Microsoft Exec: Windows Phone Outselling iPhone in China

[shafe88]

Just how many of these phones sold are running pirated versions of WP7. I bet Microsoft doesn't care weather the phones in china come with pirated versions of WP7 or not, as long as they have more market share than apple just for the bragging rights..

 

[emjayy]

[citation][nom]eddieroolz[/nom]I don't understand the obsession with the number of units sold. Sure, it's important to place some emphasis on it, but when Apple takes in nearly 75% of the smartphone profits across the world, what use is "number of units sold", really?What all companies should be focused on is to take profits away from Apple, not just dumping thousands of cheaper handhelds into the market and calling it a day, all the while not making that much money to begin with.[/citation]


Yes, Apple takes 75% of the smartphone profits. But what you're not getting is that they're not really taking that money from competitors - they're taking it from the wallets of the consumers that decide to rely on their walled garden.

The reasons why Apple gets so much of the smartphone profits are as follows:

- Apple gets huge discounts on internal components because, in any given year, they use the same internal parts across all their devices. The use of the same components across all their devices allows them to order parts in quantities that competitors would never request in a single purchase - and those larger orders qualify them for larger discounts.

- The cost of those parts drop during the course of the year. That's why Apple is able to sell the old iPhones at lower prices and still maintain margins close to what they were getting from those phones when they were new products. But Apple, instead of passing savings incurred from falling component prices on to their loyal consumers, keeps the price of their devices constant and pockets the extra profits, allowing them to announce 'record profits' with regular frequency.

- Apple mixes relatively expensive parts with cheaper parts. Most of the components of the iPhone only cost a few dollars each. The display, memory and battery account for most of the hardware cost. The cost of the parts typically come up to about $190 for the basic model with each memory upgrade adding about $30 to the cost. Then Apple sells the devices to carriers who have inked supply deals with them for about $650+ per iPhone. The additional costs incurred during development, testing, manufacture etc. are only a fraction of the $460+ that they collect per device, so Apple is able make hundreds in profit per device.

So, the reason why Apple 'takes 75% of the smartphone profits' is because they taking 2-3 times more cash from each customer they sell to than their competitors are. The average high-end smartphone maker pockets about 15% of the price of the smartphone and the margins drop as the price of the smartphone to the carriers drops. Apple pockets up to 40% of the price.

Apple's not taking 75% of the profits by selling 75% of the smartphones sold each quarter. They're only selling about 22-25% of the smartphones per quarter. Apple's profit margins are an anomaly and it may not even be sustainable in the longterm. If everyone in the industry insisted on getting the same margins as Apple, we wouldn't have affordable phones or a growing global smartphone market, and data plans would remain prohibitively expensive for years to come because the carriers would have a hard time making money due to high subsidy costs. Disregard cheap phones if you must, but they're a catalyst for bringing down the cost of data plans and other services for everyone. In other words, the more cheap phones the carriers manage to sell, the more likely it is that the data plans you use with your iPhone may fall further in price someday soon. Carriers sell services, not phones, so the more money they are forced to spend on supplying expensive phones, the less profits they get from their services.

When it comes to marketshare, the thing you need to remember is this: Apple won't need huge slices of the global market to make a profit; expensive products never do. But their iOS platform, like any other platform, needs a certain amount of market share to stay relevant to software developers in any given geographical region.

 

[Neog2]

It has nothing to do with Microsoft OS.

The only reason its selling is the same reason the Xbox doesn't sale.
It's the Brand name and the name alone.

They See Nokia and thats all they care about bottom line.
They See Sony and thats all they care about bottom line.

 

[Guest]

blah blah blah, don't you people have lives and more important stuff to talk about instead of cellphones that will all be obsolete in 3 years?

 

[silver565]

The only issue I have with WP7 is the lack of VPN. That is the only downside in my books.

 

[CKKwan]

Until MS give fair and equal access to everyone in MS Live across the globe, I wouldn't buy one.

 

[SmileyTPB1]

Also the most popular car in China is a Buick. With that in mind you may want to be a little skeptical about how Windows Phones being popular there relate back to the rest of the world.

 

[lucky015]

Windows Phone is an OS and the iPhone is a phone, How exactly are these 2 supposed to be directly compared in sales?

Personally I don't like either and would take a nice Android phone over either but It is a pity Apple got this trend of irrelevant comparisons started.