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1 Buck  Thu, Jul 28, 2011 10:32:51am

First of all, I think Apple was hoping for 5% of the entire cell phone market, not the smartphone market. When they release the first iPhone, there was a very small Smartphone market. So hoping for 5% would be a really tiny number. There is a huge difference between the smartphone market, and the "all cellphones" market. In 2010/2011, the iPhone has a market share of barely 4% of all cellphones. Still a great number, but not "exceeded their wildest expectations."

I think you are missing (purposely?) what the trend is saying. Android phones have been out for less time. 500,000 new Android phones are being activated every day. A huge number of people have 3 year contracts with AT&T that are coming up in 2012. If 2011 is any indicator, many are going to move to Android.

It is not a 2-3 year race, it is a marathon. Apple dismisses Android at their own risk.

2 MichaelJ  Thu, Jul 28, 2011 12:03:06pm

re: #1 Buck

First of all, I got my figures wrong. Steve Jobs said they were hoping for 1% of the entire cell phone market share. Current figures show them as having somewhere in the neighborhood of 4.2% of the total market share. The original point still holds - the iPhone's success has exceeded their wildest expectations. Period.

I think you are (purposely?) missing what the article's author is saying. Even though I specifically stated in the post that I am not interested in comparing Android (an OS) to iPhone (a device), you do exactly that in your comment. The point once again is to highlight the fact that Apple is the #1 smartphone HARDWARE manufacturer. Regardless of the OS shares, there is no other HARDWARE manufacturer that is selling as many devices as Apple.

I seriously doubt that Apple dismisses Android. However, I do believe that they are quite satisfied with iPhone sales.

3 laZardo  Thu, Jul 28, 2011 12:31:24pm

If they were satisfied, then they wouldn't be suing to block Android phone sales by their competitors.

4 Prononymous, rogue demon hunter  Thu, Jul 28, 2011 12:33:28pm

It's perfectly reasonable to compare operating systems instead of devices (the comparison linked is IOS, Android, etc). The availability of apps and attractiveness to developers depends in large part on the OS rather than any specific device using it.

5 Buck  Thu, Jul 28, 2011 12:39:59pm

re: #4 prononymous

The availability of apps and attractiveness to developers depends in large part on the OS rather than any specific device using it.

I am not so sure about that. If I were developing an app for mobile phones I would want to develop it for what will be the largest market... in the future. You would not invest your hard earned money developing a product for a smaller market (number of handsets that can use your app). You would want to try and look out and invest your time and money in an app that ran on a platform that had the highest number of possible customers. You would also be thinking a year out....

6 Prononymous, rogue demon hunter  Thu, Jul 28, 2011 12:46:34pm

re: #5 Buck

That's pretty much what I mean Buck. Developers keep their finger on the pulse of the market and if popularity seems to be switching to another OS they will devote more resources to developing for that OS. Just look at the growth rate of the Android vs IOS app markets. If I was going to develop an app (I might) I would develop for Android first and then if there was enough incentive I'd port to IOS, Blackberry, WebOS, etc.

7 Buck  Thu, Jul 28, 2011 12:52:04pm

re: #2 MichaelJ

OK, so I was using your numbers. I don't know when you have the quote from Steve Jobs saying 1%. Doesn't really matter. Was the entire $700 phone market under estimated.... for sure it was.

I did not miss your point. I am trying to say that according to the trend, APPLE won't be the #1 smartphone HARDWARE manufacturer for very much longer.

According to your graphic, HTC is already 20% to Apples 28% If Androids popularity continues to grow, then it will take away from the growth in Apple smartphone hardware sales. If Windows mobile succeeds at all it will also eat away at Apples growth.

At one time, I am sure APPLE sold a greater number of personal computers than any other single manufacture. We know how that turned out.

8 MichaelJ  Thu, Jul 28, 2011 1:52:15pm

re: #3 laZardo

Do you really think that Apple is suing to block sales? They are suing to protect their IP, just like everyone else. Apple is far from the only player in the patent lawsuit game.

9 MichaelJ  Thu, Jul 28, 2011 2:20:19pm

re: #6 prononymous

Not many of the developers I know share your viewpoint. I would modify your statement to say that if I were going to develop an app, I would do so for Android and iOS first and port to other platforms if there was enough incentive. If you only develop for Android, you develop for 39% of the market. If you develop for both Android and iOS, you develop for over 70% of the market. Why would you ignore that big of a percentage of potential customers?

10 MichaelJ  Thu, Jul 28, 2011 2:29:23pm

re: #7 Buck

At one time, I am sure APPLE sold a greater number of personal computers than any other single manufacture. We know how that turned out.

You're correct, Buck. We all know how that turned out. Apple is now the most profitable tech company in the entire world. Not quite the point you were trying to make, but far less disingenuous and much more accurate.

11 Prononymous, rogue demon hunter  Thu, Jul 28, 2011 3:47:42pm

re: #9 MichaelJ

Not many of the developers I know share your viewpoint. I would modify your statement to say that if I were going to develop an app, I would do so for Android and iOS first and port to other platforms if there was enough incentive. If you only develop for Android, you develop for 39% of the market. If you develop for both Android and iOS, you develop for over 70% of the market. Why would you ignore that big of a percentage of potential customers?

For a large developer that is true. But not so much for small developers. A competent developer will make the core of their code platform independent so it is easier to port to other OSes. But porting still takes time to code and debug and costs money for hardware if they don't already have it and possibly additional service plans. Small developers with limited resources have to focus their efforts and spend wisely.

re: #10 MichaelJ

You're correct, Buck. We all know how that turned out. Apple is now the most profitable tech company in the entire world. Not quite the point you were trying to make, but far less disingenuous and much more accurate.

That's a rather recent development. Apple is good at finding emerging markets, but not at holding onto them. Just like the PC and MP3 player market segments, they have an early lead in the smartphone and tablet markets. But that doesn't necessarily translate to long term dominance. And I'm fine with that, diversity is good.

12 MichaelJ  Thu, Jul 28, 2011 4:52:24pm

re: #11 prononymous

Small developers with limited resources have to focus their efforts and spend wisely.

Good point. That may explain why this is happening.

Apple is good at finding emerging markets, but not at holding onto them. Just like the PC and MP3 player market segments, they have an early lead in the smartphone and tablet markets. But that doesn't necessarily translate to long term dominance. And I'm fine with that, diversity is good.

An interesting statement. It seems like you are saying that Apple had early leads in the PC and MP3 player markets, but didn't hold onto that lead. Last time I checked, Apple still has a commanding lead in the MP3 player market, somewhere in the neighborhood of 80% in the US. It seems like they have been holding onto that market quite firmly for the last ten years. I think you are confusing Apple's present and future with it's pre-1997 past. Nothing translates automatically into long term dominance. The companies that are leading the way know this and have figured out how to keep themselves relevant.

13 WINDUPBIRD DISEASE [S.K.U.M.M.]  Thu, Jul 28, 2011 5:09:18pm

re: #3 laZardo

If they were satisfied, then they wouldn't be suing to block Android phone sales by their competitors.

Fuck Apple

14 WINDUPBIRD DISEASE [S.K.U.M.M.]  Thu, Jul 28, 2011 5:10:35pm

re: #8 MichaelJ

Do you really think that Apple is suing to block sales? They are suing to protect their IP, just like everyone else. Apple is far from the only player in the patent lawsuit game.

Patent law as it applies to digital devices is hopelessly broken and favors the gigantic megacorp who can just toss out constant patent suits

15 Four More Tears  Thu, Jul 28, 2011 5:11:50pm

re: #13 WindUpBird

Fuck Apple

omg! but Apple products are sooo maaagical!!!

16 windsagio  Thu, Jul 28, 2011 5:12:29pm

re: #14 WindUpBird

Patent law as it applies to digital devices is hopelessly broken and favors the gigantic megacorp who can just toss out constant patent suits

On that point, good NPR piece on patent trolls.

This american life

Apple is one of the most predatory companies out there right now (see their... interesting app market ideas)

And yes, Fuck apple.

17 Prononymous, rogue demon hunter  Thu, Jul 28, 2011 5:53:40pm

re: #12 MichaelJ

Good point. That may explain why this is happening.


Essentially, yes it does. With Apple leading the the recent growth in the tablet market developers are starting more IOS projects following that trend. But as Google sorts out the current app marketplace troubles and more compelling Android tablets come out I predict that trend will reverse again.

An interesting statement. It seems like you are saying that Apple had early leads in the PC and MP3 player markets, but didn't hold onto that lead. Last time I checked, Apple still has a commanding lead in the MP3 player market, somewhere in the neighborhood of 80% in the US. It seems like they have been holding onto that market quite firmly for the last ten years. I think you are confusing Apple's present and future with it's pre-1997 past. Nothing translates automatically into long term dominance. The companies that are leading the way know this and have figured out how to keep themselves relevant.

Ipod market share globally went below 50% a long time ago, IIRC. And I'm not confusing anything - you first conflated Buck's statement about pre-1997 Apple with their recent resurgence. But we all do know how their early lead in the PC market turned out. They struggled for decades as a small niche market player and even their recent success with mobile devices hasn't translated into major market share in their PC department. With technical products people tend to buy on brand recognition. People recognize the name Apple for mobile devices, for PCs they recognize Dell, HP, Acer, Toshiba, etc. If Apple can keep making a name for itself in mobile devices they will likely lead market share there. But that lead can evaporate overnight if someone comes out with the "next big thing" and they are caught unprepared.

18 Jaerik  Thu, Jul 28, 2011 6:32:39pm

Apple needs to look to Android for more of its OS design, and Android devices need to look to Apple for more of their hardware design.

19 Buck  Thu, Jul 28, 2011 7:45:55pm

re: #10 MichaelJ

the most profitable tech company in the entire world.

I actually own significant shares in both Apple and Microsoft. I have been trading stocks for about 12 years, and am very good at reading an Income Statement.

Most recent annual data (figures are in thousands):

Apple Inc. (AAPL) Annual Data
Period Ending Sep 25, 2010
Total Revenue 65,225,000
Cost of Revenue 39,541,000
Gross Profit 25,684,000 25 / 65 = 0.38 or 38%
Net Income 14,013,000 14 / 65 = 0.215384615 or 21%


Microsoft Corporation (MSFT) Annual Data
Period Ending Jun 30, 2010
Total Revenue 62,484,000
Cost of Revenue 12,395,000
Gross Profit 50,089,000 (roughly double) 50 / 62 = 0.80 or 80%
Net Income 18,760,000 (approx $4,000,000,000.00 more than AAPL)
18 / 62 = 0.290322581 or 29%

Even IBM....

International Business Machines Corp. (IBM) Annual Data
Period Ending Dec 31, 2010
Total Revenue 99,870,000
Cost of Revenue 53,857,000
Gross Profit 46,014,000 46 / 99 = 0.46 or 46% (so a higher gross profit than AAPL, but less than MSFT)
Net Income 14,833,000 14 / 99 = 0.14 (a higher net profit than AAPL in dollars, but lower ratio.)

20 Obdicut  Thu, Jul 28, 2011 8:06:52pm

re: #19 Buck

Why are you leaving out Microsoft's much higher overhead and just looking at gross profit? What use is gross profit?

21 MichaelJ  Thu, Jul 28, 2011 8:29:50pm

re: #19 Buck

You are right. That was an offhanded remark on my part and wasn't actually factual. However, the figures you quote are from last year and don't figure in the most recent results.

As an Apple stockholder, you must be happy about the reversal of Apple's fortunes. I know that I am. They are selling their devices as fast as they can make them. It's a pretty amazing success story. That's what I mean when I say that they must be satisfied with their sales. A new model hasn't been released in over a year and they are still selling tons of them.

22 Virginia Plain  Thu, Jul 28, 2011 8:50:29pm

Oh great, not another Android vs. iOS pissing match.

23 Buck  Thu, Jul 28, 2011 8:52:15pm

re: #20 Obdicut

Why are you leaving out Microsoft's much higher overhead and just looking at gross profit? What use is gross profit?

(Your first stupid question) What use is gross profit when discussing who the profitable tech company in the world is? Ummmm Duh....

However, I will bite. In fact I am leaving nothing out. I certainly didn't think I had to copy everything into the post. I did a link back for any details.

However...MichaelJ said "the most profitable tech company in the entire world."

Profitable is one of those words that can mean simply more dollars of profit, or a higher percentage of profit.

I posted both a Gross Profit, and Net Profit comparison. And included the ratios so that the comparison would be fair.

Basically tech hardware manufacturing is almost never as profitable as software. Microsoft sells a lot of software with almost a zero COG. Just the cost of a sticker (or paper) with a licence on it. That is profitable. Microsoft is a huge licencor. It is being said that almost $30 of every Android phone sold is a MSFT licence fee. Again zero COG, almost all profit.

Now did that fully answer your first question?

24 Obdicut  Fri, Jul 29, 2011 2:04:00am

re: #23 Buck

(Your first stupid question) What use is gross profit when discussing who the profitable tech company in the world is? Ummm Duh...

Yes. Gross profit is not net profit, so it tells you nothing about who the most profitable tech company in the world is.


I posted both a Gross Profit, and Net Profit comparison. And included the ratios so that the comparison would be fair.

Yeah, you did, I was wrong, sorry.

25 Buck  Fri, Jul 29, 2011 9:20:18am

re: #24 Obdicut

Yes. Gross profit is not net profit, so it tells you nothing about who the most profitable tech company in the world is.

When someone makes a comment like "most profitable" without being specific, then you don't really know what they are referring to.

Now, how do you calculate "overhead" so that you can say Microsoft has a "much higher overhead"?

26 MichaelJ  Fri, Jul 29, 2011 10:38:52am

re: #25 Buck

You really took that comment and ran with it, Buck. I've already mentioned that it was an offhanded remark, intended more as a snarky response to your snarky comment that preceded it. The bottom line is this - Apple is on quite a roll. They have beaten Wall Street's expectations quarter after quarter for years now and that really seems to bother you for some reason. I think it's pretty amazing that iPhone 4 is still the top selling smartphone in the market. With iOS 5 and a new model due to be released soon, I have a feeling that they will continue to post substantial results. Don't forget, we are only talking about the phone here and haven't even touched upon the runaway success of the iPad...

27 Buck  Fri, Jul 29, 2011 1:24:56pm

re: #26 MichaelJ

Sorry but there is a history behind Obdicut's question that has nothing to do with you.

28 Buck  Fri, Jul 29, 2011 1:30:10pm

Obdicut likes to ask inane questions, respond with more questions, slowly changing the subject. Then whine when I start ignoring the stupid off topic questions with "when are you going to answer my question?"

The only way to stop him is to be clear when I can see it coming.


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