Amazon readying 9-inch Kindle Fire for 2012, analyst predicts

[HansTWN]

Originally Posted by ucfgrad93

The best I could come up with is this chart. iTunes sales amounted to 4% of their revenue during the last quarter. That amounts to $1.85 billion. Not to shabby in my opinion.

Graph source

That is revenue. I was talking about profits. Their hardware has much better margins. So I may not be far off with 1% (I remember I read that somewhere).

I didn't mean to say it was "nothing". I meant to say not much for a company like Apple. We have to see it in relation to their overall business.

[wizwor]

That chart tells the story. Phones and tablets are their business. Samsung sells more phones and they have gone from 96% to 64% share of the tablet market. If competing in these arenas means smaller margins, there will be less $ for the next amazing thing.

[murraypaul]

Originally Posted by wizwor

Amen! As a consumer, I'd like nothing better than a $300 iPad. I'm rooting for Microsoft too. In the race to the bottom, Apple is vulnerable.

Amazon [Edit: obviously I meant Apple here!] currently have a 40+% profit margin and $70+Bn cash pile.
They can outlast anyone in a price war.

[heySkippy]

Originally Posted by HansTWN

I am convinced that leaner times are ahead for Apple. Even their market share for tablets is down to 52%. Dropping even faster than I expected.

You mean Apple might not sell more than all their other competitors combined at some point?

They're doomed!

But seriously, I think they'll be fine. They make premium stuff at premium prices and there's a healthy market for that. They have a proven track record of redefining and reviving stagnant categories, I'm interested to see what they do next.

[petermillard]

Originally Posted by murraypaul

Amazon currently have a 40+% profit margin and $70+Bn cash pile.
They can outlast anyone in a price war.

Do you have a source for that, because unless I'm misreading their last balance sheet filed 31/12/11, Amazon's cash on hand is $5.27Bn (or $9.6Bn if you include short term investments). A look at their income statement shows a Net income for 2011 of $631Mn on turnover of $48Bn - a margin just over 1.3%...

[ucfgrad93]

Originally Posted by HansTWN

That is revenue. I was talking about profits. Their hardware has much better margins. So I may not be far off with 1% (I remember I read that somewhere).

I didn't mean to say it was "nothing". I meant to say not much for a company like Apple. We have to see it in relation to their overall business.

I know you were talking profits, but I couldn't find the figures for it. However, I would argue that the iTunes store is worth much more than just those sales figures. Without the ecosystem that iTunes provides, I believe that the sales of Apple hardware (computers, iPhones, iPads, etc) would be a lot lower.

[ucfgrad93]

Originally Posted by murraypaul

Amazon currently have a 40+% profit margin and $70+Bn cash pile.
They can outlast anyone in a price war.

That sounds like the amount of cash Apple has on hand, not Amazon.

[murraypaul]

Originally Posted by petermillard

Do you have a source for that, because unless I'm misreading their last balance sheet filed 31/12/11, Amazon's cash on hand is $5.27Bn (or $9.6Bn if you include short term investments). A look at their income statement shows a Net income for 2011 of $631Mn on turnover of $48Bn - a margin just over 1.3%...

Sorry, fingers walking ahead of brain. As another user posted, the numbers are for Apple, and your numbers make the point I was going for, Apple can afford a price war, Amazon can't.

[murraypaul]

Originally Posted by ucfgrad93

I know you were talking profits, but I couldn't find the figures for it. However, I would argue that the iTunes store is worth much more than just those sales figures. Without the ecosystem that iTunes provides, I believe that the sales of Apple hardware (computers, iPhones, iPads, etc) would be a lot lower.

Apple have previously said that the iTunes store runs at "just over breakeven".
As you say, it isn't there to make money on its own, it is there to make the hardware more attractive.

[tubemonkey]

Originally Posted by murraypaul

Apple have previously said that the iTunes store runs at "just over breakeven".
As you say, it isn't there to make money on its own, it is there to make the hardware more attractive.

What makes the iPod touch most attractive is the huge third party accessory market.

[frahse]

Apple is in the iTunes (music, books, magazines, apps, etc.) market to cement its sales of its hardware. If you start off with an iPhone, and buy some stuff, then that stuff can be used on the next iPhone, on the next iPad, etc.
YES Apple wants to make as much profit on the non-hardware side as it can, but that is not its Golden Goose.

Amazon is into the Kindle hardware to cement its sales of music, software, anything that is on Amazon the gigantic reseller in the online Sky.

[Andrew H.]

Originally Posted by wizwor

I'm guessing you are young. Apple has been a sputtering company for a generation. Great ideas with no market. Jobs marketed Xerox magic until the company outgrew his abilities then Skully came in to inflict discipline then Jobs was fired then the company floundered then Jobs returned with another company's ideas (Next/Beos) then Apple floundered some more then Gates bailed out Apple to ward off the antitrust lawyers and Apple sold some MP3 players and a tablet.

That is not a business plan. Jobs is dead and Apple will follow.

Bezos sounds a lot like Jobs. He has the passion and the vision. The difference is that his INSANE products are married to a SANE bussiness plan.

No, I'm not particularly young. But I can read a balance sheet. And I can only conclude that your bizarre "history" of Apple is motivated by dislike of the company. A dislike so pronounced that it causes you to ignore (or be unable to see) what Apple has accomplished over the past 15-odd years.

I mean, seriously "Apple sold some MP3 players and a tablet?" Do you really hate Apple so much that you are willing to ignore reality.

I'm a big fan of Amazon, but the fact is that they are *barely* profitable. Apple, meanwhile, went from near bankruptcy in 1997 to being the most valuable company US company and the - by far - most successful tech company. All of which is the result of consistent and sustained growth over the past 10 years. Apple is now worth more than Google and MS combined.

In Amazon's most recent quarter, they had $17B in revenue and only $117M in profit. Apple had $46B in revenue and $13B in profit.

Amazon's profits are down almost 60% from a year ago, and they have warned that they may not make any money this quarter. Amazon can afford a few quarters of losses, and I think that they probably do have a decent plan for increasing profit.

But Apple has been very profitable for the past 10 years - much more profitable than its competition.

You would have to be delusional to argue that Apple doesn't have a sound business plan.

[Daithi]

I'm not an Apple fanboy, don't even own any high priced Apple products, but I've just read another rumor that said Apple is expected to announce their iPad 3 in early March. The resolution of the new Retina Display is reputed to be 2048-by-1536. That is freaking impressive. At 264 PPI they are almost in the area of resolutions found on printed paper.

[cjr72]

Originally Posted by Daithi

I'm not an Apple fanboy, don't even own any high priced Apple products, but I've just read another rumor that said Apple is expected to announce their iPad 3 in early March. The resolution of the new Retina Display is reputed to be 2048-by-1536. That is freaking impressive. At 264 PPI they are almost in the area of resolutions found on printed paper.

I'm no Apple fanboy either but if this turns out to be true I may pony up the money to buy one. I've been thinking about picking up a 10 inch tablet for my birthday in June.