Apple now earning 73% of global mobile profits with just 8.8% unit share
While the worldwide market for mobile phones is growing rapidly, Apple is earning the majority of all profits despite only selling a small minority of the world's mobile devices.
According to an analysis of top handset vendors' reported earnings by Horace Dediu of Asymco, the combined operating profits from all mobile phones remained relatively stagnant below $6 billion per quarter for years until the release of Apple's iPhone 4.
Over the last two years however, mobile profits have skyrocketed, jumping from $5.3 billion at the start of 2010 to $14.4 billion over the most recent quarter. The beneficiary of that explosion in mobile profits has almost exclusively been Apple.
Apart from Apple and its 73% share of mobile profits, Samsung has remained the only other major phone maker to continue capable of turning a profit in the industry since the release of the iconic iPhone, despite the voracious global demand for mobile phones, and in particular the highly profitable smartphone, which has seen its unit sales grow by 47%.
When Apple introduced the original iPhone in 2007, the market leader was overwhelmingly Nokia, but Samsung, Sony Ericsson, LG, RIM and HTC were all profitable. In the last quarter, Nokia reported its first major quarterly loss of $1.2 billion, while former industry darlings RIM and HTC also reported dismal performance. Sony Ericsson, Motorola and LG have all failed to earn significant profits in the mobile business since 2009 or earlier.
Dediu notes that Apple's recent surge in profits "were mostly carrier premiums for the iPhone 4S," and that mobile carriers "willingly hand over these premiums because the iPhone ensures a competitive advantage or preserves their customer base from churning. The calculations that go into a decision to range the iPhone are compelling enough that 250 operators made the decision (though, crucially, there are still 250 who have not)."
He further observed, "the industry is rewarding those who can supply computers-as-phones which preserve the cash flows of what is essentially a trillion dollar data services business. Vendors which cannot offer this solution saw their businesses implode. At least on the high end."
The site's review of mobile industry profits punches a hole in recent reports by a variety of market analysts that congratulated Samsung for shipping the most smartphone units, but also tears apart a theory by BITG Research analyst Walter Piecyk that suggested Apple was about to lose the carrier subsidies that have padded its bottom line over the past two years.
Following Piecyk's note to investors early last month, Apple's stock dropped nearly 12% before recovering after the company reported blockbuster quarterly earnings.
Apple shares currently remain at $581, significantly below the company's all time high of $644 reached in the days before Piecyk voiced his fears of an end to carrier's subsidy payments.
According to an analysis of top handset vendors' reported earnings by Horace Dediu of Asymco, the combined operating profits from all mobile phones remained relatively stagnant below $6 billion per quarter for years until the release of Apple's iPhone 4.
Over the last two years however, mobile profits have skyrocketed, jumping from $5.3 billion at the start of 2010 to $14.4 billion over the most recent quarter. The beneficiary of that explosion in mobile profits has almost exclusively been Apple.
Apart from Apple and its 73% share of mobile profits, Samsung has remained the only other major phone maker to continue capable of turning a profit in the industry since the release of the iconic iPhone, despite the voracious global demand for mobile phones, and in particular the highly profitable smartphone, which has seen its unit sales grow by 47%.
When Apple introduced the original iPhone in 2007, the market leader was overwhelmingly Nokia, but Samsung, Sony Ericsson, LG, RIM and HTC were all profitable. In the last quarter, Nokia reported its first major quarterly loss of $1.2 billion, while former industry darlings RIM and HTC also reported dismal performance. Sony Ericsson, Motorola and LG have all failed to earn significant profits in the mobile business since 2009 or earlier.
Dediu notes that Apple's recent surge in profits "were mostly carrier premiums for the iPhone 4S," and that mobile carriers "willingly hand over these premiums because the iPhone ensures a competitive advantage or preserves their customer base from churning. The calculations that go into a decision to range the iPhone are compelling enough that 250 operators made the decision (though, crucially, there are still 250 who have not)."
He further observed, "the industry is rewarding those who can supply computers-as-phones which preserve the cash flows of what is essentially a trillion dollar data services business. Vendors which cannot offer this solution saw their businesses implode. At least on the high end."
The site's review of mobile industry profits punches a hole in recent reports by a variety of market analysts that congratulated Samsung for shipping the most smartphone units, but also tears apart a theory by BITG Research analyst Walter Piecyk that suggested Apple was about to lose the carrier subsidies that have padded its bottom line over the past two years.
Following Piecyk's note to investors early last month, Apple's stock dropped nearly 12% before recovering after the company reported blockbuster quarterly earnings.
Apple shares currently remain at $581, significantly below the company's all time high of $644 reached in the days before Piecyk voiced his fears of an end to carrier's subsidy payments.
Comments
Apple Is Doomed.™ I want that on a t-shirt.
And I'm surprised that RIM just literally fell off last quarter.
Quote:
Originally Posted by AppleInsider
While the worldwide market for mobile phones is growing rapidly, Apple is earning the majority of all profits despite only selling a small minority of the world's mobile devices.
Then Apple's shareholders are getting rich while Apple's users are paying too much for what they get.
Quote:
Originally Posted by Tallest Skil
Apple Is Doomed.™ I want that on a t-shirt.
And I'm surprised that RIM just literally fell off last quarter.
Let's fill in all of the responses for the Apple haters to save them time so they can try to come up with some more creative trolling:
1. That's the Apple tax at work
2. Who cares about profits unless you're a stockholder?
3. So what? We're getting 800,000 activations per second.
4. Apple users are sheep (particularly fun when they can combine it with #3 while keeping a straight face)
5. The numbers must be lies. Everyone I know uses Android phones.
6. Even if it were true, so what? People need to be able to do whatever they want with their phones without Apple restricting their right to install malware.
Did I miss any?
Quote:
Originally Posted by jragosta
Let's fill in all of the responses for the Apple haters to save them time so they can try to come up with some more creative trolling:
1. That's the Apple tax at work
2. Who cares about profits unless you're a stockholder?
3. So what? We're getting 800,000 activations per second.
4. Apple users are sheep (particularly fun when they can combine it with #3 while keeping a straight face)
5. The numbers must be lies. Everyone I know uses Android phones.
6. Even if it were true, so what? People need to be able to do whatever they want with their phones without Apple restricting their right to install malware.
Did I miss any?
Why are you so quick to try and justify one company profiting so much?
The one answer is, just like all corporations, Apple is a faceless corporation, they only care about profit, and for the vast majority of people on this earth, they do not care how much money Apple is making, and in fact to a lot of people they will find it disgusting how much money Apple, and other corporations make on their products.
If you are an investor in Apple that's fine, maybe you enjoy this time of thing. If you are not an investor in Apple, and are still getting excited by this articule then maybe you should get out more.
Quote:
Originally Posted by jfanning
Quote:
Originally Posted by jragosta
Let's fill in all of the responses for the Apple haters to save them time so they can try to come up with some more creative trolling:
1. That's the Apple tax at work
2. Who cares about profits unless you're a stockholder?
3. So what? We're getting 800,000 activations per second.
4. Apple users are sheep (particularly fun when they can combine it with #3 while keeping a straight face)
5. The numbers must be lies. Everyone I know uses Android phones.
6. Even if it were true, so what? People need to be able to do whatever they want with their phones without Apple restricting their right to install malware.
Did I miss any?
Why are you so quick to try and justify one company profiting so much?
The one answer is, just like all corporations, Apple is a faceless corporation, they only care about profit, and for the vast majority of people on this earth, they do not care how much money Apple is making, and in fact to a lot of people they will find it disgusting how much money Apple, and other corporations make on their products.
If you are an investor in Apple that's fine, maybe you enjoy this time of thing. If you are not an investor in Apple, and are still getting excited by this articule then maybe you should get out more.
Similarly, if you have an emotional attachment to the fortunes of Nokia, this report must be quite painful to read.
Quote:
Originally Posted by jfanning
Why are you so quick to try and justify one company profiting so much?
The one answer is, just like all corporations, Apple is a faceless corporation, they only care about profit, and for the vast majority of people on this earth, they do not care how much money Apple is making, and in fact to a lot of people they will find it disgusting how much money Apple, and other corporations make on their products.
If you are an investor in Apple that's fine, maybe you enjoy this time of thing. If you are not an investor in Apple, and are still getting excited by this articule then maybe you should get out more.
That's answer #2.
In the end, there's nothing to justify. This is the result of a variety of factors. What it means is that:
1. Apple has produced a device that's in very high demand and sells lots of units because of it's features and designs.
2. Apple has managed to introduce this industry - leading product at a competitive price.
3. Apple managed to reduce manufacturing costs enough to be profitable even when selling the product at a competitive price.
4. Because of that, Apple will be able to continue to innovate and bring out future, competitive products with features that are valued by the market.
Everyone benefits - except Apple's competitors/copyists.
Everything is in the title. No need to add anything.
Samsung is the biggest seller of phones and still apple earns 73% of the profits. If that does not tells you your model is not working I don't know what will. Nokia really has a chance here, with the poor earning on android makers and rim going down with the new blackberry 10, as long as Nokia matches somewhat apple earning for unit IMHO they can over take android makers in a few years...
So either the iphone is so insanely great and far and above anything else on the market that its 8% market share warrants a 70% profit share, or apple is ripping us off. Apple ripping us off? Nah...
Quote:
Originally Posted by myapplelove
So either the iphone is so insanely great and far and above anything else on the market that its 8% market share warrants a 70% profit share, or apple is ripping us off. Apple ripping us off? Nah...
That's an octuple-edged sword you're holding there.
On the one hand, we're getting "ripped off". On the other hand, Apple could easily drop the price, take 100% marketshare, and still have 100% of the profits.
Android loses both ways.
Quote:
Originally Posted by jragosta
Let's fill in all of the responses for the Apple haters to save them time so they can try to come up with some more creative trolling:
1. That's the Apple tax at work
2. Who cares about profits unless you're a stockholder?
3. So what? We're getting 800,000 activations per second.
4. Apple users are sheep (particularly fun when they can combine it with #3 while keeping a straight face)
5. The numbers must be lies. Everyone I know uses Android phones.
6. Even if it were true, so what? People need to be able to do whatever they want with their phones without Apple restricting their right to install malware.
Did I miss any?
Looks like my strategy worked. Well over 5 hours and only a handful of responses. I guess I got all the Android responses for them.
Quote:
Originally Posted by Tallest Skil
That's an octuple-edged sword you're holding there.
On the one hand, we're getting "ripped off". On the other hand, Apple could easily drop the price, take 100% marketshare, and still have 100% of the profits.
Android loses both ways.
And like my pappy always said, "An octopus with a sword is a bad thing.".
True story.
Quote:
Originally Posted by jragosta
Looks like my strategy worked. Well over 5 hours and only a handful of responses. I guess I got all the Android responses for them.
I think the expression that you were looking for was 'owned'.
You owned them good and proper.
Quote:
Originally Posted by jfanning
Why are you so quick to try and justify one company profiting so much?
The one answer is, just like all corporations, Apple is a faceless corporation, they only care about profit, and for the vast majority of people on this earth, they do not care how much money Apple is making, and in fact to a lot of people they will find it disgusting how much money Apple, and other corporations make on their products.
If you are an investor in Apple that's fine, maybe you enjoy this time of thing. If you are not an investor in Apple, and are still getting excited by this articule then maybe you should get out more.
This is a common misconception.
Many 'Apple evangelists' love the fact that Apple is a company that is so successful because they are exactly the opposite of your description. Apple is an example of how all business's should operate these days.
Profit has never been what drives them, but it has been the result of what really drives them.
And why is making money so 'disgusting'?
That's a strange comment.
Quote:
Originally Posted by jragosta
That's answer #2.
In the end, there's nothing to justify. This is the result of a variety of factors. What it means is that:
1. Apple has produced a device that's in very high demand and sells lots of units because of it's features and designs.
2. Apple has managed to introduce this industry - leading product at a competitive price.
3. Apple managed to reduce manufacturing costs enough to be profitable even when selling the product at a competitive price.
4. Because of that, Apple will be able to continue to innovate and bring out future, competitive products with features that are valued by the market.
Everyone benefits - except Apple's competitors/copyists.
Straight back to number 3, the vast majority of people either don't care, or will be highly offended by how much money Apple is making off the device. And, even though you ignored this part of my post, they are equally offended at other companies in same situation. The only person who is directing this argument to Apple is you, you starting a pointless argument that wouldn't have been followed up on had you not made it.
Not everyone benefits, stop claiming they are.
Quote:
Originally Posted by GTR
This is a common misconception.
Many 'Apple evangelists' love the fact that Apple is a company that is so successful because they are exactly the opposite of your description. Apple is an example of how all business's should operate these days.
Profit has never been what drives them, but it has been the result of what really drives them.
And why is making money so 'disgusting'?
That's a strange comment.
If that's what excited you then you must have a pretty boring life. Apple, like Samsung, Dell, Microsoft, etc etc are faceless corporations that are only there to make money for their shareholders.
And I didn't say making money is disgusting, and I don't think it is, don't make things up to try and get something across.
Sure they raced and sold a lot of phones in places where Apple has taken longer to reach, but it seems more and more clear that the iPhone is smoking Android in the US. Simply everyone I see has them. They out sell all smartphone at the three major US carriers.
With Google still trying to answer Siri, and everyday giving Apple time to work on the next great thing, as well as the trouble Google has trying to push anything new and cool out to its users, I just don't see how they can win on phones, not even mentioning tablets. Then there is MS stuff which will fragment the "anything but Apple" crowd even more.
The whole reason developers got into Android was that it seemed to be the future, with the iPhone seemingly going the way of the Mac. As it becomes clear that isn't happening in the US, english speaking developers might not be as eager to continue the Android mess.
I think Google has hit a wall and are fresh out of ideas and they know it.
Hmmm.....I wonder why there are almost no Androiders in this thread....
Quote:
Originally Posted by Icelus
I think Google has hit a wall and are fresh out of ideas and they know it.
But all Apple does is steal features from Android. When Android runs out of features, so will Apple.
There. That'll get 'em riled up.
Quote:
Originally Posted by jfanning
If that's what excited you then you must have a pretty boring life. Apple, like Samsung, Dell, Microsoft, etc etc are faceless corporations that are only there to make money for their shareholders.
And I didn't say making money is disgusting, and I don't think it is, don't make things up to try and get something across.
Recognition of excellence is nothing to be ashamed of, my friend, and I still have enough of a life to ensure that my post count here isn't too high. (>_<)
I disagree with your perception that all of those corporations are faceless.
For the average person, Apple is still Jobs/Cook, Microsoft is still Gates/Ballmer.
However, Samsung, there's the personification of facelessness. ;-)
I'm sorry. When I read your statement:
The one answer is, just like all corporations, Apple is a faceless corporation, they only care about profit, and for the vast majority of people on this earth, they do not care how much money Apple is making, and in fact to a lot of people they will find it disgusting how much money Apple, and other corporations make on their products.
...without any hard evidence to back it up I mistook it for your opinion, which actually is you saying that.
Quote:
Originally Posted by Tallest Skil
But all Apple does is steal features from Android. When Android runs out of features, so will Apple.
There. That'll get 'em riled up.
Yep.
Notifications and beam.
Apple really went to town and did a proper job on Android.