All the news from Apple (AAPL) is good. Recent Gartner and IDC data show the Mac outselling PC products from Dell (DELL) and HP (HPQ). The iPhone sold one million units in its first three days on the market.
One of the tough issues for Apple is how much it makes on all of those impressive sales. According to Fortune, "Shaw Wu, the top Apple analyst at American Technology Research, is focused on the company’s gross margins, which came in surprisingly low last quarter for reasons that were never adequately explained."
Apple has agreed to stop taking a cut from the cellular subscription fees that it iPhone carrier partners get after they sell the handset. That is bound to make the overall profits on the product something less than impressive.
Apple may have hit the point where it is trading profitability for market share. Pushing the Mac and iPhone harder and harder against entrenched competition has to get harder and harder as the Apple’s market share grows.
Apple’s competition is not going to simply roll over and die.
Douglas A. McIntyre
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