The Strange Math of Apple's Alleged Massive iPhone 5 Order Cuts 298
zacharye writes "The Sunday evening Wall Street Journal article claiming that Apple had cut its iPhone 5 display orders drastically for the March quarter made quite a splash. The way WSJ wrote its piece seemed to support the original Nikkei claim about Apple cutting its iPhone 5 display orders in half from the originally planned order of 65 million units. This would be a massive adjustment. But Apple uses the same new display type for both iPhone 5 and the latest iPod touch. Neither WSJ nor Nikkei addressed this, however — both seemed to be referring to just iPhone 5 displays. The math just doesn't add up."
Market manipulation? (Score:5, Insightful)
Someone is getting rich out of this
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most likely yes, but don't expect trumpets when apple announces earnings.
they had a nice run,
i still like the iphone 5 better than the S3
but at this point hardware is a commodity. the software runs on both iOS and android
Re:Market manipulation? (Score:5, Interesting)
I think part of this is a function of android getting better, and the user experience being a lot better than it used to be.
But - I think this says more about the iPhone 5 than anything else. The 5 didn't really bring much to make Apple fans feel like they had to upgrade. An extra row of icons? Nobody cares about that. LTE is nice, but given the pervasiveness of wifi and the fact that most people are dealing with data caps, it didn't drive sales.
After 5ish years, someone is finally pushing Apple in the mobile space. They'll have to begin innovating again.
Competition is a good thing.
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Apart from that, the iPhone 5 is six months old now, which means the 5s is not far away. May as well wait for the new one to come out and either catch the 5s, or get the 5 after the price drops.
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Apart from that, the iPhone 5 is six months old now,.
Sept 15 to Jan 14 is 6 months?
Re:Market manipulation? (Score:5, Insightful)
There also hasn't been a successful jailbreak of iOS 6 on any device newer than 2010.
Personally, I don't find that to be a selling point.
Re:Market manipulation? (Score:5, Insightful)
Ditto, I like having control of my hardware, TYVM.
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You mean like someone who wants to take advantage of me financially? Like Apple?
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There was a case where a bug in the steamy load of Adobe's PDF viewer was used to jailbreak phones
http://blog.machinedesign.com/Machine_Design_Blogs/2010/08/16/hackers-exploit-adobe-bug-to-jailbreak-iphones/ [machinedesign.com]
Re:Market manipulation? (Score:5, Informative)
No. The first worm was in 2009, and it was possible to jailbreak iOS from safari (it still is, in some cases) -- http://appleinsider.com/articles/09/11/09/first_known_iphone_worm_rickrolls_jailbroken_apple_handsets.html [appleinsider.com]
Aside from that, I do expect to be able to jailbreak my devices. If that costs me something in day-to-day security, I'm completely fine with that. I always want ultimate control over my hardware. The reason why you think Android is malware infected is because we have the option of installing our own software without the store. This is why developers are complaining that it's a platform for piracy - there is a path for software onto the device that is user-controlled. Also, google supplies the bootloader unlocking tools, effectively giving their blessing to people who want to jailbreak.
Re:Market manipulation? (Score:5, Interesting)
You do, but really most of the Apple ecosystem does not want jailbreaks, and firmly supports Apple's active patching of JB-ed devices.
As a developer, jailbreaking means piracy. Installious may be gone, but there are plenty of other services that do the same thing. So, jailbroken devices take food out of our mouths. I have to thank Apple that the 4S and 5 have kept the leeches at bay for a very long time, and with the Dev Team's back broken, JBs will end up a moot point because if they do happen, the next Apple model will be out, with the next iOS version patching it.
As a user, iOS's security depends on the jail system. JB-ed devices have no security in place whatsoever (unlike rooted Android phones which at least still have separation via UIDs.)
No non-jailbroken device has ever have had malware in the wild, and this is where the proof is in the pudding. I can be assured that data stored on an iOS device will be protected, by both storage encryption, and by extreme protection even on the CPU itself. No other mass-market device can give this assurance outside of milspec stuff that only works in SIPRnet.
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It's a bit hard to say that IOS had a worm when the user had to install OpenSSH, leave it running all the time, *and* leave the root password ("alpine") unchanged to be vulnerable.
Re:Market manipulation? (Score:4, Interesting)
Someone is getting rich out of this
And the SEC is starting to investigate [wsj.com]
Re:Market manipulation? (Score:5, Insightful)
That's an interesting read. Perhaps they've spotted a pattern. This story is very similar one that was reported last year regarding the 4S
http://www.forbes.com/sites/ericsavitz/2011/11/09/apple-reportedly-tells-iphone-parts-makers-to-delay-shipments/ [forbes.com]
I wonder what we'll see this time next year.
Re:Market manipulation? (Score:4, Informative)
Except that is an article from 2010 about possible insider trading, not about the alleged market manipulation by driving down the stock price through rumors and FUD like seemed to start happening in 2012.
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Except that is an article from 2010 about possible insider trading, not about the alleged market manipulation by driving down the stock price through rumors and FUD like seemed to start happening in 2012.
The article explicitly talks about insider trading by market manipulation of channel checks.
Re:Market manipulation? (Score:5, Funny)
Except that is an article from 2010 about possible insider trading, not about the alleged market manipulation by driving down the stock price through rumors and FUD like seemed to start happening in 2012.
Yes, last time they used a spoon. This time they're using a fork. However you're what's for dinner so does it really matter?
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Day to day, week to week and month to month stock manipulation does not hurt the long term investor (unless they are are margin). It generally only hurts the day traders and people treating the stock market like a gambling den.
This kind of manipulation is a flash in the pan that at the longest lasts until the next quarterly report. Long term investors aren't buying and selling in that time frame. If you are the little guy buying and selling on those time frames you're a fucking idiot.
Re:Market manipulation? (Score:5, Interesting)
Re:Market manipulation? (Score:4, Funny)
BGR points out that the best estimates of Q4 sales is 52M iPhones
No wonder they dropped "think different" from their marketing.
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Re:Market manipulation? (Score:5, Interesting)
Re:Market manipulation? (Score:4, Insightful)
Then why have they changed the story several times since last night?
Including removing the 65M number.
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Re:Market manipulation? (Score:5, Insightful)
Having worked in a newsroom and posted news stories online, I'll state that no good ones do.
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That doesn't make the NYTimes good. Or the practice good.
WTF, do you think doing live copyediting is a good thing?
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Can you really think of no other reason they might change their article after it is posted? Saying, "they changed the article therefore they are trying to manipulate the market" is a non sequitur.
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I never said they did that. I just said it's bad journalism. Especially when they're removing the most damning part of the rumor.
BGR Report is Useless (Score:3)
If Apple had previously ordered 65MM 4" screens their total iPhone sales would be about 50MM iPhone 5's, 20MM 4/4S (plus 10MM iPod touch units). Quite frankly, that is impossible territory there for the December quarter, but filling the channel and a subsequent draw-down as they move more to a 6-month update cycle could possibly explain a "50% drop in screen orders."
Quite frankly, crap like this makes me want to get out of the stock market altogether. (Which is exactly what it is intended to do.)
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If your reason for getting out of the market is information asymmetry, you are right. You and I have a lot less information than managers in the companies and those with access to those managers.
Despite this, I stay in the market and have done well. I have two undergrad degrees in Finance and an MBA. Basically, I take a very simple strategy -- I invest almost exclusively in index funds and diversify geographically. index funds have the advantage of very low management fees and I track the market as a whole.
Apple the largest Company (Score:2)
Quite frankly, crap like this makes me want to get out of the stock market altogether.
Like every other Apple shareholder that is why the value of 13 Dells market cap got wiped off Apples Market cap in three months. I notice Apple shares continue to plunge..currently hugging just above 500. Its also why you see less people singing Apples praises here.
In reference to spin. "Apple's orders for iPhone 5 screens for the January-March quarter...dropped to roughly half" and "The latest model comes with a longer, four-inch screen compared with the 3.5-inch screens used in all previous iPhone models.
Re:Apple the largest Company (Score:4, Interesting)
Which doesn't really make all that much sense. What has Apple actually done to cause such a stock drop?
It's not what they've done, it's what they haven't done, and what others have done.
Investors have this perception of Apple as an innovator, creating new markets where none existed, and this perception is built into the stock's valuation. With the iPhone 5, Apple released not a new innovative product, but yet another incremental iteration of the iPhone. Then they did it again with the iPad mini and iPad 4. All the while, you have headlines like Android surpassing iPhone market share, Samsung selling more Galaxy phones than iPhone. The iPad mini was perhaps the worst of the bunch, where Apple was perceived as following Google's lead into smaller tablets, especially when Steve Jobs was quoted as saying they would never do such a thing. Right or wrong, this perception is not good for the narrative that Apple is a leader and can magically create markets where none existed before.
Perhaps the decline has everything to do with the Jobs RDF wearing off. Perhaps it has everything to do with Apple's first mover advantage in smartphones wearing off. Maybe it's just the competition heating up, or a combination of these and other factors. But what's clear is that Apple is no longer in a position to dominate the smartphone and tablet markets on their own, which is a real problem for them, since their massive profits are *largely* derived from iPhone sales.
I don't think it's a coincidence that AAPL hit an all time high the day the iPhone 5 was released, and has been in a steep decline since then.
the third option - options. (Score:2)
Try googling:
apple call options jan 19
Over half a billion dollars could be liberated (in the Iraq sense) if AAPL remains below $550 through this date, then rises.
Re:Apple the largest Company (Score:4, Informative)
You're an idiot. Their stock is near an all time low when you actually look at the right metric, PE which stands for price (per share) relative to earning (per share). It's a clear measure of what investors are willing to pay for earnings. And in spite of greater (earning and revenue) growth than any other large cap company in the last 10 years, somehow Apple's earnings are the least valuable.
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Actually, a much better explanation for Apple cutting orders (from one supplier) by 50% would be because they have a second supplier.
Manipulation (Score:2)
The math adds up once you view it through the lense of stock market manipulation. I suspect the source of the rumour will match up rather nicely with someone who made an enormous amount of money shorting Apple today.
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There are a lot of people short AAPL. The stock has had a good run but the fundamentals are against them. They cannot defend their price points anymore. Look no further than iPhones in Walmart for the handwriting on the wall.
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They have a P/E under 12, and a huge amount of cash. What fundamentals are you talking about?
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The 'fundamentals' of growth that's less than 100% YOY.
That's considered bad, but only for Apple. And only on Wall Street.
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The 'fundamentals' of growth that's less than 100% YOY.
Given that Apple revenue and profits are in double digit growth, that's an imaginary fundamental. Wishful thinking on your part rather than reality.
I bet you wished you had a pony too.
Re:Manipulation (Score:4, Informative)
Yeah right. Might want to get some facts.
http://www.asymco.com/2012/10/26/apples-growth-scorecard-for-third-quarter-2012/ [asymco.com]
There's a whole lot of revenue AND earnings numbers that are greater than 100%.
There's been less of it lately, so Apple CLEARLY deserves a PE of 11.5. (Dripping in sarcasm there)
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Sorry, comprehension fail on my part. And thanks for the link, that growth data is just what I was interested in seeing.
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The shrinking market for their products and the pressures on their margins. The company itself is fine. However it has been valued based on its ability to generate abnormally high profits and lots of volume. This article is an example of Apple purchasing fewer displays because they do not forecast as strong of a demand for their products as previously expected. There was an article last year about Samsung jacking up the price of the processors. Look for more of the same in the future. Fewer sales, few
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The shrinking market for their products
Neither the smartphone market nor the tablet market is shrinking.
The PC market is shrinking, but that's largely because of Apple's iPad. But within that market Macs are still in growth. With lots of room for moregrowth as their new customers come from the 90% who currently have Windows PCs.
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iPhones in Walmart are selling with a contract, which means that Apple is still making a healthy profit on them.
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The ones I'm seeing on Walmart.com are without contract. But here's the thing: They are exactly the same price as the Apple Store sells them for. Walmart is offering 26 months interest free credit terms to sweeten the deal. But there's no lowering of the price.
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Spoken like a person who doesn't understand the difference between price and cost.
An iPhone 5 retails for $650 - $950 depending on the model without the monthly subsidy of a contract. That is the COST regardless of the "under contract" PRICE Walmart sells it. I don't see many $3,000 TVs flying off the shelves at Walmart. People dropping that kin
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But clearly it's price that matters here. That's the only part that's paid at Walmart. The rest is monthly payments as banking transactions with a carrier.
I don't know what point you're trying to make, but plenty of people are quite happy to buy smartphones at Walmart. Why is it you believe Apple should refuse to supply phones to Walmart?
All math is strange when you're speculating (Score:3)
why is BGR even trying to do math on something it has no numbers on?
Apple (Score:5, Insightful)
Apple has serious competition now. Back when they were the only game in town they could do as they pleased.
But fat margins and high market share rarely last. And when margins and market share come down so does the stock.
A company whose primary product is a smart phone has the highest market capitalization in history? That smacks of Tulips [wikipedia.org]. You know it can't last.
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Apple has serious competition now. Back when they were the only game in town they could do as they pleased
The iPhone marketshare right now is highest in Apple history with >53% of the US market. They were never the 'only game in town'.
http://bgr.com/2012/12/21/apple-market-share-u-s-262731/ [bgr.com]
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Apple sells iPhones outside of the US. What is their global marketshare?
(Hint: It's lower than you want it to be, and it's falling.)
That isn't down to any underperformance on Apple's part. iPhone sales continue to have two digit YoY growth. It's simply that the ultra cheap market is Android, and the third world has lots of people in it. Apple does not and doesn't need to serve the ultra cheap market. There's no profit in it. That's why there's only Apple and Samsung that are making profit in the smartphone business. And Apple's making more of it than Samsung.
The GPs point is good. In the top end market which exists in the US, the iPhone
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Don't confuse primary product with only product. Without the iPhone or iPad, Apple would still be very profitable. Yes they make a great deal of money on the iPhone which is actually more revenue than ALL of Microsoft. So their market cap is somewhat justified.
The analogy to tulips doesn't make sense here. The tulip situation was based on pure speculation of a market. The main difference is Apple makes real revenue on products not speculative revenue.
No Apple wouldn't (Score:2)
Without the iPhone or iPad, Apple would still be very profitable
...no it wouldn't what a load of rubbish,its profits would take a massive dive instantly. Most of their profits come from the iPhone. Secondly without the iPhone/iPad is Apple relevant.
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Without the iPhone or iPad, Apple would still be very profitable
...no it wouldn't what a load of rubbish,its profits would take a massive dive instantly. Most of their profits come from the iPhone. Secondly without the iPhone/iPad is Apple relevant.
You are confusing profit margin with profit.
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Yes, you are correct. But what I believe the poster was trying to say is that while Apple would be profitable, in the sense they make more money then they spend, they would not be as profitable, in the sense that they do not make as much total profits.
No company would be AS profitable if you took away their two most profitable products. It's just a truism, and not worth saying. The point that Apple would still be profitable without them is worth saying. And proves that your accusation of not being diversified enough is false.
Without iPhone/iPad, Apple is back to where they were in 2007. Mac hasn't grown much since then
In 2007 they sold 7.2 million Macs.
In 2012 they sold 18.2 million.
they've all but killed their enterprise efforts, and iPod is no longer what is once was.
Their "enterprise efforts" never counted for very much. So no loss there. And the iPod is mostly sold as part of the iPhone these days. It's silly to imagine "without
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Apple has serious competition now. Back when they were the only game in town they could do as they pleased.
Apple does not have enough competition for some reason.
Ever try to buy a non-Apple equivalent of MacBook Air? an iPod touch substitute?
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I have seen MacBook Air equivalents, although I didn't pay enough attention to remember who made them.
Please look it up. Note that both the weight and matching screen resolution are non-negotiable. A laptop that's +1lb heavier or relies on 1024x768 max resolution will not count as a MacBook Air equivalent.
The iPod touch substitute is easy. Buy any Android phone and don't put it on a cell plan. Android phones work just fine as wifi only devices.
The iPod touch is significantly thinner than an iPhone (and cheaper). An iPhone does not count as iPod touch substitute, why should an Android phone?
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Depends on how you define market. This Forbes article argues that Microsoft's market share has collapsed.
http://www.forbes.com/sites/timworstall/2012/12/13/microsofts-market-share-drops-from-97-to-20-in-just-over-a-decade/ [forbes.com]
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Due to the generous Microsoft investment seeking to avoid monopoly intervention from the government, all while they languished near death.
More likely explanations (Score:5, Interesting)
It's unlikely Apple completely blew the estimated sales for iPhone 5 in the March quarter by that much. The most likely explanation is that the rumor is just wrong. Next most likely is that the 5S is coming soon and gets a slightly tweeked screen. Maybe even just a slightly different part from the same supplier. Whoever leaked the info saw the partial cancellation, but isn't aware of the replacement order. And, remember, even if 5S isn't coming until the next quarter, Foxconn might have to start taking delivery of screens this quarter, in order to ramp up production and build launch inventory.
It is an Apple patent. (Score:5, Funny)
Sign of the times (Score:4, Insightful)
I've said before that the world's love affair with Apple is slowly eroding, and so it seems iPhone 5 orders are not quite what Apple was expecting. 2013 is going to be a very tough year for Apple and coming out with cheap iPhone mini's or doing minor revamps of existing products are not going to cut it. Unless Apple does something truly innovative with iOS and iPhone in general, this slow erosion of their market will pick up speed.
Cutting back screen orders because they want to introduce a new product does not make any sense, why place an order so large in the first place? Is Apple so completely out of touch they don't even have a firm release cycle for future products when they ship a new product? Like they didn't know the 5S release cycle when they shipped the iPhone 5? I would be dumping Apple stock if this is their emerging trend, release a product with ridiculous expectations on sales, cross their fingers, and when the sales don't reach their inflated estimates dump the product and rush a new version to market???
Nothing about this speaks of a company that is being run properly.
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Now if it was iPad screens, I'd consider the report more plausible. One thing that nobody can know until Apple's quarterly report is the impact of the iPad mini on sales of the full-size iPad. There are three iPad mini buyer scenarios, not all mutually exclusive.
Scenario 1: The iPad mini attracts buyers who might otherwise have bought an iPad. The iPad mini has a healthy margin, but it's a cheaper product, so Apple's total revenue will suffer.
Scenario 2: The iPad mini appeals to buyers who would not have bo
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Like they didn't know the 5S release cycle when they shipped the iPhone 5?
Who says they did?
If they weren't sure if they could do that upgrade cycle yet, or if Sharp was going to get IGZO production working (which six months ago was an unknown) why wouldn't they hold on to their part orders? If IGZO production couldn't be ramped, they probably could ship using the existing screens instead.
There are a lot of reasons that even if they were aiming for a six month upgrade cycle they would have had a backup plan. The six month upgrade cycle falling out and then not having the part ord
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I've said before that the world's love affair with Apple is slowly eroding
Sure, you've been saying it for years. And year after year Apple's results have proved you wrong.
In part it's because you foolishly accept any rumour as fact without considering that time and time again these rumours turn out to be false. Click trolling or market manipulators.
Maybe they have enough (Score:2)
Maybe they have enough displays to make all the iPhone 5's they're going to sell, so the iPhone 6 can be released sooner. The quicker they're churned out, the more they'll sell.
Advanced Production Capacity Planning (Score:3)
Modern supply chain systems make extensive use of EDI and ERP systems. When you are Apple, and you really want to make sure you have sufficient capacity to supply your product, you tool up two suppliers to supply the full volume of your sales. As such, the EDI system says that in 6 months you will ship 32 million units x 2 suppliers = 65 million units.
At the 3 month mark, both suppliers are fully tooled up. As such, you cut the 3 month advance planning order to 16 million units x 2 suppliers = 32 million units. This should be close to actual sales. This is done, because the automated ERP systems will actually build 65 million phones, unless someone tells them to stop.
Crazy numbers like this happen all the time in some industries. 6 month = 2 million units/month. 3 month = 1 million/month. 1 month = 1.5 million/month. 2 week = 0.5 million/week. 1 day = 0.2 million/day. The numbers can be all over the place. Sometimes, the suppliers have no idea how many parts will be shipping the next day.
Re:so? apple is still selling less product (Score:4, Insightful)
Unfortunately most of the time these cost cuts are not based on R&D to invent a new method to decrease costs of production or increase the efficiency; which would take time and also uncertain. Remember high-earning managers don't like to wait (their time is money), and their stress level can't endure uncertainty of that level and they go the easiest way of cost-cutting; which is called mass lay off. They know human can increase their efficiency automatically when they are afraid of something, for this case losing their jobs (not steve). They know remaining workers will work twice to secure their places, instead of criticising the bad management etc. And exploit this fact every now and then.
Re:so? apple is still selling less product (Score:4, Informative)
Stocks go up on profit. And profit does not grow only with revenue. You can also deduct spendings. That's how big businesses work. They spend enormously for marketing, branding, hire unnecessary amount of people, to build a brand.
Not sure if you're talking about Apple or competition. Apple spends way less on marketing, offers no incentives, than, say, Samsung, which has has virtually bought their market share dollar-for-sale. http://www.asymco.com/2012/12/05/the-mystery-of-samsung-electronics-sga/ [asymco.com]
Dividends from Apple? (Score:2)
Apple has only recently started paying dividends and it doesn't look like they're giving away that much cash at all.
Re:so? apple is still selling less product (Score:5, Informative)
Stocks go up on profit. And profit does not grow only with revenue. You can also deduct spendings. That's how big businesses work. They spend enormously for marketing, branding, hire unnecessary amount of people, to build a brand.
Profit share in the phone industry: Apple 75%, Samsung 24%, everyone else who cares.
Product design team: Apple 16 people, Samsung 1000+ people.
Marketing spend 2009-2012: Apple approx 2.6 billion dollars. Samsung Electronics division alone approx THIRTY THREE BILLION DOLLARS.
Re:so? apple is still selling less product (Score:5, Insightful)
iPhones are so cheap? Are you insane?
iPhone 5 is what, around $200 with a 2-years contract in the USA? But these monthly fees are likely to be around $50 or more, so $200+(24x$50)=$1400 at the least.
iPod touch 5th generation is $300. That's less than a quarter of the cost. There's free wi-fi everywhere in NYC so iPod touch + VoIP = free calls.
And if people are too stupid to include their monthly fees in the cost of their iPhone, too bad. You can't fix stupid.
Re:so? apple is still selling less product (Score:4, Informative)
$199 on contract in the US
Galaxy S3 is also $199 and $149 at some stores depending on where the sale it
wal mart has the iphone 5 at $119
for single people its $90 a month for the carrier bill. for most of us on family plans we pay a lot less. i went to the new mobile share plan with AT&T. 4 smart phones will run me in the $200 range for unlimited minutes and texts and 10GB of data. and that's before my in laws kick in their part of the bill
everyone has a cell phone these days. i don't know a single person doing the wifi for free calls thing
Re:so? apple is still selling less product (Score:4, Interesting)
for single people its $90 a month for the carrier bill
Holy shit, that's a lot of money for cellphone service.
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$199 down is putting it more realistically. The rest of the money comes out of the higher monthly cost of contracts. Getting a phone cheaper by signing up for a contract is no different than getting a loan... you pay it all back eventually, with interest.
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If only you could get a discount for paying full price for *any* phone.
Unfortunately, that's not possible in the US.
Try a prepaid MVNO (Score:2)
If only you could get a discount for paying full price for *any* phone.
Unfortunately, that's not possible in the US.
It's been possible since the first prepaid carrier offered a smartphone. By now, Virgin Mobile USA (a Sprint MVNO) offers the iPhone 4S with 1200 minutes, 2.5 GB/mo of 3G data, and unlimited EDGE data for about $40 per month. See if your favorite carrier offers prepaid plans.
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I have an Android phone through Virgin Mobile - unlimited texting, unlimited data (3G), 300 minutes/mo for $35 ($42 after phone insurance, taxes, fees, etc). The coverage isn't great compared to AT&T/Verizon in NY (beats the hell out of T Mobile though). You won't get the latest and greatest phones through Virgin, but they're almost all under $200 (some smartphones as low as $30 if you catch a sale), completely your property, and there's no contracts. My only complaint are the stupid apps they put on th
Re:so? apple is still selling less product (Score:4)
Try living in the Western half of the US, having T-Mobile, and going on a road trip.
http://www.t-mobile.com/coverage/pcc.aspx/ [t-mobile.com]
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I had terrible service in Wyoming and the National Parks. Other than that, I spent the time working form the back of a minivan with my laptop tethered to my phone, while my wife drove. It was shocking just how good the service was. There were small dead spots here and there, but I was able to work just fine.
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I live in Colorado. If I drive to So-Cal, I'm going to be out of service coverage for about half the trip, maybe more.
No thanks.
Yeah, all carriers allow you to bring your own phone.
None of them give you a discount equal to the subsidy if you bought it through a contract.
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No, it is more like the Gillette model: Lower the price of the razor, stick them for the blade.
Which is why a safety razor costs around $35. but the blades cost as little as 5 cents.
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Re:so? apple is still selling less product (Score:4, Interesting)
iPhone 5 is what, around $200 with a 2-years contract in the USA? But these monthly fees are likely to be around $50 or more, so $200+(24x$50)=$1400 at the least.
iPod touch 5th generation is $300. That's less than a quarter of the cost. There's free wi-fi everywhere in NYC so iPod touch + VoIP = free calls.
And if people are too stupid to include their monthly fees in the cost of their iPhone, too bad. You can't fix stupid.
You need to compare what you would pay otherwise for the service contract, rather than taking the entire cost of the monthly service. If you're actually in an area where it's feasible to go without an actual phone service, good for you. If you're not, then there's an inherent cost in having a cell phone, which needs to be considered. It's the difference in cost that's the issue.
Case in point, if you're already paying that $50/mo for another phone, and don't plan on switching to another carrier any time soon, then that service contract doesn't need to be considered beyond "what will it cost me to break the contract if a better deal comes along?" And even then, it's really more of a question of "how much do I stand to save if I cancel and go with this other plan, amortized over the period of the contract" than it is an actual base consideration. In that case, the relative cost of the phone is actually $200.
What I don't understand, however, is why people need to spend large amounts of money on the latest and greatest phone in the first place. When the phone is so expensive you need to sign your soul away for a prolonged contract in order to subsidize it, perhaps you should be considering alternative options. Smart phones do not have to be that expensive, and there's no reason you *need* the newest and greatest phone. You can get a Galaxy S2 for $300 at retail, and it's got plenty of grunt for just about everything you could throw at it. It's not the S3, but you really don't sacrifice much, and it's a significantly less expensive option, especially when you consider the obligations of the contract. For me, the freedom to go wherever I want is more important, and I am quite happy with my less expensive Android phone.
Dumbphone costs an order of magnitude less (Score:2)
If you're actually in an area where it's feasible to go without an actual phone service, good for you. If you're not, then there's an inherent cost in having a cell phone, which needs to be considered. It's the difference in cost that's the issue.
Case in point, if you're already paying that $50/mo for another phone
Which I'm not. I carry a $5/mo flip phone for those few calls I can't make on a land line, which are mostly to arrange rides and the like.
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People are similarity stupid when calculating how much house/car they can afford. They don't look at the total cost of the home/car...they just look at how little downpayment they can make. When you pay between $200 to $400 up front for your phone...this is just a downpayment.
The iPhone 5 actually costs between $650 to $850 in the USA depending on model.
Yes...you can finance your phone by paying between $200 to $400 up front and paying the remaining $450 over a 2 yr period via a 2 yr contract...for between
Recurring fee gap between flip phone and iPhone (Score:2)
I've never met a person who does the wi-fi thing you mentioned.
Even if you're out of range of Wi-Fi, you can still make calls on a dumbphone. U.S. carriers tend charge a far larger recurring fee for a smartphone than for a dumbphone. For example, dumbphone plans on Virgin Mobile (a Sprint MVNO) start at $5 per month. Until this gap closes, some people will still carry a dumbphone and a 4" tablet (iPod touch, Galaxy Player, etc.) to save on the recurring fee.
OK, so $6.67/mo, not $5/mo, but still not $50/mo (Score:2)
The cheapest payLo plan I see is $20/mo.
That's true among monthly plans, which appear to be designed for people who have dropped their land line. But pay as you go plans [virginmobileusa.com] start cheaper: $20 per 90 days. They must have eliminated the $15 per 3 months tier fairly recently. It appears $20 buys 400 minutes in 1 month or 100 minutes in 3 months.
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Re:so? apple is still selling less product (Score:4, Insightful)
I'd love to experience the genius of Google's latest Nexus phone, if only they had enough sense to manage their stock and have one for me to buy.
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"In the US more than 50% of people have smartphones....who else is left to buy an iphone 5? not the people in developing markets who can't afford them"
It would really be nice if there were somewhere else on the planet where people could afford to buy stuff besides the 4% of the world's population in the U.S.
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I think the point is to regurgitate cliches from 2005 like "Apple laptops cost $2000"
Re:so? apple is still selling less product (Score:4, Insightful)
iPod touch is a 4" tablet (Score:2)
but I could see the Ipod Touch losing huge marketshare with all the tablets and smartphones being tossed about
Technically, a "tablet" and a "PDA" are the same thing in different sizes, making iPod touch a 4" tablet. But perhaps you're right that some people who would have bought a 4" tablet are buying a 7" tablet (Kindle Fire and Nexus 7) or Apple's own 8" tablet (iPad mini) instead.