EoW March 2012

Transatlantic cable

that reported for its retail operation in the equivalent quarter a year earlier. As TelecomTV observed: “Steve Jobs has left the world with a money-making machine extraordinaire.” With all this winning going on, Mr Scales was moved to frame a question: Who is doing the losing? His answer: Just about every other player you can think of. He locates the explanation for this in what consultant Francis McInerney, of North River Ventures (Katonah, New York), calls Apple’s “hoovering” of pro ts out of the mobile market. This may be seen in fourth-quarter results posted by the telecommunications company Verizon, which show a loss of $2.02 billion. Pension charges come in for most of the blame. But according to IT market research rm Yankee Group (Boston), another substantial culprit, given its hoovering propensity, was Apple. According to Mr McInerney, Apple’s market power tends to give it the ability to appropriate the pro ts being made by other players within its ecosystem. In the case of Verizon, Apple’s high iPhone pricing means that Verizon must heavily subsidise the phone in order to get it out to consumers. From the Yankee analysis: “While the iPhone helped Verizon snag 1.2 million subscribers for monthly contracts, many were signed at a loss due to the hefty subsidy (as much as $400 per user) that Verizon o ers for the iPhone. While, over time, the subscriber gains should outweigh the subsidy losses, Verizon hasn’t yet had the iPhone long enough to see that happen.” In other words, according to TelecomTV, the ticket price of the Apple iPhone appropriates Verizon’s future service revenue.

US protested the emissions rules; but from Luxembourg the Court of Justice – the EU’s highest court – rejected the challenge. American environmentalists have praised the EU for extending its pollution-control policy to airlines.

Telecom

Does Apple’s market power enable it to ‘hoover up’ the pro ts of players within its ecosystem?

“Looming recession? Not down at the Apple store.”

Ian Scales, of TelecomTV, was taking note of the phenomenal success of iPhone maker Apple Inc at a time when virtually all of its rivals are feeling the pinch of a constricted market. In its best-ever quarter, Apple saw its earnings for the October-December period of last year – its rst scal quarter of 2012 – rise more than 117% to $13.06 billion, on revenue of $46.33 billion. Revenue in the rst scal quarter of 2011 totaled $26.74 billion. (“Apple Storms Ahead as Competitors Bury Their Heads in Their Hands,” 25 th January). The death on 5 th October of its legendary co-founder, chairman, and CEO Steve Jobs clearly did not hinder Apple’s performance. Some 37 million iPhones and 15 million iPads were sold in the quarter ended 31 st December, during which Mac sales climbed to 5.2 million. The company posted quarterly revenue from its retail outlets of $6.1 billion. This was nearly 60% higher than

“Hoovering indeed,” commented Mr Scales.

Dorothy Fabian – USA Editor

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EuroWire – March 2012