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cb474 is offline cb474
2009-11-11 , 13:39
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#21
Originally Posted by mikec View Post
They did total revenues of $36.27B of which 6.7B was iPhone and iPhone related (assume includes app store sales). This represents 18% of total sales.
Where did you get this number since Apple doesn't breakdown revenues by the product, I thought? If they did, Strategy Analytics wouldn't have to do its estimate.

Originally Posted by mikec View Post
Assuming linear relationship with the full year numbers (and yes I know iphone growth was high in FYQ4) then iphone sales for FYQ4 should be closer to $1.76B and Operating income at $394M.
I just don't see why one should assume a linear relationship with the full year numbers. Apple iPhone sales skyrocketed in the September quarter. They sold 7.4 million iPhones. In the previous quarter they sold 5.2 million iPhones. And in the quarter before that, they sold 3.8 million iPhones. So as soon as you assume a linear relationship with the full years numbers, your calculation becomes completely disconnected from what happened in the September quarter.

Strategy Analytics was only making a claim about the last quarter. Averaging back over the whole year effectively effaces the point of what happened in the last quarter. Once a linear relationship is assumed, then the numbers really are made up.

Look, here's a story explaining that Apple probably has an almost 60% profit margin on the iPhone: http://venturebeat.com/2009/07/29/at...to-60-percent/. Other stories over the years have been done making the same point (e.g. http://www.computerworld.com/s/artic...eater_than_50_). The iPhone is the most profitable thing Apple sells. Is it so hard to believe that it accounts for a huge portion of Apple's profits?
Last edited by cb474; 2009-11-11 at 14:24.
 
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mikec is offline mikec
2009-11-11 , 13:59
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#22
Apple 10 k filing for 2009, the breakdown is in there for the full year on revenues only.

iphone sales were 4.2M,3.79M,5.2M,7.4M

I did caveat the Linear relationship. happy if anyone can provide a better estimate of the breakdown.
Last edited by mikec; 2009-11-11 at 14:09.
 
Thor is offline Thor
2009-11-11 , 14:03
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#23
Apple brought touchscreen phones to the mainstream. They are in the unique position of having their "cult" that will stay loyal regardless. They also have unlimited goodwill from the media types who tend to do their work on Apple's machines. This is part of the underrated aspect of their success, whereby the media types will back Apple regardless of whether they have the best device on the market. Not forgetting the apparently simplistic user interface. Like it or not, most people in the World, and the USA, are not the smartest. Just as the top 5% may own the majority of the wealth, the top 5% in intelligence is also a small number of people. Simple is good for the rich but stupid. There is also the high-priced status symbol aspect. Everyone knows Apple products do not come cheap. How else do phones such as the Arte, Vertu, Tag etc keep selling? And I know a couple of people with money who bought Arte and Vertu phones just because they are expensive and like the expensive materials used.

I will be interested to see how the next iteration of the iPhone turns out. The industry seems to be moving towards WVGA, will Apple follow? If so, how will they maintain app compatibility with such a change in resolution ? Will that alienate older users and will developers move to design exclusively at the new resolution, or will apps be easily scaleable? It's going to be interesting.

I have a feeling that Apple are happy to occupy a niche (high-paying) market as they do with their computers. The iPod started hugely successful until mobile phones cut into their profits and they jumped in with the iPhone. How will they keep their high profits sustainable ?
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cb474 is offline cb474
2009-11-11 , 14:35
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#24
Originally Posted by mikec View Post
Apple 10 k filing for 2009, the breakdown is in there for the full year on revenues only.

iphone sales were 4.2M,3.79M,5.2M,7.4M

I did caveat the Linear relationship. happy if anyone can provide a better estimate of the breakdown.
Yes, I just corrected my sales numbers. Doesn't really change my point that the linear relationship assumption is not a good one, caveat or not.

Anyway, here's the link to the 10-K if anyone else wants to take a look at it: http://www.apple.com/investor/.

The 6.7 billion revenue for iPhone sales in 2009 figure that you quote is the net sales. The 4.5 billion sales figure in the story about Strategy Analytics estimates does not specifiy, so it could be gross sales or some other metric.

On the other hand, Apple's total operating income for 2009 was 7.6 billion. It is a little hard to believe that 1.6 billion of that came from the iPhone alone in the fourth quarter, even if sales were down for the year on iPods and computers (but grew 266% for the iPhone).

Anyway, it's all getting a little complicated and I still find it hard to believe that Strategy Analytics posted such easily debunked estimates. It's not like they can't read the 10-K and other documents themselves, which one would assume anyone making such estimates would do.

But even if the estimates are wrong, it does seem like the iPhone may well account for the majority of Apple's profits, which is still an interesting state of affairs.
 
HuangShan is offline HuangShan
2009-11-11 , 15:26
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#25
Thanks for the numbers and explanations. Very interesting.

One thing I would like to add:
it is not only that they are marketing genius.
They have created a very solid PRODUCT, which in fact has been brought to the market in an extremely innovative way.

We should not call them "marketing genius". It does not explain their success. And we should understand why they are successful.

By the way, I am using an iPod touch since 5-6 months. And this is the greatest hate-like relation I was into. By far it does not solve my wishes. But I do not see any competitor. Oh, I am hardly using the AppStore ...
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christexaport is offline christexaport
2009-11-11 , 15:45
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#26
Originally Posted by Thor View Post
Apple brought touchscreen phones to the mainstream. They are in the unique position of having their "cult" that will stay loyal regardless.
Don't be naive to believe that. Nokia's fans thought the same thing, then watched market share in smartphones fall from 70% to 40%. Success in tech is short lived. The longevity of anything comes from ability to grow the concept. Apple hasn't done much of that. Where's the keyboard, iPhone Mini, multitasking, and better signal strength users have been begging for? In HTC, Blackberry, Nokia, and Samsung devices, that's where. Apple's still working under the same rules as everyone else, and making the same mistakes that kept them in a niche in the PC market.
They also have unlimited goodwill from the media types who tend to do their work on Apple's machines. This is part of the underrated aspect of their success, whereby the media types will back Apple regardless of whether they have the best device on the market.
As a musician and recording engineer, please stop dissemenating this old wive's tale. Macs WERE the choice for recording artists and content creators back when those types weren't always geeky or tech savvy maybe 10 years ago. Not any more. More movies are made on PCs than Macs, most audio is done on PCs, and most schools that teach media feature labs full of HP, Dell, and IBM PCs running Windows. Go tour Full Sail University, Dallas Sound Lab, or any commercial studio out there today. I promise, its alot more ASIO equipment then Audio Units. I used to use a hella expensive Pro Tools Mix Mac rig with big bucks in farm cards, etc. Now I use Nuendo on a PC with virtual plugin accelerator cards. Apple saw the creatives starting to leave, and bought Logic and made it Mac only to try to stem the exodus, but do you know any pro studios running Logic? This is 2009, not the 90s.

Not forgetting the apparently simplistic user interface. Like it or not, most people in the World, and the USA, are not the smartest. Just as the top 5% may own the majority of the wealth, the top 5% in intelligence is also a small number of people. Simple is good for the rich but stupid. There is also the high-priced status symbol aspect. Everyone knows Apple products do not come cheap. How else do phones such as the Arte, Vertu, Tag etc keep selling? And I know a couple of people with money who bought Arte and Vertu phones just because they are expensive and like the expensive materials used.
The problem is not smarts, but exposure. Symbian is ok for Europe because they're used to it. Windows is good for the US because we're used to it. When you grow up using something, its simple. I used to teach Windows and Microsoft Office classes at a job I had years back. Today, kids could teach the same class.

Right now, the US is behind in tech, so the iPhone is perfect for this market. All of the tech of today with training wheels. But people advance. Look at 10 years ago with AOL. It was all the rage and super simple. Where is it today? A distant memory. Users grow, and tech must grow with them. iPhones are popular because they are good introductions to mobile tech for those new to the space, and great for those wanting the core features without all the extra fluff they won't use. It has nothing to do with rich or poor, but smarts, maybe a little. Not everyone will always want this simple training wheels approach, and you'll begin to see people "upgrade" from an iPhone alot in the coming years. Whether Apple provides that upgrade or someone else remains to be seen.

And in the US, the iPhone is considered cheap. Its $199 on contract, while most high end devices have gone for $300+ on contract until now. The Vertu devices aren't popular, and I rarely see them outside of magazine ads. Not a good comparison to the iPhone at all.

How will they(Apple) keep their high profits sustainable ?
Good question. We'll see once the at&t gravy train leaves the station. Without cheap pricing, I don't see their ARPU staying as high.
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christexaport is offline christexaport
2009-11-11 , 15:46
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#27
Originally Posted by dtrouton View Post
I did read it, and it's a good point, but I think they aren't making a fair comparison (if you read my previous post). I can see where they get 1.6 billion US figure for Apple, but the 1.1 billion figure for Nokia doesn't make sense. I can't for the life of me see how they came to that number. It would suggest Apple have a margin of $200 per unit and nokia $10 per unit. I'm sure apple make vastly more per unit, but not *that* much. For this to be true Nokia's operating cost per quarter would have to be ~350 million, which on sales of 10 billion would be pretty remarkable!
When the iPhone costs less than $185 per device to produce, and they get an instant $450 from at&t, plus parts of the phone plan revenues, iTunes sales, and App Store profits, you're talking about a ARPU of $200+ quite easily after R&D and marketing. I don't see what you're missing, unless you're not from the US, where 40% of all iPhones are sold.

Nokia has a more diversified portfolio of devices, ranging in price from $30-$1200. They are strongest in emerging markets where ARPU is lower, unit prices are lower, and unlimited data plans are less common. Its simple math.

Are iPhone handset sales really more than all Apple's other businesses combined? I just can't see it.
Then you need to catch up with the times. The iPhone saved Apple. They'll never command more then 15% of the PC market, no matter what they do. The iPod business has declined, and will probably be discontinued soon. Mobile is the center of the technology planet at the moment. Cellphones have surpassed PCs for the largest installed base. This isn't the future, mobile is NOW!

The only fair comparison is the units sold and money made from that. 7.5m units for 4.5 billion for Apple, and 100m units for 10 billion for Nokia. The other figures are pure guesswork. (and I think that figure is impressive enough in Apple's favour).
Strategy Analytics studies are nothing near guesswork! They are the most respected industry analysis firms out there. I have the priviledge of reading many of their studies through a friend's access, since these studies cost $3k-$12k EACH! They get figures from the manufacturers, supply chains, retailers, and other sources to bring the most accurate information available. I wouldn't be surprised if Nokia and Apple each were clients.

As for Maemo being left in the dust by android, I think with the information currently available it's a fair guess. Maemo will be only a section of Nokias business, while Android will transition to absorb most handsets from several manufacturers. Nokias business will split between Symbian and Maemo. I think it really does remain to be seen how Android does vs Symbian in developing markets though -- those are really the only two options in that sector.
Maemo won't be left in the dust by Android. Maemo isn't even on the same highway. Maemo is for high end portable desktop applications. Android competes with Symbian, not Maemo.

Something lost in all of this is how unsound Apple's iPhone business position really is. Apple to too heavily hedged in the US with 40% of its sales in America. They are also heavily hedged in the high end. We've seen what an economic turndown can do to high end real estate. The same could happen to Apple once their midrange pricing advantage via subsidy ends, and people are less willing to spend $350 on an iPhone on contract.

Also, look at where their revenues come from. App sales, music sales, and device sales. Apple is afraid of adding Flash to the iPhone browser because it leaves a void to be filled by apps. Soon it will be seen as a disadvantage, especially once everyone else has Flash 10 on device.

Web based apps and services are the future, as Tomi Ahonen and other visionaries have continuously reminded us. Whoever has the best web browser on device has a better chance of surviving any OS battle in the marketplace. Supporting the most popular services is just as important, and supporting services other than those you own or promote will only make the offering more attractive. Apple can't continue to rest on its music store laurels, with Amazon, Google, and Nokia coming to play as well, and Last.FM, Pandora, and other streaming services getting more popular every day.

Nokia's strategy has allowed it to remain profitable while holding parts of every market pricing bracket. It is situated to survive downturns to the low, mid, and high ends. Try that, Apple. Take a look at BMW and Mercedes. They're both companies only positioned in the high end, making profits of scale hard to see. Meanwhile, Audi, Caddillac, Lexus, Infinity, and Lincoln have good futures ahead because of the mass market partners there to cover them in times of loss. So the same with RIM and Nokia, who have diversified their device portfolios to weather economic storms and appeal to more people. I'd rather be RIM or Nokia than Apple in this regard.
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mrojas is offline mrojas
2009-11-11 , 16:09
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#28
Originally Posted by cb474 View Post
2) The article points out that because of the popularity of the iPhone in the U.S., the U.S. has become the major source of cell phone applications. Hence even though the U.S. has traditionally not been one of the most important cell phone markets, it now has disproportionate influence over the direction cell phone development is heading in. If you want your app market to take off, you need a platform that's popular in the U.S. Again, Android will only compound this problem for Nokia.
This point makes the implicit assumption that US market is equal to the global market, and what happens in the US market will happen elsewhere.

Wrong assumption. Sometimes I want to scream to the media: "WAKE UP!!! DO SOME RESEARCH ON OTHER MARKETS THAN YOURS AND STOP ASSUMING EVERYTHING HAPPENS EVERYWHERE THE SAME WAY THAN IN THE US!!!"

In other point, if Apple wants to rip off their customers, and such customers let it happen, well then *shrug*.

There are many other customers and markets that prefer to get good bang for their buck... and that need a mobile device, not as a fashion statement, but as critical asset for their life. Just check the work Nokia is doing in India. Its because of things like that, Nokia deserves my utmost respect for what they do as a global citizen. And in my opinion that is far more important than plain profits.
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Thor is offline Thor
2009-11-11 , 16:46
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#29
Originally Posted by christexaport View Post
As a musician and recording engineer, please stop dissemenating this old wive's tale. Macs WERE the choice for recording artists and content creators back when those types weren't always geeky or tech savvy maybe 10 years ago. Not any more. More movies are made on PCs than Macs, most audio is done on PCs, and most schools that teach media feature labs full of HP, Dell, and IBM PCs running Windows. Go tour Full Sail University, Dallas Sound Lab, or any commercial studio out there today. I promise, its alot more ASIO equipment then Audio Units. I used to use a hella expensive Pro Tools Mix Mac rig with big bucks in farm cards, etc. Now I use Nuendo on a PC with virtual plugin accelerator cards. Apple saw the creatives starting to leave, and bought Logic and made it Mac only to try to stem the exodus, but do you know any pro studios running Logic? This is 2009, not the 90s.
Apologies, by media types, I meant more in the way of journalists. Of course, all don't use Apple but when I see a news programme on TV and you can see the Macs in the background, or a test of uploading professionally recorded news media via an Apple laptop on something as mainstream as "The Gadget Show"... well, I don't think they specially bought the laptop just to record that segment of the show. It would go some way to explaining the possibly unknowingly biased reporting of Apple and competitors. Why do movies come with iPhone apps but a bigger platform like Symbian doesn't (and I'm a Symbian/Blackberry user with no intention of getting an iPhone).

Originally Posted by christexaport View Post
And in the US, the iPhone is considered cheap. Its $199 on contract, while most high end devices have gone for $300+ on contract until now. The Vertu devices aren't popular, and I rarely see them outside of magazine ads. Not a good comparison to the iPhone at all.
I guess I have a more UK/Euro-centric view here.
Over here, many people are used to getting a free phone on contract, or paying a minimal amount (eg. $30-50) to upgrade. The 3GS with 32GB costs 175GBP on a 24 month contract (275gbp on an 18 month contract), and the other operators getting the phone won't be reducing contract prices or length. Personally I have trouble with an 18th month contract, and don't want to be on a 24 month one at all...! O2 are currently giving away Sky Sports and Sky News free for 3 months on there (I hope this will be available on the N900 even as the standard subscription of 5GBP per month).

Source for cost of phone: o2
http://shop.o2.co.uk/update/paymonth.html

The point is, iPhone is seen as expensive and exclusive here in the UK. From my point of view I see it as more for the poseurs, the pretentious and the deluded, but that's something else entirely

I've known people personally who have had Vertus and Artes, and they are the kind who would have expensive watches like IWC and Audemars Piguet. However, one of them who is more practical, at one point had an N95 and an iPhone.
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christexaport is offline christexaport
2009-11-11 , 16:51
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#30
amen, mrojas. amen.
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