Google Targets iPhone Profits
A few months ago I wrote about why I thought Apple’s stock was over-hyped – it has good profit margins now, but it will be nearly impossible to hold them up as competition increases from other manufacturers such as Samsung.
Now Google is openly going after the iPhone’s profit margins. They aren’t doing this to take the profit themselves, but rather to lower the cost of smartphones. A Google executive at Motorola states “Those products earn 50 per cent margins. We don’t necessarily have those constraints. Those [margins] will not persist” as they prepare to launch a new phone that will be “priced well below the iPhone 5”.
As the article mentions, smartphone prices haven’t really declined over the last few years in the same way that other electronics tend to do. As new technologies spread amongst manufacturers, it seems like it will only become more difficult to create a product unique enough to command sustainable high profit margins. And if someone does, there’s no telling which manufacturer will get there first and push everyone else out of the market for a few years.
But there’s always the watch market right? Haha, just joking. When I think of watches I remember brightly-colored plastic and $15 price tags. If Apple is shameless enough to jump into that market, look out below!