Grips Green

Apple Rules Cellular Sector With A Percentage Of Market Share

Apple’s iPhone is causing outrage within the cellular market with its outrageous performance. Apple’s emphasis on brand name and refusal to compete on price has resulted within the biggest chunk of cellular industry profits despite having the smallest market share. Even “Antennagate,” which could have killed many handsets, could not stop Apple from setting sales records with the iPhone 4. Analysts are saying Apple’s domination of the mobile industry makes it unlikely that Android, which depends on devices that compete on price, could ever pose a threat.

Apple prospers through innovation

Apple’s domination of the mobile industry was reported on September 21 by Fortune on CNN.com. Fund market analyst Canaccord Genuity gave Apple stock a “buy” rating and price target of $ 356 per share. The analyst’s recommendations incorporated data showing how Apple is turning its inventions into cash. From January to June this year, Apple sold 17 million iPhones. That total represents a share of the market of just 3 percent. Samsung, Nokia and LG–the world’s three largest handset makers–sold 400 million units combined. Apple collected 39 percent of the mobile industry’s profits during that time. Apple left its heavyweight rivals competing among themselves for 32 percent. Canaccord Genuity pointed out that most handset businesses struggle to make a profit or even 10 percent operating margins. On the other hand, Apple is thought to make a gross margin of 50 percent on the iPhone, with an operating margin of 30 percent.

How does Apple get it done?

Capturing just 3 percent of a market while reaping 40 percent of its profit was impossible. Then Apple created the iPhone. Apple has far outgained its rivals with more than slick marketing campaigns, according to Jason Mick at Daily Tech. Mick writes that as the iPhone is so popular, AT and T has given Apple an extremely lucrative contract to grow its subscriber base. Apple also leverages the operating system to gain cost efficiencies from a lesser grade of hardware. It uses the recognition of its products to get high volumes at lower prices. This strategy gives Apple plenty of money to innovate in the battle against Android. But Mick said, why bother?. Catering to a loyal core of iPhone enthusiasts has gotten Apple this far.

Even Consumer Reports can’t derail the iPhone

Even a so-called public relations ordeal such as Antennagate could not disrupt the iPhone’s momentum. The “Death Grip” reception issues that fanned much media attention upon the release of the iPhone 4G did not phase the business. When Consumer reports tested the iPhone reception problem and said it could not recommend the iPhone, Apple bashers reacted with glee. It nevertheless won’t. However 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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