Hardly surprising given the quality price ratio, Samsung's smartphone beat Apple's hands down. If Apple want to continue with their high margin strategy, they have to come with something new and exciting.
You have to bear in mind that Samsung made its $5.2 billion profit on 107 million mobile phones shipped in 2Q13 while Apple made its $4.6 billion profit on just 31.2 million phones shipped in the same period.
So Apple leads in profit per phone shipped.
I make it about $50 Samsung phone and $150 per Apple iPhone.
Yes, hence my point about margins. They can't carry on with such high margins strategy with the iphones as Android phones are bridging the quality gap with cheaper products. Apple have to bring something disruptive and start it all over again. They have done it in the past, I hope they can do it again as they seem to be the only company capable of doing so these days :-|
It is always a bad sign if you are going slower than the market. Maybe it is Apple's strategy, or maybe the just miss Steve Jobs. They better watch out for the next three that had very good growth for the year. They may fall further in a couple of years.
"Apple dropped to second place, making profits from iPhone sales of about $4.6 billion, according to Strategy Analytics' estimates."
I understand that if you are not going forward you are going backward or at best standing still. And I get Wall Streets expectations of more, more, more. But this is what I don't understand. Apple made $4.6 billion in profit in three months from one product line. Is that seriously a problem?
True. Apple has had success capturing a bigger slice of the PC market. And again, as others have said, Apple does it while keeping its margins nice and high. In everything it does. Hence the new headquarters.
I hear you. And it seems like it's been a while since Apple totally revolutionized a product category. But the company has done it four times. That's not to say it will necessarily do it again. But still, that's a pretty impressive track record. Maybe Apple is going through a lull, or maybe the magic left with Steve Jobs. But either way, Apple is well positioned to continue raking in the profits for years, at least.
"Apple have to bring something disruptive and start it all over again."
The last couple of years, Apple seems stuck with infrequent incremental upgrades. Maybe the 2013 dought of new stuff is due to the management turmoil and they will get back in the game next year. Maybe.
Talk of new things "in the pipeline" won't cut it anymore. Previews and promises can sustain a brand for only so long and Apple has rode that horse into the ground.
I think this was inevitable. We won't be throwing any benefit concerts for Apple anytime soon, but Samsung has a much broader array of offerings and their high-end Galaxy phones are gaining traction (whether you believe they ripped off Apple or not). The iPhone is still a lifestyle choice/status symbol and thus Apple still commands a premium for it.
Thanks, Peter. It is very good information. No doubt Samsung is leading the revenue and market share. Apple iPhone still has the highest profit margin among all the other competitors'.
Apple might be worried about the seemingly sliding of market share. However, number of iPhone shipment is still increasing. Management may not be worried too much. After all, Apple has a group of fans that will own Apple products and nothing else. In addition, Apple seems to be playing a hi-end luxury product strategy in the electronic market. The closest parallel is BMW vs KIA. Neither is necessarily better than the other. They just belong to different market segments.
No question that Apple is sitting on a pile of cash (much of which is going into building a new headquarters), has a wider profit margin, and commands a premium price for its products from its legion hard-core fans. That said many iPhone users are not hard-core fans, but are simply looking for the best product at a pricepoint. As the value/price ratio falls, I would expect a lot of them to shift to Samsung or other lower-cost phones that offer the same or better features, particularly as two-year service contracts expire in the lucrative North American market. Apple investors apparently agree...the stock is trading at about $447 now, up slightly from its 52-week low of $385, but a long way from the $705 they commanded in September 2012.
Can Apple come up with another industry leading product to sustain its once-proud image as the leading industry innovator? Or is it slowly drifting downward into a heads-on competition with Samsung and other manufacturers, resulting in much tighter margin?
Speaking of the lucrative North American market, why would you expect the value/price ratio to fall, considering that the price of a subsidized smartphone is always $199 with a new 2-year contract? A Samsung phone is not lower cost than an iPhone to an American consumer with a wireless carrier contract.
"A Samsung phone is not lower cost than an iPhone to an American consumer with a wireless carrier contract."
It's not the case here in Europe. Samsung phones are cheaper than iPhones (often by 20%). The US mobile market suffers from some unfair market practices IMHO, and US consumers are not getting the best deal possible as a result.
In trips to Asia last year I saw Samsung's big displays making headway in the market for the top-end fashionista phone.
I don't know if Sammi can continue to dominate at the top or if Apple will take it back with some iPhone 6 or 7 cool thing, but I suspect the spectrum of what radical new stuff you can do at the high end will narrow over time.
In any case, I think Samsung's strategy of making a broad portfolio will ultimately leave Apple and its one-high-end-model approach in the dust.
It would be interesting to compare the profit per unit for Samsung and Apple. Clearly, Samsung is making it up in volume, which is frankly an impressive feat. Lower cost doesn't always translate to higher profits.
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