Apple NASDAQ: AAPL is set to see a dramatic decrease in it’s profits if current subsidies decrease. To explain this theory please read on.
In the US the mobile phone industry is worth Billions upon billions per year, as new models are bought and sold online and through warehouse retailers. Each individual mobile phone is usually sold as part of a mobile contract package and therefore the customer will not pay a cent upfront and the mobile companies earn their money back over the 24 month period contract hire.
However, because Apple had the hottest commodity on the market, they were subsidized the most in the mobile telecommunications market. However, because of current competitors such as Nokia, Google, Samsung and RIM the subsidury will decrease meaning that those telecommunication mobile providers will push the Apple product less and less each month.
This will mean for Apple that the shares and profits will decrease as other mobile phones become more and more popular and received more and more funding to subsidize their product to the telecommunications companies.
So does this spell the decrease of Apple profits?
It very well could do as companies such as Apple rely on these subsidies to fund their projects as the actual handsets themselves cost a lot to produce and get to market, if the funding is not there then mobile phone companies who push consumers to buy certain products will not push the Apple product as much as it is not worth their while in the long run if they cannot make their money back on the mobile phone contracts.
If Apple loses this market share as the most popular mobile phone provider then this would have a knock on effect for the profits and shares of the company, which will in turn lead to the actual product value decreasing.
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