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Apple's iPhone earned 87.4% of global handset profits in December quarter

post #1 of 49
Thread Starter 
Despite efforts seeking to portray Apple as having experienced a disappointing winter quarter, the reality is that Apple brutally dominated the slowing global handset market, syphoning off 87.4 percent of the industry's global profits.



According to a research note by Raymond James analyst Tavis McCourt cited by Patrick Seitz of Investors.com, Apple's 87.4 percent share of the industry's profits dwarfed the earnings of second place Samsung, which accounted for 32.2 percent.

Most other vendors continued their historical trend of losing money in the quarter, contributing to the top two vendors' shares exceeding 100 percent. McCourt's analysis is even more favorable to Apple than figures by Canaccord Genuity (above), which have regularly charted Apple as leading an industry overwhelmingly represented by commercial failures, from HTC and LG to Google's Motorola, now being sold to Lenovo.

The fact that Apple is collecting a lion's share of the industry's profits also figures into the future of a market that appears to be satiating demand. McCourt noted that industry growth has now slowed to the lowest growth rate since the recession.

"In aggregate," McCourt wrote, "we believe the industry ex-Chinese vendors is likely to see little to no growth this year. Chinese-based vendors now account for 30% of industry revenue and 40% of industry volumes, and although growth is still elevated at Chinese-based vendors, we suspect these vendors will slow in 2014 as well, as China's end markets for smartphones slow."

McCourt added, "it remains unclear to us where any non-Chinese vendor outside of Apple and Samsung will obtain the profits necessary to re-invest in the business. The mobile device market continues to look like an Apple and Samsung market in the developed world, with Chinese-based vendors continuing to take share in emerging markets."
post #2 of 49

This was put out there by an analyst to make money by manipulating the market.  I don't believe even one single guess that they made.

post #3 of 49
Sell..Sell...Sell.
post #4 of 49
The consumer has spoken... Samsung had better put out a smaller screened phone or they are dead in the water.
post #5 of 49
Originally Posted by ort View Post
The consumer has spoken... Samsung had better put out a smaller screened phone or they are dead in the water.

 

In response, Samsung releases a waterproof phone.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

Reply
post #6 of 49
Quote:
Originally Posted by supdizzle View Post

Sell..Sell...Sell.
Well, Apple's highest profit-generating product is not expected to see sales growth or margin increases, so that isn't completely irrational. What they made already has been disclosed. What remains to be seen is what happens with the remainder of Apple's ecosystem.
post #7 of 49
Quote:
Originally Posted by ort View Post

The consumer has spoken... Samsung had better put out a smaller screened phone or they are dead in the water.

Samsung is the largest smartphone vendor by units sold... and the 2nd largest in terms of industry profits.

Samsung isn't dead by any stretch of the imagination.
post #8 of 49

Provided Android holds about 80% of the world marketshare in smartphones, the fact that Apple made 87.4% of all handset profits is a pretty remarkable feat. This just proves that chasing after the marketshare is a worthless strategy. 

post #9 of 49

Race to the bottom is for losers

post #10 of 49
Quote:
Originally Posted by sirozha View Post
 

Provided Android holds about 80% of the world marketshare in smartphones, the fact that Apple made 87.4% of all handset profits is a pretty remarkable feat. This just proves that chasing after the marketshare is a worthless strategy. 

 

In order to get a critical mass for proprietary stuff like Facetime, market share is vitally important.  And the ecosystem for a product is also vitally important, especially these days.  

 

As of now, the companies with the largest marketshares are making the most money.  Those with small marketshares are fading.

 

If Apple annot keep a critical mass, it too will fade away.  It is important that many, many people buy Apple products.

post #11 of 49
DED your chart doesn't show the information you wrote in the article. Just FYI.
post #12 of 49
Does anyone know how many iOS devices are active?

That is a much more important number. Since the iPhone 4 and iPad 2 are te two oldest models that support iOS 7 and current it is installed on ~80% of all iOS devices. This might mean that market share calculated by devices sold each quarter is completely meaningless.
post #13 of 49
Quote:
Originally Posted by SudoNym View Post

As of now, the companies with the largest marketshares are making the most money.

Apple makes more than Samsung with a lower share.
Quote:
Originally Posted by SudoNym View Post

If Apple annot keep a critical mass, it too will fade away.  It is important that many, many people buy Apple products.

That's what has made mobile such a home run for Apple. They've got high volume shipments (200 million+ units per year), they've got the mindshare (exclusive apps, best quality hardware and ecosystem) and they've got the profits.

This is an area where having a lower share doesn't matter because the market is so huge. No developer or peripheral manufacturer is going to ignore a market that has over 600 million people in it. It wouldn't be ideal to have a very low share of it (like the Surface) but Apple has the prime spot because they are comfortable. Companies like Samsung pushed hard to get the volume but there's no profit growth strategy so they are going to start flailing around treading water to stay where they are. As Tim said, they can push a couple of buttons and ramp it up when they are good and ready.
Quote:
Originally Posted by Drunkzombie 
Does anyone know how many iOS devices are active?

That is a much more important number. Since the iPhone 4 and iPad 2 are te two oldest models that support iOS 7 and current it is installed on ~80% of all iOS devices. This might mean that market share calculated by devices sold each quarter is completely meaningless.

Apple reported 700 million, Google reported 1 billion. The reason reports don't rely on these is because it makes Apple look too good and some older devices will have gone out of service. These figures tell more about what's going on than quarterly sales though.
post #14 of 49
Quote:
Originally Posted by SudoNym View Post
 

 

In order to get a critical mass for proprietary stuff like Facetime, market share is vitally important.  And the ecosystem for a product is also vitally important, especially these days.  

 

As of now, the companies with the largest marketshares are making the most money.  Those with small marketshares are fading.

 

If Apple annot keep a critical mass, it too will fade away.  It is important that many, many people buy Apple products.

 

Reading is not your strong suit, is it?

post #15 of 49
Quote:
According to a research note by Raymond James analyst Tavis McCourt cited by Patrick Seitz of Investors.com, Apple's 87.4 percent share of the industry's profits dwarfed the earnings of second place Samsung, which accounted for 32.2 percent.

 

Once again, there is something funny about the arithmetic here.  

87.4 + 32.2 = 119.6.

"Rounding error" cannot account for a discrepancy that large.

As wakefinance points out above, the chart presented by D.E.D. in the article does not present the data, so it's impossible to figure where the error is.

post #16 of 49
Quote:
Originally Posted by SudoNym View Post

In order to get a critical mass for proprietary stuff like Facetime, market share is vitally important.  And the ecosystem for a product is also vitally important, especially these days.  

As of now, the companies with the largest marketshares are making the most money.  Those with small marketshares are fading.

If Apple annot keep a critical mass, it too will fade away.  It is important that many, many people buy Apple products.

You're simply looking at the market share numbers and imagining that the lower number is automatically in trouble.

Yes... "Android" has 80% smartphone market share compared to Apple's 10% or whatever. That may look bad on paper... but it's not bad at all.

You're forgetting that "Android" refers to any smartphone running the Android operating system. That includes flagship Android phones and those terrible Android phones sold in developing nations. It's the phones in that 2nd category that don't contribute anything to the Android ecosystem. Those phones might be sold in parts of the world that barely have 3G access. Or to people who can barely afford to buy apps for their phone. In short... "Android" has a lot of market share... but as an ecosystem it's not getting the results.

Just look at Apple's App Store revenue... and remind yourself that Apple only has 10% of the smartphone market. While Apple has lower market share... their ecosystem is actually the top performer.

Why on Earth would any developer make iPhone-only apps? Don't they know that "Android" has more market share?

Of course they know that... but the iPhone is still the most beneficial platform to focus on... despite only having 10% of the market.

See... it's not the amount of market share you have... it's what you can achieve with the amount of market share you have.

That's why I have to laugh when you talk about Apple and critical mass. In case you haven't noticed... the iPhone has more than enough critical mass. It has developer support, accessory support, etc. Hell... there are companies who base their entire operation on making accessories and peripherals for the iPhone.

So remember that the next time you think "those with small market shares are fading."
post #17 of 49
Quote:
Originally Posted by AppleInsider View Post


According to a research note by Raymond James analyst Tavis McCourt cited by Patrick Seitz of Investors.com, Apple's 87.4 percent share of the industry's profits dwarfed the earnings of second place Samsung, which accounted for 32.2 percent.

 

I'm confused about how to interpret these numbers. In the citation it seems Apple took 87.4% of phone earnings which I believe is considered distinct to profit. Obviously 32.2 + 87.4 is more than 100% profits. Perhaps this is due to the negative incomes from the other competitors in the market, but it seems odd to use a percentage measure like this.

 

In fact the cited article is quite light on citations itself, I really don't like these numbers when they're not attributed. Regardless of the source of the numbers or technical details though, we all know Apple is taking the lion's share of all profits from the phone and tablet market.

post #18 of 49
"Apple's 87.4 percent share of the industry's profits dwarfed the earnings of second place Samsung, which accounted for 32.2 percent"....

Could someone clarify this, please?
post #19 of 49
Quote:
Originally Posted by TeaEarleGreyHot View Post
 

 

Once again, there is something funny about the arithmetic here.  

87.4 + 32.2 = 119.6.

"Rounding error" cannot account for a discrepancy that large.

As wakefinance points out above, the chart presented by D.E.D. in the article does not present the data, so it's impossible to figure where the error is.

 

The numbers include the losses from other industry players, like Nokia, HTC, LG, Sony, Moto, Blackberry, etc. These other players in this study constituted -19% of the industry profits according to their math. From the original article:

 

"Because their combined earnings were higher than the industry's total earnings as a result of many vendors losing money in Q4, Apple and Samsung mathematically accounted for more than 100% of the industry's earnings."

post #20 of 49
Quote:
Originally Posted by Michael Scrip View Post


You're forgetting that "Android" refers to any smartphone running the Android operating system. That includes flagship Android phones and those terrible Android phones sold in developing nations. It's the phones in that 2nd category that don't contribute anything to the Android ecosystem. Those phones might be sold in parts of the world that barely have 3G access. Or to people who can barely afford to buy apps for their phone. In short... "Android" has a lot of market share... but as an ecosystem it's not getting the results.

I'm not convinced by this argument. I think getting market share in developing countries is perhaps more important in terms of long term growth than developed countries. When someone has a lot of money available to them they might spend it on apps, but they also can overcome any costs with switching between platforms.

 

On the other hand, people in developing nations who can't afford another phone or can't afford the apps they want can often turn to development, making the apps that have the features they desire and building a community of users to cooperate. That is an important target for any manufacturer I think. Apple's making some good inroads in China, I don't know what the situation with India is, but they clearly feel like developing markets are also very important.

post #21 of 49
Quote:
Originally Posted by Drunkzombie View Post

Does anyone know how many iOS devices are active?

That is a much more important number. Since the iPhone 4 and iPad 2 are te two oldest models that support iOS 7 and current it is installed on ~80% of all iOS devices. This might mean that market share calculated by devices sold each quarter is completely meaningless.

Apple has sold the following as of 28 December 2013:

451,626,000 iPhones
195,230,000 iPads

How many of these devices are currently active is unknown.
post #22 of 49
Quote:
Originally Posted by SudoNym View Post
 

In order to get a critical mass for proprietary stuff like FaceTime, ....

Use something else then...

post #23 of 49
So much for having a larger market share! Apple fans will maintain their product loyalty, so if Android has 94% of the market, it has little rom to grow. It looks like Apple's strategy of taking the higher percentage of the high-end market is working for Apple. Samsung has the bulk of the market, but its profits are very low and it will be difficult for it to increase its price of product without meeting customer resistance.
post #24 of 49
Quote:
Originally Posted by MacBook Pro View Post


Apple has sold the following as of 28 December 2013:

451,626,000 iPhones
195,230,000 iPads

How many of these devices are currently active is unknown.

I seem to remember Apple mentioning a number just shy of 500 mil. unique active devices accessing the App store in december 2013 (that’s the number they used to provide the statistic about iOS 7 adoption rate) in the recent earnings call... I could be wrong though.

post #25 of 49
Quote:
Originally Posted by ItsTheInternet View Post

I'm not convinced by this argument. I think getting market share in developing countries is perhapsmore important in terms of long term growth than developed countries. When someone has a lot of money available to them they might spend it on apps, but they also can overcome any costs with switching between platforms.


When persons with money available to them overcome any costs with switching between platforms they have overwhelmingly chosen in favor of Apple iOS.
Quote:
Originally Posted by ItsTheInternet View Post

On the other hand, people in developing nations who can't afford another phone or can't afford the apps they want can often turn to development, making the apps that have the features they desire and building a community of users to cooperate. That is an important target for any manufacturer I think. Apple's making some good inroads in China, I don't know what the situation with India is, but they clearly feel like developing markets are also very important.


There is no evidence that the developing world is producing software engineers in mass numbers to produce the apps they can't afford.
post #26 of 49
Quote:
Originally Posted by MacBook Pro View Post


When persons with money available to them overcome any costs with switching between platforms they have overwhelmingly chosen in favor of Apple iOS.

Whether or not that's true (I haven't really seen the numbers) the fact is that people with plenty of spare cash can afford to buy into any competitor with little notice. Look at Woz for example, how many phones does he carry now!

 

Quote:
There is no evidence that the developing world is producing software engineers in mass numbers to produce the apps they can't afford.

I don't know what field you work in, but I am an independent contractor and I assure you that the developing world is indeed producing vast numbers of software engineers. India is a particularly long standing example but just look at any app store in China.

post #27 of 49
Quote:
Originally Posted by sog35 View Post
 

Race to the bottom is for losers

But! But! Someone told me thats where I can get beer!

post #28 of 49
Quote:
Originally Posted by ItsTheInternet View Post

Whether or not that's true (I haven't really seen the numbers) the fact is that people with plenty of spare cash can afford to buy into any competitor with little notice. Look at Woz for example, how many phones does he carry now!


Your frame of reference is a single person? One of the richest people in the United States? A person who prides himself on and known for his technology savvy?
Quote:
Originally Posted by ItsTheInternet View Post

I don't know what field you work in, but I am an independent contractor and I assure you that the developing world is indeed producing vast numbers of software engineers. India is a particularly long standing example but just look at any app store in China.


No. The majority of the population of India can't afford a smartphone. While there is a thriving software engineering community in the upper class, the upper class largely favors Apple iOS because they can afford the iPhone and desire the status of having an iPhone.
post #29 of 49
Quote:
Originally Posted by Michael Scrip View Post

See... it's not the amount of market share you have... it's what you can achieve with the amount of market share you have.

 

Whatever you say. All I know is that features intended to make the iPhone/Mac experience better, like FaceTime and Messages, are useless for the two-thirds of the people I interact with who are on Android devices. From an ecosystem point of view, I might actually be better off with Android (<*Shudder!*>).

 

Maybe what matters to you as an investor is different than what matters to me as a user. Like that profit margin. Part of what's deterring me from buying any more iPhones at the moment (aside from holding out for a larger screen) is the hefty price tag. At $900 per for a unit with reasonable storage, sticker shock has us hanging on to old models and not buying new units. It also results in many of the people in my communications circle buying non-Apple devices because they're so much less expensive. Maybe that doesn't matter to Apple as long as it continues to set new sales records with each new model, but it matters to me when the people I interact with are on VHS while I have Beta.

post #30 of 49
Quote:
Originally Posted by MacBook Pro View Post


Your frame of reference is a single person? One of the richest people in the United States? A person who prides himself on and known for his technology savvy?

No, he was an example of someone who heavily invests into an ecosystem but experiments freely as he is not limited by the cost. My 'frame of reference' is knowing that I could do the same if Android or iOS annoyed me into switching.

 

Quote:
No. The majority of the population of India can't afford a smartphone. While there is a thriving software engineering community in the upper class, the upper class largely favors Apple iOS because they can afford the iPhone and desire the status of having an iPhone.

The majority perhaps not, but there are a lot of people in India and their smartphone market is growing like crazy: http://www.idc.com/getdoc.jsp?containerId=prIN24471213

 

You say iOS is largely favoured, yet I find no evidence of this, can you cite please?

post #31 of 49
Quote:
Originally Posted by ECUmd2b View Post

"Apple's 87.4 percent share of the industry's profits dwarfed the earnings of second place Samsung, which accounted for 32.2 percent"....

Could someone clarify this, please?

 

Here's a complete explanation.  Please do let us know if you have any more questions:

 

http://forums.appleinsider.com/t/162018/apples-iphone-earned-87-4-of-global-handset-profits-in-december-quarter

Sent from my iPhone Simulator

Reply

Sent from my iPhone Simulator

Reply
post #32 of 49
Quote:
Originally Posted by SockRolid View Post
 

Here's a complete explanation.  Please do let us know if you have any more questions:

 

http://forums.appleinsider.com/t/162018/apples-iphone-earned-87-4-of-global-handset-profits-in-december-quarter

 

Sometimes I wonder how people on this forum come up with such seemingly illogical opinions. Then we get one of these examples of what passes for reading comprehension these days.

post #33 of 49
Quote:
Originally Posted by v5v View Post

Whatever you say. All I know is that features intended to make the iPhone/Mac experience better, like FaceTime and Messages, are useless for the two-thirds of the people I interact with who are on Android devices. From an ecosystem point of view, I might actually be better off with Android (<*Shudder!*>).

Maybe what matters to you as an investor is different than what matters to me as a user. Like that profit margin. Part of what's deterring me from buying any more iPhones at the moment (aside from holding out for a larger screen) is the hefty price tag. At $900 per for a unit with reasonable storage, sticker shock has us hanging on to old models and not buying new units. It also results in many of the people in my communications circle buying non-Apple devices because they're so much less expensive. Maybe that doesn't matter to Apple as long as it continues to set new sales records with each new model, but it matters to me when the people I interact with are on VHS while I have Beta.

So use Google Hangouts or Skype. Or Kik or Whatsapp. Or just make a damn phone call. 1wink.gif All of the things I just mentioned are cross-platform and available today.

I don't know why there have been so many comments in this thread about ecosystems referring to FaceTime and iMessages. Are they that big of a deal?

What did people use before FaceTime and iMessages?

Honestly... I've only made a couple of FaceTime calls... and only to test it out. And I only use iMessages because it just happens to work when texting another iPhone user. I know because the bubbles are in blue. Otherwise... they are green when texting an Android user.

There's more to an ecosystem than just a couple of first-party chat apps.

In my earlier comment... I was actually referring to 3rd-party apps and accessories in regards to Apple's ecosystem. You can't deny that Apple has a very desirable ecosystem despite having a small percentage of the smartphone market.

Oh... the new numbers are in: Android has 78.1% of the smartphone market... while Apple has 17.6%

Yet there will still be tons of apps that come out for the iPhone only... and plenty of accessory makers who focus on the iPhone exclusively.

That was my point.

Android's market share makes a great headline... but there's no compelling story afterwards.
post #34 of 49
119.6 is the new 103.
post #35 of 49
Quote:
Originally Posted by ItsTheInternet View Post

I'm not convinced by this argument. I think getting market share in developing countries is perhapsmore important in terms of long term growth than developed countries. When someone has a lot of money available to them they might spend it on apps, but they also can overcome any costs with switching between platforms.

On the other hand, people in developing nations who can't afford another phone or can't afford the apps they want can often turn to development, making the apps that have the features they desire and building a community of users to cooperate. That is an important target for any manufacturer I think. Apple's making some good inroads in China, I don't know what the situation with India is, but they clearly feel like developing markets are also very important.

There are phones that sell for very cheap prices in developing countries. The companies selling those phones have a decent amount of market share in those countries. (Apple currently has 0% market share in the under-$450 market)

Unfortunately... most of the companies who sell very cheap phones in developing countries aren't making any money.

So is it really advantageous to have growth in unit sales and market share... but have a loss in revenue and profit?

Like I said... Apple doesn't play in the under-$450 smartphone market. They don't play in the under-$1000 laptop market, either.

Now look at all the companies who do play in those cheaper markets. It's not all roses, is it.
post #36 of 49
"It is important that many, many people buy Apple products." In an article proving the exact opposite.
post #37 of 49
Quote:
Originally Posted by Michael Scrip View Post


There are phones that sell for very cheap prices in developing countries. The companies selling those phones have a decent amount of market share in those countries. (Apple currently has 0% market share in the under-$450 market)

Unfortunately... most of the companies who sell very cheap phones in developing countries aren't making any money.

So is it really advantageous to have growth in unit sales and market share... but have a loss in revenue and profit?

Like I said... Apple doesn't play in the under-$450 smartphone market. They don't play in the under-$1000 laptop market, either.

Now look at all the companies who do play in those cheaper markets. It's not all roses, is it.

 

Well that is a very complex question. It's obviously in Apple's best interests to make a good margin on all their products and I'm sure they're confident that rising income levels will increase their potential user base.

 

On the other hand, it's also good for consumers to have a wide choice of manufacturers who compete aggressively against each other in order to lower prices. As long as Apple's market share keeps increasing then they shouldn't be a problem. They can fight amongst themselves and go bankrupt trying.

post #38 of 49

I agree that i think if there was a way someone can track active (aka, used in the last month) devices it would be a more realistic market share view. Too bad the companies that post mobile internet traffic usage statistics can't do it. That would also eliminate the "non-smart android phones" from the batch if people never use them to browse a website.

 

I honestly think the "active" market for real smart phones is a lot closer to 50/50 than in the quarterly reports.

 

I say that because in the time I've had my iPhone 5 (year and a half) a few of my friends have replaced their Androids twice because they slowed down or stopped working. That's a big + for quarterly market share for Android but not a true representation of Android's dominance.

post #39 of 49

All the negative numbers together don't add up to 19% so the explanation of 119% is still confusing. It seems to me the table says one thing then the author of the article says another. I don't have any reason to believe the table was manipulated but I'm also having trouble understanding how the author misread the numbers. 

 

ps. It's entirely possible that I'm misreading the table but the article certainly doesn't help me understand how to arrive at 87.4%.

post #40 of 49
Quote:
Originally Posted by ItsTheInternet View Post

Well that is a very complex question. It's obviously in Apple's best interests to make a good margin on all their products and I'm sure they're confident that rising income levels will increase their potential user base.

On the other hand, it's also good for consumers to have a wide choice of manufacturers who compete aggressively against each other in order to lower prices. As long as Apple's market share keeps increasing then they shouldn't be a problem. They can fight amongst themselves and go bankrupt trying.

It's actually in EVERY company's best interest to make good margin. But looking at this article... most companies aren't making any money at all.

I understand that it's good for consumers to have a wide choice of manufacturers... but how much longer will some of those manufacturers be around? They can't keep losing money forever.

And... you can't pay your bills with market share.
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