Apple's iPhone reaps dominant 92% of handset industry's profits

Posted:
in iPhone edited September 2015
Though the iPhone is just 20 percent of the overall smartphone market, Apple's handset accounted for a colossal 92 percent of the industry's operating income during the March quarter, according to new research.




That share is up from 65 percent a year ago, according to a Canaccord Genuity memo obtained by AppleInsider on Monday. Samsung, Apple's chief rival, claimed 15 percent of income. Their combined figure surpassed 100 percent because other companies in the top eight either took losses or broke even.

BlackBerry, for instance, held a flat zero, while Lenovo hit -1 percent. Microsoft declined to a 4 percent share, and will be radically altering the way it tackles phones as it cuts up to 7,800 jobs and writes off its Nokia acquisition.

Even Samsung recently forecast a 4 percent drop in operating profits for the June quarter, something a Wall Street Journal source blamed on a botched Galaxy S6 launch. Although the phone is selling, the company initially produced too many regular S6 units and too few Edge models.

Apple's iPhone is thought to account for less than 20 percent of worldwide smartphone unit sales, meaning that its control of industry profits is mostly due to higher margins off each customer. The iPhone's major competion comes in the form of Android devices, which because of their shared platform have to compete on either cost or hardware features, reducing profit margins.

Canaccord noted that the income estimate didn't factor in privately-held firms like China's Xiaomi, but argued that such companies were unlikely to skew figures in a meaningful way.

Apple is due to announce June-quarter financial results on July 21. A conference call is scheduled for 5 p.m. Eastern time that day, during which Apple executives will share results with investors, analysts, and the media. AppleInsider will break the results as soon as they're available.
«1345

Comments

  • Reply 1 of 90
    rmb0037rmb0037 Posts: 142member
    THIS is what matters. Keep your marketshare. I'd rather have the profits so when the market craps out Apple will still be standing strong.

    Fantastic news. What a Monday.
  • Reply 2 of 90
    MacProMacPro Posts: 18,295member
    Dang, Apple need to try harder! :D

    Of course Wall Street will crucify AAPL as this shows they have reached saturation so no where to go whereas poor Scammy has lots of room to grow! :no:
  • Reply 3 of 90
    gprovidagprovida Posts: 247member
    Just a bit of historical perspective, it would delightful to see more of this in journalist reporting. A simple score card on journalist, analysts, blogger, pundit, etc., performance over time would be sobering and I think improve reporting overall. The simple fact, Apple is utterly unprecedented and generally completely misunderstood as a company and business.



    BGR, ".... Apple and Samsung combined to pull in 100% of mobile profits in Q1
    By Dan Graziano on May 7, 2013 at 6:00 PM ... Samsung has slowly eaten away at Apple’s profits over the past few quarter. The research firm notes that Samsung is now on track to surpass Apple for the largest share of smartphone industry profits within the next few months.

    “During the June quarter, we believe softer iPhone sales combined with strong Samsung Galaxy S4 sales could result in Samsung surpassing Apple for the top share of handset industry profits,” Walkley said. ..."

    Business Insider "... Apple Has 53% Of The Smartphone Industry's Profits, Samsung Has 50%, Everyone Else Is Negative Or Zero

    JAY YAROW

    Jul. 31, 2013, 10:47 AM 5,091 15
    FACEBOOK
    LINKEDIN
    TWITTER
    For the longest time, Apple's supporters had an easy retort to anyone that said the iPhone was getting crushed in market share.

    They could just say, "Yes, it only has 15% of the smartphone market share, but it has the majority of its profits."

    They're probably going to have to start thinking up a new defense because Apple is about to lose its lead in smartphone industry profit share. ..."

    "... FromeDome
    By Dan Frommer. From the SplatF archives.
    Tuesday, November 15, 2011 at 1:26 pm.

    Why Apple’s iPhone market share actually matters
    Tim CookWhile Google Android’s share of the smartphone market soars, Apple’s is drooping.

    Last quarter, Android represented 53% of smartphone shipments, according to Gartner — some 60 million devices shipped worldwide.
    That represented three times more Android shipments than the year-ago period (21 million), and twice as much market share (25%).
    Meanwhile, Apple’s market share dropped to 15%, down from 17% a year ago and 18% during the prior quarter. Overall shipments grew, but not nearly at the rate as Android’s. ..."

    "... Daring fireball.net, Gruber,

    APPLE’S SHARE OF PHONE HANDSET INDUSTRY PROFITS CLIMBS TO 92 PERCENT ?
    Shira Ovide and Daisuke Wakabayashi, reporting for the NYT:

    Roughly 1,000 companies make smartphones. Just one reaps nearly all the profits.

    Apple Inc. recorded 92% of the total operating income from the world’s eight top smartphone makers in the first quarter, up from 65% a year earlier, estimates Canaccord Genuity managing director Mike Walkley. Samsung Electronics Co. took 15%, Canaccord says. Apple and Samsung account for more than 100% of industry profits because other makers broke even or lost money, in Canaccord’s calculations. […]

    Apple’s share of profits is remarkable given that it sells less than 20% of smartphones, in terms of unit sales.

    At just 20 percent of unit sales, Apple isn’t even close to a monopoly. At 92 percent profit share, they have a market dominance that rivals any actual monopoly the tech industry has ever seen. We don’t even have a term for this situation, it’s so unusual. Profit monopoly? ..."
  • Reply 4 of 90
    jbdragonjbdragon Posts: 2,135member
    This is really just getting silly!!! Why would all these company continue making Android phones when there's NO MONEY to be made doing it? Are they all hoping others would quit and then they could raise prices enough to start making money in the future?

    The only company that wins with Android is Google and I think they still make more money from iOS users then Android.

    These fandroids still don't seem to get it about Market Share. If all things were being equal, then sure, it would matter. If company's were making near the same profit as Apple, then Apple would only have around 20% of the Smartphone profits according to Market Share, right? Yet now it's gotten up to 92% of the profits while only have 20% of the Global Market Share. That's really pretty sad for Android!!! 92%!!! Most of the rest goes to Samsung and they're dropping fast. Think about it, LG, Motorola, HTC and all the rest fighting over around 2%.

    People really thing if Nokia went with Android instead of Windows that things would be different? LOL!!! Windows has the same issues, but at least you have more of a chance because there's not a flood of Windows phones like with Android. If Windows took off, it wouldn't last either. Everyone else would jump on board and what profits were being made would disappear also.
  • Reply 5 of 90
    SpamSandwichSpamSandwich Posts: 31,191member
    There is no way to know how much the iPhone rip offs make in foreign markets. Presumably, that they continue to sell iPhone rip offs is a good indicator they [B]are[/B] making money.
  • Reply 6 of 90
    ceek74ceek74 Posts: 324member
    Huh. One thing that Samsung just can't seem to copy.
  • Reply 7 of 90

    Doomed.

  • Reply 8 of 90
    Quote:

    Originally Posted by JBDragon View Post



     Most of the rest goes to Samsung and they're dropping fast. Think about it, LG, Motorola, HTC and all the rest fighting over around 2%.

    Samsung actually makes about 15% of the profit. Samsung + Apple > 100% profit share because everyone else is making losses.

  • Reply 9 of 90
    jbdragonjbdragon Posts: 2,135member
    Quote:

    Originally Posted by addicted44 View Post

     

    Samsung actually makes about 15% of the profit. Samsung + Apple > 100% profit share because everyone else is making losses.


     

    15% would be a big jump for Samscum!  The S6 must be selling ok.  Everyone else must be in the Negatives.  That's not good, for them!!!

  • Reply 10 of 90
    Quote:
    Originally Posted by JBDragon View Post

     

     

    15% would be a big jump for Samscum!  The S6 must be selling ok.  Everyone else must be in the Negatives.  That's not good, for them!!!




    I'm pretty sure Samsung was closer to 30-40% a couple of years ago. Android sellers are getting crushed. Samsung will probably swing to losses very soon too.

  • Reply 11 of 90
    wood1208wood1208 Posts: 1,968member

    IF IT IS NOT A IPHONE, IT AIN'T SMARTPHONE.....

  • Reply 12 of 90
    lkrupplkrupp Posts: 7,156member

    So Android phones have become the commodity products racing to the bottom with almost no margins while the iPhone stays high end and profitable. This will probably become another course at the Harvard School of Business, a course on how Apple disrupted the ‘market share means everything’ business model. I remember when once again the tech press predicted that iOS would suffer the same fate as Mac OS did against Windows. Developers would flock to the platform with the biggest market share and abandon iOS they said. It’s a basic law of economics they said. There’s no way the walled garden could succeed... they said.

  • Reply 13 of 90
    isteelersisteelers Posts: 738member
    It goes to show that people will pay more for quality. If the value proposition is high then the iPhone isn't really overpriced. Some people (Mac Rumors) view it as Apple gouging its lemming customers, but flagships from Android manufacturers are around the same price or more. Customer loyalty lasts as long as you offer quality products. If Apple continues to do so, Apple will continue to reap the rewards.
  • Reply 14 of 90
    The correct answer is always that Apple + Samsung account for 103% of the industry profits. So, given that Apple has 92%, the 15% number for Samsung cannot be right. :D
  • Reply 15 of 90
    dasanman69dasanman69 Posts: 12,980member
    jbdragon wrote: »
    This is really just getting silly!!! Why would all these company continue making Android phones when there's NO MONEY to be made doing it? Are they all hoping others would quit and then they could raise prices enough to start making money in the future?

    What's the alternative?
  • Reply 16 of 90
    kevtkevt Posts: 195member
    Quote:
    Originally Posted by Rmb0037 View Post



    THIS is what matters. Keep your marketshare. I'd rather have the profits so when the market craps out Apple will still be standing strong.

     

    Matters to whom? To shareholders, obviously. Maybe also to the countries receiving tax revenue on profit.

    But, simply as a user of I'd prefer to see marketshare than profit. Marketshare means greater support for a device by developers, third parties, it means that the device becomes the standard.

     

    In fact it's kind of perverse for non-shareholding customers to take joy in how much profit a company is making out of them!

     

    This story (and those like it we've endured) are deeply flawed in the way they treat loss as negative profit, which gives silly figures. Most people would understand "percentage profit", as that proportion of profits made - loss isn't profit so it would not be included in the calculation.

     

    Apple do well enough in these figures anyway.

     

     

    Quote:

    Originally Posted by JBDragon View Post



    This is really just getting silly!!! Why would all these company continue making Android phones when there's NO MONEY to be made doing it? Are they all hoping others would quit and then they could raise prices enough to start making money in the future?



    The only company that wins with Android is Google and I think they still make more money from iOS users then Android.

     

    This is the other reason the "profit" analysis is so flawed. Someone is making significant profits from the sale of Android phones and it's Google.

     

    What makes the iPhone (or Mac) experience outstanding is that Apple do both the hardware and software/services so they are well integrated and optimised. When you buy an android smartphone you are buying a Samsung-Google, LG-Google, HTC-Google hybrid device. Sure Google go about taking their pound of flesh with a different privacy-invasive ad-serving business model. But their profits (not in the same league as apple ;)) should still be weighed in the scheme of things to make any percentage profit figures meaningful.

  • Reply 17 of 90
    apple ][apple ][ Posts: 8,680member

    This 92% figure is just amazing! Certain people are always boasting about Android activation numbers and boasting about the numbers of garbage Android devices being sold? 

     

    Why even bother? They should all just throw in the towel. Everybody else besides Apple is not making a lot of profit. If Apple has 92% of ALL of the profits, then everybody else is just desperately fighting over the few crumbs that are left.

     

    They should all exit the business! Leave it to the professionals and the only people who know how to make great devices, like Apple! 

     

    Android should be abanonded as a useless and worthless experiment that didn't work out, and there should be no more Android devices manufactured ever again, because what's the point? There is no money in it.

     

    It's like running a soup kitchen for homeless people. Does anybody expect to get rich doing that?

  • Reply 18 of 90
    Quote:
    Originally Posted by kevt

     

    In fact it's kind of perverse for non-shareholding customers to take joy in how much profit a company is making out of them!


    It isn't. It really isn't.

     

    Profits means Apple is creating a sustainable business which can survive and grow on its own merits. A sustainable business means they dont insert the junk that PC makers install on their devices to try and make a profit. A sustainable business means no SuperFish, and no hijacking your internet usage to route it through the Device makers ads.

     

    A sustainable business means that Apple has incentives to provide support and upgrades for a much greater range of devices. A sustainable business means that Apple can invest in R&D that improves the devices you buy, improves the platform, and improves the ecosystem.

     

    Can you name 1 industry where consumers benefited from buying products from a company that was losing money? You think Google would be doing all the open source stuff it is if it wasnt making money hands over fist by selling its users' attention?

  • Reply 19 of 90
    dasanman69dasanman69 Posts: 12,980member
    addicted44 wrote: »
    Can you name 1 industry where consumers benefited from buying products from a company that was losing money? You think Google would be doing all the open source stuff it is if it wasnt making money hands over fist by selling its users' attention?

    Doesn’t Google make more money off iOS users? If that is indeed the case it means that iOS users are actually subsidizing Android.
  • Reply 20 of 90
    jungmarkjungmark Posts: 6,705member
    DOJ to investigate because Apple.

    Apple not only gets 92% of the profit but gets that without releasing cheap ass hardware that Wall Street inexplicably likes.
Sign In or Register to comment.