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Behold:

The nonrelease of the Googlephone just highlights what Apple gets about consumers, and what Google doesn't. Apple knows how to design not just gadgets, but the businesses that go around them. And as a result, I wouldn't be surprised if Apple is worth more than Google within two years.

Google has a market cap of $230 billion and Apple checks in at $167 billion, so it’s really not that outrageous a claim.

ValleyWag lists the reasons:

First, Apple makes a profit when the phone is sold -- about $200. Second, it takes a hefty chunk of subscription revenue from the carrier -- $18 a month, or $432 over two years. Third, Apple takes a cut from music and television shows sold through the iTunes Store -- and, possibly, it will take a cut of sales of third-party software applications as well.

The hardware profits are likely here to stay. Apple has been hugely successful in driving down costs and keeping margins up. For the most part, Apple doesn't really lower prices. Its top of the line laptop has been in the $2,000-$2,500 range for years. Those $500 pieces of crap at Wal-Mart? Those are last year's computers being sold as new. Apple doesn't do that, so they keep their margins fat and juicy.

The same thing happened with the iPod. When it debuted in October 2001, the iPod was $399. For years the top of the line iPod remained around that price. Only more recently, with the advent of cheap flash drives -- Apple spent $1.2 billion to snatch a huge percentage of the worldwide supply of it -- has it been able to drive down the average cost of iPods. As a result, Apple has sold millions upon millions of the music players, taking a huge market share and laughing all the way to the bank.

Posted by edelfenbein at November 6, 2007 4:14 PM