Tuesday, July 14, 2015 [Tweets] [Favorites]

92% of Smartphone Profits

John Gruber:

At just 20 percent of unit sales, Apple isn’t even close to a monopoly. At 92 percent profit share, they have a market dominance that rivals any actual monopoly the tech industry has ever seen. We don’t even have a term for this situation, it’s so unusual.

Graham Lee:

That 92% profit on 20% sales is indicative, rather than contraindicative, of a monopoly. And there’s another word we could use, too: monopsony. Let’s say that you’ve made an iOS app, and now you want to sell it. Do you create a storefront on your website to do that? Do you contact Sears and see how many boxes they want? Speak to some third-party distributor? No, you can only sell to Apple, they are the only buyer for iOS apps.

[…]

I would imagine that a legal system that did explore this question would consider analogous environments, like the software market of the 1990s. Back then, Microsoft bundled a web browser and a media player with their operating systems and used their market power (which let them act as a monopoly even though competitors existed) as an operating system vendor to make it hard to sell competing browsers or media players. It might be an interesting thought experiment to compare that situation with today’s.

2 Comments

[…] Graham Lee quoting John Gruber (via Michael Tsai): […]

[…] on a campaign a few years ago, and it felt only slightly more charming at the time. Now, with an industry-dominating profit share, it feels kinda […]

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