5 ms·

The fallacy of volume and revenue: The iPhone difference

9 points by raganwald 18y ago

GavinB 18y ago
Yes, premium luxury products can make a huge profit. This doesn't mean that someone who goes for the middle of the market and works on low profit margins is somehow "wrong." Apple nailed the market with a great product. What makes them special, and profitable, isn't that they make a high-priced lower volume product. It's that they make a product that customers love and value at much higher than its cost.
inovica 18y ago
When we did a lot of consultancy-based projects we found we often had one of the highest prices for a job. To be completely honest it allowed us to server the customers better, by having higher margins than our competitors. We have done the same with some of our products and whilst we look expensive to some (who are always going to be price-conscious) again we are able to invest more, offer better customer service and frankly sell less to achieve the same goals. We've played with price points and often found that selling something for less money sometimes means less sales. We had two very similar products - one sold for nearly 3 times the price and had more sales as the perception was that it was a better product.
deleted 18y ago
[deleted]
jacoblyles 18y ago
Did he subtract out profit from Apple's many other businesses before calculation profit per iPhone sold? It sure doesn't look like he did. That would make this an apples-to-beef jerky comparison. Edit: Nope! He didn't.
- wallflower 18y ago
  Take everything you read on CNet with a grain of salt, however: "CNET News' Krazit wrote that an internal assessment at Apple--using supplemental metrics--determined that the iPhone represents 39 percent of company revenue, while the Mac accounts for 30 percent." http://news.cnet.com/8301-13579_3-10072404-37.html?tag=mncol;txt http://news.cnet.com/8301-13579_3-10072404-37.html?tag=mncol...
vivekkhurana 18y ago
I find apple as a smart company, they make good products and they ensure profitability of every venture. I dont count apple products as a premium products but they are not making commodity products either. Overall apple has managed to strike a balance between innovation, brand and profit (now we have number for this too). Higher profits means higher share holder value, something every corporate strives for
- lacker 18y ago
  You don't consider Apple products to be "premium"? You can make a pretty good argument that the iPhone is the best phone out there. It may not be, but it's certainly successfully targeting the highest portion of the market. Same for iPods - what would you consider a "premium" mp3 player if no iPod counts?
wallflower 18y ago
Motorola (US) "Latest Phones" offered: 83 Apple iPhones: 1* (* 2 if you count the vintage iPhone)

9 points by raganwald 18y ago

Yes, premium luxury products can make a huge profit. This doesn't mean that someone who goes for the middle of the market and works on low profit margins is somehow "wrong." Apple nailed the market with a great product. What makes them special, and profitable, isn't that they make a high-priced lower volume product. It's that they make a product that customers love and value at much higher than its cost.

inovica 18y ago

When we did a lot of consultancy-based projects we found we often had one of the highest prices for a job. To be completely honest it allowed us to server the customers better, by having higher margins than our competitors. We have done the same with some of our products and whilst we look expensive to some (who are always going to be price-conscious) again we are able to invest more, offer better customer service and frankly sell less to achieve the same goals. We've played with price points and often found that selling something for less money sometimes means less sales. We had two very similar products - one sold for nearly 3 times the price and had more sales as the perception was that it was a better product.

deleted 18y ago

[deleted]

jacoblyles 18y ago

Did he subtract out profit from Apple's many other businesses before calculation profit per iPhone sold? It sure doesn't look like he did. That would make this an apples-to-beef jerky comparison. Edit: Nope! He didn't.

wallflower 18y ago
Take everything you read on CNet with a grain of salt, however: "CNET News' Krazit wrote that an internal assessment at Apple--using supplemental metrics--determined that the iPhone represents 39 percent of company revenue, while the Mac accounts for 30 percent." http://news.cnet.com/8301-13579_3-10072404-37.html?tag=mncol;txt http://news.cnet.com/8301-13579_3-10072404-37.html?tag=mncol...

vivekkhurana 18y ago

I find apple as a smart company, they make good products and they ensure profitability of every venture. I dont count apple products as a premium products but they are not making commodity products either. Overall apple has managed to strike a balance between innovation, brand and profit (now we have number for this too). Higher profits means higher share holder value, something every corporate strives for

lacker 18y ago
You don't consider Apple products to be "premium"? You can make a pretty good argument that the iPhone is the best phone out there. It may not be, but it's certainly successfully targeting the highest portion of the market. Same for iPods - what would you consider a "premium" mp3 player if no iPod counts?

wallflower 18y ago

Motorola (US) "Latest Phones" offered: 83 Apple iPhones: 1* (* 2 if you count the vintage iPhone)