For Apple Size does matter -


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Tuesday, 22 November 2016

For Apple Size does matter

Apple has always been known as a company associated with quality, innovation and higher prices. However, it appears that the profit margin of its flagship product - the iPhone in all its editions - is gradually declining. According to Bernstein analysts, next year it will fall to 40% and decline again in 2018 to reach 39%. Some anything positive for the Cupertino fanboys and news, which obviously provide a price increase iPhone to alleviate it .

As you can see in the graph reported, the percentage of profits have been falling almost in free fall since 2009, peak at which Apple obtained a 57.7% until now, where they only achieve 40.8% of the sales price for every iPhone sold. The causes? The tough market competition and innovation investment in Apple.

Interestingly, a Morgan Stanley analyst says the popularity of the iPhone 7 and its sales success can act negatively for Apple, they will see how vendors try to put the thumbscrews in their prices increase pretending piece of the pie.

In addition, the Cupertino iPhone sales underestimated 7 so against all odds have had to start new orders component manufacturers. In fact, given the political situation - the current economic world that America is one of the protagonists, Apple opted for a conservative production policy to protect against the uncertainty of new markets and the unexpected victory of Trump. However now they have only to hurry to arrive in time to meet expectations for Christmas.

UBS analysts Steven Milunovich and Benjamin Wilson support theories of Bernstein on the demands of providers, also adding that Apple can probably cope with the negotiations without raising prices, yes, Apple may need to modify the price difference between models standard and Plus.

And it is that the iPhone Plus is Apple's strong point, as they are the least suffer percentage terms the increase in production costs. As a result, analysts believe that Apple will significantly lower the market price of iPhone 7 Plus models to drive buyers to buy the larger edition, rather than iPhone 7.

Analysts also expect to remain so, Apple will soon not be able to bear the costs of warranty repairs, we remember lasts for one year. Lately Apple has launched two programs repairs to correct errors on their devices: the unexpected blackouts iPhone 6S and another to resolve failures Touch iPhone 6 Plus, quite controversial to tax the buyer of the cost of repair for a factory failure .

Of course, these programs have a relatively high cost to Apple, but we can not forget that the impact of leave unattended customers manufacturing errors would be even greater in terms of brand image. Also, we can not forget that in general, the margins of companies are less than 39%, so that although their profits are decreasing, they are still well above the rest.

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