The mobile industry has been looking for an answer to Apple’s iPhone, but it continues to suck all the air out of the room. Apple’s emphasis on brand and refusal to compete on price has resulted in the biggest chunk of mobile sector profits despite having the smallest market share. Apple’s iPhone is so popular the “Antennagate” issue of last summer had virtually no effect on sales. Tech specialists have said that Apple’s outsize share of mobile industry profits will proceed to fend off so-called Android based “iPhone killers” that cost far less.
Apple’s iPhone a license to print cash
Apple’s domination of the mobile industry was reported on Sept. 21 by Fortune on CNN.com. Apple stock was given a “buy” rating and a $ 356 per share price target by Canaccord Genuity, a fund market analysis firm. The analysts used data about Apple’s performance to back up its advice to purchase the company’s stock. Apple sent 17 million iPhones out the door within the first half of 2010—3 percent of mobile industry sales. The three biggest cell phone makers within the world, Samsung, Nokia and LG, dominated with a combined 400 million units sold. Apple, however, won the game by collecting 39 percent of total sector profits. The top three heavyweights fought over 32 percent of mobile industry profits. The significance of Apple’s performance was put in context by Canaccord Genuity. As a rule, cell phone manufacturers are lucky for making 10 percent operating margins, or any profit at all. With its iPhone, it is believed that Apple enjoys a 50 percent gross profit on top of a 30 percent operating margin.
What’s behind Apple’s business design?
Until the iPhone was created, making nearly 40 percent of industry earnings with a mere 3 percent a share of the market was unthinkable. Jason Mick at Daily Tech outlines a few practical reasons why Apple makes more profit per phone than its competitors. A big factor is the carrier iPhone owners love to hate. Apple has wrought an exceedingly rich contract from AT and T, who is using the iPhone to gain customers. Apple gains another profit advantage over Android competitors by using less expensive hardware. It uses the recognition of its products to get high volumes at lower prices. This business design has been so successful, cash is no object when it comes to developing technology that stays a step ahead of Android. Beating Android, Mick said, probably is not at the top of Apple’s list. Continuing to impress loyal iPhone users is enough to keep Apple where it wants to be.
The iPhone’s energy increases
Even a so-called public relations debacle such as Antennagate could not disrupt the iPhone’s momentum. The “Death Grip” reception issues that fanned much media attention upon the release of the iPhone 4G did not phase the business. When Consumer reports tested the iPhone reception problem and said it could not recommend the iPhone, Apple bashers reacted with glee. Recently, the magazine reiterated its position on the product. But the iPhone marches on. According to Computerworld, the J.D. Power and Associates customer satisfaction rankings for smartphones lists the iPhone at the top of the list—its fourth consecutive first place finish.
Additional reading
CNN
CNN.com
Daily Tech
dailytech.com
Computerworld
computerworld.com
