Tuesday, July 14, 2015

iPhone Scored 92% of Phone Profit - Apple Is Doomed

Source:  Just google, it's all over the Web.

Okay, get this. Apple is barely scratching out a 20% share of the global smartphone market in terms of units sold.  And this is from Apple running with all cylinders firing and task masters at Foxconn factories whipping workers to churn out as many iPhones as they can.  Okay, minus the whips and the task masters but you still get the point.  Apple took months to meet demand and just as it had, we are now onto the next upgrade mere months away.

Still, all that work and Apple only managed to take one-fifth of the market.  Doomed, many would say.  Well, except for the fact that for every dollar of profit generated, 92 cents of that goes to Apple.  The rest goes to Samsung while others barely break even or are in the red.

Many would like to think that Apple's fortune is the result of Samsung's collapse in the high-end segment of the market but the truth is, Apple's iPhone appeal does not have a single competitor including the Galaxy S6 or the Edge.  Furthermore, this is about Apple's ability to differentiate itself from the rest of the pack as the only company that designed its own hardware and software packed into a beautiful design resulting in an appealing user experience. 

It is not to say that there are no trade-offs - for example, thin design that limit the battery life and Apple's exquisite walled garden but still walled off despite some limited openness recently.  On top of that, Apple's cloud services are still playing catch-ups to Google. 

It will be interesting to see whether Apple can continue its march towards 100% of the smartphone profit.  Personally, as an Apple fan, I'd settle for 95%.  Let's not get too greedy here.  Apple will release the next iPhone in September with innovations that is once again putting more distance between itself and its competitors. 

At this point, only Apple can stop Apple.  That could mean a couple of things.  Apple becoming complacent and loses out to a new competitor.  Not likely under Tim Cook as CEO of Apple.  Or the more likely scenario is that Apple disrupts itself with a new product and this new iDevice (probably not the Apple Watch) and end up cannibalizing iPhone sales.  The latter is the more likely scenario, one that is very scary for others.  

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