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Apple profits Continue to Soar But Just How Does It Maintain These Huge Profits?

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Apple sold a record 13 million iPhone 6s and 6s Plus three days after launch. Of the American companies keeping a pile of $1.4tr/278tr Naira in cash, it has over $200b/40tr Naira to call its own. On top of that, its share of the smartphone industry profit soared to 92% in July, 2015 and lastly at the end of 2014, Apple’s mobile operating system iOS and Android jointly controlled about 96% of the OS market. But just how exactly does Apple manage to maintain this financial lead over its rivals?

In a CNBC report, “Apple spends $236/ 46K Naira to make each iPhone 6s Plus device, which it sells for over three times that value at $749/149K Naira —a 217.4 percent markup that highlights the tech giant’s ability to dominate the premium market while other smartphone makers struggle.” Well if you’re in Nigeria or some other African country, don’t expect it to be sold at that rate locally. It could be as high as $950/190k Naira/97K Kenyan Shillings

So here’s a quick breakdown;

ItemCost to Apple per iPhone 6s Plus
Screen$52.50/10,450Naira/5,400 Kenyan Shilling
Main camera (12 mega pixels)$22.50/4,400Naira/2,300 Kenyan Shilling
16GB of storage$5.50/1,000Naira/560 Kenyan Shilling

 

“Flash is now so cheap it’s almost irrelevant, but Apple monetizes this difference with consumers, to the tune of $100 for each additional step-up in memory capacity,” Andrew Rassweiler, senior director of cost benchmarking services for IHS Technology, said in a news release.

“For example, a 64 GB iPhone now costs Apple about $17 more to make than a 16 GB iPhone, but Apple charges iPhone buyers $100 more for the increased memory. This is part of Apple’s ongoing strategy to improve profits by selling a product mix that is heavier in the higher-end iPhones.”

Well there you have it, a good marketing strategy and variety of services gives Apple an edge over its rivals. At the end of the first quarter of this year, Samsung had sold more phone units more than Apple but Apple’s profit continued to dominate. Could the explanation above be the reason? Maybe/maybe not as most manufacturers may have access to these components. It could just be as simple as quality and durability of the product itself in addition to the exclusive app services it has to offer.

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