Apple iPhones have had a resounding success since launch, having generating huge revenues for the Cupertino-based company over the time.
With an estimated volume of 250 million iPhones sold over 5 years, Apple rose among the most profitable and valuable companies in the world, managing to collect, with this range of products only, revenues that currently exceed $ 150 billion. However, from the equation are excluded accessories, software and other services, which together generated between 3% and 5% of quarterly revenues associated with Apple’s iPhones.
However, the spectacular success enjoyed by Apple in the last five years is not a guarantee for the future. According to Neil Shah, senior analyst at Strategy Analytics, there are already appearing signs announcing a more difficult progress for the iPhone range.
"Some mobile operators are becoming concerned about the high level of subsidies they spend on the iPhone, while Samsung is expanding its popular Galaxy portfolio and providing Apple with more credible competition,” Shah told CNET.
According to him, mobile operators’ concerns are based on economic reasons. Shah gave an example where an iPhone priced at $ 600, then offered through a two-year subscription contract at $ 299 or even $ 199, the difference of $ 300 – $ 400 from the original price is supported at the expense of mobile operators. Aware of the sales power they hold, those from Apple are willing to negotiate for a lower price.
The story is radically different when it comes to popular Android terminals such as HTC One X or the Galaxy S3 from Samsung. Taking as example the Galaxy S3, with starting price set initially at $ 500 – $ 550, mobile operators have managed to negotiate discounts at $ 400 or even less, considerably shortening the time required to recover the investment in the payment of contracted subscriptions. "The Galaxy S3 subsidy is considerably lower," Shah told CNET, also adding that this might convince phone operators to think twice before working with Apple.
However, there are some doubts about the ability of operators to make things right. Katy Huberty, an analyst at Morgan Stanley, said that most mobile operators are contractually obliged to provide certain subsidies, and these contracts will remain in force for at least several years. Even worse is that all these contracts will expire simultaneously, virtually excluding any possibility that the large operators to ally against Apple, seeking more favorable conditions for subsidizing products.
Helped by favorable contracts and the popularity enjoyed by its products, Apple is likely to achieve record revenues in the years to come, even if the competition comes with products that are reaching a level that can be considered convincing alternatives.