The tech industry’s greatest growth area is smartphones and tablets. Who’s got the monopoly abuse? Microsoft? Puhleeze. ARM? Nope. You might answer Google because of Android’s smartphone marketshare dominance, but you’d be wrong.
The Profit Monopoly
In most countries a monopoly is not illegal. Abuse of monopoly power is where the legal eagles begin to take notice.
Even against the growing hoardes of Android devices that appear on the market daily, it is perpetual underdog Apple that has the monopoly.
It’s a monopoly on profits. The company’s lock on all the profits is abusing the competition and it’s all perfectly legal. For now.
With tongue planted securely in cheek, here’s a brief look at how it works.
A monopoly exists when a company is the only supplier of a particular component (in this case, profits) in the industry.
Likewise, monopolies are often characterized by a lack of economic competition in a market segment. A business that wields monopoly market power over the competition often raises prices to increase profits.
Extraordinary gross margins describes Apple, which has a growing monopoly on the smartphone industry’s profits, which, in turn, is making it difficult for competitors to survive. The money in the market is drying up, and Apple has most of the industry’s profits.
Profit Share, Not Marketshare
Under normal business conditions, a company may have a monopoly on marketshare, much the way Google’s Android has in the smartphone arena, but cannot abuse it.
The problem here is that only one Android device maker shows any profit from smartphone sales. Who? Samsung.
Analyst Tavis McCourt crunched the numbers and it’s not looking good for Apple. Obviously, Apple’s monopoly on industry profits, which McCourt says now exceeds 87-percent, is abusing smartphone competitors.
Second place Samsung’s smartphone profits are pegged at barely 32-percent. See? Apple is abusing Samsung et al and the feds need to step in and stop the bloodletting and close down Cupertino’s growing profit monopoly abuse.
Apple appears also to be abusing mathematics, too. Apple’s 87-percent and Samsung’s 32-percent come up to more than 100-percent. That’s because the rest of the smartphone industry is losing so much money, obviously in a desperate attempt to bleed red ink so profusely as to make Apple look bad to the fed’s monopoly trust busters, that even the math doesn’t add up anymore.
It’s not looking good for the iPhone maker as the competition shrivels. One time market leader Nokia has been sold to Microsoft, which still can’t sell Windows Phone devices. BlackBerry is a shell of its former self. Motorola has been sold for scrap.
Only Samsung stands between federal government intervention and the breakup of Apple’s stranglehold on the smartphone industry’s profits. It’s a good thing Apple let Samsung copy the iPhone and iPad’s designs. Otherwise, with Samsung out of the picture, Apple would have all the industry’s profits.