3 ms·

"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

"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.
    - aetherson 10y ago
      Nobody is denying that Apple is making money. "Profit" is a great metric. Profit share is a terrible one. Because how much money Apple makes is precisely the point, and whether a competitor has wide margins, narrow ones, or negative ones does not affect how much money Apple makes, but it does affect their profit-share. Huawei and Apple have roughly equal marketshare. If "nobody wants" to buy a phone from an unprofitable manufacturer, how come that's true?

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.
  - aetherson 10y ago
    Nobody is denying that Apple is making money. "Profit" is a great metric. Profit share is a terrible one. Because how much money Apple makes is precisely the point, and whether a competitor has wide margins, narrow ones, or negative ones does not affect how much money Apple makes, but it does affect their profit-share. Huawei and Apple have roughly equal marketshare. If "nobody wants" to buy a phone from an unprofitable manufacturer, how come that's true?