The cellular market has been looking for an answer to Apple’s iPhone, but it continues to suck all the air out of the room. Apple’s focus on an exclusive product and prestigious brand has allowed the company to claim more profits than all its major competitors combined, with a mere fraction of market share. Even “Antennagate,” which could have killed many handsets, couldn’t stop Apple from setting sales records with the iPhone 4. Even with Android on the rise, cellular market analysts say Apple’s iPhone is so lucrative it’s unlikely the business feels threatened.
Apple’s iPhone a license to print money
Apple’s domination of the mobile industry was reported on September 21 by Fortune on CNN.com. Giving its stock a “buy” rating, the fund market analyst Canaccord Genuity projected out Apple stock as high as $ 356 per share. The analysts used data about Apple’s performance to back up its advice to buy the company’s stock. From January to June this year, Apple sold 17 million iPhones. That total represents a share of the market of just 3 percent. The three biggest cell phone makers within the world, Samsung, Nokia and LG, dominated with a combined 400 million units sold. Apple collected 39 percent of the mobile industry’s profits during that time. Samsung, Nokia and LG shared 32 percent of industry profits. Canaccord Genuity pointed out that most handset corporations struggle to make a profit or even 10 percent operating margins. With its iPhone, it is believed that Apple enjoys a 50 percent gross profit on top of a 30 percent operating margin.
How does Apple get it done?
Capturing just 3 percent of a market while reaping 40 percent of its profit was impossible. Then Apple created the iPhone. Apple has far outgained its rivals with more than slick marketing campaigns, according to Jason Mick at Daily Tech. Mick said the iPhone’s popularity enables Apple to demand a very lucrative contract from AT and T, who’s depending on the iPhone to gain subscribers despite its poor customer satisfaction record. Apple also leverages the operating system to gain cost efficiencies from a lesser grade of hardware. Apple also drives a hard bargain with its manufacturers. Apple’s battle plan has resulted in piles of cash to spend on invention in the iPhone/Android war. Beating Android, Mick said, probably isn’t at the top of Apple’s list. All Apple has to do is keep its loyal customers happy.
Even Consumer Reports can’t derail the iPhone
Even a so-called public relations ordeal such as Antennagate could not disrupt the iPhone’s momentum. The “Death Grip” reception issues that fanned much media attention upon the release of the iPhone 4G did not phase the company. Antennagate reached its peak in July. After Consumer Reports said it would not recommend the iPhone, experts forecasted a disaster that never came. It still won’t. But Computerworld reports that Apple’s iPhone took first place for the fourth consecutive year in J.D. Power and Associates’ smartphone consumer satisfaction rankings.
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