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Undoubtedly, Apple will continue to grow & be profitable. The question is whether they'll be able to maintain those fat 40%+ gross margins on their flagship pro

by sami36 14y ago

Undoubtedly, Apple will continue to grow & be profitable. The question is whether they'll be able to maintain those fat 40%+ gross margins on their flagship products. I'm a huge fan of Apple but even I would start to question the wisdom of the iPhone 5 costing 649 $ (unlocked) vs a very capable & well-specced 349 $ Nexus 4. The same could be said about the iPad Mini & the Nexus 7. It's not the Apple products have lost any of their shine, it's that Nexus Devices have gotten a lot better. Google's OS is getting polished by the day (Google Now's today update) & is slowly but surely eroding the advantage Apple once had in mobile OSes. WallStreet is expecting those margins to compress & that's affecting their valuation.

kunaalarya 14y ago
They can make a capable and well specced Nexus 4 for $349, but they're not making any money off of it, which doesn't make it economically sustainable in the long term. It's the same thing with the Nexus tablets. They're selling them so cheap so they can gain marketshare. If it picks up and starts selling like hotcakes, they'll have to take it off the market before every Android manufacturer starts looking for other platforms because there would be no reason for them to sell phones at a loss. Source: http://www.knowyourmobile.com/blog/1666557/google_said_to_be_taking_a_237_hit_on_every_nexus_4_it_sells.html http://www.knowyourmobile.com/blog/1666557/google_said_to_be...
- sami36 14y ago
  I agree, but only partially. Many companies thrive on 10% or less operating margins. Amazon, Walmart come to mind. I'm not saying AAPL shouldn't make a profit, I'm saying it's going to have to come down a little. Now, as far as GOOG selling their tables at cost. It's because Google is not a hardware company & does not expect their margins to come from devices. If you step back a little to contemplate the entirety of their business plan, you'll see that the see devices as conduits for their services & that's where their profits comes from, ad impressions.So, the fact they're selling their devices to break-even is only a piece of the puzzle.

by sami36 14y ago

kunaalarya 14y ago

They can make a capable and well specced Nexus 4 for $349, but they're not making any money off of it, which doesn't make it economically sustainable in the long term. It's the same thing with the Nexus tablets. They're selling them so cheap so they can gain marketshare. If it picks up and starts selling like hotcakes, they'll have to take it off the market before every Android manufacturer starts looking for other platforms because there would be no reason for them to sell phones at a loss. Source: http://www.knowyourmobile.com/blog/1666557/google_said_to_be_taking_a_237_hit_on_every_nexus_4_it_sells.html http://www.knowyourmobile.com/blog/1666557/google_said_to_be...

sami36 14y ago
I agree, but only partially. Many companies thrive on 10% or less operating margins. Amazon, Walmart come to mind. I'm not saying AAPL shouldn't make a profit, I'm saying it's going to have to come down a little. Now, as far as GOOG selling their tables at cost. It's because Google is not a hardware company & does not expect their margins to come from devices. If you step back a little to contemplate the entirety of their business plan, you'll see that the see devices as conduits for their services & that's where their profits comes from, ad impressions.So, the fact they're selling their devices to break-even is only a piece of the puzzle.