Answer on @Quora by @Carniphage to Is Apple facing extinction in the future?
Answer by Glyn Williams:
The mindset of the mainstream tech press is pretty consistent.
Apple makes stuff. It competes with commodity manufacturers.
Prices inevitably tumble. Therefore Apple MUST FAIL.
And the tech press have been repeating this mantra for ever. Imagine I link to about 100 articles with the "Apple is Doomed" theme. I won't because it is boring.
And for the first time, some of them have noticed that the exact opposite is happening – and they are still puzzled.
In the PC market, the Mac is slowly strengthening while other manufacturers are in decline. In terms of pure business terms, Apple makes more from the Mac than the top five largest OEMs.
This is because PC OEMs make around $15 per PC. And Apple might make 20X that. And with that reality, Apple can afford to be inventive, establish market trends.
In the smartphone space, something similar is occurring. With the exception of Samsung, all of the Android OEMs are loss-making businesses. And even Samsung is seeing a collapse in handset profits, leaving Apple with a profit share of about 80%.
And Apple continue to enter new markets with new devices. Leaving the rest of the industry red-faced and flummoxed.
The interesting part of this is why Apple continues to defy these laws of market dynamics. It's not actually complicated or mysterious.
Apple is capable of selling differentiated valuable items. It uses both hardware and software to add value and then sells into a market that is happy to pay for the added value. This creates profit.
It's competitors only assemble parts, and have outsourced their software to third parties. (Microsoft or Google) By doing so they lose control over their own products, and lose any ability to add value. So they compete on price. And you get perfect race-to-the-bottom conditions.