14 Apr, 2021

Extensions that increase profits

When the iPhone was launched, the American company Apple has become dependent on a policy that followers consider a "tricky trick" to withdraw more money from users' pockets.

Despite the waiting period that Apple 'fans' spent to reveal iPhone 12, they were surprised that the new version does not contain many required accessories.  The shock was that the American company announced that it would sell these phones without headphones or a charger, due to its desire to "reduce electronic waste"!

According to the new policy, the iPhone 12 box will include, besides the new phone, a Lighting to USB-C cable, but it is not the typical USB port that you may have in your computer or that you find in some wall outlets in airports, cafes or similar places.  To charge your phone from the wall, you need to get a USB-C wall charger.

If you need to buy one of these accessories, Apple sells it, but it is very expensive. There is another surprise: the new phone does not come with wired headphones inside the box.

Apple has other justifications such as cutting costs by reducing the weight of the case, size and shipping costs, as well as the carton and nylon used for this task. According to weight reduction, , the company profits 8,000 tons annually by reducing 8 grams by phone for 200 million phones , all by removing two of the most important accessories!

The funny thing is that the American company is prosecuting any companies selling its accessories through Amazon, saying that 90% of the goods offered on that site are "counterfeit and not original", and lawsuits have been lodged against 51 companies in this context.

On the other hand, the Brazilian state of Sao Paulo ordered Apple to pay a fine of about two million US dollars (10.5 million Brazilian reals) for selling the iPhone 12 without a charger in the country, which is considered a "violation of the user protection law in Brazil."

France had previously forced Apple to put a charger and headphones in iPhone 12 phones, in compliance with its consumer protection laws.

Apple says that it achieved a "strong performance" in the first quarter of fiscal year 2021, after recording revenues exceeding $ 110 billion with the forefront of the new iPhone 5G devices, so how was it able to achieve these numbers and can it maintain these margins in the future?

According to several indicators, the total margins of Apple products increased, or the profits that they achieve after calculating the direct costs related to making devices and their accessories, two factors came: The first is that it has a certain level of fixed costs in its product cost structures, and with the increase in product revenues by about 21%, it benefited from some leverage gains, second, Apple pushed customers towards "professional" versions of its devices, which have richer margins.

In fact, Apple raised the price of its iPhone 12 versus the iPhone 11, making the iPhone 12 Pro models (at $ 1,000 and up) seem to be more valuable than their predecessors in terms of supply and demand.

It is also possible that Apple has seen a large percentage of commission-driven revenue such as app sales, subscriptions, and device accessories (chargers and headsets) that are more profitable.  In apps, for example, revenue numbers for the AppStore, Apple Music, Apple TV +, iCloud, third-party subscriptions, licensing, Apple Care and Apple Pay are estimated to be high.