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Is Apple losing its profit margins?

The price of an Apple stock (AAPL) has been declining steadily over the past months.  Analysts blame this decline on the increase availability of cheaper smartphones. Huawei and Lenovo are currently gaining a large market share in China where they are selling smartphones for as low as $100.  Moreover, the premium segment of the US smartphone market is no longer growing as rapidly as in the past. The combination of these factors has reduced Apple’s profit margins from 39%, in the fourth quarter of 2011, to 30% in the first quarter of this year.


The profit margins for apples very popular iPad and iPad mini are significantly less than their premium smartphones.  Apple cannot really increase the profit margins for these products because unlike smartphones, the cost of iPads are not subsidized by carriers.