4 ms·

Apple earns about 94% of the smartphone industry profit with just 14% of the market. It's a thing.

by seanmccann 10y ago

wnevets 10y ago
Different business models for different companies.
- hyperbovine 10y ago
  Pretty sure most companies would aspire to the model where 94% of the rent accrues to you...
  - wnevets 10y ago
    not when you can control 85% of the market and just want your software in front as many people as possible so you can sell them ads. Do you really think google cares that much about making profit on smartphone hardware?
    - hyperbovine 10y ago
      Then why have they made this phone?
      - wnevets 10y ago
        probably the same reason they released the pixel (notice the name?) chromebook, to have a high end reference design.
      - mason240 10y ago
        It seems like Google treats the phones almost like concept cars. They are really just there to push the 3P manufacturers in the desired direction.
      - dragonwriter 10y ago
        > Then why have they made this phone? To drive consumer demand in a direction that favors their software and online services, even if its other manufacturers (and, especially, other Android manufacturers) actually selling most of the hardware in the long run. Not that they'd mind if their hardware took off, its just not the primary goal.
        Fricken 10y ago
        I'm sure Google's shareholders won't much mind if the Pixel could command anything close to the kind of margins Apple collects selling iphones.
      - criddell 10y ago
        I think for the same reason Microsoft has started making hardware. Their partners are unreliable.
angryasian 10y ago
google has never sold a phone directly. The pixel is the first one. Second no one know how much income google generates from Android or Android related services.
- delecti 10y ago
  This Pixel is really no different from the previous Neuxs phones, except that they're not emphasizing the manufacturer as much. The hardware is made by HTC, and Nexus phones were also sold directly through Google.
- vmarsy 10y ago
  There was this story recently on hacker news about that Oracle lawyer that published this exact information: > Google Inc.’s Android operating system has generated revenue of $31 billion and $22 billion in profit http://www.bloomberg.com/news/articles/2016-01-21/google-s-android-generates-31-billion-revenue-oracle-says-ijor8hvt http://www.bloomberg.com/news/articles/2016-01-21/google-s-a...
- st3v3r 10y ago
  "google has never sold a phone directly." They've sold the Nexus phones directly for quite a while now.
2almalki 10y ago
although i like iOS, but I can't help think it may end the way of BlackBerry. Those guys made a ton off hardware..
- redial 10y ago
  On an infinite timescale, sure, everybody is going the way of Blackberry.
aetherson 10y ago
"Percentage of industry profit" is a stupid metric. "Percentage of industry revenue" is an interesting one. But if Google sells phones at a loss, and they eat into Apple's sales, it is not a good thing for Apple.
- threeseed 10y ago
  Companies that play that loss leader strategy almost always fail. Apple would be over the moon if all their competitors were doing this.
  - aetherson 10y ago
    If they fail at doing it, then you'll be able to tell by market share or percentage of industry revenue. But profit share as a metric would have it that even if Google succeeds and lowers Apple's market share and revenue, but in doing so causes itself serious losses, that's somehow good for Apple. Which is stupid, and particularly so in the case of the competing platforms market of this, where even if a strategy ends up being long-term bad for Google, if it lures people into Android and away from iPhone, there are barriers to switching back, and Google's hypothetical loss is more likely to be Samsung's gain than Apple's. But this is all by design. The profit-share metric -- a metric that you never, ever, ever heard about before iPhone became a highly profitable phone with a low market share -- is a vanity metric that's made precisely to make a low market share/high profitability phone look good. The flaws of the metric are baked into it. Apple's profits are amazing for them. Their market-share is not great, and their percentage of industry revenue is not great. Trying to hide the latter fact by using one metric to report both of those things is stupid.
    - threeseed 10y ago
      Again. Apple is making money. Lots of it. Having money means you can continue to keep up with the investments in technology needed to stay relevant in the mobile phone business. And the reason people keep bringing up the profit share metric is because companies like HTC, Sony, LG were running at losses for so many years that it put in jeopardy their continued presence in the mobile phone market. And nobody wants to buy a phone that isn't supported in a year or two.
cptskippy 10y ago
I think his point is that they command only a small fraction of the market at this point meaning they aren't the Goliath everyone is trying to beat. Everyone would love to have Apple profit margins but their market share is so small that there's plenty of room to co-exist without "killing" Apple.
- zepto 10y ago
  There's almost no room to co-exist if you want to profit.

Apple earns about 94% of the smartphone industry profit with just 14% of the market. It's a thing.

wnevets 10y ago

Different business models for different companies.

hyperbovine 10y ago
Pretty sure most companies would aspire to the model where 94% of the rent accrues to you...
- wnevets 10y ago
  not when you can control 85% of the market and just want your software in front as many people as possible so you can sell them ads. Do you really think google cares that much about making profit on smartphone hardware?
  - hyperbovine 10y ago
    Then why have they made this phone?
    - wnevets 10y ago
      probably the same reason they released the pixel (notice the name?) chromebook, to have a high end reference design.
    - mason240 10y ago
      It seems like Google treats the phones almost like concept cars. They are really just there to push the 3P manufacturers in the desired direction.
    - dragonwriter 10y ago
      > Then why have they made this phone? To drive consumer demand in a direction that favors their software and online services, even if its other manufacturers (and, especially, other Android manufacturers) actually selling most of the hardware in the long run. Not that they'd mind if their hardware took off, its just not the primary goal.
      - Fricken 10y ago
        I'm sure Google's shareholders won't much mind if the Pixel could command anything close to the kind of margins Apple collects selling iphones.
    - criddell 10y ago
      I think for the same reason Microsoft has started making hardware. Their partners are unreliable.

angryasian 10y ago

google has never sold a phone directly. The pixel is the first one. Second no one know how much income google generates from Android or Android related services.

delecti 10y ago
This Pixel is really no different from the previous Neuxs phones, except that they're not emphasizing the manufacturer as much. The hardware is made by HTC, and Nexus phones were also sold directly through Google.
vmarsy 10y ago
There was this story recently on hacker news about that Oracle lawyer that published this exact information: > Google Inc.’s Android operating system has generated revenue of $31 billion and $22 billion in profit http://www.bloomberg.com/news/articles/2016-01-21/google-s-android-generates-31-billion-revenue-oracle-says-ijor8hvt http://www.bloomberg.com/news/articles/2016-01-21/google-s-a...
st3v3r 10y ago
"google has never sold a phone directly." They've sold the Nexus phones directly for quite a while now.

2almalki 10y ago

although i like iOS, but I can't help think it may end the way of BlackBerry. Those guys made a ton off hardware..

redial 10y ago
On an infinite timescale, sure, everybody is going the way of Blackberry.

aetherson 10y ago

"Percentage of industry profit" is a stupid metric. "Percentage of industry revenue" is an interesting one. But if Google sells phones at a loss, and they eat into Apple's sales, it is not a good thing for Apple.

threeseed 10y ago
Companies that play that loss leader strategy almost always fail. Apple would be over the moon if all their competitors were doing this.
- aetherson 10y ago
  If they fail at doing it, then you'll be able to tell by market share or percentage of industry revenue. But profit share as a metric would have it that even if Google succeeds and lowers Apple's market share and revenue, but in doing so causes itself serious losses, that's somehow good for Apple. Which is stupid, and particularly so in the case of the competing platforms market of this, where even if a strategy ends up being long-term bad for Google, if it lures people into Android and away from iPhone, there are barriers to switching back, and Google's hypothetical loss is more likely to be Samsung's gain than Apple's. But this is all by design. The profit-share metric -- a metric that you never, ever, ever heard about before iPhone became a highly profitable phone with a low market share -- is a vanity metric that's made precisely to make a low market share/high profitability phone look good. The flaws of the metric are baked into it. Apple's profits are amazing for them. Their market-share is not great, and their percentage of industry revenue is not great. Trying to hide the latter fact by using one metric to report both of those things is stupid.
  - threeseed 10y ago
    Again. Apple is making money. Lots of it. Having money means you can continue to keep up with the investments in technology needed to stay relevant in the mobile phone business. And the reason people keep bringing up the profit share metric is because companies like HTC, Sony, LG were running at losses for so many years that it put in jeopardy their continued presence in the mobile phone market. And nobody wants to buy a phone that isn't supported in a year or two.

cptskippy 10y ago

I think his point is that they command only a small fraction of the market at this point meaning they aren't the Goliath everyone is trying to beat. Everyone would love to have Apple profit margins but their market share is so small that there's plenty of room to co-exist without "killing" Apple.

zepto 10y ago
There's almost no room to co-exist if you want to profit.