> But with declining market share puts those profits in
> severe danger in the future.
Can someone explain, how this got upvoted? 50% of profits with just 4% of market share, the article we ar discussing there sates that Apple's market share grew (6,4 to 7 percent in OEM, 24.6 to 24.7 in total smartphones market. Even more—Apple was the only growing besides Google), and somehow "declining market share" gets upvoted?
Add 20x revenues of App Store vs. Android market and 9,5 billions made by iPad in just nine months — all that is somehow "severe danger" to Apple's profits?
It is an outsized threat to their profits vs. what you might expect based on linear extrapolation. Up until quite recently they've basically been able to collect monopoly rent. It is quite likely they will not be able to do so by this time next year. It is entirely possible that they will lose this ability this year, with the speed this market has been moving with.
Especially if iPhone users start to migrate to Android. While Apple partisans will swear up and down this is simply Not Possible (TM), it in fact is completely possible. Broadly speaking, most Americans will choose to save money and get something "good enough" over something perfect. Even if I stipulate that Android will never be more than "good enough", a statement I would not necessarily agree with but let's go with it, you will still find a lot of not-Apple-partisans getting peeled off proportionally to the price delta between the iPhone and the Android. In which case Apple will either have to drop prices and profits or firmly entrench itself as the high-margin, low-sales player... and drop profits. There really isn't a scenario in which Apple gets to be the high-margin, high-sales player that some people seem almost desperate to believe will be the outcome, but even mighty Apple with its Steve-Jobs-powered RDF can't actually flout economic realities, only harness them.
"Even if I stipulate that Android will never be more than "good enough", a statement I would not necessarily agree with but let's go with it, you will still find a lot of not-Apple-partisans getting peeled off proportionally to the price delta between the iPhone and the Android. In which case Apple will either have to drop prices and profits or firmly entrench itself as the high-margin, low-sales player... and drop profits."
With iPod, Apple played this almost perfectly, driving down their component prices by always being the single biggest customer of their suppliers, then deciding how long they could charge a premium versus lowering prices to keep the delta with competitors prices from getting too large. They kept the prices close enough that most consumers were willing to pay the premium for the Apple brand.
I actually think they will do the same thing with iPhone. They are getting close to having the previous iPhone version a "free" throw in with new contract, and there are rumors of Apple developing an even lower version for pay-as-you-go contracts.
I think angering content providers is a much bigger risk for Apple right now.
Can someone explain, how this got upvoted? 50% of profits with just 4% of market share, the article we ar discussing there sates that Apple's market share grew (6,4 to 7 percent in OEM, 24.6 to 24.7 in total smartphones market. Even more—Apple was the only growing besides Google), and somehow "declining market share" gets upvoted? Add 20x revenues of App Store vs. Android market and 9,5 billions made by iPad in just nine months — all that is somehow "severe danger" to Apple's profits?