Apple depends on the iPhone more than previously thought
The story on Apple’s margins is even more interesting when you look at how high its iPhone margins are. Analysts have calculated that the gross margins on the iPhone are nearly twice the margin on the iPad. And this suggests that Apple depends heavily on iPhone sales to maintain margins. What does this mean about Apple going forward? Well, to the degree that Apple wants a positive high margin/high growth mix they need to have an iPhone product cycle that sells a lot of units. If their product cycle is slow then both volume and margins fall as the product mix skews away from the iPhone. The reason Apple’s quarter was so bad was because of this.
The question is whether there are some sort of hysteresis effects, meaning that the lost momentum from one upgrade cycle feeds through negatively to the next upgrade cycle. Another question is whether the shift from non smartphone handsets to smartphones favors Android and therefore Samsung due to price. If so, the platform network effects could become a significant headwind for Apple as they attempt to keep both margins and growth high. I don’t think they can do it. I believe margins or growth will slow… or both. And I believe that’s what we are seeing right now.
Apple’s margins on the iPhone 2x that of the iPad — Apple News, Tips and Reviews
Samsung Q2 Smartphone Shipments Nearly Double Those of Apple – Ina Fried – Mobile – AllThingsD
Amazon’s profit margin rises as new businesses grow | Reuters
Samsung posts record $5.9 billion profit on smartphones | Reuters
Why Twitter’s move into TV could be a recipe for disaster — Tech News and Analysis
Apple denied German injunction of Galaxy Nexus, Galaxy Tab 10.1N
Amazon revenue jumps, but forecast cautious | Reuters
INDUSTRY INSIDER: Here’s How Apple Blew It On The iPhone – Business Insider
Europe
Angela Merkel and Francois Hollande pledge to back euro – Telegraph
Exclusive: ECB may take losses in second Greek debt restructuring | Reuters
Bundesbank Stays Opposed to Bond Buys – WSJ.com
Spain discussed $366 billion bailout with Germany: source | Reuters
FT Alphaville » What’s the ECB going to do next?
Germany says will do all it can for euro, just like ECB | Reuters
Plan concerté entre les Etats et la BCE pour sauver l’euro
BBC News – The white elephants that dragged Spain into the red
BBC News – Spain unemployment hits new high
FT Alphaville » Premia, there and everywhere
Felipe González: “Todo el mundo sabe que España no va a bajar el déficit” | Economía | EL PAÍS
Castilla-La Mancha no descarta pedir ayuda, aunque no de “manera urgente” | Política | EL PAÍS
Other links
Report shows US drought rapidly intensifying – FOX 10 News – Phoenix, AZ | KSAZ-TV
More than 70% of Illinois land suffering extreme drought – chicagotribune.com
Andy Warhol and Nico as Batman and Robin, 1967 | Retronaut
Starbucks reports third-quarter net income below expectations | Business | guardian.co.uk
Analysis: India’s shopping malls lose bustle as economy cools | Reuters
New record average mortgage rate: 3.49%! – Lansner on Real Estate : The Orange County Register
Argentina: lots of Evitas needed | beyondbrics
Calculated Risk: Lawler on Builder Results
S&P 500 Poised to Reach 1,380 by September, Laszlo Birinyi Says – Bloomberg
Stocks Surge, But Analysts Skeptical About Draghi’s Comments – MarketBeat – WSJ
Why Regulation Won’t Fix Finance – CNBC
How Our Brains Stop Us From Achieving Our Goals (and How to Fight Back)
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