Apple takes 57% of handset profits, Samsung accounts for remaining 43%

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  • Reply 21 of 76
    ash471ash471 Posts: 705member

    Quote:

    Originally Posted by SolipsismX View Post





    Assuming that these estimates are accurate (we have nothing else to use at this point) since Apple releases new handsets annually you need to factor in a year of profit margins, not a quarter where Apple is at the trail end of their release cycle and Samsung et al. are releasing new products to market. This means that one can't claim Apple is losing ground when it makes a lower percentage of the industry's profits in the Spring just as one can't clam that Apple is increasing their lead on the industry's profits come Autumn.


    completely agree.  We need year over year data to be able to say anything significant.  The table indicates that Apple went from 72% to 57% of market profits. If that were a year over year number it might be an indication of something troubling.


     


    Nevertheless, Samsung's profitability of 43% does strike me as quite significant.  I've also noticed quite a few Samsung devices in the hands of sophisticated people.  I even have a colleague that went from an iPhone to a Samsung.  The alleged reason was the larger screen.  


     


    We'll soon find out if the larger screen is a niche market for a few people who have now mostly converted to Samsung or whether this will continue. It will also be interesting to see if Apple produces a larger screen and how people respond to that.  Will the Samsung Galaxy folks come back to Apple if their desires are met? What percentage of the market are these people?

  • Reply 22 of 76
    sacto joesacto joe Posts: 895member
    osinl wrote: »
    These figures don't include the astonishing marketing costs Samsung has. They are hidden in another business.

    I thnk that's a very good point. I can study Apple's financials in detail, not Samsung's. I know that Samung's total net profit for all its businesses was $6.5 billion for Q1 2013 from an operating profit of $8 billion. I also know that its IT and Mobile communications segment (which includes its smartphone sales) had an operating profit of $5.9 billion.

    But I have no idea what the smartphone segment cost the company to develop, produce, promote, and sell, nor do I have any idea of actual smartphone sales, and I suspect nobody really does outside of Samsung management. Trying to compare Apple financials to Samsung's is quite literally impossible.
  • Reply 23 of 76
    ash471ash471 Posts: 705member

    Quote:

    Originally Posted by Tallest Skil View Post


     


    I'm curious where all the Samsung "profits" came from, given that just last year Apple had 75% of all mobile profits.



    My understanding is Samsung "profits" have come from market growth, particularly in developing countries in the pacific rim. Keep in mind that Samsung can take part of the "profit" pie even if they don't take a single sale away from Apple.  If Samsung really is making this much money on growth in developing markets, it begs the question as to whether Apple should be getting into the market.  In the past Apple was smart to stay out of the low end market because there was no money in it.  If it is true that Samsung is making these kinds of profits, shouldn't apple get into that market?


     


    Or is there some other explanation for Samsung's profitability????

  • Reply 24 of 76
    froodfrood Posts: 771member

    Quote:

    Originally Posted by Tallest Skil View Post


     


    I'm curious where all the Samsung "profits" came from, given that just last year Apple had 75% of all mobile profits.



     


    Yes.   Apple makes profits and Samsung makes "profits"   They obviously are making up numbers since Samsung just ships phones and doesn't actually sell them. They put them at ships that they sink at sea or give away all their phones in BOGO/giveaway deals.  Using that as a given, Samsung should be operating at a substantial loss.

  • Reply 25 of 76
    dasanman69dasanman69 Posts: 13,002member
    slurpy wrote: »
    Apple is taking 57% of mobile phone industry profits, one of the largest industries on the planet, an industry it entered only a few short years ago. Pretty insane.

    Talk about being schooled.

    Because the smartphone market wasn't all that big when Apple entered it, which is where the high profit margins are. Back in 2007 the market was mostly low profit margin feature phones.
  • Reply 26 of 76
    asdasdasdasd Posts: 5,686member
    solipsismx wrote: »
    Yeah, you really didn't understand what I wrote since you're using these estimates against estimates last Fall and then saying "at this rate." :no:

    So you didn't accept the 73% last fall? I remember when those statistics were widely celebrated here. With a fall in market share though, the stats become suspect.
  • Reply 27 of 76
    asdasdasdasd Posts: 5,686member
    ash471 wrote: »
    My understanding is Samsung "profits" have come from market growth, particularly in developing countries in the pacific rim. Keep in mind that Samsung can take part of the "profit" pie even if they don't take a single sale away from Apple.  If Samsung really is making this much money on growth in developing markets, it begs the question as to whether Apple should be getting into the market.  In the past Apple was smart to stay out of the low end market because there was no money in it.  If it is true that Samsung is making these kinds of profits, shouldn't apple get into that market?

    Or is there some other explanation for Samsung's profitability????

    There is another explanation.
    It's a vast conspiracy by the IDC illuminati. Samsung may not even exist for all we really know.
  • Reply 28 of 76
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by asdasd View Post

    So you didn't accept the 73% last fall? I remember when those statistics were widely celebrated here. With a fall in market share though, the stats become suspect.


     


    Except Apple's marketshare has gone up.

  • Reply 29 of 76
    solipsismxsolipsismx Posts: 19,566member
    asdasd wrote: »
    So you didn't accept the 73% last fall? I remember when those statistics were widely celebrated here. With a fall in market share though, the stats become suspect.

    If you have evidence of a YoY drop in market share, profit share or profits then please post them but one claiming "Apple sucks" because of a drop from Autumn to Spring are just as foolish as those saying "Samsung sucks" because of a drop from Spring to Autumn after the next iPhone is factored in.


    PS: Note that Canaccord Genuity states 72% for 4Q2012 and 69% for all of 2012. Do you know what that means? It means that there were quarters that were less than the 72% which is why the year is less than a single quarter.
  • Reply 30 of 76
    ash471ash471 Posts: 705member

    Quote:

    Originally Posted by dasanman69 View Post





    It's the smartphone market and it wasn't all that big when Apple entered it.


    That doesn't change the fact that 57% of the market profits is still an insane amount for Apple, given the pundits said Apple would fail in this endeavor. (remember the iPhone as a paperweight argument). However, as a shareholder of Apple, I'm concerned about the direction of the profit share.  Where are Apple's profits headed?  Since Apple's percentage of the profits were so insanely high in 2011-2012, they had nowhere to go but down.  The question now is how far down will they go?  Is Apple doomed or is this just a logical correction of an imbalance in market power.


     


    Quote:

    Originally Posted by Frood View Post


     


    Yes.   Apple makes profits and Samsung makes "profits"   They obviously are making up numbers since Samsung just ships phones and doesn't actually sell them. They put them at ships that they sink at sea or give away all their phones in BOGO/giveaway deals.  Using that as a given, Samsung should be operating at a substantial loss.



    What makes you think Samsung is making up numbers?  Giving away phones or dumping them on the bottom of the sea doesn't make a company profitable. The numbers in this chart relate to profitability, not units shipped. Either Samsung is cooking the books, or it is taking a portion of the market that we Apple shareholders would prefer that Apple owned......i.e., the profitable portion of the market.

  • Reply 31 of 76
    gwmacgwmac Posts: 1,800member

    Quote:

    Originally Posted by ash471 View Post


    We'll soon find out if the larger screen is a niche market for a few people who have now mostly converted to Samsung or whether this will continue. It will also be interesting to see if Apple produces a larger screen and how people respond to that.  Will the Samsung Galaxy folks come back to Apple if their desires are met? What percentage of the market are these people?



    It is no niche and no fad. As more and more people are using their phones more like tablets and computers than phones you start to wish for a larger screen. I am as loyal an Apple person as you can find and in 25 years of purchasing computers have never bought anything other than an Apple computer.  I am no Warren Buffet but am in the top quintile. My next phone will likely be an S4 if Apple doesn't release an iPhone with a larger screen. I have an iPhone 5 now and with all I love about my iPhone I just can't get over the limitation and irritations I feel from this small 4" display. But I can say that I will be the first in line if Apple makes a larger version. It doesn't have to be 5" either, I would be happy with anything between 4.5" to as large as 5.3" with a strong preference for 4.8". 

  • Reply 32 of 76
    dasanman69dasanman69 Posts: 13,002member
    ash471 wrote: »
    That doesn't change the fact that 57% of the market profits is still an insane amount for Apple, given the pundits said Apple would fail in this endeavor. (remember the iPhone as a paperweight argument). However, as a shareholder of Apple, I'm concerned about the direction of the profit share.  Where are Apple's profits headed?  Since Apple's percentage of the profits were so insanely high in 2011-2012, they had nowhere to go but down.  The question now is how far down will they go?  Is Apple doomed or is this just a logical correction of an imbalance in market power.

    What makes you think Samsung is making up numbers?  Giving away phones or dumping them on the bottom of the sea doesn't make a company profitable. The numbers in this chart relate to profitability, not units shipped. Either Samsung is cooking the books, or it is taking a portion of the market that we Apple shareholders would prefer that Apple owned......i.e., the profitable portion of the market.

    Apple will come down some but they'll still lead the pack, which is far from being doomed.
  • Reply 33 of 76
    solipsismxsolipsismx Posts: 19,566member
    ash471 wrote: »
    I've also noticed quite a few Samsung devices in the hands of sophisticated people.  I even have a colleague that went from an iPhone to a Samsung.  The alleged reason was the larger screen.

    I know quite a few people that have moved to Android as well. These aren't typically longtime Apple customers or Mac users, but those that prefer Windows, and are usually gamers, but that's just anecdotal so i can't comment as to how common those elements are.

    I know some that have tried Android from going from no smartphone or from WinCE/BB/Palm and then to the iPhone, as well as from the iPhone to Android and then back to the iPhone, but with the S3 these switchers seem to be enjoying it more. I can't say if it's Android finally being a decent mobile OS, the S3 HW or a combination of both.

    I don't think Apple needs a larger iPhone to be competitive but I do think there is a decent market for these large smartphone displays that Apple can take advantage of. If they don't make a new resolution and use their previous methods they'll make a 4.94" display that is 264 PPI (same as Retina iPad), but I'm not sure that's high enough for being Retina on an iPhone, or if that display size is too large. Sometimes you simply can't make an ideal device using other tech you've paid for and mastered like they did with the 7.85" 163 PPI iPad mini.
  • Reply 34 of 76
    anonymouseanonymouse Posts: 6,698member

    Quote:

    Originally Posted by osinl View Post



    These figures don't include the astonishing marketing costs Samsung has. They are hidden in another business.


     


    I think an assertion like this requires some details.

  • Reply 35 of 76
    ash471ash471 Posts: 705member

    Quote:

    Originally Posted by SolipsismX View Post





    I know quite a few people that have moved to Android as well. These aren't typically longtime Apple customers or Mac users, but those that prefer Windows, and are usually gamers, but that's just anecdotal so i can't comment as to how common those elements are.



    I know some that have tried Android from going from no smartphone or from WinCE/BB/Palm and then to the iPhone, as well as from the iPhone to Android and then back to the iPhone, but with the S3 these switchers seem to be enjoying it more. I can't say if it's Android finally being a decent mobile OS, the S3 HW or a combination of both.



    I don't think Apple needs a larger iPhone to be competitive but I do think there is a decent market for these large smartphone displays that Apple can take advantage of. If they don't make a new resolution and use their previous methods they'll make a 4.94" display that is 264 PPI (same as Retina iPad), but I'm not sure that's high enough for being Retina on an iPhone, or if that display size is too large. Sometimes you simply can't make an ideal device using other tech you've paid for and mastered like they did with the 7.85" 163 PPI iPad mini.


    Agreed. My colleague that switched to S3 is a Microsoft guy (literally, he drafts patents for Microsoft).  He said he liked the iPhone and didn't have anything against Apple, he just wanted a larger screen.  It's hard to say what his real motivation was.  I assume it was a least partially motivated by screen size, but there could be more to it.  Besides, it is just one data point.


     


    I agree that Apple will survive just fine without a larger screen.  However, does that mean they shouldn't do it?  I don't envy Tim Cook's position.  If he diversifies the screen size, he will be disrupting the simplicity of the supply chain.  If it doesn't work out, he will get crucified.  If it turns out that the large screen market was critical to continued dominance, he will be crucified for not doing it.  Thirdly, he may lose market share no matter which way he does it, in which case he will be crucified either way.  


     


    You can see why a CEO like Tim Cook is incentivized to pad his pockets and walk away a wealthy person some day.  I'm not saying Tim will do this, but it is obvious to me that the market is going to be unjustly critical of Cook.  Apple can't dominate the way they have forever.  As the pullback happens, the market feels the need to blame someone and Cook is the obvious person to blame. 

  • Reply 36 of 76
    theothergeofftheothergeoff Posts: 2,081member

    Quote:

    Originally Posted by Slurpy View Post



    Apple is taking 57% of mobile phone industry profits, one of the largest industries on the planet, an industry it entered only a few short years ago. Pretty insane.



    Talk about being schooled.


    hyperbolic myopia.  You're looking at it, therefore it must be the biggest/most important.


     


    This is just a highly automated manufactured, scalable distribution product.   AKA it's no different than a mouse trap... everyone needs them but you really don't spend much on them, but if you can make one better, and build it cheaply, you can make a lot of money on it.


     


     


    mobile phone manufacturing industry probably isn't in the top 100 of the 'planet's'  industries.


    heck... for every dollar you spend on the mobile phone, you're likely spending 2 on the network.  So Telco is bigger than mobile phone manufacturing.


     


     


     


    7 of the top 9 Fortune 500 world companies are in petroleum... the other 2...  Walmart (retail distribution) and China Electric (power production/distribution). 


     


    Toyota and Volkswagen are bigger than your top 2 players in the mobile phone industry.. 


     


    Mining is also bigger.


     


    Shipping


     


    Military equipment.


     


    Pharma


     


    Healthcare


     


    cocaine/heroin/marijuana/Khat


     


    Insurance


     


    Banking


     


    Residential/commercial construction


     


    Road construction


     


    Clothe and clothing manufacturing.


     


    as industries go... my guess is 'higher education' is a bigger industry than mobile phone handset production.


     


     


    and to be honest.  Food production is the largest industry on the planet.  few big players... it's just highly distributed.


     


    in 2012 Samsung eaks in at 20th position on world wide F500, and their primary money maker is TV sets, let alone chip making, and then phones.   It's not even the biggest business within it's own portfolio.


     


    apple is 55th on the F500.


     


    Just think about it in terms a family of 4 priority list...  Is an smart phone even in your top 20 priorities? a phone maybe, but food, clothing, shelter, heat/energy, education, transportation, savings, and security are probably orders of magnitude 'more important industries' for you to buy into.

  • Reply 37 of 76
    kevtkevt Posts: 195member


    Fear of cannibalisation of high end iPhone profits, is sometimes cited as a reason for Apple not producing an iPhone at a lower price point, but Samsung does seem to sell plenty of high end phones despite having lower cost options.

  • Reply 38 of 76
    juiljuil Posts: 75member


    This I wonder, do Samsung list their manufacturing under this « Mobile communications » umbrella of theirs? If so, it would mean that the displays, silicon and memory they sell to their « clients » who are in fact « competitors » (like Apple, and the others) all go towards taking profit from the market indirectly.


     


    I too find it weird that their smartphones would earn them 90 % of their megacorporation-wide profits, and the rest (appliances, computers, electronics and what not) add up to a very small part of their overall profits.


     


    But you have to feel it for all the other guys though. Apple and Samsung are really milking the cow right now!

  • Reply 39 of 76
    rickagrickag Posts: 1,626member
    One explanation is Samsung is supplying components to their mobile phone manufacturers at prices below what they sell to outside companies for. This is a common practice within vertically integrated industries.

    I haven't had looked at Samsungs quarterly statement, but I understand their display and memory manufacturing did not have typical profits.

    We know Samsung fudges numbers as we found out in their lawsuit battles with Apple. I wouldn't put it past them to artificially prop up their profit margins in the cell phone industry.

    If someone that has more access to Samsungs quarterly numbers they could dig a little deeper and correct me.
  • Reply 40 of 76
    juiljuil Posts: 75member

    Quote:

    Originally Posted by TheOtherGeoff View Post


    hyperbolic myopia.  You're looking at it, therefore it must be the biggest/most important.


     


    This is just a highly automated manufactured, scalable distribution product.   AKA it's no different than a mouse trap... everyone needs them but you really don't spend much on them, but if you can make one better, and build it cheaply, you can make a lot of money on it.


     


     


    mobile phone manufacturing industry probably isn't in the top 100 of the 'planet's'  industries.


    heck... for every dollar you spend on the mobile phone, you're likely spending 2 on the network.  So Telco is bigger than mobile phone manufacturing.


     


     


     


    7 of the top 9 Fortune 500 world companies are in petroleum... the other 2...  Walmart (retail distribution) and China Electric (power production/distribution). 


     


    Toyota and Volkswagen are bigger than your top 2 players in the mobile phone industry.. 


     


    Mining is also bigger.


     


    Shipping


     


    Military equipment.


     


    Pharma


     


    Healthcare


     


    cocaine/heroin/marijuana/Khat


     


    Insurance


     


    Banking


     


    Residential/commercial construction


     


    Road construction


     


    Clothe and clothing manufacturing.


     


    as industries go... my guess is 'higher education' is a bigger industry than mobile phone handset production.


     


     


    and to be honest.  Food production is the largest industry on the planet.  few big players... it's just highly distributed.


     


    in 2012 Samsung eaks in at 20th position on world wide F500, and their primary money maker is TV sets, let alone chip making, and then phones.   It's not even the biggest business within it's own portfolio.


     


    apple is 55th on the F500.


     


    Just think about it in terms a family of 4 priority list...  Is an smart phone even in your top 20 priorities? a phone maybe, but food, clothing, shelter, heat/energy, education, transportation, savings, and security are probably orders of magnitude 'more important industries' for you to buy into.



     


    Very interesting point of view - that I share with you (though I hate to nag you, but your F500 sats are coming from year 2011 and have evolved since;)

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