Bloomberg on Apple’s Utter Dominance of Phone Market

Ashlee Vance, writing for Bloomberg:

Apple’s utter dominance of the money-making end of the industry stems from its business model and unique brand. Since stumbling in 2013 with the slightly down-market iPhone 5C, the company has redoubled its focus on an annual, highly desired flagship phone at a high price, turning its back on cheaper models for the masses. With the iPhone as its main profit center, the world’s biggest company has been able to invest in developing its own speedy, power-efficient chips and sturdy, lightweight materials, as well as continuing to refine its software.

The 5C wasn’t a stumble. It’s fair to say it wasn’t a hit, but it didn’t hurt their overall business at all. The alternative would have been for Apple to keep selling the then-year-old iPhone 5 for another year at the same price points the 5C debuted at — and margins on the 5S were lower. Apple’s 2013 “stumble” was that they still didn’t have larger displays in the then-new top-of-the-line 5S. Which in turn means the real stumble was back in 2010, when they began planning for the form factors for the iPhone 5/5S form factor.

Other large companies, including China’s Lenovo, have a tougher time rationalizing their phone businesses. Lenovo bought Motorola from Google last year for $2.9 billion, hoping to boost its fortunes by expanding beyond PCs. No such luck: In its last quarter, Lenovo’s mobility unit posted a $292 million loss that just about wiped out its PC business profits. The company says it can fix things by paring back the number of devices it sells, combined with a “faster, leaner business model.”

Remember when Google bought Motorola for $12.5 billion back in 2011? Good times.

★ Thursday, 8 October 2015