What is the core of Apple’s high profits

What is the core of Apple’s high profits

After four consecutive quarters of declining net profit, Apple has finally ushered in growth.

Recently, Apple released its 2020 fiscal first quarter performance report, showing that Apple’s net revenue was US$91.819 billion, a year-on-year increase of 9%; net profit was US$22.236 billion, an increase of 11% year-on-year. In addition, Apple’s revenue and net profit in the first quarter of fiscal 2020 both hit record highs.

Among them, divided by product, the revenue of iPhone in this quarter was 55.957 billion US dollars, a year-on-year increase of 7.65%, and the revenue accounted for 61%. It can also be seen that the growth of Apple’s performance is also closely related to the growth of the iPhone business.

Although the iphone business showed a trend of performance reversal in the financial report, its mobile phone shipments and market share showed another scene.

According to the quarterly report on the global mobile phone market released by IDC, Apple’s smartphone shipments in 2019 were 191 million units, down 8.5% year-on-year. For the first time, the annual shipments were surpassed by Huawei and ranked third in the world. The global smartphone market share is 13.9%, behind Huawei’s 17.6%.

We can see that although Apple’s sales and market share are declining. However, its revenue continued to grow. Therefore, Blue Technology believes that Apple is establishing its own high-end, luxury positioning. Although the market share and sales of iphone are declining, but with its high profit and high premium ability, it can still bring good financial report numbers for itself.

According to a report on global smartphone profits in the third quarter of 2019 released by Counterpoint Research, in the third quarter of 2019, global mobile phone profits were US$12 billion, down 11% year-on-year. However, Apple still occupies 66% of the industry profits of the global smartphone market, which is about 8 billion US dollars, while the second-ranked Samsung has only 17% of the profits, which shows that Apple’s super-high profits.

The reason why Apple can become the most profitable smartphone brand in the world is not just because its price is expensive, its mastery of core technology, the building of the company’s brand, etc. are all key factors to obtain sufficiently high profits.

The world’s first mobile phone brand

In December 2008, the then mobile phone king Nokia released the new N-series smart S60 flagship – N97. This phone is also the first S60 smartphone with full touch screen + QWERTY keyboard in Nokia’s history, which not only indicates that Nokia will enter the touch phone industry in an all-round way, but also reveals Nokia’s determination to bring a new experience to consumers.

But I never imagined that when people made the N97 the king of the machine, this was also the last glory of Nokia.

As early as the previous year, at the 2007 Apple Global Software Developers Conference at the Mascone Convention Center in San Francisco, USA, Steve Jobs launched the first generation of the iPhone. At that time, most people would not have thought that from this moment Since then, the name iphone has dominated the mobile phone market for the next decade.

With its excellent design and concept, Apple has achieved the new king’s ascension, and gradually built its own brand value. The first mobile phone with no removable battery, the advanced retina Display screen, the innovation of 16:9 screen size, and a series of operations have all made consumers marvel at the creation of the iphone. The iphone has also become the direction that many mobile phone manufacturers imitate and the vane of future development.

The core technology is also a premium right

Of course, in addition to continuous innovation in the iphone, its own ios system is also the key to keeping the iphone at a high premium.

For the system, the most important thing is the experience of fluency. Apple’s ios system adopts the processing method of responding to the screen first, which can greatly improve the user experience of consumers. At the same time, Apple’s ios system is closed-source operation, and the mobile phone software on the market must be approved by Apple before it can be put on the shelves.

In this way, it is possible to form a good supervision of the software, control rogue software and software that does not fit well with the mobile phone system, ensure the purity of the system, and greatly increase the service life of the mobile phone. In this way, the iphone can still maintain the initial fluency in the perennial use.

Moreover, since the iPhone was released, its price has been higher than the industry average price. Therefore, the use of iphone brings consumers a sense of vanity from a psychological perspective. This is also why when Apple releases high-priced iPhones, people will still flock to them, and consumers will complain about the slightly higher prices of domestic mobile phones. The reason for this, in addition to Apple’s brand value and mastery of core technologies, is also closely related to Apple’s perennial high-end image.

In the past decade or so, Apple’s rise has been because every time it has seized the opportunity of the times to establish the brand it is today. Now that Apple’s sales are down, its market share is gone, and innovation has disappeared, how long can it maintain high profits just by virtue of its unique system and prestige? This is a conundrum facing Apple.

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