Apple now inhaling 94 percent of global smartphone profits, selling just 14.5 percent of total volum

Posted:
in iPhone edited November 2015
Apple's share of total smartphone industry profits grew to 94 percent during the September quarter, up from 85 percent one year ago.

The iPhone maker's overwhelming share of all smartphone income comes despite Apple being second in smartphone volume shipments to all vendors collectively selling devices running some form of Android software.


Source: Canaccord Genuity


According to Canaccord Genuity research, Samsung, the largest Android licensee by far, took a distant 11 percent share of total operating income. Those numbers exceed 100 percent because most other phone makers reported negative operating income.

Canaccord analysts Mike Walkley blamed some of the losses suffered by HTC, BlackBerry, Sony and Lenovo (which now owns Google's former Motorola subsidiary) on their inability to compete in the market for higher end phones priced at more than $400.

Apple earned its overwhelming share of profits despite producing just 14.5 percent (48 million) of the smartphones sold in the quarter. Samsung shipped an estimated 81 million units in the same quarter, accounting for 24.5 percent of the total.

The average selling price of iPhones in the quarter was $670 driving 37 percent operating margins, while Samsung's ASP was just $180.

While some analysts are predicting that Apple has nowhere to go but down, Apple's chief executive Tim Cook noted it the company's September earnings report that "momentum for iPhone 6 and iPhone 6 Plus remained very strong across the quarter, and we established a new launch record for iPhone 6s and iPhone 6s Plus near the end of the quarter." "We recorded the highest rate on record for Android switchers last quarter at 30 percent" - Tim Cook

He added, "we exited the quarter with demand for our new iPhones exceeding supply, but we've made good progress with our manufacturing ramp in the initial weeks of October."

In response to a question on future guidance from analyst Katie Huberty of Morgan Stanley, Cook answered, "We believe that iPhone will grow in Q1, and we base that on what we're seeing from a switcher point of view. We recorded the highest rate on record for Android switchers last quarter at 30 percent. We also look at the number of people that have upgraded, that were in the install base prior to iPhone 6 and 6 Plus, and that number is in the low 30 percentages, so we feel like we have a very open field in front of us."
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Comments

  • Reply 1 of 125
    Doomed. 14.5% volume?! Apple will be bankrupt by the end of the year!! DOOMED. /s
  • Reply 2 of 125

    Doomed, I say: It's not 103%.

  • Reply 3 of 125
    Basically, the only people who can afford to compete are those whose profits come from other products. Their phones become, in effect, loss leaders.
  • Reply 4 of 125
    I'm glad Apple is doing well and I love my Macs!!! But I wonder if having that much profit is maybe because Apple is charging too much for their phones and, in good conscience, ought to lower their prices a little bit???
  • Reply 5 of 125
    badmonkbadmonk Posts: 1,266member
    Wall Street is insane. Apple dominates a market in which everyone changes out their device every one to four years. Can they not see the writing on the wall?
  • Reply 6 of 125
    jungmarkjungmark Posts: 6,926member
    How the eff is that possible, Apple? What are its competitors doing that makes them profit less. Kudos to Apple. If you build it, they will come.
  • Reply 7 of 125
    512ke512ke Posts: 782member

    For me, this is the key piece of information:

     

    Quote:


     just 14.5 percent of the 48 million smartphones sold


     

    Granted, all 48 million smartphone users do not want to buy a middle or high end smart phone.

     

    But I'm willing to bet that Apple can still grow its marketshare at the expense of Samsung and other companies.

     

    It's kind of like PC's. Even though the overall market is shrinking, Apple's sales and marketshare are growing.

     

    Also, I believe (although I am too lazy to find the data to prove it) that people are increasingly willing to spend more money on smartphones, due in part to the increasing importance of smartphones in peoples' lives (both function and status).

  • Reply 7 of 125
    sog35 wrote: »
    Having a 4.7 inch phone at $450 and a 5.5 inch phone at $550 will destroy Android.

    Android is mostly made up of $50 to $200 smartphones anyway. So I don't see how it can be "destroyed" by iPhones costing 2 or 3 times that.

    Android's numbers come from the volume of lower-prices handsets... primarily in China and India. Over a billion Android phones are sold each year. And that's not gonna stop anytime soon.

    The iPhone will continue to grow sales for a while. I don't think it has reached its peak yet. Enough people want iPhones and can afford iPhones. I love my iPhone 6S Plus.

    But to think that Apple will affect sales of super-cheap Android smartphones... that's a little crazy.

    Apple is firmly in the $450+ smartphone market with an average iPhone price of $670. They don't do cheap.

    So Apple won't have any effect on the under $200 smartphone market... let alone "destroy" it.
  • Reply 9 of 125
    blazarblazar Posts: 270member
    Carplay, homekit, healthkit, applepay, geolocation devices.

    Rollout on product based on these ideas has been at a snail pace.

    If they were able to execute better on these ideas, I feel they would have a more profitable ecosystem.

    Apple maps needs to be better too... And at a more rapid clip.
  • Reply 10 of 125
    dasanman69dasanman69 Posts: 13,002member
    wwelsh39 wrote: »
    I'm glad Apple is doing well and I love my Macs!!! But I wonder if having that much profit is maybe because Apple is charging too much for their phones and, in good conscience, ought to lower their prices a little bit???

    Is it not more or less the same prices for other high end phones?
  • Reply 11 of 125
    boredumbboredumb Posts: 1,418member
    Quote:

    Originally Posted by anantksundaram View Post

     

    Doomed, I say: It's not 103%.


    Apparently you, like Apple, are simply setting your sights too low...  /s

     

    (Although, "doomed" is good.)

  • Reply 12 of 125
    r00fusr00fus Posts: 245member
    Quote:

    Originally Posted by Robin Huber View Post



    Basically, the only people who can afford to compete are those whose profits come from other products. Their phones become, in effect, loss leaders.



    This is a very insightful statement.  When the rest of the industry is treating the mobile device as a loss-leader, I wonder what they're hoping to get by letting Apple dominate profits in this space? 

     

    Is everyone hoping for commodity 64-core 10Ghz processors that charge using body movement to save them someday in the future?

  • Reply 13 of 125
    Apple earned its overwhelming share of profits despite producing just 14.5 percent of the 48 million smartphones sold in the quarter.

    Something is wrong with these numbers.

    It should read: "Apple earned its overwhelming share of profits despite producing just 14.5 percent of the 340 million smartphones sold in the quarter."

    The 48 million number is how many iPhones Apple sold themselves.
  • Reply 14 of 125
    sog35 wrote: »
    I meant it would destroy all of Androids profits.

    Any phone sold for under $350 is not making any profit.

    Companies are in the business of making money.  If you are not making money you are being 'destroyed'

    Ohhhhh... gotcha. Sorry for the confusion.

    Well the destruction has already begun! :D

    I hear there are 1,000 companies selling Android devices... but only a few actually turn a profit.

    Things aren't looking good for Android on that front.
  • Reply 15 of 125

    Unless Apple can capture over 100% of the profits and over 100% of the market share, it's doomed.

     

    At least 110% market share, Apple, or it's lights out for you in two years. Mark my words.

  • Reply 16 of 125
    It's basically the traditional "PC" market all over again. The other OEMs, for the most part, have to fight amongst themselves with their shared OS core.
  • Reply 17 of 125
    wwelsh39 wrote: »
    I'm glad Apple is doing well and I love my Macs!!! But I wonder if having that much profit is maybe because Apple is charging too much for their phones and, in good conscience, ought to lower their prices a little bit???

    no. that isnt why.
  • Reply 18 of 125
    maestro64maestro64 Posts: 5,043member

    it looks like most of the competition has manage to minimize their loses most are just breaking even. That is great way to run your business go all out to break even.

  • Reply 19 of 125
    solipsismy wrote: »
    It's basically the traditional "PC" market all over again. The other OEMs, for the most part, have to fight amongst themselves with their shared OS core.

    Exactly.

    Apple sells fewer units... but they make a lot of profit on each unit. They are the only company selling MacOS computers so they can command a higher price. But that price is obviously not too high since people keep buying Macs.

    The other guys are all selling Windows PCs with very little differentiation. They're all selling basically the same product. Dell can try to charge $600 for a laptop... but then HP will come along and make a similar enough laptop for $550.

    And then Lenovo undercuts them both by making one for $500. (and even less)

    It's a race to the bottom... and no one wins.
  • Reply 20 of 125
    wigginwiggin Posts: 2,265member
    Quote:

    Originally Posted by wwelsh39 View Post



    I'm glad Apple is doing well and I love my Macs!!! But I wonder if having that much profit is maybe because Apple is charging too much for their phones and, in good conscience, ought to lower their prices a little bit???

     

     

    Quote:

    Originally Posted by sog35 View Post

     

     

    Apple's company wide profit margin is 25%

     

    In other words for every $1 they sell they get 25 cents of profit.  IMO, that is not charging too much.  Also keep in mind Apple has ridiculous revenue, at about $150 billion a year.  If they had less revenue their profit margin would be below 20%.  All those profits are needed to hire and retain top talent, R&D, new buildings, new products, and maintaining services and software.  

     

    Its not that Apple is making ridiculous profit.  Its that the competitors are all selling the same crappy product (Android phones) and don't make enough profit to invest in their own ecosystem.


     

    If their company wide profit is 25%, wouldn't that already take into consideration those other things (hiring, R&D, etc)?

     

    It's a combination of both things...Apple making better products AND Apple making ridiculous profits. As a shareholder, that's great. As a consumer it's kinda sucky. How many other companies make the kind of profit margin Apple does? Apple is the 1% in the corporate world.

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