Apple collects nearly all of the profit in the worldwide smartphone market

Posted:
in iPhone
In 2022, Apple's operating profit share of the worldwide smartphone market reached a recent high of 85%, and the company shipped 70 million iPhones in the fourth quarter.

iPhone 14
iPhone 14


Driven by sales of the iPhone 14 launched in September, Apple has achieved its highest-ever global smartphone shipment, revenue, and operating profit share in 2022.

Although Apple's shipments, revenue, and operating profits declined year-over-year in quarter four of 2022, it still captured 18% of shipment share, 48% of the revenue of the marketplace, and 85% of the profit generated by the segment for the year.

The company shipped 70 million iPhones in the fourth quarter, up from 49.2 million in quarter three but down from 81.5 million units in quarter four of 2021. Apple's manufacturing issues in China and not demand are the culprits for the lower shipment numbers.

According to the latest analysis from Counterpoint Research, the global smartphone market saw an 18% year-over-year decline in shipments in quarter four of 2022, the lowest level for a holiday quarter since 2013. Shipments for the entire year declined to 1.2 billion units, also the weakest since 2013.

Global smartphone shipments in 2022. Source: Counterpoint Research
Global smartphone shipments in 2022. Source: Counterpoint Research


However, shipments grew by a minuscule 1% quarter-over-quarter to 303.9 million units.

Research Director Jeff Fieldhack commented on Apple's success in a market crushed by external forces.

"Having proficiently managed its production problems, Apple was able to weather a year already marred by economic and geopolitical turmoil better than other major smartphone players," Fieldhack said. "Its iPhone Pro series continued performing well and its share of iPhone shipments could have been even higher if not for the production issues caused by the COVID-19 breakout at the Zhengzhou factory, which produces the vast majority of Pro series volumes. As a result, some Pro series volumes got pushed to January."

Apple wins the top spot

Apple's product line is entirely situated in the premium segment of the market, which was less affected by economic and geopolitical uncertainties. Because they last a long time, many smartphone users have been preferring to purchase premium devices.

Apple won the top spot in 2022. Source: Counterpoint Research
Apple won the top spot in 2022. Source: Counterpoint Research


Meanwhile, in the first quarter of 2023, Apple reported $117.15 billion in revenue, a decline from $123.9 billion in quarter one of 2022. The iPhone brought in $65.78 billion in revenue for the quarter, down from the $71.6 billion in the year-ago quarter.

Less than a decade ago, Apple collected more profit from the smartphone market than was strictly generated in total, if the losses that most Android manufacturers were seeing was incorporated into the calculation.

Read on AppleInsider

Comments

  • Reply 1 of 11
    XedXed Posts: 1,658member
    That's very similar to the results of personal computer (laptops and desktop) sales for a couple decades now, and I assume that's the way it is for the tablet segment, too, but I didn't think that was the way it was for the smartphone market. Impressive.
    watto_cobra
  • Reply 2 of 11
    entropysentropys Posts: 3,847member
    I guess in the other category Samsung I presume.
    Which means of course, that Apple (and Samsung) are pretty much the only phones sold at a high margin, which in turn translates into high profit. It isn’t just a mark of volume (well, 14% market share is reasonably popular), but how big a difference there is between costs and wholesale price. And to completely beat out everyone else on margins.
    In the end, we are all paying for this metric.
    edited February 3 FileMakerFellerwatto_cobra
  • Reply 3 of 11
    XedXed Posts: 1,658member
    entropys said:
    I guess in the other category Samsung I presume.
    Which means of course, that Apple (and Samsung) are pretty much the only phones sold at a high margin, which in turn translates into high profit. It isn’t just a mark of volume (well, 14% market share is reasonably popular), but how big a difference there is between costs and wholesale price. And to completely beat out everyone else on margins.
    In the end, we are all paying for this metric.
    What do you mean by "a difference [...] between costs and wholesale price"? Are you talking about net income, which is sales minus cost of goods sold, general expenses, taxes, and interest? That's just net income. We can't say it's a "high" anything simply because they make a profit compared one that make little to no profit, only that it's "higher".

    What do you mean by "we are all paying for this metric"? Are you saying that we're being overcharged if Apple is making a profit? If so, you need to look at why others aren't making a profit as well as what drives you as a customer to buy or not to buy a product from Apple, Samsung, or another vendor.

    Personally, I only look at how a given product will affect my bottom line. I could do like many others and buy a $500 WinPC every 12 months knowing the vendor will get very little (if any) direct profit from that sale, which then requires me to waste time setting up, which also includes removing installed crapware and buying 3rd-party apps -or- I could spend $3k on a Mac every 4 years that is quick to setup, requires very little additional paid SW (in comparison), and allows me to complete tasks more efficiently (in comparison) that then yields me a lower TCO over all those kludgy WInPCs. Whether or not Lenovo or Apple make a profit on my purchase is irrelevant when my goal is how the purchase affects the increase or decrease of my wallet (and my stress and time wasted) over its lifetime.
    edited February 3 UNLK_A6FileMakerFellerd_2watto_cobraAlex_V
  • Reply 4 of 11
    dewmedewme Posts: 4,760member
    Of course they do. Apple made the biggest investment, took on the largest risk, and established the de facto standard for smartphones. The opportunists just glommed on to fight over the scraps. As long as Apple can control demand based on quality and features the followers will always are playing catch-up.
    FileMakerFellerwilliamlondonhydrogenwatto_cobraAlex_Vdanox
  • Reply 5 of 11
    radarthekatradarthekat Posts: 3,622moderator
    And the beat goes on.  
    watto_cobra
  • Reply 6 of 11
    MadbumMadbum Posts: 464member
    Amazing Tim Cook
    watto_cobraAlex_V
  • Reply 7 of 11
    lkrupplkrupp Posts: 10,487member
    entropys said:
    I guess in the other category Samsung I presume.
    Which means of course, that Apple (and Samsung) are pretty much the only phones sold at a high margin, which in turn translates into high profit. It isn’t just a mark of volume (well, 14% market share is reasonably popular), but how big a difference there is between costs and wholesale price. And to completely beat out everyone else on margins.
    In the end, we are all paying for this metric.
    And we are voluntarily paying for this metric are we not? And if it’s voluntary what’s wrong with it?
    watto_cobradanox
  • Reply 8 of 11
    danoxdanox Posts: 1,722member
    entropys said:
    I guess in the other category Samsung I presume.
    Which means of course, that Apple (and Samsung) are pretty much the only phones sold at a high margin, which in turn translates into high profit. It isn’t just a mark of volume (well, 14% market share is reasonably popular), but how big a difference there is between costs and wholesale price. And to completely beat out everyone else on margins.
    In the end, we are all paying for this metric.
    Samsung’s profit in this area is as bad as HP or Dell in the PC world. They are just an 0EM, at least until they can get their in-house OS to do something more than what it currently does.
  • Reply 9 of 11
    danoxdanox Posts: 1,722member
    lkrupp said:
    entropys said:
    I guess in the other category Samsung I presume.
    Which means of course, that Apple (and Samsung) are pretty much the only phones sold at a high margin, which in turn translates into high profit. It isn’t just a mark of volume (well, 14% market share is reasonably popular), but how big a difference there is between costs and wholesale price. And to completely beat out everyone else on margins.
    In the end, we are all paying for this metric.
    And we are voluntarily paying for this metric are we not? And if it’s voluntary what’s wrong with it?
    Apple is too vertical they’re having too much success the deck should be reshuffled by government so that everyone else can catch up, mediocrity in the tech computer world all round. I think that’s what he was implying.
  • Reply 10 of 11
    danoxdanox Posts: 1,722member
    dewme said:
    Of course they do. Apple made the biggest investment, took on the largest risk, and established the de facto standard for smartphones. The opportunists just glommed on to fight over the scraps. As long as Apple can control demand based on quality and features the followers will always are playing catch-up.
    Competition wants a deck reshuffle by government mandate.
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