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

Posted:
in iPhone edited February 2014
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."
«13

Comments

  • Reply 1 of 48

    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.

  • Reply 2 of 48
    Sell..Sell...Sell.
  • Reply 3 of 48
    ortort Posts: 39member
    The consumer has spoken... Samsung had better put out a smaller screened phone or they are dead in the water.
  • Reply 4 of 48
    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.

  • Reply 5 of 48
    supdizzle wrote: »
    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.
  • Reply 6 of 48
    ort wrote: »
    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.
  • Reply 7 of 48

    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. 

  • Reply 8 of 48
    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.

  • Reply 9 of 48
    DED your chart doesn't show the information you wrote in the article. Just FYI.
  • Reply 10 of 48
    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.
  • Reply 11 of 48
    MarvinMarvin Posts: 15,354moderator
    sudonym wrote: »
    As of now, the companies with the largest marketshares are making the most money.

    Apple makes more than Samsung with a lower share.
    sudonym wrote: »
    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.
    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.
  • Reply 12 of 48
    pmzpmz Posts: 3,433member
    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?

  • Reply 13 of 48
    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.

  • Reply 14 of 48
    sudonym wrote: »
    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."
  • Reply 15 of 48
    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.

  • Reply 16 of 48
    "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?
  • Reply 17 of 48
    thttht Posts: 5,494member
    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."

  • Reply 18 of 48
    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.

  • Reply 19 of 48
    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.
  • Reply 20 of 48
    Quote:

    Originally Posted by SudoNym View Post

     

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


    Use something else then...

Sign In or Register to comment.