The net margin for the consumer electronics industry is 15.97% higher than the industry average. Profit margin is net income divided by total income. Analysts often use this metric to compare companies in similar industries or industries. A higher profit margin shows that a particular company has a good understanding of costs compared to its rivals.
If the company loses money, this relationship has little use. What Benedict wrote is something he and I have talked about in past episodes of our podcast. The thesis was always that a lower-cost iPhone would certainly help increase sales of iPhones, but it wouldn't increase revenues. Selling a lower-cost, lower-margin product means you need to sell substantially more product to earn income similar to selling less than a higher-margin asset.
But, as Benedict points out, this doesn't necessarily mean that Apple shouldn't launch a lower-cost phone, just that it wouldn't necessarily be because of hardware revenues, but because of the potential value to the ecosystem, in terms of capturing revenue beyond hardware, such as apps, subscription services, etc. Benedict rightly points out that Apple has more options than ever before and I would add that few companies have full control of their destiny than Apple.