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Comment by Demiurge | Hacker News Reader

>Your entire rant completely forgets that Apple runs, on average ~70% profit margin ($700 phone costs about $200 to make).

I doubt he forgets it, because it's not true. The 70% difference between retail price and cost to stamp a device at a factory is not "profit margin", because there are further costs, before and after manufacturing, such R&D, organizational and business costs. You can bet Apple is spending more on R&D than almost anyone else, so there is likely no wiggle room at all for anyone to compete on innovation, unless they aim for some niche market.

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>You can bet Apple is spending more on R&D than almost anyone else, so there is likely no wiggle room at all for anyone to compete on innovation, unless they aim for some niche market.

Actually, Apple spends comparatively less on R&D than any of its competitors. It's increased recently, but for many years - especially in the late Jobs years - people were scratching their heads at how comparatively little they spent on it.

http://www.cnet.com/news/apples-r-d-up-32-percent-in-2013-st...

Apple does spend comparatively little on R&D (perhaps part of that is because they don't produce 400 different models of every darn device), but their margins on iPhones are still nowhere near 70%.

I was just speaking specifically the notion that Apple's margins as a company are eaten up by R&D spend which we agree they're clearly not. (The fact that they're doing multi-billion dollar stock buybacks and issuing increasing dividends show they have more money than they know what to do with).

Although since you brought it up, I did a quick search and found that the margins on the iPhone as an individual product (vs. the company's overall margin) are speculated to be near 70% and that figure isn't just pulled out of thin air:

http://appleinsider.com/articles/13/09/30/iphone-5s-demand-h...

Because all the companies producing the several parts involved did absolutely no r&d and they got information on how to produce all those batteries, cpus, glass, radios, sensors, etc from aliens.

Every company does r&d and manage just fine with non obscene profits on each product. Apple and Samsung create artificial scarcity with lawsuits. They probably spend more on legal than r&d.

It is true. Apple has a 70% profit margin on sales that they reinvest.

Just because revenue is reinvested doesn't mean it isn't revenue or a margin.

And, seeing as Apple has >$100,000,000,000 of cash and near cash, your "reinvestment" line is a total fantasy. Apple is printing cash with a massive profit margin, and reinvesting a tiny tiny tiny fraction of that money back into their business.

>> Just because revenue is reinvested doesn't mean it isn't revenue or a margin.

Your sentence is a little confusing, because calling something revenue means it is revenue. And while related, revenue is not the same as margin.

And please note that the bill of materials for a phone is only a part of the cost of goods sold, which as mentioned by others, also includes manufacturing, assembly, marketing, r&d and other costs. Those costs are generally not considered to be "reinvestment".

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