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Comment by cmiles8 | Hacker News Reader

“Your margin is my opportunity”

Absent a true monopoly or government protection high margin businesses are usually those most ripe for disruption. Someone eventually comes along and, for various reasons, is willing to make far lower margin and then the battle begins. Lots of sleepy high margin businesses out there just waiting to get picked off by a new entrant.

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And thus we get into the territory of profit hiding and transfer. Executive consultancies are a common mechanism for doing that, as hourly fees can be exorbitant without anyone batting an eye.

It lowers the profit of a public company, thus decreasing pressures to pay a dividend, while the consultancy leeches money and pays it forward to some other company in which the public company’s founders/executives are direct beneficiaries.

Not when you have a huge lead over your competitors and it’s almost impossible for a new entrant to catch up without excessive funding. Even with that, if you have products that need lots of approval with long duration tests (this materials leeching into food and water over a long time), it can be years before even good products will replace you.

In theory but not in practice. Apple has massive margins but they're not being disrupted by a slightly cheaper iPhone. In fact, plenty of big tech companies sit in this bucket (thus the reason they've sat on massive cash piles for so long!)

A slightly cheaper iPhone is already in the market (android). In theory Apple shouldn't be able to maintain these high margins.

Well yes, that was my point ;-)

Margins are also high based on brand. But software by definition should be a high marginal profit business.

Conversely, the ones which still exist are biased towards industries where that's very hard.

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