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Apple takes 53% of smartphone profits, Samsung at 50%, remainder lose money

post #1 of 61
Thread Starter 
Apple remains the most profitable company in the smartphone industry, though its lead over rival Samsung is shrinking, as just 3 percentage points separated the two companies during the second quarter of calendar 2013.

Canaccord


The latest data from Cannacord analyst Michael Walkley shows that Apple took 53 percent of smartphone profits in the second quarter, down from 57 percent in the first quarter, and 69 percent in 2012.

Samsung, meanwhile, has seen its value share steadily grow, from 34 percent in 2012, to 43 percent in the first quarter of 2013. Now, in the second quarter of the year, Samsung took 50 percent of the smartphone industry profits, according to Walkley's research.

As has been the case in the past, Apple and Samsung are still estimated to account for more than 100 percent of the smartphone industry's profits. That's because all other companies are either break-even, or they experienced losses.

Nokia, HTC, LG and Sony Ericsson all saw revenue share of 0 percent in the second quarter, Walkley found. That was still better than BlackBerry, which has a negative 1 percent share, or Motorola, with negative 2 percent.

The figures are based on published company reports, as well as estimated made by Canaccord Genuity. Walkley's report is also the latest data to refute a recent claim that Samsung Electronics had dethroned Apple, Inc., in mobile profits.

As noted by AppleInsider last week, Samsung's IT & Mobile division brought in $5.64 billion in operating profit last quarter, which amounts to just 61 percent of Apple's total earnings.

Estimates such as Walkley's are necessary for comparison because Samsung does not detail exactly how many smartphones it sold in any given quarter. In fact, the company's "handset" business lumps in tablet and PC sales.

In contrast, the Canaccord Genuity figures do not include other mobile devices, such as tablets. Apple Chief Executive Tim Cook noted in his company's most recent quarterly earnings report that the latest Web browsing share data shows that the iPad accounts for 84 percent of tablet traffic.

"If there are other tablets being sold," Cook said, "I don't know what they're being used for."
post #2 of 61
Well, I'm sure if Apple has newer smartphones in the wings, the amount of profits for Apple will increase. I wouldn't look at just whats happening during a 3 month period before new product announcements. In addition, Apple needs to sign deals with China Mobile and the largest carrier in Japan. Then they need to come out with their replacement hand sets and a larger hand set and then the profits should come right back.

Samsumg is the only Android maker that actually makes any profit, but that's because they make components. That's the ONLY reason.
post #3 of 61

It makes no sense to look at just one quarter, especially when people are (rationally) waiting for a thinner, lighter, faster, more memory-laden one to come along in the next couple of months.

 

Why don't we wait until the end of the year, and revisit these shares...


Edited by anantksundaram - 7/31/13 at 8:45am
post #4 of 61
Uhm, the headline adds up to 103% of the profits.

That is not valid in the slightest bit. If another company has a loss, then it's zero profits, not negative profits.
post #5 of 61
Quote:
Originally Posted by Gustav View Post

Uhm, the headline adds up to 103% of the profits.

That is not valid in the slightest bit. If another company has a loss, then it's zero profits, not negative profits.

 

I'm 103% sure that "loss" and "negative profit" are synonymous.

post #6 of 61
Oh no he didn't!
I don't know what they are being used for? LOL!
post #7 of 61
It is unfair to compare Apple with Samsung with the quarter people are holding to buy iPhone for iPhone 5s .
To be fair , please compare the quarter when each of them launch their flagship smartphone .
post #8 of 61

I remember reading that there are around 800 carriers around the world and Apple is selling the iPhone on 100 of them and Samsung is selling on all 800. Now granted most of the remaining 700 are not as big as the 2 famous ones of China Mobile and DoCoMo. But this still leaves Apple with tremendous growth potential. Samsung have already grown about as much as they can since they are selling on every carrier right now and have been for a while.

 

It appears APple is about to make 2 game changing moves. The first is to release a more affordable iPhone to help them compete better with a much larger market. The second move might be to use the Qualcomm front end RF360 solution which would immediately allow them to be used on all the 700 carriers not served now whether they make a contract with the company or not. If those 2 things come to pass in a few months I can see Apple climbing way above 53% again. 

post #9 of 61
Quote:
Originally Posted by crazy_mac_lover View Post

It is unfair to compare Apple with Samsung with the quarter people are holding to buy iPhone for iPhone 5s .
To be fair , please compare the quarter when each of them launch their flagship smartphone .

That also wouldn't work very well.

 

Keep in mind, although the Galaxy S4 launched in Q2, some of the different variants have only launched in Q3. Galaxy S4 Active/Mini/Zoom/Google Edition, the Galaxy S4 LTE Advanced model had a Q3 launch and the international version might even make it into Q4 in some regions.

 

Don't forget there is also a new Galaxy Note III launching in Q3~Q4.

post #10 of 61
I call 50% bullshit ¡
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post #11 of 61

50+53 = 103 % ?

post #12 of 61
Quote:
Originally Posted by PhilBoogie View Post

I call 50% bullshit ¡

 

I agree 103%.

post #13 of 61
Quote:
Originally Posted by Gustav View Post

Uhm, the headline adds up to 103% of the profits.

That is not valid in the slightest bit. If another company has a loss, then it's zero profits, not negative profits.

 

To use a simplified example... If Apple makes $5, and Samsung makes $5, and the other companies collectively lose $2, then total industry profits are $8 (5+5-2). Apple obviously has a 5/8 share of the profits (or 62.5%) and Samsung has the same. It's perfectly valid. What other alternative calculation do you think there would be?
post #14 of 61
What smartphone industry? This is a Samsung, Apple world. Chrome OS is going to swallow the world one day though.
post #15 of 61
If these numbers are really true, it paints a pretty ugly picture about how Apple has been just coasting along. How long has Apple been in the smartphone business? It's been doing relatively well by any standards. Yet for Samsung to just run a one-year blitz and take over the smartphone industry by storm it seems to indicate that Apple isn't even trying. Again Apple becomes the laughingstock of the smartphone industry and Wall Street. Just when Apple shareholders think they might see some light, along comes Samsung and steps all over Apple like a cockroach. Samsung made it look so easy. They're nothing and then BOOM, they drop a hammer on Apple's head in such a short time.

Market share hardly matters, but Samsung is on the verge of taking away both market share and profit share from mighty Apple. Just a quarter ago, I thought the Apple had close to 70% of smartphone profits. You really have to wonder what's going on at Apple. Were they not even aware about Samsung chipping away at the iPhone's foundation? I realize the smartphone market is in constant flux and the release of new iPhones can easily shift the tides of profit, but just the idea of Apple getting bitch-slapped by Samsung is really unsettling. The way the news media keeps announcing this is like Apple is done for. I guess Apple's economies of scale are no match for Samsung's economies of scale. I'm not sure what Apple is saving their reserve cash for, but maybe its about time they used it to put some distance between them and Samsung.
post #16 of 61
Quote:
Originally Posted by Constable Odo View Post

If these numbers are really true, it paints a pretty ugly picture about how Apple has been just coasting along. How long has Apple been in the smartphone business? It's been doing relatively well by any standards. Yet for Samsung to just run a one-year blitz and take over the smartphone industry by storm it seems to indicate that Apple isn't even trying. Again Apple becomes the laughingstock of the smartphone industry and Wall Street. Just when Apple shareholders think they might see some light, along comes Samsung and steps all over Apple like a cockroach. Samsung made it look so easy. They're nothing and then BOOM, they drop a hammer on Apple's head in such a short time.

Market share hardly matters, but Samsung is on the verge of taking away both market share and profit share from mighty Apple. Just a quarter ago, I thought the Apple had close to 70% of smartphone profits. You really have to wonder what's going on at Apple. Were they not even aware about Samsung chipping away at the iPhone's foundation? I realize the smartphone market is in constant flux and the release of new iPhones can easily shift the tides of profit, but just the idea of Apple getting bitch-slapped by Samsung is really unsettling. The way the news media keeps announcing this is like Apple is done for. I guess Apple's economies of scale are no match for Samsung's economies of scale. I'm not sure what Apple is saving their reserve cash for, but maybe its about time they used it to put some distance between them and Samsung.

 

Wow...........

You are comparing a down quarter for Apple and a quarter right after the S4 introduction along with the introduction of multiple other S4 models.

 

A lot of Samsung's growth came from within the Android ecosystem, not really from Apple's.

post #17 of 61
Quote:
Originally Posted by Constable Odo View Post

If these numbers are really true, it paints a pretty ugly picture about how Apple has been just coasting along. How long has Apple been in the smartphone business? It's been doing relatively well by any standards. Yet for Samsung to just run a one-year blitz and take over the smartphone industry by storm it seems to indicate that Apple isn't even trying. Again Apple becomes the laughingstock of the smartphone industry and Wall Street. Just when Apple shareholders think they might see some light, along comes Samsung and steps all over Apple like a cockroach. Samsung made it look so easy. They're nothing and then BOOM, they drop a hammer on Apple's head in such a short time.

Market share hardly matters, but Samsung is on the verge of taking away both market share and profit share from mighty Apple. Just a quarter ago, I thought the Apple had close to 70% of smartphone profits. You really have to wonder what's going on at Apple. Were they not even aware about Samsung chipping away at the iPhone's foundation? I realize the smartphone market is in constant flux and the release of new iPhones can easily shift the tides of profit, but just the idea of Apple getting bitch-slapped by Samsung is really unsettling. The way the news media keeps announcing this is like Apple is done for. I guess Apple's economies of scale are no match for Samsung's economies of scale. I'm not sure what Apple is saving their reserve cash for, but maybe its about time they used it to put some distance between them and Samsung.

Apple has been busy making good products. The same cant be said for Samsung. Apple is not supported by many of the top carriers in the world, most places outside of America don't have phone subsidies, and Apple is only really competing at one segment of the phone market. I think your frustration is way out of proportion to what's happening. Apple hasn't shown any indication of napping.

It was easy to hear Steve Jobs say that Apple isn't about being the biggest or most profitable company when Apple was on a meteoric rise, but now that profit margins have dropped off, it seems that these principles are unsettling for some money-oriented people. What you see with Apple now is the result of a company not being motivated to be the biggest or most profitable company. This is what it looks like. Samsung, however, wants to be #1 in those metrics, and they won't stop until they are. I have no doubt they will be.
post #18 of 61
There's a certain amount of profits out there. If I take 53%, then the most anyone else can take is 47%. Someone isn't reporting accurately on the source material.
post #19 of 61
People need to read the whole article. The math does indeed work out because losses from Motorola and Blackberry count as negative profit.

53% 50% - 2% - 1% = 100%
post #20 of 61
Quote:
Originally Posted by Gustav View Post

Uhm, the headline adds up to 103% of the profits.

That is not valid in the slightest bit. If another company has a loss, then it's zero profits, not negative profits.

You are 110% correct. Yogi Berra did the numbers.
post #21 of 61
Quote:
Originally Posted by Mooch View Post

To use a simplified example...If Apple makes $5, and Samsung makes $5, and the other companies collectively lose $2, then total industry profits are $8 (5+5-2). Apple obviously has a 5/8 share of the profits (or 62.5%) and Samsung has the same. It's perfectly valid. What other alternative calculation do you think there would be?

It is fully invalid to do the math this way. If Apple made $5 and Samsung made $4 and HTC, LG, Google, Sony... Combined LOST $9, Apple and Samsung did not make an indeterminate amount of the profits.

You have to treat losses separate from profits.
post #22 of 61
Quote:
Originally Posted by Steven N. View Post

It is fully invalid to do the math this way. If Apple made $5 and Samsung made $4 and HTC, LG, Google, Sony... Combined LOST $9, Apple and Samsung did not make an indeterminate amount of the profits.

 

 

The probability of that happening is zero. You're just being pedantic.

 

Quote:


You have to treat losses separate from profits.
 

 

     Says who?! Where? (Other than you, here).

post #23 of 61
Quote:
Originally Posted by manicakes View Post

Quote:
Originally Posted by Gustav View Post

Uhm, the headline adds up to 103% of the profits.

That is not valid in the slightest bit. If another company has a loss, then it's zero profits, not negative profits.

 

I'm 103% sure that "loss" and "negative profit" are synonymous.

If your were to theoretically look at the smartphone industry as a single company with a single balance sheet. The industry (viewed as a single company) would report 100% of their profits and 100% of their losses. The Samsung division and the Apple division were the only two profitable divisions. 

 

Apple produced 51.46% of the industry profits (viewed as a single company) and Samsung produced 48.54% of the total profits of the industry (viewed as a single company). The total industry profit (viewed as a single company) would be the total profit in [dollars] minus the total loss in [dollars]. Assuming the profits were greater than the losses.

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post #24 of 61

Corrected headline:

 

Apple takes 53% of smartphone profits, Samsung at 47%, remainder lose money

 

If they can make up numbers, so can I.

post #25 of 61
Quote:
Originally Posted by anantksundaram View Post


     Says who?! Where? (Other than you, here).

But it is not uncommon for an industry in disruption to show minimal or even no profits (losses outweigh profits). So under this flawed math, you could end up with whacky numbers like company A getting 1290% profit, company B getting 3543% of the profit

Or even worse:

Company A getting -254% of the profit.

To avoid these issues, you have profit and losses. Not just profit. It is not a hard concept to grasp.
post #26 of 61
So these are estimates from an analyst. Remember, an analyst is just a carnival fortune teller%u2026just not as accurate or as entertaining.
post #27 of 61
Quote:
Originally Posted by Steven N. View Post

To avoid these issues, you have profit and losses. Not just profit. It is not a hard concept to grasp.

Neither is the concept of a + (plus) or a − (minus).

post #28 of 61
Quote:
Originally Posted by Mooch View Post

To use a simplified example...If Apple makes $5, and Samsung makes $5, and the other companies collectively lose $2, then total industry profits are $8 (5+5-2). Apple obviously has a 5/8 share of the profits (or 62.5%) and Samsung has the same. It's perfectly valid. What other alternative calculation do you think there would be?

It gets fuzzy because you're including losses. How would you chart this in a pie chart, for instance? In comparing Apple and Samsung (the whole point) it should exclude anyone losing money.

I mean, would you want a headline that says both Apple and Samsung are each making 62% of the profits?
post #29 of 61
Quote:
Originally Posted by Gustav View Post

Uhm, the headline adds up to 103% of the profits.

That is not valid in the slightest bit. If another company has a loss, then it's zero profits, not negative profits.

That's not correct either because a company that breaks even has zero profit as well. There's no 'loss' column on earnings charts so in order to show a loss a negative number is used and that's why it's common called negative profits, but there's also another definition and one that makes more sense. If a company is expected to lose a certain amount say $10 million but they lose less say $8 million then they have $2 million in negative profit.
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post #30 of 61
Quote:
Originally Posted by SpacePenguinBot View Post

People need to read the whole article. The math does indeed work out because losses from Motorola and Blackberry count as negative profit.

53% 50% - 2% - 1% = 100%
Correct. The thing to remember is that profit is a signed number, so if you talk about profit percentages, then you necessarily get signed percentage. It still adds up to 100%.

People confuse that with "percentage of total (positive) industry profits", which would ONLY include players who made a positive profit (negative profit players would be excluded from the pie chart).

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post #31 of 61
Quote:
Originally Posted by Seankill View Post

 

Wow...........

You are comparing a down quarter for Apple and a quarter right after the S4 introduction along with the introduction of multiple other S4 models.

 

A lot of Samsung's growth came from within the Android ecosystem, not really from Apple's.

 

Not only that. You need to realize, Apple is doing this with basically one model from 3 generations. While Samcrap has fired all the bullets, Apple's time is yet to come.....

 

And again: what would Samcrap profits be if they would pay for components at market prices? Odor is Constantly trolling and he knows that very well...

post #32 of 61

I say this article is total BS and useless. Neither company publishes numbers in a way that allows them to be compared to each other.

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post #33 of 61
Quote:
Originally Posted by anantksundaram View Post

Quote:
Originally Posted by Steven N. View Post

It is fully invalid to do the math this way. If Apple made $5 and Samsung made $4 and HTC, LG, Google, Sony... Combined LOST $9, Apple and Samsung did not make an indeterminate amount of the profits.

 

The probability of that happening is zero. You're just being pedantic.

 

The probability of that happening exactly may be zero, but the point remains that it represents an example of why taking the ratio of a positive number with a sum (that may be positive, negative or zero) to get a percentage is not meaningful. To take a non-zero probability example, how would the positive profit of a single company be represented as a percentage of an overall loss-making segment? As a negative percentage?

post #34 of 61
Instead of having the exact same argument as the last time we had 103% profits in the industry, could someone find that thread and link to it?
post #35 of 61
Horace Deidu just came out with an article that addresses this:

http://www.asymco.com/2013/07/30/that-competition-thing/
post #36 of 61
Quote:
Originally Posted by Realistic View Post

I say this article is total BS and useless. Neither company publishes numbers in a way that allows them to be compared to each other.

Absolutely true.
Quote:
Originally Posted by Suddenly Newton View Post

Correct. The thing to remember is that profit is a signed number, so if you talk about profit percentages, then you necessarily get signed percentage. It still adds up to 100%.

People confuse that with "percentage of total (positive) industry profits", which would ONLY include players who made a positive profit (negative profit players would be excluded from the pie chart).

Exactly. The people who keep railing on this methodology are simply proving that they have no concept of how math works.
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post #37 of 61
I fully agree that AAPL is making more profits then Samsung. There was some speculation in the Press if AAPL makes 50% of their operating margin because its revenue is close to 52% of their total revenue. The following are the facts.

Apple's average selling Price for the last 4 quarters is $620 (581, 618, 635, 651).

Average cost of making an iPhone 5 is $207, iPhone 4/4S is $180 (Components cost of iPhone is going down).

So Gross Profit of the iPhones on a average terms is close to 66%.

Average selling Price of an iPad/iPad Mini is $375 and cost of making these iPads is around
$270.
So Gross profit for iPads is around 40%.

iTunes Gross profit we all know is 30%, because Apple gets 30% of everything they sell in the iTunes Store.
Macs estimated gross profit is around 28% approximately.

If you review all the above gross profit among all the products, Apple's iPhone Gross Profit is 70% of all Apple's Profits.
So Apple's Profit is close to 70% of all its profit.

If you properly review samsung's earnings, you will notice that they club smartphones, iPads, PC, Laptops in their revenue.

Another way to find is the net profit of Samsung & Apple for the last 12 months is as follows:

Apple - 37.75 Billion Dollars (70% of all profits for iPhone = 26.5)

Samsung - 19.77 Billion Dollars ( Samsung makes 100 different products which includes smartphones, iPads, PC, TV, refrigerator Plus 100 other Products.) Samsung may not be making more than 50% of all its profits on Smartphones, but even if you assume it makes 70%, then Samsung's Net Profit on smartphones is around $13.83 Billions.


The actual factual profit mentioned by Apple & Samsung shows us that Apple still has 65% of all the profits in the smartphone market trailing 12 months. These are facts based on their actual earnings.
post #38 of 61
Quote:
Originally Posted by sammy100 View Post

I fully agree that AAPL is making more profits then Samsung. There was some speculation in the Press if AAPL makes 50% of their operating margin because its revenue is close to 52% of their total revenue. The following are the facts.

Apple's average selling Price for the last 4 quarters is $620 (581, 618, 635, 651).

Average cost of making an iPhone 5 is $207, iPhone 4/4S is $180 (Components cost of iPhone is going down).

So Gross Profit of the iPhones on a average terms is close to 66%.\

You can stop there. You have no idea what it costs Apple to make an iPhone. Those appear to be the numbers published by a company which only publishes component costs without any of the indirect costs, overheads, and other costs.

Apple's gross margin is certainly far lower than 66%.
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post #39 of 61
Quote:
Originally Posted by muppetry View Post

The probability of that happening exactly may be zero, but the point remains that it represents an example of why taking the ratio of a positive number with a sum (that may be positive, negative or zero) to get a percentage is not meaningful. To take a non-zero probability example, how would the positive profit of a single company be represented as a percentage of an overall loss-making segment? As a negative percentage?

You're wrong. This is third grad math and it's really sad how many people can't understand it.

Take a single company. Let's say that they exactly broke even last year and this year made $1,000. Their percentage increase was undefined. Does that mean it's impossible for them to break even last year? Of course not. Similarly, the fact that you can come up with a scenario where one of the numbers is undefined doesn't mean it's impossible.

Again, it's third grade math. Get over it.
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post #40 of 61
Quote:
Originally Posted by jragosta View Post

Quote:
Originally Posted by muppetry View Post

The probability of that happening exactly may be zero, but the point remains that it represents an example of why taking the ratio of a positive number with a sum (that may be positive, negative or zero) to get a percentage is not meaningful. To take a non-zero probability example, how would the positive profit of a single company be represented as a percentage of an overall loss-making segment? As a negative percentage?

You're wrong. This is third grad math and it's really sad how many people can't understand it.

Take a single company. Let's say that they exactly broke even last year and this year made $1,000. Their percentage increase was undefined. Does that mean it's impossible for them to break even last year? Of course not. Similarly, the fact that you can come up with a scenario where one of the numbers is undefined doesn't mean it's impossible.

Again, it's third grade math. Get over it.

 

You addressed neither the example nor my question, and instead just introduced a different example where an undefined result is the correct and reasonable answer, since, by definition, a change from zero to any finite number is an undefined fractional increase.

 

Firstly we were not talking about fractional derivatives (changes), we were talking about one quantity as a fraction of another which, third grade math notwithstanding, is different, and secondly, this method for representing profit share results in some obvious logical ambiguities.

 

I guess I need to formalize the problem. If, as has been done here, we define a company's profit share as its individual profit divided by the net profit of the market (where losses are just summed as negative profit), then, for example, if a company makes a positive profit, p, and the industry, as a whole, makes a net positive profit P, then the company's profit share is p/P (or (p x 100)/P as a percentage). Superficially just fine.

 

But what if the company makes that same profit, p, but the net industry profit is negative - a loss of P? The profit share calculation is now -p/P. The same magnitude number, but now negative in sign, representing the same actual profit but now in an overall loss-making market. A negative percentage representing a better performance than the same positive percentage. Even worse, that result is indistinguishable from the situation where the company makes a loss of p in a market with a net positive profit of P - both cases would result in reporting the same profit share, -p/P. That does not appear meaningful in any sense. Are you really arguing that it is a useful way to describe profit?

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