

Android Makers Being Eaten Alive - ytNumbers
http://www.theregister.co.uk/2014/09/19/smartphones_its_the_economics_stupid/

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jdietrich
Commodity software, commodity hardware.

Apple have always had low volumes and fat margins built into their business
model. For many years, Apple have represented about 5% of the PC market by
volume but about 50% by profits. Only by locking down the entire stack can
they achieve this; If you want OSX or iOS, you have to buy Apple hardware.
They sell a strongly differentiated luxury product at a premium price and reap
the rewards.

The Android handset market is simply following the same market forces that
have shaped the PC hardware market. Acer and Asus entered the PC market at the
bottom and applied relentless margin pressure on the existing players. Huawei,
ZTE and Lenovo are doing the same to the smartphone market. Bad news for the
established manufacturers, but great news for the consumer.

The Android market is a wonderland of good handsets at silly prices thanks to
Rockchip, Mediatek and the white box brigade. Google are seeking to
commoditise the market even further with Android One, by creating a mass-
market of handsets with near identical specs for consumers in newly
industrialised countries.

I'm reminded of Société Bic, a company I deeply admire. They took expensive
consumer durables (cigarette lighters, fountain pens, safety razors) and
figured out how to churn them out in plastic for pennies a piece. They made
these products into utterly unremarkable commodity items, and in doing so made
them accessible to the very poorest.

Within a decade or two, I fully expect there to be a powerful internet-
connected computer in the pocket of every man, woman and child on earth. That
is a triumph of engineering, a beacon of hope for humanity, and an opportunity
for software developers that will make the dot-com boom look like a yard sale
by comparison.

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lmm
This isn't an Android problem, it's an industry problem. Just like Samsung,
Apple relies on a huge amount of marketing to push its phones, and at some
point that's going to outweigh its profits.

But it's a problem only for the manufacturers, and it's the same problem as
many industries - commoditization. Smartphones are becoming a commodity, just
like everything, and they'll be made cheaply in volume by no-name
manufacturers with razor-thin margins. Which is great for customers!

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zimpenfish
> Just like Samsung, Apple relies on a huge amount of marketing

I'm not sure "just like" is warranted there since Samsung spent $12-14bn on
marketing in 2013 and Apple spent $1.1bn (Asymco numbers).

> at some point that's going to outweigh its profits

Which were $37bn in 2013. They'll be ok for a good few years.

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Maskawanian
This editorialized article reads like it was written by a Apple appologist. I
highly doubt that the iPhone 6 will single handedly cause the demise of the
Android platform.

