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Apple went from 4% market share with 50% profits sometime in 2010, to 8.7% market share with 75% profits. Which seems to imply they are also making their device

Apple went from 4% market share with 50% profits sometime in 2010, to 8.7% market share with 75% profits. Which seems to imply they are also making their devices, on average, cheaper. Is this the start of them slowly adjusting their prices to grab some more market share? Especially now that they actually have phone models to serve multiple segments of the mobile phone market?

philwelch 15y ago
That was the iPod gameplan. By the time the Shuffle came out at $50 to compete with the $50 SanDisk stuff, they had already dominated every single price segment above that.
schiffern 15y ago
Or pie got larger, which seems more likely. Most of the price of the device is negotiated with the carrier, not the consumer. So a "free" device is really $600, and a "$199" device is $800.
- jamesaguilar 15y ago
  Or the profit everyone else was making went down. Apple could make a dollar of profit on $50 billion sales and if everyone else was losing money, that'd still be 100% profit share. Still wouldn't be good for an Apple investor. As much as market share is a poor metric, profit share has similar problems.
MBCook 15y ago
Remember, they still sell the 3GS. Those phones are old enough that they probably cost next to nothing to make, but Apple still sells them for a few hundred (from the subsidy). Having the older 3GS and 4 also means they can pull in customer who wouldn't have paid the $200+ for the latest model. How much of Samsung's profit came from people buying their $0-$100 (on contract) phones? How much did that go down when the 3GS became free on contract? They may not just be making more, but cutting into their competition in areas that were previously safe profit centers.
- 2muchcoffeeman 15y ago
  Yeah. I was thinking about it later in the afternoon (when I was more awake) and I realised my math is wrong. At face value, this would indicate that they are making $31 for every $1 that their competitors make. As opposed to $24 to the dollar when they had 4% market share and 50% profit. So either they are increasing prices (not happening, we can see the price on their website), so they are increasing their margins in some areas. I was originally thinking about the relative percentages, which is not right.

philwelch 15y ago

That was the iPod gameplan. By the time the Shuffle came out at $50 to compete with the $50 SanDisk stuff, they had already dominated every single price segment above that.

schiffern 15y ago

Or pie got larger, which seems more likely. Most of the price of the device is negotiated with the carrier, not the consumer. So a "free" device is really $600, and a "$199" device is $800.

jamesaguilar 15y ago
Or the profit everyone else was making went down. Apple could make a dollar of profit on $50 billion sales and if everyone else was losing money, that'd still be 100% profit share. Still wouldn't be good for an Apple investor. As much as market share is a poor metric, profit share has similar problems.

MBCook 15y ago

Remember, they still sell the 3GS. Those phones are old enough that they probably cost next to nothing to make, but Apple still sells them for a few hundred (from the subsidy). Having the older 3GS and 4 also means they can pull in customer who wouldn't have paid the $200+ for the latest model. How much of Samsung's profit came from people buying their $0-$100 (on contract) phones? How much did that go down when the 3GS became free on contract? They may not just be making more, but cutting into their competition in areas that were previously safe profit centers.

2muchcoffeeman 15y ago
Yeah. I was thinking about it later in the afternoon (when I was more awake) and I realised my math is wrong. At face value, this would indicate that they are making $31 for every $1 that their competitors make. As opposed to $24 to the dollar when they had 4% market share and 50% profit. So either they are increasing prices (not happening, we can see the price on their website), so they are increasing their margins in some areas. I was originally thinking about the relative percentages, which is not right.