There’s little question that Apple prefers to create and sell products at the high end of the product range. That affords the company higher than industry standard margins, and those profits are put to use in nailing down lower prices for components in the supply chain, which circles back around to higher margins, but competitive prices, and more profit for Apple on each sale.
That’s Apple’s methodology up and down the product line. The entire Mac line usually sells for about the same as a similarly equipped PC, but Apple sells more, seldom discounts, and therefore gains more profits. The same holds true for iPhone, iPad, iPod touch, and even the lowly iPod.
Apple takes a hefty slice of the revenue as profit, even on music, TV shows, movies, applications, and book sales. The company’s relentless pursuit of a perfect product costs money, and profits drive future products.
A good example of a product undergoing relentless perfection is the new MacBook Air. Thinner, lighter, faster, and with longer battery life at a lower price point. What’s not to like?
On the other hand, Apple’s profile among customers and consumers in general is much higher than ever before (hundreds of millions of customer will do that), and that makes Apple more of a target for critics, politicians, and competitors (who want a slice of the Apple pie; pun intended).
For whatever reason, Apple didn’t pay any taxes in the U.K. last year, and the company was under separate scrutiny in the U.S. for having tens of billions of non-U.S. dollars sitting outside the country.
Apple CEO Tim Cook said, ‘We pay all the taxes we owe, every single dollar. We not only comply with the laws, but we comply with the spirit of the laws.’
Maybe that’s the case and maybe it’s not, but Apple places itself in a tenuous position with customers and politicians (those who write and approve the arcane complexity of tax laws which Apple tries scrupulously to obey) by paying only what is required in taxes. I do some work in the U.K. each year and have to pay taxes on what I earn. That means I paid more in U.K. taxes last year than Apple, which reaped billions of dollars in revenue and profits.
It may be perfectly legal, and certainly acceptable to shareholders, but at a time when many of Apple’s customers are suffering in a world wide economic drought, I ask, is that the right thing to do?