Three Guys and a Podcast: Apple News & Analysis
Analysts, investment firm researchers, and over caffeinated personalities like Jim Cramer, want it both ways with Apple. One one hand they are crying a river that Apple did not deliver a stunningly feature set laden free iPhone (subsidy driven), that costs $300 or less if purchased outright. "So much for the low end," Credit Suisse analyst Kulbinder Garcha stated in a note to investors. "Touch screen ID's? Yeah, that's what I've been waiting for," said Jim Cramer dripping with sarcasm.
On the other hand, they want Apple to make 40% gross margins and reign in massive market share growth at the same time. They can't have it both ways, yet this is the cry of Wall Street.
This isn't how the world turns. Apple either moves aggressively into the low-end, with sub-$300 handsets for markets like China and India (with lackluster features and abilities), and watches their profit margin fall into the abyss. Or Apple stays the course in providing high-end handsets to those that can afford them, maintaining high margins per handset sale.
Either way, Apple is blasted by those that want to drain them for stock growth. The desire is for Apple to produce a magical unicorn that dominates the low-end market, yet somehow delivers amazing margins. Unicorn indeed...
Currently, only Samsung and Apple are making a profit by designing, manufacturing and selling smartphones. LG, Nokia, Blackberry, Sony Ericsson and now likely HTC, are losing money making smartphones, as the race to the bottom is nearly complete. Apple and Samsung have secured the high-end profitability smartphone market, while the rest of the players are languishing in the world of cheap commoditized PC-like results.
Under Tim Cook's leadership, Apple is making the right decisions. Apple owns 40% of the U.S. smartphone market, and continues to grow that share. Apple is now focused on dominating the high end handset market world-wide, as they expand their direct sales channel in China, while signing up more carriers across the globe.
Apple's iPhone goals are clear: Dominate upper and high-end smartphone sales world-wide, which ensures app sales and developers making money on the iOS platform. It also sends their number one competitor, Samsung, down the ladder of profitability in the smartphone market, letting their management team fret about whether they should retreat back to their successful world of component supplier, or continue struggling in the consumer space.
While Wall Street complains of Apple's latest and greatest world leading gear, Apple's Q1 2014 quarterly results will put the "expert" world to shame.
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