Money makes the world go round, right? You have to spend money to make money. But no matter how you count the beans, making money is the objective and over the past five years no company on earth has made more money than Apple.
Unfortunately for bean counting, Apple only reveals revenue and profits for the company as a whole, but revenue for major product lines. Competing companies do something similar, but with less detail. That means members of the worldwide Guesstimators Club are required to estimate how any one company or product is doing with their aforementioned beans, but there is some unanimity in the counting. Apple owns the profits in every industry segment where it competes.
So, how do competitors stay in business?
End Of The ‘Doomed’ Meme
Please, technology critics and charlatans and so-called market anal-ysts, isn’t it time to drop the ‘Apple is doomed‘ meme because there just are no numbers anywhere that indicate anything that resembles doomed, troubled, beleaguered, or anything that smacks of red on a P&L or balance sheet. Everyone else? Maybe. But not Apple.
In fact, it’s the opposite. Across the board, Apple takes the largest share of profits wherever it competes, and the billion or so customers it has should indicate that marketshare just doesn’t mean what it used to mean (which only implies that it ever meant anything, as it seems profits have reigned supreme since Jack began counting beans).
According to those who count such things and get air time in places like Barron’s, Apple shipped slightly more– 78.3-million vs. 77.5-million– iPhones than Samsung did all kinds of phones. Yet, Apple took home 92-percent of the industry’s entire profits. And Samsung had a pretty good year. So, how do iPhone’s competitors stay in business?
They don’t. In China, the largest smartphone market on planet earth, the top sellers sell plenty but struggle to make money, hence who is on top in marketshare changes every year, while Apple, usually in the Top 5 (and ahead of Samsung) takes most of the profits. The same situation occurs in tablets. Apple’s iPad is the biggest single seller, but takes most of the industry segments profits. Amazon, Samsung, and every other Chinese maker refuses to say even how many they shipped, let alone sold, and nobody ever outside of Cupertino, CA bothers to divulge their sales and profits.
What about the Mac? Apple’s once flying flagship product barely touches two digits of marketshare, but more than half the industry’s profits. How do PC makers stay in business? Quick. Name five PC makers. Well, let’s see. Dell. HP. Uh, um. Lenovo. Acer. And, uh, well…
What about Apple Watch? Apple doesn’t say how many units are sold each quarter– after all, Watch is not a major product; it’s an accessory to iPhone and Apple seldom mentions accessory numbers– but the aforementioned members of the Guesstimator’s Club guessed that Apple sold almost 12-million Watch unites last year, and took home 80-percent of the smartwatch revenue and profits, and that was against many non-smartphone fitness bands and cheaper watches that are not all that smart.
Who Is Doomed Now?
That brings me full circle back to the original question. How do Apple’s competitors stay in business?
For Google, Samsung, Microsoft, they each have a different business model so revenue from other products and services helps to subsidize what is lost while competing head to head with Apple. Wait. Isn’t the Microsoft Surface a big seller against the Mac? Excuse me. I snorted derisively. Surface PCs were down in sales and revenue last quarter, while the Mac had yet another record sales quarter. Google’s Pixel isn’t much of a competitor since it’s more like last year’s iPhone 6s than an iPhone 7. And, well, uh, Samsung’s latest product innovation is a flame retardant for its smartphones.
Let’s face it. Nobody anywhere– hardware or services or retail stores– competes well with any of Apple’s products. Some may sell more, but it’s Apple that competes so well in each product category that the company walks away with the industry segment’s profits.
How long will some of these competitors with pockets that are not deep even stay in business?