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Apple ships 6% of mobile devices but milks 77% of market profits

by Mark Tyson on 8 August 2012, 08:45

Tags: iPhone, iPad, Samsung (005935.KS)

Quick Link: HEXUS.net/qabknz

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Everyone knows the iPhone and iPad are top of the range mobile gadgets and that Apple don’t design things for a price but for a function. However new research brings into question how inflated these prices are. New figures from analysts at Raymond James Equity Research shows that Apple are indeed raking it in and making a lot more money on each product sold than any other competitor.

The new Raymond James Equity Research reveals the following startling figures; In the second quarter of 2012 Apple shipped only 6 per cent of smartphones and tablets, despite this the company took in 43 per cent of the total industry revenue. If you think this is a great achievement the following statistic will blow your socks off; from its 6 per cent of sales Apple made 77 per cent of the industry’s operating profits!

Samsung success

In the second quarter of 2012 Samsung has undoubtedly had success in its sales figures. The Korean company shipped about 52 million smartphones, nearly twice the amount that Apple shifted. However Samsung make a lot less on each phone sold, which could mean you are getting better raw value from a Samsung than an Apple iDevice. However raw hardware value for money isn’t everything, it could be argued that Apple spends a lot more resources on innovations in product design, software design (iOS & apps) and some intangible qualities to enhance its products in the eyes of the consumer. Design and innovation isn’t cheap and innovation is risky.

Apple pull in the profits

Travis McCourt at Raymond James says “Ultimately, profits are the feedstock of innovation; and, innovation drives profits. Until Samsung starts generating more profits than Apple, we would not be overly concerned with who has the unit share lead. Remember, HP and Dell still sell a lot more PCs than Apple sells Macs, but does it matter?” Profits are indeed of utmost importance but iPhone sales for Q2 2012 (Apple’s Q3) were 26 million compared to 35 million in Q1 (Apple’s Q2). If the iPhone 5 isn’t as rip roaring a success as previous generations then something has to give. Perhaps the company may have to resort to offering better value to customers if the iPhone 5 isn’t innovative enough. From early indications the next gen iPhone is just “the same but more of it” and iOS 6 is also not a very inspiring advance.

Do you think the iDevice products are really worth the money or are people falling for Apple’s prestige pricing tactics?



HEXUS Forums :: 17 Comments

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it could be argued that Apple spends a lot more resources on innovations in product design, software design (iOS & apps) and some intangible qualities to enhance its products in the eyes of the consumer.
Sorry, so don't agree - I'd take a lot of convincing that the current Apple has been more "innovative" than any other of the major players, like Nokia, Samsung, HTC, etc. And as to "intangible qualities" - yeah, that's a polite name for "hype". And as far as I can tell, Apple's key distinction seems to be spending a market-leading amount on lawyers. :(
Do you think the iDevice products are really worth the money or are people falling for Apple’s prestige pricing tactics?
Hmm, I think they used to be worth the premium - simply because you were getting that peerless ease of use, and the designs were very attractive. However, post iPhone4, WinPhone and Android are nipping at the heels on "ease of use" and as to designs, well I'm going to argue that the current price-comparable models from HTC, Nokia, Samsung, Sony, etc have just as much "presence" as the iPhone4S, and in a lot of cases the iPhone is the ugly duckling.
"New figures from analysts at Raymond James Equity Research shows that Apple are indeed raking it in and making a lot more money on each product sold than any other competitor."

So?
I am not an Apple fanboi, but its their choice to price their items at whatever level they want, and if people buy it then its the free choice of the individual to pay the price or to buy a competitor offering.

These are not essential items such as food, power, water, transportation.
Journalists and analysts time would be better spent on those methinks...
Thanks for pointing out the for/to error. I think Apple does have a better history of innovation than many competitors. Making the OS and ecosystem for the iDevices is also no small feat. I'd like to see some new really innovative stuff though... I think Apple does indulge in prestige pricing; making things expensive and therefore more exclusive/desirable to certain people.
mtyson
Thanks for pointing out the for/to error. I think Apple does have a better history of innovation than many competitors. Making the OS and ecosystem for the iDevices is also no small feat. I'd like to see some new really innovative stuff though... I think Apple does indulge in prestige pricing; making things expensive and therefore more exclusive/desirable to certain people.
Don't get me wrong - I'm not saying that Apple is not "innovative", as to do so would be unfair and incorrect. No, what I am saying is that pace/scope of this innovative streak has faltered - e.g. Siri as the "must have" feature of the 4S!

I'll also cry j'accuse on Apple confusing "inventing" with "popularising". Without question, they popularised the current smartphone and tablet form factors - but whether they were first to do them is a matter of some doubt in my mind. Heck, I even saw a web advert recently from them that claimed that they were "the inventor of the personal digital music player". Err, no!

They also indulge in "prestige pricing" undoubtedly - but the fact that folks still flock to them in droves is surely testament to them still having that illusive "X-factor" that makes their products more desirable. "Good on 'em" says I, since I don't think that being in that position is a bad thing - actually I'm sure it's an aspect that Samsung et al would just love to be able to emulate!

Wasn't there that Stella Artois ad campaign that had the tag line "reassuringly expensive" in which case it's not only Apple that deliberately goes for "premium pricing".
rabbid
So? Journalists and analysts time would be better spent on those methinks...
Methinks there is demand for such information from investors would be quite interested to know that despite the decreasing market share the company's major cash cow, Apple remains a very profitable company.
(Also, some individual my take their free choice elsewhere knowing that their money is getting them less tangible)