Comment by onlyrealcuzzo | Hacker News Reader

Comment by onlyrealcuzzo | Hacker News Reader

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Apple could sell the iPhone for a million dollars, and I'm sure at least one person would buy it.

Similarly, they could sell the iPhone for $10k and maybe sell a million of them.

I guess "overpriced" is a subjective term. But if Apple sold the iPhone at cost, Apple could certainly sell a lot more of them. If Apple sold it for a margin more in line with other manufacturers, Apple could still probably sell a lot more...

Apple doesn't care that much about total shipments, though. They care more about total revenue & profits.

I think it's fair for people to call something overpriced even if tons of people are buying it -- especially if there's an argument to be made that a substantial portion of consumers are buying an alternative based mostly on price, and that the comparison product has a much higher margin than the alternative.

Again, this doesn't make it a bad business decision. If there's one thing I guarantee Apple knows more than anyone on Hacker News, it's what the optimal price is for their product to meet their business objectives.

They also put more effort into their products in ways that a lower price point wouldn't support.

Like for example, this: https://www.redmondpie.com/why-most-2018-smartphones-have-ch...

Or literally designing their own chips for use in their products which very few other manufacturers can do.

Apple could not sell the phone at a price more in line with other manufacturers, because they spend a shit ton of money on R&D and other costs that the other manufacturers don’t bother to do — because they know Apple will do it, and they can leach off the work Apple has done.

There will always be lower priced competitors who are happy to be in a race to the bottom. Apple is smart to recognize that they cannot do this, for it would spell the doom of the company.

Luxury brands don’t do races to the bottom. To do so would violate their entire reason for existence.

Sure, you might want that Ferrari or Lamborghini to be given to you on a silver platter, or sold to you for just $10.00 each, but do you really honestly expect them to be that stupid?

A minor point, Apple's R&D spend is significantly lower as a percent of budget compared to most of the market. I found this article really interesting:

https://www.ped30.com/2019/03/10/defense-apples-14-billion-r...

Edit for context: in 2018, 11.6bn or 5.1% of revenue. Compare to Amazon it's half as many dollars and 1/3 the percent.

What is it compared to other phone manufacturers? Percentages don’t really matter as much as raw numbers. You can only throw so much money at any technology without having a diminishing rate of return.

It's difficult to say what they spend on Phone R&D, but Samsung spends about 11-12% on R&D in general. Huawei and Google clock in around 15% by public numbers and Intel for comparison sits about 20%. Microsoft is somewhere around 12-13%.

Apple's total R&D spending is well below their contemporaries as a % of revenue.

Samsung has a lot more products and verticals as does Google.

Looking at all of the money that Google spends on research - they still make 90% of their revenue on ad sales and have had a string of failures and also rans.

No one can seriously argue that Apple’s ARM processor designs aren’t top notch, they just took over Intel’s modem division and they still depend on Intel for much of their computer hardware - except for the T2 chips that are part of their ARM designs

What else do you propose that Apple spend money on?

Horace Deidu just posted a graph on twitter showing that just their services revenue is larger than all of Apple’s revenue a decade ago.

I'm not suggesting anything about Apple's quality of engineers or what they should spend money on. I am only observing that their R&D spending is below other companies that are considered in the same class or industry as a percent of revenue.

Their spending (as percent) is approximately 1/3 of other phone makers, 1/3 of software developers, or 1/4 of other chipset manufacturers.

These numbers are all very rough of course because, as you point out, all of these companies work in multiple sectors and R&D spending is not disclosed in that much detail.

Then their engineers are not very good, because all the improvements now come from Google (Night Sight, 3D gestures), Huawei (5x zoom), Samsung (60MP sensor), Oppo/Xiaomi (front camera behind the display) and so ones.

Without commenting specifically on the features you mentioned, I'll just observe that being first to market with a particular feature doesn't mean that you have the best implementation of that feature.

So either Apple is a class-leader in R&D or they wait till others have cut their teeth on tech before adopting it, thereby minimize their costs but are also not leaders in R&D and dont have others stealing from their work. Which is it?

There are costs that people overlook, or might not even make use. Previously my dad (who's basically tech illterate), kept getting talked into getting Nexus phones by the local carrier. And once he gets the phone, and he's got questions, the staff that sold him the phone would hardly extend the help.

I got him (and my mom) iPhones, knowing that they cost a lot (and in my eyes, overpriced) because once they both are on the same phones, he could walk into an Apple Store, and get issues resolved. They could share with one another about how to use the phone, etc...

If it breaks, he could talk to a person to sort out what to do, and get swapped with a replacement.

I sold an old Nexus 6 to a friend, and eventually an OTA update borked it. He was on the phone getting the run around to recover it.

I know I could work with a much cheaper phone, but for the use cases above, I'm not just paying for the R&D and the hardware and a margin on top, but the services and peace of mind.

This is actually quite important. After supporting my family and relatives with Linux and Windows for 15 years, I decided that I’ll only support them if they buy Macs. My time has become more precious to myself than it was without family and work. Some bought Macs and basically I may need to install some updates when visiting and point them to some software, nothing annoying or time consuming and no late-night helpdesk support calls.

Of course some relatives like my mom were cheapskates and did not buy Macs but then their problems are now somebody else’ problems. My personal life quality improved a lot after drawing the clear line.

And no, Macs are not completely problem-free but anecdatally a lot easier :)

When my grandmother's old PC laptop finally died, I got here a chromebook... absolutely bog simple and no virii. After my mom saw it, she switched to one too. IMHO even easier than a mac, though lower support. My other grandmother who lived local (before she passed last year) I had running on linux, with wine for a couple of her mid-90's era games, would stop by and run updates every few months.

Definitely would not suggest windows for non-technical people if you can avoid it. And if you don't need local apps, omg chromebooks are great.

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