Why Apple's IPhone 7 Release Changes Little In The Smartphone Market

Date: Thursday, September 8, 2016 10:21 PM EDT

Apple (AAPL) recently announced the iPhone 7, which you can pre-order now. The basic cost is $649, and dependent on the carrier you choose, your monthly payment could vary. The phone packs in some interesting new features which I will review here. While the smartphone technology is advancing, very little is expected to change in the mobile market as the result of the new iPhone features. Apple will continue to dominate profits in the area, while Android will continue to dominate in the overall number of handsets in production. Users will have a growing choice of options, and finally I have decided to stop using iPhone products. 

Apple currently dominates with 92% of smartphone market profits. This is more astounding when you consider that Android (phone OS owned by Google) dominates the market share in terms of phones sold. See graph (courtesy of KPCB):

Growth rates have indicated that smart phone saturation is neigh. Currently, $5 billion people have some form of smart phone. Or perhaps some of those people have multiple models of different smart phones. Either way, there isn't a whole lot of room for growth. 

Apple must be doing something right with their iPhones. While various manufacturers of Android-based phones are fighting a brutal price and features war, Apple strolls along calling it's own design shots while raking in the cash. Simply put, Apple has seemingly been able to command outrageous premiums compared to the market and staying out of the fray of price decreases that have characterized Android's dominance of mobile market growth. 

It is easy to see why the iPhone is so profitable. While many smartphone manufacturers allow external memory to be added at whatever costs the market currently offers them at, Apple asks $100 for each additional 100GB of memory. Want the top of the line iPhone 7? Well, then you just spent $200 more because the iPhone doesn't allow external memory to be added. Other manufacturers not only cannot charge that type of premium for a simple memory upgrade, they often lose memory sales to the plethora of memory manufacturers in the market that are busy bidding down the price of memory to the consumer. 

The author is not invested in any funds mentioned in the article. 

The author is not invested in any funds mentioned in the article. 

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Source: Why Apple's IPhone 7 Release Changes Little In The Smartphone Market