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It means that if Apple where to lower their prices then they'd only be hurting their own profits. Apple (and all scrupulous companies) are trying to maximize p

It means that if Apple where to lower their prices then they'd only be hurting their own profits. Apple (and all scrupulous companies) are trying to maximize profits, not wipe out the competition.

aetherson 11y ago
"It" doesn't mean that, no. I mean, that may or may not be true, but profit share has no explanatory power here.
- metric10 11y ago
  Profit share means that when you total up all the money that's been made as profits for the industry, 92% of that money went to Apple and 8% went to "other." If Apple where to wipe out the competition as you suggest, then they would gain that final 8% of profits[1]. But if they had to, say, lower their prices by 20% to achieve that, then they wouldn't come out ahead. And that's ignoring the anti-trust issues that would spring up. Thus, that's why I'm saying they are doing the right thing and pursuing a "scorched Earth" policy would be ill advised. [1] Unless people won't buy from Apple even if they're the only game in town. But I doubt there's enough of those people to make a difference. edit: formatting.
  - aetherson 11y ago
    As a point of order, I didn't suggest that Apple wipe out anything. But, no, you're wrong, and the way you're wrong is doing an excellent job of demonstrating the problems with profit share. There's not an amount of "profit" out there. There is sort of an amount of "revenue" out there. But Apple takes in a small minority of the revenue associated with smart phones, as demonstrated by their market share, which is something on the general order of 14%. The fact that other vendors are inefficient at turning their revenue into profits is neither here nor there. Of course, the actual analysis is far more complicated than that, since the market isn't in fact a static thing. If Apple turned say half of their unit profits into price reductions, it would have enormous, chaotic effects on the smartphone market. I don't have the ability to predict what the end result would be, and neither does anyone here. But profit share doesn't tell us that Apple has no opportunity, and in fact it is a metric crafted to draw attention from the fact that Apple has a low market share, which does a better (though certainly imperfect) job of showing the opportunity.

It means that if Apple where to lower their prices then they'd only be hurting their own profits. Apple (and all scrupulous companies) are trying to maximize profits, not wipe out the competition.

aetherson 11y ago

"It" doesn't mean that, no. I mean, that may or may not be true, but profit share has no explanatory power here.

metric10 11y ago
Profit share means that when you total up all the money that's been made as profits for the industry, 92% of that money went to Apple and 8% went to "other." If Apple where to wipe out the competition as you suggest, then they would gain that final 8% of profits[1]. But if they had to, say, lower their prices by 20% to achieve that, then they wouldn't come out ahead. And that's ignoring the anti-trust issues that would spring up. Thus, that's why I'm saying they are doing the right thing and pursuing a "scorched Earth" policy would be ill advised. [1] Unless people won't buy from Apple even if they're the only game in town. But I doubt there's enough of those people to make a difference. edit: formatting.
- aetherson 11y ago
  As a point of order, I didn't suggest that Apple wipe out anything. But, no, you're wrong, and the way you're wrong is doing an excellent job of demonstrating the problems with profit share. There's not an amount of "profit" out there. There is sort of an amount of "revenue" out there. But Apple takes in a small minority of the revenue associated with smart phones, as demonstrated by their market share, which is something on the general order of 14%. The fact that other vendors are inefficient at turning their revenue into profits is neither here nor there. Of course, the actual analysis is far more complicated than that, since the market isn't in fact a static thing. If Apple turned say half of their unit profits into price reductions, it would have enormous, chaotic effects on the smartphone market. I don't have the ability to predict what the end result would be, and neither does anyone here. But profit share doesn't tell us that Apple has no opportunity, and in fact it is a metric crafted to draw attention from the fact that Apple has a low market share, which does a better (though certainly imperfect) job of showing the opportunity.