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by aetherson
3691 days ago
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No, that's a really bad analysis of margins on cars. Look, the margin on a $700 iPhone is somewhere in the vicinity of 30%. That means that the price that an iPhone user pays for the privilege of having an iPhone per se is about $200, maybe $300 on the outside. For a car whose manufacturing costs are $30,000, a 30% margin would mean selling at $42,000. The size of addressable market that can afford to spend $12,000 on Apple brand is microscopic compared to the market size of people who can pay $300 on Apple brand. The "luxury" market for cars is inherently much, much, much, much, much smaller than the luxury market for smart phones. So if Apple does try to attain iPhone-like margins in the car market, they will necessarily address a tiny market. If they don't, they'll still address a much smaller market than the smartphone market, and with smaller margins to boot. |
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I'm not seeing how. You post is talking about market size. The parent I replied to was only talking about margin. Two very different things which, as you were pointing out, will have two very different outcomes as far as profitability due to market size but that was never something brought up in the context of the original conversation.
> So if Apple does try to attain iPhone-like margins in the car market, they will necessarily address a tiny market. If they don't, they'll still address a much smaller market than the smartphone market, and with smaller margins to boot.
Smartphones are one of the biggest markets in the world so of course they will be addressing something smaller. Though car market is still pretty huge especially in the corporate selling of vehicles. What if Apple sold fleets to taxi / uber / lyft type companies? Maybe they create their own rival to uber / lyft and you can get picked up in an Apple car.
Seems there is so much speculation here that no one is going to be able to paint an accurate picture of what Apple's entrance into the car market would look like let alone figure out what the margins and revenue would be.