Monday, July 20, 2009

Sales Share v. Profit Share

In the past when discussing Apple I've mentioned its sales share as less important than the amount of profit it derives from the sales it achieves. I sense this is greeted with a sort of "sour grapes" view by some readers.

This news piece brings the facts into sharp relief: Apple and RIMM have a combined worldwide cell phone market share of maybe 3%, but command something like 35% of all the cell phone profits to be had on the planet. Imagine you are competing for the other 97% of the market, and could not reach the delicious cream of the market held by the likes of Apple and RIMM. Whose business would you rather own?

With Apple's margins expected to be about double Dell's in the next earnings release, one hardly need ponder.

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