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iPhone Lucre and iPad Cash Form Raging River of Revenue

iPhone Lucre and iPad Cash Form Raging River of Revenue

Apple's market cap topped $600 billion recently, and the level of profit it's reeling in have made it a big target. "Like the political system, there's a real effort of revenge taking place," said ACI Research's Edward Zabitsky. "Facebook and Microsoft are collaborating to an unprecedented extent with carriers in the battle for the future of the Internet, and these companies are acting in their own best interest."

By Rachelle Dragani MacNewsWorld ECT News Network
04/11/12 5:00 AM PT

Apple's market capitalization passed the US$600 billion milestone Tuesday, a first for the company.

Shares of the stock went as high as $644 on Tuesday, putting Apple's market cap at $600.2 billion.

The company is riding on record product sales, especially with its iPhone 4S and new iPad, as well as the announcement that an investor dividend is coming. If it can keep momentum going, it certainly has its work cut out for it, said Edward Zabitsky, principal and CEO of ACI Research.

"$600 billion is just a number," he told MacNewsWorld. "These are monopoly profits, and like the political system, there's a real effort of revenge taking place. Facebook and Microsoft are collaborating to an unprecedented extent with carriers in the battle for the future of the Internet, and these companies are acting in their own best interest."

Although the iPhone has been a huge part of Apple's success, competing platforms such as Android are gaining large chunks of the marketshare, and carriers hope to wield more control over the products they sell, said Zabitsky.

"Verizon and AT&T want control over their networks, and they know people don't always want to pay $650 for a phone," he said.

Competition Upping Its Game in China

China is another market in which many aren't willing or able to pay $650 for a smartphone. The emerging market is crucial in global mobile sales, with an estimated 988 million mobile phone subscribers. The Apple brand is popular in China for its luxury appeal, as evidenced by the mobs that have gathered at the opening of Apple retail stores there. It's so popular, in fact, that reports emerged this week about five people in China facing charges after an incident last year in which a teen sold his kidney to be able to buy an iPad and iPhone.

On a more mainstream level in China, though, Android and other competitors are catching up to Apple, according to a report from Beijing analytics firm Analysys International. By the end of 2011, Android captured 68 percent of the smartphone market in China, up from the 33 percent it could claim three quarters before that, according to the report.

"If you look at what's available on the market, there are phones for $120 that are amazing," said Zabitsky. "Companies have to appreciate that's where the future is."

A possible contract with China's largest carrier, China Mobile, could help Apple gain back some marketshare. Talks between the two are reportedly ongoing, although neither side has been public about a potential deal. Various media outlets reported that technological problems with the iPhone and China Mobile's network are one obstacle in the way.

However, "there's more to China Mobile than just technology," said Zabitsky. "This is industrial policy, and there's a lot of collaboration between China and Taiwan and other carriers on these phones, and there are some barriers to entry in China."

All Are One

Tablets are one place where Apple will continue to dominate, according to a report from Gartner this week. By 2016, 665 million tablets will be in use worldwide, it said, and Apple will have 45 percent of those sales.

The dominance of the iPad is so pronounced that the name "iPad" is starting to become synonymous with the word "tablet," claimed a report from Bloomberg this week. Like Kleenex, Band-Aid and Frisbee before it, the iPad brand name could supersede the tablet.

"I do see the iPad still being a dominating force in tablets well into the end of the decade," Tim Bajarin, president of Creative Strategies, told MacNewsWorld. "This is because it has such a rich ecosystem of software and services behind it, and we assume Apple will bring prices down so they will be affordable to more people over time."

The report added that by 2015, 35 percent of those tablets will be sold for the enterprise sphere. While some will be purchased by a corporate entity, many will be bought by business workers on their own, in addition to a PC or other more traditional electronic product, to make business on the go easier.

"We are seeing strong interest in tablets within IT, and this will only grow," said Bajarin. "I would not be surprised if tablets gain even more then 35 percent of the tablet market, as it will become an important business tool over time."

Apple didn't return our requests for comment on this report.


Rachelle Dragani is a freelance reporter based in Brooklyn, NY. She enjoys staying on top of e-commerce deals, reporting on what new gadget is coming your way, and keeping tabs on anyone trying to hack into your info. Feel free to e-mail her at rachelle.dragani@newsroom.ectnews.com.


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