By profit share, on the other hand, according to Canaccord Genuity analyst T. Michael Walkley, last year Apple took 69 percent of the handset industry’s profits; Samsung took 34. For just the last quarter, the numbers were 72 percent for Apple, 29 for Samsung. You will note that both the annual and quarterly numbers total more than 100 percent; that is because all other handset makers, combined, are losing money. This is rather astounding — Apple and Samsung have together destroyed the rest of the mobile handset industry.
Great piece on defining “winning” and “losing” in the smartphone space. You’d think the amount of money a company makes would be a good metric since it ensures long-term viability of said company. But most of the tech press seems to feel otherwise. Because they’re bored.
Eugene Wei on a key facet of Amazon’s business that few people think about:
Almost all customers paid by credit card, so Amazon would receive payment in a day. But they didn’t pay the average distributor or publisher for 90 days for books they purchased. This gave Amazon a magical financial quality called a negative operating cycle. With every book sale, Amazon got cash it could hang on to for up weeks on end (in practice it wasn’t actually 89 days of float since Amazon did purchase some high velocity selling books ahead of time). The more Amazon grew, the more cash it banked. Amazon was turning its inventory 30, 40 times a year, whereas companies like Barnes and Noble were sweating to turn their inventory twice a year. Most people just look at a company’s margins and judge the quality of the business model based on that, but the cash flow characteristics of the business can make one company a far more valuable company than another with the exact same operating margin. Amazon could have had a margin of zero and still made money.
Amazon continues to fascinate me because increasingly, they’re playing the same game as Apple (meaning in the same markets: music, movies, books, tablets, phones, etc). But they play the game in the opposite way — and it still works.
Sure, Apple, like all companies, wants to sell a lot of widgets—but given a choice between making $10 billion by capturing 10 percent of the market or $1 billion by capturing 90 percent of the market, Apple will always choose money over sales.
That is the main difference that makes Apple’s business successful…
They always understood that high margins and profits trump market share and revenue.
Great article by Farhad Manjoo about the death of the Netbook.
“The nature of promises […] is that they remain immune to changing circumstances.”
What I forgot to says in my bio is that i’m a tv series freak, it’s worse than bulimia, and since STARZ canceled BOSS i was in mourning. Wondering when will I be able to watch another political drama…
Just after announcing a new season of one of the best comedy show ever a little thing known as Arrested Development, Netflix produced a political drama called House of Cards.
Let just say that the trailer is really promising and I have high hopes about this show. They are using one of my favorite dramatic device the Aside in which a character speaks to the audience as in movies like Alfie or tv shows like Malcolm in the middle. In this case it’s Kevin Spacey that takes this role.
Speaking of Spacey… I don’t know how they managed to get such a cast (Robin Wright, Kate Mara, Corey Stoll, Constance Zimmer…) but I will just say one thing: