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newgersy/ With iPhone, Economy Dances to Apple's Tune


With iPhone, Economy Dances to Apple's Tune

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Ripple effects from sales of newly introduced iPhone are being felt throughout the American economy -- and they have moved the stock market.

Gloomy economic news and the wild swings of the stock market may be getting you down. But at least you can count on this: We've entered the sweet spot of the iPhone cycle.

Since Sept. 19, when the iPhone 6 and its larger sibling, the iPhone 6 Plus, went on sale, consumers have been ordering the gadgets faster than Apple can deliver them. The ripple effects are being felt throughout the economy -- and they have been moving the stock market.

"The iPhone is having a measurable impact," said Michael Feroli, the chief United States economist for JPMorgan Chase. 

"It's a little gadget, but it costs a lot and it seems that everybody has one. 

When you do the multiplication, it's going to matter." He estimates that iPhone sales are adding one-quarter to one-third of a percentage point to the annualized growth rate of the gross domestic product.

You may not think of the iPhone as a financial powerhouse. After all, it's just a consumer good -- albeit a highly functional, high- end one that you can carry in your pocket or your purse. 

Sales typically surge every two years when, as now, Apple does a major iPhone upgrade. You may have the warm and personal relationship with the iPhone that Timothy D. Cook, Apple's chief executive, described on Monday to Wall Street analysts during a conference call. 

Apple's next three months will be "incredibly strong," he said. And he spoke enthusiastically about the principal reason for this performance: "These phones are the best we have ever created, and customers absolutely love them."

Whether you love them or not, though, it's a good moment to recognize their significance as a financial force.
The iPhone's financial impact starts, of course, with Apple, which is reaping enormous profit from it. 
As the company disclosed in data embedded in a Securities and Exchange Commission filing on Monday, it has been selling a broad mix of iPhone models at an average price of $603.

That's not remotely close to the "starting price of $199" that Apple advertises, as I wrote last month. 
The full price is embedded in service agreements that many customers in the United States reach with phone carriers. 
And many of those carriers are stating that full price quite openly. The real starting price for a new, basic iPhone is $649, and models with more memory and bigger screens cost much more.

This price structure is lucrative for Apple. "The cost of building a basic phone has stayed at about $200 for years," said Andrew Rassweiler, senior director for cost benchmarking services, at IHS Technology.

That estimate doesn't include many expenses, like research and marketing costs. 
But it's a rough guidepost, and it helps explain how, as Apple disclosed in a court filing two years ago, its profit margins for the iPhone are roughly double those for iPads, which tend to be priced more cheaply.

Toni Sacconaghi, an analyst at Sanford C. Bernstein, says the gross profit margin for the iPhone is close to 50 percent. …

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When we talk about the chinese economy What is Apple's contribution to the Chinese economy?


While talking about the kind of contribution, it is all good and conventional to talk about jobs. But people often forget one simple fact. The product, which is the actual contribution of any company to society. 

There are thousands and thousands of Chinese using apple devices, which are making their lives better. That is a direct contribution of Apple to Chinese economy, indeed to any country's economy which does allow Apple products.


source: questia

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