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Comment by nulldereference | Hacker News Reader

Not so much a comment about this particular article but its funny how companies are realizing the advantages of being fully vertical again, and we the consumers get to witness the the pros and cons of this trend.

It goes back to the days where DEC, NCR, IBM etc... came with entire portfolios of competing implementations, none of which interoperated with each other. IBM for example also had the "Insurmountable Platform Advantage", it had the full stack ... literally, from sillion, chip design, operating-systems all the way up to software-services, but the industry lost out due to big blue's big-iron prices and the pc clone-wars began.

I don't see what the pc clone-wars are in this case, android doesn't seem to make much of dent in apple's profits here.

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True story: DEC was so vertically integrated that it owned a turkey farm, because that was the most cost-effective way to give every employee a turkey for Thanksgiving.

Do you have a source for that? It seems far more humorous than probable.

>android doesn't seem to make much of dent in apple's profits here

Of course it does. Imagine the profits if iOS had 90% market share as Windows once did (or still does) on the PC.

Your point about IBM is a good one though. I think the reason why vertical integration can be dangerous is that the entire platform is only as strong as its weakest link. You don't want great industrial design being held hostage by, say, bad batteries or slow CPUs.

Android's market share mostly comes from phones much cheaper than the iPhone. Galaxy S-whatever is stealing market share from the iPhone; $100 Huaweis largely aren't, because people who buy them could never have afforded iPhones.

True, but that doesn't change the fact that Android makes a massive dent in Apple's profits. Android's market share has surpassed iOS is almost every rich country where people can afford Apple's devices.

True, but that doesn't change the fact that Android makes a massive dent in Apple's profits.

This is false. Apple's percentage of the profits in the cell phone industry has only increased over the years; it's up to 92% now: http://www.wsj.com/articles/apples-share-of-smartphone-indus....

Apple may make 92% of the profit of the phone industry, but without Android competition they would be making a lot more money:

- a good portion of the people currently carrying Android phones would buy an iPhone instead of a Windows or Blackberry phone if Android wasn't an option

- viable competition provides pressure on Apple to keep prices down and/or add more features to their phones at their current price. (For example, without Android pressure, Apple would probably still be shipping 3.5 or 4 inch phones)

Apple may make 92% of the profit of the phone industry, but without Android competition they would be making a lot more money

Apple set the world record for the largest quarterly profit ever—$18 billion—during last year's holiday quarter when they sold 74.5 million iPhones, which is more smartphones than any company has ever sold in a single quarter.[1]

And given this year's iPhone 6s weekend launch surpassed last year's opening weekend (13 million vs. 10 million phones), they could break their own unit and profitability records.

It's difficult to imagine Apple making more money than they do now.

[1] http://www.cnet.com/news/apple-beats-world-record-in-quarter...

Taking percentage share of profits from device sales is not the only way to make a dent in Apple's profits. Profits are not a constant.

What would Apple's profits be if Android did not exist? I believe they would be much higher just as Microsoft's profits would be much higher if Linux didn't exist.

But it's a counterfactual question. So we will never know for sure.

The situation in Android is such, that even if you can afford an expensive android phone, you don't lose much by buying a $200 phone , in many cases. And that's a huge market.

I suspect vertical integration is more efficient and wins out, so long as you accurately read the market and don't throw your advantage away.

IBM didn't bring the personal computer to market early enough, which left the door open to Apple, Commodore and others. Then they signed the MS-DOS licensing deal... and the rest is history.

In other words, until apple makes a stupid mistake, they're unstoppable.

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