The Chinese smartphone landscape has been termed the most competitive Samsung having felt its full effects but not Apple Inc. (NASDAQ:AAPL) if second-quarter earnings are anything to go by. Much to the surprise of the Street, Apple has continued to sell its high-end products in volumes, a fate that Samsung has struggled to replicate. Speaking on CNBC, IDC vice president Bryan Ma reiterated that a 71% growth in second quarter revenues is an indication that Apple’s margins remain intact, despite selling most of its products in a highly competitive market.
Samsung is no longer a big concern to Apple, which owns one of the most profitable businesses ever, on the premium end of the market according to the analyst justified by the units the company sold in the second quarter. China might also be a price sensitive market, but the analyst believes targeting the upper crest of the society in terms of pricing has worked to the Apple’s advantage in terms of margins.
“If you are concerned about the margin that China tends to be a very price competitive market and you tend to have a lot of low and mid-range phones that may be true. However don’t forget that in China you still have that upper crest of the market in the large cities with a large amount of disposable income. [..] One of the reasons why Apple Inc. (NASDAQ:AAPL) can continue to command those kinds of premiums to the dismay of competitors,” said Mr. Ma.
Apple Inc. (NASDAQ:AAPL) might have said that demand for Apple Watch remains strong against a weaker than expected supply, but the Street remains skeptical about the long-term prospect of the wearable. Lack of numbers for the watch in Q2, as well as future guidance, should continue to be a niggling concern to many people. Despite the supply concerns, Ma remains confident that Apple could ship up to 16 million units this year.
“I think you still got to give Tim Cook credit what he is doing. He does have the vision where the industry is going, and I think it is a case, where if anybody in the industry can make the Watch happen, it is going to be Apple Inc. (NASDAQ:AAPL). They just have so much cash and most of all they have the rapport with developers who can come up with apps that can change the way we do things,” said Mr. Ma.
Good news for Apple Inc. (NASDAQ:AAPL) shareholders is the announcement that the company is planning to give back up to $200 billion in buybacks and dividends, having generated enough cash according to Ma.
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