Apple takes 57% of handset profits, Samsung accounts for remaining 43%

Posted:
in iPhone edited January 2014
Apple and Samsung have once again accounted for all of the profits in the smartphone business, with the iPhone taking 57 percent of the market's value.

The latest "value share" data from Canaccord Genuity, provided to AppleInsider on Monday, measures how profitable companies are in the handset space. Together, Samsung and Apple are estimated to have accounted for 100 percent of industry profits in the March quarter.

Canaccord Genuity


That number is actually down from the previous quarter, when the two rivals took 103 percent of handset profits. That was made possible because of losses incurred by Motorola, Sony and Nokia ? companies that actually lost money in the December quarter.

"While Apple and Samsung continue to dominate the share of industry profits, improving cost structures and results from other OEMs have reduced Apple and Samsung's combined share to 100% from levels above 100% in the past several quarters," analyst T. Michael Walkley wrote in a note to investors on Monday.

Apple's estimated 57 percent of handset industry profits was down from 72 percent in the December quarter, as Apple saw its operating margins fall from 40 percent to 35 percent. Those shifts were attributed to softer iPhone 5 sales and stronger demand for the legacy iPhone 4 and iPhone 4S models.

Samsung, meanwhile, saw its "value share" grow from 29 percent of the industry's profits to an estimated 43 percent in the March quarter. Samsung's margins also increased slightly, from 20 percent to 22 percent.

Among the major vendors tracked by Canaccord, the only company to carve out a positive value share was LG, which took 1 percent. But LG's success was offset by a negative 1 percent loss seen by Motorola.

The remaining companies in the list essentially broke even in the March quarter, earning them a 0 percent value share: Nokia, BlackBerry, Sony Ericsson, and HTC.

Apple and Samsung are also the only handset companies tracked by Canaccord with any operating margins to speak of. The remaining companies all operate on razor-thin margins, while Motorola is estimated to have actually seen negative 18 percent margins in the March quarter.
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Comments

  • Reply 1 of 76
    suddenly newtonsuddenly newton Posts: 13,725member
    Wait a minute... isn't Apple doomed and analysts are dumping its stock?
  • Reply 2 of 76
    teejay2012teejay2012 Posts: 273member
    Actually the fall in margins for Apple may have been due more to write downs on warranties including 0.5B on China. Samsung's margins will fall in future on handsets, as consumers will continue to tolerate present cheap plastic build on the SG phones when they have HTC One or iPhone alternatives.

  • Reply 3 of 76
    solipsismxsolipsismx Posts: 19,566member
    1) I'm surprised at just how much Samsung is profiting which means Samsung's higher-end handsets are popular, regardless of how you feel about the company.

    2) Blackberry, Nokia and HTC are the only others that aren't showing a loss, and 2 of the 3 aren't using Android. That makes me wonder about the laws that allowed Samsung to blatantly steal from Apple without any real penalties. It's clearly shifted the dominance of the Android market unfairly in favour on Samsung. Not that I can blame Samsung for taking a calculated risk in a market. We can't do anything about that now but we really need better laws to prevent such unfair advantages from happening in the future.
  • Reply 4 of 76
    solipsismxsolipsismx Posts: 19,566member
    teejay2012 wrote: »
    Actually the fall in margins for Apple may have been due more to write downs on warranties including 0.5B on China. Samsung's margins will fall in future on handsets, as consumers will continue to tolerate present cheap plastic build on the SG phones when they have HTC One or iPhone alternatives.

    We're also mostly through a product cycle.
  • Reply 5 of 76
    pedromartinspedromartins Posts: 1,333member

    Quote:

    Originally Posted by SolipsismX View Post



    1) I'm surprised at just how much Samsung is profiting which means Samsung's higher-end handsets are popular, regardless of how you feel about the company.



    2) Blackberry, Nokia and HTC are the only others that aren't showing a loss, and 2 of the 3 aren't using Android. That makes me wonder about the laws that allowed Samsung to blatantly steal from Apple without any real penalties. It's clearly shifted the dominance of the Android market unfairly in favour on Samsung. Not that I can blame Samsung for taking a calculated risk in a market. We can't do anything about that now but we really need better laws to prevent such unfair advantages from happening in the future.


    Not at all, they make huge profits from cheaper smartphones. They just fool costumers and are integrated so they can still maintain margins. In some countries the Galaxy Ace still is the best selling device. It's hillarious.


     


    People just want Samsung.

  • Reply 6 of 76
    osinlosinl Posts: 5member
    These figures don't include the astonishing marketing costs Samsung has. They are hidden in another business.
  • Reply 7 of 76
    steven n.steven n. Posts: 1,093member


    Very impressive performance from Samsung. It shows you can also win by making 50+ different handsets per year at each and every price point differentiated in very subtle ways. My guess is the actual R&D on many of their smartphones is actually very small with only minor, cosmetic changes from different handsets.


     


    EDIT:


    Also, thank goodness the rest showed very small profits or losses so we don't have to have the crazy discussion of profits adding up to greater than 100% again and wisdom of profit VS loss.

  • Reply 8 of 76
    solipsismxsolipsismx Posts: 19,566member
    I'm glad to see HTC is at least not at a loss right now and hope they can pull out a decent profit as I like their HW designs.

    Not at all, they make huge profits from cheaper smartphones. They just fool costumers and are integrated so they can still maintain margins. In some countries the Galaxy Ace still is the best selling device. It's hillarious.

    People just want Samsung.

    Huge profits or huge profit margins? A cheap handset at half the price of a high-end handset would need to have 2x the net profit margin to equal its profit. That certainly could be happening but in my experience that's not common.
  • Reply 9 of 76
    geekdadgeekdad Posts: 1,131member

    Quote:

    Originally Posted by SolipsismX View Post



    I'm glad to see HTC is at least not at a loss right now and hope they can pull out a decent profit as I like their HW designs.

    Huge profits or huge profit margins? A cheap handset at half the price of a high-end handset would need to have 2x the net profit margin to equal its profit. That certainly could be happening but in my experience that's not common.


    Yeah the HTC One is a nice design.


    I like the distinction between profits and profit margins....


    If you are selling a lower end phone....you still have to sell more to make the same profit Apple does on one higher end phone.


    That's why Apple net profit is higher...

  • Reply 10 of 76
    gwmacgwmac Posts: 1,795member


    57% profit is still a very impressive number for one company making essentially one model of smart phone but Samsung certainly has closed the gap tremendously. From 72% profit to 57% is pretty steep drop.  I would imagine Samsung's profits off of all those cheap phones is rather small and the largest profits are coming from their Galaxy class phones with large displays. 

  • Reply 11 of 76
    nagrommenagromme Posts: 2,834member
    That's massive growth for everyone else! They went from negative 1% profit to 0%. That's a rocket to the top!
  • Reply 12 of 76
    kdarlingkdarling Posts: 1,640member

    Quote:

    Originally Posted by SolipsismX View Post



    I'm glad to see HTC is at least not at a loss right now and hope they can pull out a decent profit as I like their HW designs.


     


    Me too.


     


    Quote:


    Huge profits or huge profit margins? A cheap handset at half the price of a high-end handset would need to have 2x the net profit margin to equal its profit.



     


    Per device.  Or they could sell 2x as many to equal the same total profit.


     


    Separating out the profits vs margins is definitely important.  For example, the iPad mini has the same (or possibly even higher) gross profit margin % as the regular iPad, but grosses less cash profit per device.


     


    However, even with lower gross profit, and cannibalizing some of its bigger brother's sales, the mini is viewed as a product that will add to Apple's total profits out of sheer extra volume.

  • Reply 13 of 76
    solipsismxsolipsismx Posts: 19,566member
    gwmac wrote: »
    57% profit is still a very impressive number for one company making essentially one model of smart phone but Samsung certainly has closed the gap tremendously. From 72% profit to 57% is pretty steep drop.  I would imagine Samsung's profits off of all those cheap phones is rather small and the largest profits are coming from their Galaxy class phones with large displays. 

    Assuming that these estimates are accurate (we have nothing else to use at this point) since Apple releases new handsets annually you need to factor in a year of profit margins, not a quarter where Apple is at the trail end of their release cycle and Samsung et al. are releasing new products to market. This means that one can't claim Apple is losing ground when it makes a lower percentage of the industry's profits in the Spring just as one can't clam that Apple is increasing their lead on the industry's profits come Autumn.
  • Reply 14 of 76


    There's something wrong with the table presented in the article.  I'm fairly confident that Apple made more than eight thousand dollars in Q113.  But the table legend does not indicate "hundreds" or "thousands" or "millions".  So really, the entire table is meaningless.  People are making up the figures they want to see.

  • Reply 15 of 76
    ash471ash471 Posts: 705member

    Quote:

    Originally Posted by osinl View Post



    These figures don't include the astonishing marketing costs Samsung has. They are hidden in another business.


    What business are they hidden in?  Has anyone reputable tried to estimate a true operating profit comparable to Apple?  Also, can anyone point to a source for these ideas?  Several of the comments allude to the concept so it appears it may have merit.

  • Reply 16 of 76
    asdasdasdasd Posts: 5,207member
    solipsismx wrote: »
    Assuming that these estimates are accurate (we have nothing else to use at this point) since Apple releases new handsets annually you need to factor in a year of profit margins, not a quarter where Apple is at the trail end of their release cycle and Samsung et al. are releasing new products to market. This means that one can't claim Apple is losing ground when it makes a lower percentage of the industry's profits in the Spring just as one can't clam that Apple is increasing their lead on the industry's profits come Autumn.

    So what? If Apple wants profits per year to be stable it needs more than one cycle. This is an answer to the "who is making the most profits?" argument.

    It is Apple. Just. For now. But down 20% - 200 profit share basis points.

    At this rate the answer will be Samsung before the year is out. The answer has to be more than one model of iPhone.
  • Reply 17 of 76
    slurpyslurpy Posts: 5,090member
    Apple is taking 57% of mobile phone industry profits, one of the largest industries on the planet, an industry it entered only a few short years ago. Pretty insane.

    Talk about being schooled.
  • Reply 18 of 76
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by Slurpy View Post

    Apple is taking 57% of mobile phone industry profits, one of the largest industries on the planet, an industry it entered only a few short years ago. Pretty insane.



    Talk about being schooled.


     


    I'm curious where all the Samsung "profits" came from, given that just last year Apple had 75% of all mobile profits.

  • Reply 19 of 76
    solipsismxsolipsismx Posts: 19,566member
    asdasd wrote: »
    So what? If Apple wants profits per year to be stable it needs more than one cycle. This is an answer to the "who is making the most profits?" argument.

    It is Apple. Just. For now. But down 20% - 200 profit share basis points.

    At this rate the answer will be Samsung before the year is out. The answer has to be more than one model of iPhone.

    Yeah, you really didn't understand what I wrote since you're using these estimates against estimates last Fall and then saying "at this rate." :no:
  • Reply 20 of 76
    gwmacgwmac Posts: 1,795member


    Looking at the chart again made me realize that in Q1 2013 the iPhone 5 was still fairly new. You expect a drop the last two quarters before the next iPhone is released but not that soon after a release. I know it was released earlier than the 4S but still that first quarter was early enough in the product cycle that it should have had high demand as opposed to this and next quarter where people are already looking to the 5S or 6. In Q1 2013 the Samsung S3 was already far older than the iPhone 5. I think the Note II came out around the release of the iPhone 5 though. How did Samsung manage to do so well in Q1 this year and jump from 29% to 43% profit from the previous quarter while Apple dropped from 72% to 57% during those same two quarters? 

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