Apple is turning the mobile sector upside down with the recognition of its iPhone. Even though Apple claims a tiny sliver of the market, it collects the fattest portion of cellular sector profits. Even “Antennagate,” which could have killed many handsets, couldn’t stop Apple from setting sales records with the iPhone 4. Experts are saying Apple’s control of the mobile industry makes it unlikely that Android, which depends on devices that compete on price, could ever pose a threat.
Apple has the gold affect
Apple’s domination of the mobile industry was reported on Sept. 21 by Fortune on CNN.com. Fund market analyst Canaccord Genuity gave Apple stock a “buy” rating and price target of $ 356 per share. As part of its recommendation of Apple stock, Canaccord Genuity offered evidence of how the company capitalizes on its innovations. The business sold 17 million iPhones within the first half of 2010–a 3 percent market share. Samsung, Nokia and LG–the world’s three largest handset makers–sold 400 million units combined. Apple racked up the numbers where they counted. The business amassed 39 percent of market profits in that time frame. Samsung, Nokia and LG shared 32 percent of industry profits. Canaccord Genuity pointed out that most handset companies struggle for making a profit or even 10 percent operating margins. It’s estimated that Apple makes about 50 percent gross margin and more than 30 percent operating margin for its iPhone.
What’s powering Apple’s business design?
Producing 3 percent of an industry’s products to make almost 40 percent of the industry’s profit was unheard of until Apple came along with the iPhone. Distinctive advertising aside, there are significant reasons why Apple has managed to run circles around the mobile sector, said 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 consumer satisfaction record. Apple also uses cheaper hardware than top-of-the-line Android competitors. It uses the recognition of its products to get high volumes at lower prices. This structure has been so successful, money is no object when it comes to developing technology that stays a step ahead of Android. However, that could be a moot point. Mick figures that Steve Jobs isn’t all that concerned with Android. Catering to a loyal core of iPhone enthusiasts has gotten Apple this far.
The iPhone’s momentum builds
Even a so-called public relations ordeal for instance Antennagate could not disrupt the iPhone’s energy. The media’s flogging of “Death Grip” reception interference failed to choke off sales of the iPhone 4G. Antennagate reached its peak in July. After Consumer Reports said it would not recommend the iPhone, analysts predicted a disaster that never came. Recently, the magazine reiterated its position on the product. But the iPhone marches on. According to Computerworld, the J.D. Power and Associates customer satisfaction rankings for smartphones lists the iPhone at the top of the list—its fourth consecutive first place finish.
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