Can you name a company that is more profitable? Can you name a company that would not like to swap financials with Apple? After buying back tens of billions of dollars of Apple stock, and giving tens of billions more in dividends, Apple still has nearly $150-billion in cash. How did the company get this rich?
Perception Is Reality
Apple is rich for a variety of reasons, not the least of which is a penchant for well designed and desirable products sold at a premium price.
Apple’s profit margins are not just the envy of the industry, they’re the envy of every industry that ships anything but software.
How did Apple get so rich? Think about what you pay for an Apple product. Is it worth it? Of course. We love our Macs, iPhones, and iPads.
Yet Apple could easily be accused of gouging customers to reap enormously undue profits, far beyond that of Google, Samsung, Microsoft or almost any other company not selling oil.
The average PC sells for less than $600. The average Mac selling price is about twice that. Need an iPhone or iPad with more than the 16GB minimum storage? Another 16GB costs $100. Double that to 32GB and you pay another $100.
That’s $200 for an additional 48GB of flash storage. A brand name SanDisk 64GB USB flash storage drive from Amazon costs less than $36. That’s why Apple is so rich. Price gouging.
It Costs How Much?
4GB of RAM in a notebook is about normal these days, and the Mac is no different. The hot selling MacBook Air comes with 4GB standard. Double that to 8GB and it’s another $100. Double the 256GB of flash storage and you’ll pay $300 more.
Think about it. Apple charges $100 more for 4GB of RAM, and an additional $300 for 256GB more flash storage on the Mac, but manages to squeeze $200 from iPhone and iPad users for a measly 48GB more flash storage.
Worse is what’s not in the iPhone and iPad. RAM and affordable storage. Apple doesn’t tell potential customers what the amount of RAM is in iPhone and iPad because they would be embarrassed. The low amount of RAM explains why Safari for iPhone and iPad is in constant refresh mode when you open too many websites in browser tabs.
Apple can afford to put more RAM and storage into every device but chooses not to, or, makes customers pay heartily through the nose (an unpleasant metaphor) for the privilege of more.
It’s simple math. Apple is rich because it can get away with higher prices than every competitor.