man could be a large % of profits. I dunno, but I'm not familiar with too many people going direct to the Samsung store to buy a smart phone, and I haven't noticed Samsung B&M stores like I have Apple stores.

-ERD50

 

[ERD50]

I still have one more question. What is a smartphone? My phone cost $15. That sounded pretty smart to me, but I may have missed something. It "talks" and texts (sort of - if you are very patient and your thumbs still work - big assumption at my age.) That's all I need. Naturally, YMMV.

I finally broke down and got a smart phone. It's a mixed bag for me.

The flip phone fits in my pocket better. And if I drop it, it's unlikely to break, the small screen is tucked away, protected by the flip. I wouldn't care of it got scratched. And it fits my hand better, I'm less likely to drop it I think.

But, I can't arrange an Uber ride with my flip phone. I just rarely have any need for any data away from a wifi spot (which I could do with my non-cell enabled tablet).

But for people more in need of data on the go, it's a good thing.

-ERD50

 

[W2R]

When my iPhone 5S wore out (or at least, became incapable of easily transmitting phone calls), I wondered what to do. The iPhone 7 costs a fortune. It's ridiculous. Plus, I found that as the years passed, I was using the internet function on my iPhone less and less. For me it was a novelty, and in my case the novelty wore off.

So I switched carriers and got a free LG Spree smartphone for doing that (plus my plan costs less than half).

For me, iPhones are just too expensive for the value I get from them. That is certainly not the case for everyone, and many people get a lot of value from their iPhones. I'm just not one of them. Love my new LG phone.

But anyway, with prices through the roof and some people feeling like they absolutely have to have an iPhone, I'm not surprised that Apple is making money. I am also glad that they are not making quite so much from me as they once did.

 

[NW-Bound]

One of the iPhone 3's my children gave us also quit working as a phone. I have been using it as a kitchen timer. A very nice kitchen timer with 32GB of memory. The WiFi still works, so I occasionally use it to play youtube or MP3 music, piped to a HiFi stereo via Bluetooth.

The other iPhone 3 still works. I reluctantly switched to a newer Android Nexus 5 that's also a hand-me down from my children. I sat on this Android phone for 6 months, as it looks too big. My wife already had to upgrade to a new phone earlier, as it was her iPhone 3 that quit.

The reason for my eventual switch is that I realize I need a better smartphone to take on my upcoming European road trip. I need to navigate, to look up info, and it is easier on a smartphone. As big as it is, it is still a lot handier than a tablet or a netbook.

At home, I hardly use it.

PS. I saw that the newer phones can take pictures that beat my 5-year old pocket Canon by far. They are no match for DSLR's but I am not into photography enough to use a DSLR on a trip. I don't even have one.

 

[explanade]

On some other measures, Apple supposedly gets over 100% of profits, because a lot of other companies are losing money.

iPhone has been great for my APPL holdings and in this case, since they pretty much redefined what a smart phone was (it's predecessors were things like the Treo and Blackberry to a lesser extent), it's fitting that they get the lions share as much as any other company.


For smart phones, the way to look at it is, it's an extension of the personal computer. Before the mid-90s, most people had no use for having a PC in their home and certainly not a connected computer.

The web changed people's every day lives and smart phone takes that further. Certainly the convenience of looking up information from anywhere has made some things better.

But the downside is that a lot of smart phone use is diversionary. I just listened to this interview with an author who contends that technology is addictive, literally, as it changes synaptical pathways and reduces attention span:

'Irresistible' By Design: It's No Accident You Can't Stop Looking At The Screen : All Tech Considered : NPR

People used to say the same thing about TV but now the smart phone lets you be distracted in so many other ways.

But there are also a lot useful things with mobile technology.

 

[NW-Bound]

The younger generation spends a lot of time on their smartphones. But then, I am also spending way too much time on my laptop, where I am typing this. Same as my children, I do not watch much TV anymore. Oh, we still have our TV's, for the rare times that we watch a DVD, and the times they "cast" a movie from their smartphone to a larger screen.

Back on smartphones, one may wonder how they cost so much. A screen, a CPU, a GPS chip, a WiFi chip, Bluetooth, some memory chips. And they go for $600-700, while Fry's Electronics has a 50" TV for $229, and a bit more than $400 for 4K TV of the same size.

Smartphones are expensive because of miniaturization. My son who works in microelectronics tells me of stuff that is really astounding in packaging and making everything so small and so thin. It's also why the thin tablets cost so much. Give the maker another 0.1" or 0.2", and he can make it a lot cheaper.

I also saw at Fry's Electronics a little tablet running Win 10. It's a bit slow, and I wonder if you can do much with 16GB of storage and 1GB of RAM, but what do you want for $59 that comes with Windows? And it comes with a wireless little keyboard. Good grief! The whole thing folds up into a wallet larger than your checkbook, and perhaps 1.5x as thick. Many people here can still remember what they spent on a 20MB hard drive, and running Win 95 on 8MB.

 

[explanade]

They're using the latest in lithography, battery chemistries, etc. so every year, those $700 phones bring the latest refinements and often, good jumps in performance.

There are perfectly fine $200-300 smart phones too, just not with the latest components.

 

[ERD50]

They're using the latest in lithography, battery chemistries, etc. so every year, those $700 phones bring the latest refinements and often, good jumps in performance.

There are perfectly fine $200-300 smart phones too, just not with the latest components.

Agreed. I've been buying 'value' level smartphones, the Moto G3 & now G4 are quite nice and capable in the $200-$250 (no contract) price range. Plus real USB w/o adapters, and expandable memory (u-SD card).

But if you want/need the latest greatest, you go up the price (and profit for the mfg) slope.

-ERD50

 

[Totoro]

Plus, how much of what Apple sells goes directly through their B&M stores or their online stores? Eliminating a middle-man could be a large % of profits. I dunno, but I'm not familiar with too many people going direct to the Samsung store to buy a smart phone, and I haven't noticed Samsung B&M stores like I have Apple stores.

That is indeed a factor, but a relatively small one. Numbers I've seen are that around 20% of IPhones are sold directly, and the bulk goes through carriers (bundled with contracts and such).

Selling through your own store though is not per definition more profitable. It only is if you can get higher revenue (or gross margin) per sq. ft. than non-brand stores (at a similar cost base). Incidentally, for Apple that is actually true: they have one of the best numbers in the industry.

 

[Totoro]

They're using the latest in lithography, battery chemistries, etc. so every year, those $700 phones bring the latest refinements and often, good jumps in performance.

And display quality. Big factor.

 

[NW-Bound]

They're using the latest in lithography, battery chemistries, etc. so every year, those $700 phones bring the latest refinements and often, good jumps in performance.

There are perfectly fine $200-300 smart phones too, just not with the latest components.

They are making the chips smaller and smaller. The problem is in connecting them together. Old PCBs like what people are familiar with no longer work long ago, as they need precision 1000x times better, plus the substrate is way too thick. Then, thermal expansion, flexure, shocks and vibrations cause the connections to fail. The silicon dies may be reliable, but the interconnects fail. When they start using micron as the unit for the precision needed for chip interconnect, not just the transistors inside the chips, it takes the problem to a new level.

 

[Lsbcal]

I refused to pay the Apple margins on phones and computers.

We have Google phones. My Nexus 6P was $400 and does the smartphone job I need. It is the same size as the Iphone 6+. And it fits nicely in the newer Levis jeans which have bigger pockets -- maybe done for the larger phones?

I've noticed the newest Google phones have moved up in price, closer to the Apple Iphone numbers. I guess they want those margins too.

 

[ERD50]

...
I've noticed the newest Google phones have moved up in price, closer to the Apple Iphone numbers. I guess they want those margins too.

It has nothing to do with what they want, it what they can get! - ERD50

 

[kcowan]

We are an Apple house except for my old HP laptop. I started with a Samsung Android but got a hand-me-down iPhone. Probably getting new iPad and iPhones this year.

We like iTunes and iCloud plus the photo capability. Synchronizes with various mail systems. Handles organization automatically. But basically lazy and Shareholders for a long time. Glad to see that Berkshire finally broke down and consider them a consumer products company (rather than technology). We have owned since $8 and divested of half. Still our largest holding.

No interest in engaging in technology arguments. A good friend had all Google but he seems to work at it.

 

[broadway]

I refused to pay the Apple margins on phones and computers.

+1
I refuse to be a lemming.

 

[audreyh1]

+1
I refuse to be a lemming.

Everyone who buys Apple products is a lemming?

Hmmmm.........

God, I remember when we were considered the ones way out there, the freaks difficult to understand, the minority by far.

Fortunately we loaded up on Apple stock back then when we were considered such strange beings. Most hated and dissed tech stock for so many, many years until if finally because a Wall Street darling (well, sort of, P/E still remains uncannily low).

 

[Al18]

Apple makes good phones that work very well and are popular. Apple commands a higher price for it's phones because of this. If they didn't sell well, Apple would have to lower it's price. Used iPhones that are 2-3 years old are widely available for $200-$300 - check Gazelle.com

 

[Midpack]

+1
I refuse to be a lemming.

Everyone who buys Apple products is a lemming?

Hmmmm.........

God, I remember when we were considered the ones way out there, the freaks difficult to understand, the minority by far.

If Apple buyers are lemmings, Android/Google buyers are dupes. Choose wisely.

 

[kcowan]

If Apple buyers are lemmings, Android/Google buyers are dupes. Choose wisely.

I started out with a Samsung Android. When I upgraded to an iPhone, I found that a lot of stuff was done for me automatically. If that makes me a lemming, bring it on!

Has anyone compared Apple stocks with Samsung stocks? When I looked at Samsung, it was a conglomerate and poorly-performing stock.

 

[MichaelB]

The outrage! Pretty soon we'll have Siri, Alexa, and Home trash-talking each other.

 

[broadway]

If Apple buyers are lemmings, Android/Google buyers are dupes. Choose wisely.

I am not going to spend 2x to 3x on something. NOT going to happen.

 

[broadway]

Has anyone compared Apple stocks with Samsung stocks? When I looked at Samsung, it was a conglomerate and poorly-performing stock.

I don't buy individual stocks, so I don't care.

 

[Totoro]

Has anyone compared Apple stocks with Samsung stocks? When I looked at Samsung, it was a conglomerate and poorly-performing stock.

On what timescale? Samsung electronics outperformed AAPL in the last 1, two or five years. Only when you look at 10 years are they on par.

Might be looking at the wrong chart? Or are you thinking about the layer above, Samsung Group?

In any case, in my book Samsung is a different beast though, it's almost unreasonable to compare them with Apple. Even the electronics divisions by itself goes as diverse as TVs, phones, harddisks, cameras, satellites, DRam (including for Apple), and laser printers. 370.000 people employed. That's more than the population of Iceland.

Apple has a third of that. Still huge, but nowhere near as complex in product offering.

 

[tbbarton]

Buy stock in Apple and then always buy Apple products. This strategy paid for my children's college education. Quality is much higher than windows computers and competitive phones/tablets so the price pays for itself in the long term