3 ms·

Strange like the government in China is subsidizing it?

by fffernan 8y ago

xvedejas 8y ago
More like strange how Apple can charge as much as they do because their brand is targeting the "luxury" market.
- flarex 8y ago
  Nice try 中华人民共和国国家安全部.
  - dang 8y ago
    This sort of attack will get you banned here. Please read https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and follow the rules when posting.
- agumonkey 8y ago
  Apple always did that. It's not entirely vain. !) they led the pack, their brand has value (stores waiting line) 2) they push the price as high as it can be (cold but smart) 3) their products often have higher level of finish <= this is worth a lot, very often you have lower priced product with almost the same specs.. but a ton of 'almosts' create a shitty product. It's surprisingly costly to push a few percent above the pack.
  - iainmerrick 8y ago
    And their profit margin is “only” 20-25%. That’s high compared to the rest of the industry, but not ludicrously so. I think it’s a lower margin than luxury watches or clothes, say, where you’re mostly paying for the label, and more comparable to something like luxury cars, where they clearly have to invest a lot in design, materials and manufacturing to make a decent product. (Having said that, a quick google suggests Rolex’s margin is only about 30%, so maybe all these businesses are more similar than I realized.)
    - jdietrich 8y ago
      iPhones represent about 15% of global smartphone shipments, but over 90% of profits. Google intended to commoditise smartphones with Android and largely achieved that aim; nobody is making much money from Android handsets. iOS (and the luxury cachet of the brand) gives Apple a moat that allows them to make meaningful profits on their devices. Apple's operating margin hovers around 22%, but their gross margin on iPhones is well over 50%. A lot of the difference is tax trickery - Apple funnel a large proportion of profits to offshore companies, which doesn't appear on their balance sheet. https://en.wikipedia.org/wiki/Base_erosion_and_profit_shifting https://en.wikipedia.org/wiki/Base_erosion_and_profit_shifti... https://www.nytimes.com/2017/11/06/world/apple-taxes-jersey.html https://www.nytimes.com/2017/11/06/world/apple-taxes-jersey....
      - ksec 8y ago
        It is also worth noting Apple rarely subsides its Hardware Product, and I cant record one that ever existed. From Cables, Hobbies, or other smaller gadget they all have nearly the same gross margin. As a matter of fact the pricing structure of Apple's hardware are the easiest part to understand. Compare to others, Google subsidise Android development with Ads from Search Engine, Huawei cover most of the R&D expense via their Industry leading telecom infrastructure market, Sony has lot of business to cover for their every losing money Mobile handset, Samsung Electronics, has NAND / DRAM and Semi Fab for their bottom line as well as being a group of larger Samsung. It is not that Apple made lots of money covering the industry 90% of profits, it is that everyone else aren't making money at all. And in the long run, those who cant get enough cash flow will die out. In 2017 the top 5 brand manage 60% of market shares, nearly 10% higher then last year. We are looking at 65% this year, and very likely in a few years time, Apple, Samsung, Huawei, Vivo / OPPO, Xiaomi will cover 80%+ of market.
        iainmerrick 8y ago
        Maybe this isn’t what you’re talking about, but aren’t their storage prices excessively high? You pay a lot for a 500G or 1TB SSD from Apple, vastly more than competitors. I always assumed their margin was higher on the higher tiers.

Strange like the government in China is subsidizing it?

xvedejas 8y ago

More like strange how Apple can charge as much as they do because their brand is targeting the "luxury" market.

flarex 8y ago
Nice try 中华人民共和国国家安全部.
- dang 8y ago
  This sort of attack will get you banned here. Please read https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and follow the rules when posting.
agumonkey 8y ago
Apple always did that. It's not entirely vain. !) they led the pack, their brand has value (stores waiting line) 2) they push the price as high as it can be (cold but smart) 3) their products often have higher level of finish <= this is worth a lot, very often you have lower priced product with almost the same specs.. but a ton of 'almosts' create a shitty product. It's surprisingly costly to push a few percent above the pack.
- iainmerrick 8y ago
  And their profit margin is “only” 20-25%. That’s high compared to the rest of the industry, but not ludicrously so. I think it’s a lower margin than luxury watches or clothes, say, where you’re mostly paying for the label, and more comparable to something like luxury cars, where they clearly have to invest a lot in design, materials and manufacturing to make a decent product. (Having said that, a quick google suggests Rolex’s margin is only about 30%, so maybe all these businesses are more similar than I realized.)
  - jdietrich 8y ago
    iPhones represent about 15% of global smartphone shipments, but over 90% of profits. Google intended to commoditise smartphones with Android and largely achieved that aim; nobody is making much money from Android handsets. iOS (and the luxury cachet of the brand) gives Apple a moat that allows them to make meaningful profits on their devices. Apple's operating margin hovers around 22%, but their gross margin on iPhones is well over 50%. A lot of the difference is tax trickery - Apple funnel a large proportion of profits to offshore companies, which doesn't appear on their balance sheet. https://en.wikipedia.org/wiki/Base_erosion_and_profit_shifting https://en.wikipedia.org/wiki/Base_erosion_and_profit_shifti... https://www.nytimes.com/2017/11/06/world/apple-taxes-jersey.html https://www.nytimes.com/2017/11/06/world/apple-taxes-jersey....
    - ksec 8y ago
      It is also worth noting Apple rarely subsides its Hardware Product, and I cant record one that ever existed. From Cables, Hobbies, or other smaller gadget they all have nearly the same gross margin. As a matter of fact the pricing structure of Apple's hardware are the easiest part to understand. Compare to others, Google subsidise Android development with Ads from Search Engine, Huawei cover most of the R&D expense via their Industry leading telecom infrastructure market, Sony has lot of business to cover for their every losing money Mobile handset, Samsung Electronics, has NAND / DRAM and Semi Fab for their bottom line as well as being a group of larger Samsung. It is not that Apple made lots of money covering the industry 90% of profits, it is that everyone else aren't making money at all. And in the long run, those who cant get enough cash flow will die out. In 2017 the top 5 brand manage 60% of market shares, nearly 10% higher then last year. We are looking at 65% this year, and very likely in a few years time, Apple, Samsung, Huawei, Vivo / OPPO, Xiaomi will cover 80%+ of market.
      - iainmerrick 8y ago
        Maybe this isn’t what you’re talking about, but aren’t their storage prices excessively high? You pay a lot for a 500G or 1TB SSD from Apple, vastly more than competitors. I always assumed their margin was higher on the higher tiers.