iPhone Generated Record-Breaking Share of Profits Last Quarter Despite Continued Sales Decline

[MacRumors]

iPhone sales may have declined for three consecutive quarters, but the latest data from research firm Strategy Analytics suggests Apple is unsurprisingly still doing exceptionally well in the smartphone market.

Apple captured a record 91% of profits in the worldwide smartphone market in the third quarter, or $8.5 billion of the overall $9 billion in profits recorded by all vendors combined, according to Strategy Analytics.

Apple's biggest competitor Samsung was nowhere to be found on the list, as Chinese smartphone makers Huawei, Vivo, and OPPO took the second, third, and fourth spots respectively with between 2.2% and 2.4% of profits.

"Apple's ability to maximize pricing and minimize production cost is hugely impressive and the iPhone continues to generate monster profits," said Linda Sui, Director at Strategy Analytics. "Huawei, Vivo and OPPO are the next three most profitable smartphone vendors globally this quarter, but they are still a long way behind Apple."

Apple's profit margin is impressive given no other smartphone maker generated more than $200 million in profits during the quarter, according to Strategy Analytics. Apple's share of profits was some 40× larger than its closest competitor.

iPhone sales declined on a year-over-year basis in the second, third, and fourth quarters of the 2016 fiscal year, after rising only marginally during the first quarter, which makes Apple's record-breaking smartphone profits even more impressive.

BMO Capital Markets analyst Tim Long previously estimated Apple captured 103.6% of smartphone industry profits in the third quarter. Long's estimate factors in companies that lost money during the quarter, placing Apple above 100%.

Article Link: iPhone Generated Record-Breaking Share of Profits Last Quarter Despite Continued Sales Decline

 

[Suckfest 9001]

Sounds to me like their profit margins increased more than their sales decreased. Pretty typical for a fashion accessory brand.

 

[v0lume4]

Sounds to me like their profit margins increased more than their sales decreased. Pretty typical for a fashion accessory brand.

Your signature fooled me. Totally fell for it.
[doublepost=1479864683][/doublepost]Not surprised. The iPhone is the phone to own. Won't be MY next purchase, but I'm not surprised. Apple's profit margins are the craziest in the industry. Have been for a while.

@Suckfest 9001 put it well. haha.

 

[autrefois]

Apple's 10-year plan: in 2026, they will sell just ten phones for $2 billion each and still have the highest margins.

And they will all be unapologetically thin.

 

[iExpensive]

Well... I mean, did their cost of materials really increase that much over the previous versions? I would think not. So why would it be surprising that a product lacking significant improvements (sold at the same price) would yield higher profit?

 

[AxoNeuron]

Apple really is rudderless these days. Blowing billions of dollars on hair brained driverless car projects, acquiring headphone companies, selling ridiculous gaudy $20K watches....

I love Apple, I have owned every iPhone ever made, but it's sad to watch them try to turn in to a fashion/accessory brand and completely losing focus on what they do best. It's absolutely disgusting that they only JUST this year increased the base model iPhone from 16GB to 32GB. They should have done that years ago. It just goes to show that Apple cares more about profits than anything else, even at the expense of their long term brand.

The future of tech is AI. Apple should be starting gigantic research initiatives in the field of AI instead of wasting time with gimmicky watches and car projects. Apple has done an excellent job on making a truly impressive CPU/GPU for the iPhone (the A10 is amazing), and I wish they would focus more on the raw tech rather than trying to make their phones & laptops even more thinner and prettier.

 

[mejsric]

Wow All Top are Made in China

 

[Speedy Dingo]

Maybe it has something to do with them pressuring suppliers into lowering their prices...
https://www.macrumors.com/2016/07/05/apple-price-cuts-iphone-7-components/

 

[Crosscreek]

Somebody make Apple Macs great again .....Please

 

[needsomecoffee]

Ballmer: record profit and revenue growth. MSFT long-term prospects crippled. TC like SB will have more than enough to buy a toy or two as he cashes in during the near-term market reward period.

 

[macs4nw]

That's almost embarrassing..... 91% of profits for Apple, 9% for all the rest combined.

 

[iSayuSay]

A bunch of cables and dongles, that would fatten Apple's bank account for sure. Profit over quality, that's why.

 

[Bubba Satori]

The cost of suicide nets, solder and super glue have declined.

 

[miknos]

Apple took Samsung profit. Expect Google to take back some of it with the Pixel.

 

[dumastudetto]

But I thought Tim Cook was doomed as Apple CEO? Seems like he might be doing an ok job after all.

 

[ackmondual]

Do these claims of "recording breaking profits" mean anything anymore? I don't doubt that Apple sold enough iPhones and other products. However, Apple, and any other company really can just set the supply so they always set out, comparisons always favor them, and records to be compared to anything they choose. for some companies, they don't share actual sales figures, so it's not like we have anything to compare them to.

 

[cardfan]

"Apple's ability to maximize pricing and minimize production cost is hugely impressive"

Apple is cutting costs, outsourcing inferior sources, and in some cases increasing prices on you. Jury is still out on whether some of these cost cutting decisions will bite them in the future..

 

[kas23]

This is not sustainable. It'll catch up to them soon, likely pretty much every other product they sell.

 

[macTW]

Doesn't matter if people think their margins are too large. People dictate the price of the iPhone. The market for smartphones allows Apple to price with such a margin yet be right in the thick of things for the market price. Economics 1. It isn't their fault they can make profit, if they can, they should.
[doublepost=1479865395][/doublepost]

This is not sustainable. It'll catch up to them soon, likely pretty much every other product they sell.

Says who?

 

[Cactii]

Innovation distinguishes between a leader and a follower. ~ Steve Jobs.

 

[pat500000]

I was hoping Siri didn't have to wake me up for another negative articles. Profit is not sales.

Besides...it's been "sold out" status for awhile now....

 

[macTW]

A bunch of cables and dongles, that would fatten Apple's bank account for sure. Profit over quality, that's why.

amazon and third parties with all-in-one dongles (eliminating the dongle issue so many people here like to pretend is the end of the world) would beg to differ...

 

[Flow39]

That's good and all, but I'd also like to see them focus more on the Mac and actually make the Mac line relevant again (I love the 2016 rMBP but the Mini and Pro are severely gimped).

 

[bladerunner2000]

Somebody make Apple Macs great again .....Please

Start by firing Phil Schiller and Tim Cook.

 

[macTW]

Apple really is rudderless these days. Blowing billions of dollars on hair brained driverless car projects, acquiring headphone companies, selling ridiculous gaudy $20K watches....

I love Apple, I have owned every iPhone ever made, but it's sad to watch them try to turn in to a fashion/accessory brand and completely losing focus on what they do best. It's absolutely disgusting that they only JUST this year increased the base model iPhone from 16GB to 32GB. They should have done that years ago. It just goes to show that Apple cares more about profits than anything else, even at the expense of their long term brand.

The future of tech is AI. Apple should be starting gigantic research initiatives in the field of AI instead of wasting time with gimmicky watches and car projects. Apple has done an excellent job on making a truly impressive CPU/GPU for the iPhone (the A10 is amazing), and I wish they would focus more on the raw tech rather than trying to make their phones & laptops even more thinner and prettier.

1) They don't have a $20k watch anymore
2) There is no "should" for 16 GB base to 32 GB. Many 16 GB users were fine with the memory, and many of them also used cloud services, through which there is no reason to have 32 GB memory...
3) Show me a tech company that doesn't care about profits over anything else, and I'll show you a unicorn.
4) As you could see browsing these forums, thinner and prettier sell laptops, as long as there are internals that will last 4+ years. Which all these new laptops will.
5) Ask any Watch user if it's gimmicky. There are 12+ million of them in the US alone, selling more watches first time around than iPhones first time around...
6) Until the car is released, there is no evidence to suggest it is a bad idea.
7) This profit-first mentality has worked for Apple for decades, as it has for every other company ever...