The story on Apple's margins is even more interesting when you look at how high its iPhone margins are. Analysts have calculated that the gross margins on the iPhone are nearly twice the margin on the iPad. And this suggests that Apple depends heavily on iPhone sales to maintain margins. What does this mean about Apple going forward? Well, to the degree that Apple wants a positive high margin/high growth mix they need to have an iPhone product cycle that sells a lot of units. If their product cycle is slow then both volume and margins fall as the product mix skews away from the iPhone. The reason Apple's quarter was so bad was because of this.
The question is whether there are some sort of hysteresis effects, meaning that the lost momentum from one upgrade cycle feeds through nega...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.