Apple's Share of Smartphone Industry Profit Rises to 92%, Despite iPhone Representing Less Than 20% of Sales

[MacRumors]

A new report out over the weekend by Canaccord Genuity estimates that Apple has recorded a 92 percent share of the world's entire smartphone market in the first quarter of 2015, which is up from 65 percent a year earlier. The company managed to do so on less than 20 percent of actual smartphone sales, which the Wall Street Journal accounts to the company's "ability to command much higher prices for its phones."

Behind Apple was Samsung with a total of 15 percent of the smartphone market, with the two combining to tally up for more than 100 percent of the industry's profits, "because other makers broke even or lost money, in Canaccord's calculations." In the early days of the iPhone, Canaccord estimates that Nokia was holding two-thirds of the smartphone industry's profits, but by 2012, Apple and Samsung shared the industry's profits at a nearly exact 50/50 split.

"The dominance of Apple is something that is very hard to overcome," said Denny Strigl, former chief operating officer of Verizon Communications Inc. "Apple has to stumble somehow or another, and I don't think that's going to happen."

Canaccord contributes Apple's bigger-than-ever market dominance to a combination of increased iPhone sales and higher prices for the bigger-screened iPhone 6 and iPhone 6 Plus released last year. A year before, an iPhone sold at an average of $624 -- compared to $185 for Android-running smartphones -- according to data collected by Strategy Analytics. By the end of 2015's first quarter, Apple had sold 43 percent more iPhones than the year before and at a higher price of about $659 thanks to the bigger screened models.

Apple's dominance doesn't seem to be slowing down as we move closer to the launch of the next generation of iPhone, with the company reportedly ordering a record-breaking amount of units for the so-called "iPhone 6s" launch later this year. Its rivals won't be threatening to take any of its market share at the moment, either, with companies like HTC and Samsung reporting quarterly losses and "disappointing profits" and Microsoft just last week laying off 7,800 employees, primarily in its smartphone business.

Article Link: Apple's Share of Smartphone Industry Profit Rises to 92%, Despite iPhone Representing Less Than 20% of Sales

 

[Godzilla71]

The one thing Samsung wished it could copy

 

[djcerla]

Starts with a D, ends in "omination".

 

[keysofanxiety]

LOL

Hmm I'm not sure. Everybody seems to be happy but this is just a solid reminder of the remarkable profit margins Apple are making from these devices. And with 16GB still as the base I can't help but feel a little bitter that they don't do a bit more to increase storage. We do pay an awful lot for these devices.

Sometimes it's important to remember how hard we work for our money and how much we pay to a company. There's just something a little cult-like about throwing cash at a company and then cheering when we find out how much profit they've made. It seems really strange.

This isn't likely to be a popular opinion — I just feel a little jaded and I fully appreciate how petulant I must be sounding.

 

[0007776]

That's great for apple shareholders, would be nice if they could pass some of that back to their customers through cheaper prices though.

 

[groovyd]

They do, it's called dividends

 

[Mercifull]

Thermonuclear...

 

[Robert.Walter]

"...with the two combining to tally up for more than 100 percent of the industry's profits, "because other makers broke even or lost money, in Canaccord’s calculations.""

This is a stupid way to calculate, giving the profit makers a way to exceed 100% because others lose money. Ridiculous concept.

If they want to do a more reasonable calculation it would be ROI and ROS based.

 

[Pelea]

100s of billions in profit, yet they continually remind us how they need to "save money on flash storage" in order to put "high quality components" on their phones... Maybe we'll get 32gb in 2018

 

[Kaibelf]

Hmm I'm not sure. Everybody seems to be happy but this is just a solid reminder of the remarkable profit margins Apple are making from these devices. And with 16GB still as the base I can't help but feel a little bitter that they don't do a bit more to increase storage. We do pay an awful lot for these devices.

Sometimes it's important to remember how hard we work for our money and how much we pay to a company. There's just something a little cult-like about throwing cash at a company and then cheering when we find out how much profit they've made. It seems really strange.

This isn't likely to be a popular opinion — I just feel a little jaded and I fully appreciate how petulant I must be sounding.

With all due respect, it's not Apple's concern how hard you do or don't work, and it's not on them to provide you with what you think you deserve. They will do whatever the market allows, and you don't pay more for their devices than you do for competing handsets from Samsung.

 

[Kaibelf]

That's great for apple shareholders, would be nice if they could pass some of that back to their customers through cheaper prices though.

Shareholders take on the risk. What risk do you take on by buying the phone?

 

[Keane16]

which the Wall Street Journal accounts to the company's "ability to command much higher prices for its phones."

And the fact they don't play in the cut-throat low-end of the market keeps the margins high.

The iPhone is a remarkable product line. High end and high demand. There are so many cheaper alternatives that people could go for and still be relatively happy, yet they will pay the extra for an iPhone.

 

[Edgar Spayce]

There two reasons:

1. There's no competition. I hate Apple since Steve Jobs is not there anymore, and I think their last products are crappy. But I've been using them for 15 years and I know the reasons why

Well the problem is that no competitor has been friggin capable of even matching these reasons. Android Lollipop is beautiful, maybe better than iOS8, but all the messy option, categorisation, the completely obnoxious updates AND the REALLY UGLY android phones puts them in a category nowhere near the iPhones.

2. Because of this, they have the power to overprice un-innovative, low/obsolete spec'd, low quality and even...ugly iPhones at margin NEVER reached by any company before. And there are many stupid latecomer fans, which most people even casual Apple user won't argue about, because even if Apple has become obvious crap, there's no competition to compare it out there.

 

[Alenore]

In other words, "Apple manages to sell overpriced stuff and 20% people keep buying it".

 

[autrefois]

I dare Tim to mention this at the next keynote when he's talking about how great the iPhone is, or Phil to tweet about this as one of the real justifications for keeping a 16GB base model (in addition to getting people to subscribe to iCloud), or Jony to mention this in his next video about what a marvel the next iPhone design is (this will be our most amazingly profitable design ever).

 

[Keane16]

This isn't likely to be a popular opinion — I just feel a little jaded and I fully appreciate how petulant I must be sounding.

Of course that's a popular opinion, you're talking about people saving money.

But what you're missing is supply and demand. The demand even at these prices are outstripping supply for a long period at launch.

The RRP (cheaper if you shop around) of iPhone 6 and Galaxy S6 in the UK:

iPhone 6 16GB: £539
Galaxy S6 32GB: £569
iPhone 6 64GB: £619

There really is no need to lower prices when you have such high year round demand, especially when your competitors have the same prices.

In the future when supply might dry up - sure, that's when you might see decreases. All the public can do is vote with their wallets if they really think the Apple stuff is overpriced.

 

[throAU]

The one thing Samsung wished it could copy

Maybe if they stopped trying to make eleventy billion models, and perhaps focused on building a few good ones that they could simply re-tool their factory ONCE for they might get economy of scale.

This is why apple make money hand over fist. They don't change the design of things at the drop of a hat. They don't attempt to put out a thousand different specifications in a hundred different enclosures. All that costs a heap of money and isn't really a deal breaker if the few models you offer are actually good.

 

[louiek]

There two reasons:

1. There's no competition. I hate Apple since Steve Jobs is not there anymore, and I think their last products are crappy. But I've been using them for 15 years and I know the reasons why

Well the problem is that no competitor has been friggin capable of even matching these reasons. Android Lollipop is beautiful, maybe better than iOS8, but all the messy option, categorisation, the completely obnoxious updates AND the REALLY UGLY android phones puts them in a category nowhere near the iPhones.

2. Because of this, they have the power to overprice un-innovative, low/obsolete spec'd, low quality and even...ugly iPhones at margin NEVER reached by any company before. And there are many stupid latecomer fans, which most people even casual Apple user won't argue about, because even if Apple has become obvious crap, there's no competition to compare it out there.

So they're the best of a bad lot, but being the best of a bad lot doesn't give them the right to charge a premium. Just checking I've got that straight.

 

[Jamo12]

They could make such a kickbutt phone and get a huge percentage of the market back from if they wanted to. I think they are waiting for a time when profits actually start to slow down to do this. Kinda like what Delta does to other flight companies; charge a lot until someone comes to fight, then they destroy them with good deals and better quality they can't beat, then when they are dead, they go back to gouging.

 

[Jmausmuc]

With all due respect, it's not Apple's concern how hard you do or don't work, and it's not on them to provide you with what you think you deserve. They will do whatever the market allows, and you don't pay more for their devices than you do for competing handsets from Samsung.

You have a twisted understanding about how the market works.
Of course a company has to please its customers. Otherwise the same customers will eventually stop buying.

Company's exist to make profits, that's a fact. But maximizing profits is not done by optimizing costs in the short term but also by making sure customers keep buying and thus maximizing revenue in the long term.

 

[throAU]

So they're the best of a bad lot, but being the best of a bad lot doesn't give them the right to charge a premium. Just checking I've got that straight.

Apple being a company is entirely within their rights to charge whatever people are willing to pay. Or even more than people are willing to pay, if they want to bleed customers for some reason.

I do not consider apple gear expensive, given the cost of the competition, and the value I feel I get from apple's ergonomics, general build quality, integration between devices, UI and level of support. Your mileage may vary and you are free to purchase other brands if you feel the costs apple charge are not fair.

i feel that they're entitled to make a profit if they provide something I want at a price I am willing to pay.

 

[keysofanxiety]

With all due respect, it's not Apple's concern how hard you do or don't work, and it's not on them to provide you with what you think you deserve. They will do whatever the market allows, and you don't pay more for their devices than you do for competing handsets from Samsung.

You're absolutely right. Again I know there's really not a viable alternative and that these prices aren't anything new in the market. It's just that they are making an awful lot of money, and coupled with Phil Schiller's rhetoric of 'well we can't really afford to up the 16GB base storage' really doesn't sit right with me.

I suppose it's mainly that which irks me - Apple's 'we only think about the consumer' speeches; it's almost unending how much they big themselves up. The intros to the keynotes these days seem to be slathered in self-satisfying smugness, which I just can't abide when I read articles like this and they're still selling 8GB phones. I don't think I'd mind as much if they weren't so obsessed with their own belief of 'we're changing the world and we are bulletproof'.

It's just that a little effort and a little less profit would mean much better baseline products and (in my opinion) more satisfied consumers. Even the base products are still awfully expensive, and the lack of respect given to consumers in the bottom-end products seems to be synonymous with RIM/Blackberry's mentality (as they began to fail).

If I may also thank you for your courteous reply, because you could have quite easily flamed me as others tend to do on these sorts of threads, and it's good to know that we can still have a reasonable discussion

 

[throAU]

Part of the reason apple has issues with ramping up flash storage is that there isn't actually enough of it being made and they have issues getting enough.

 

[keysofanxiety]

Part of the reason apple has issues with ramping up flash storage is that there isn't actually enough of it being made and they have issues getting enough.

I would strongly disagree with that statement, though if you have any sources I'd be really interested in giving them a read.

 

[Rocketman]

Hmm I'm not sure. Everybody seems to be happy but this is just a solid reminder of the remarkable profit margins Apple are making from these devices. And with 16GB still as the base I can't help but feel a little bitter that they don't do a bit more to increase storage. We do pay an awful lot for these devices.

Sometimes it's important to remember how hard we work for our money and how much we pay to a company. There's just something a little cult-like about throwing cash at a company and then cheering when we find out how much profit they've made. It seems really strange.

This isn't likely to be a popular opinion — I just feel a little jaded and I fully appreciate how petulant I must be sounding.

Congrats you are thinking like a capitalist, not a socialist, but you still feel guilty

The fact is the high profits of Apple allow massive capital investments in supply chains, mass-production of bleeding edge technologies, R&D investment independent of economic conditions. Apple was one of the few companies to increase investment, employment and sales during the 2007-10 economic recession.

So the rest of the readers here, don't hate on Apple for high margins. You are benefiting from mass availability of a rapidly expanding ecosystem and access to the latest hardware sooner in the cycle than ever. Let shareholders and employees enjoy the work they did. They did it for you. Even the ungrateful among you.

Apple offers a 16 GB option for the most price sensitive buyers. That's the only reason. For only $100 more they offer 64 GB, which for the memory needy is a great value. When most people start buying the bigger capacity then Apple may drop the lowest capacity unit and initially probably replace it with 32 GB.

The deposit on 90m iPhone 6S's is $12.5B. Not chump change and it has to be fronted.

Rocketman