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

[louiek]

What a ridiculous thing to say. Being recognized by consumers as a premium brand takes a lot of hard work. Any company that gets that kind of name fully deserves it, as does Apple

I think its fair to say, no you don't have that "straight", not even close!

I was summarising the post that I quoted. A post I don't agree with. I thought the sarcasm was obvious. I'll use emoticons next time.

 

[akbarali.ch]

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.

I wouldn't put it that harsh but i also can't deny what you are saying. I do want apple to reduce the price of the iPhones. It is way to costly, if you want to buy an iPhone.

 

[firewood]

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

That's easy. If you want some back, pay more (for some AAPL stock as well as iOS devices), and you get passed some back as dividends. A little harder is to get a job working at Apple. Then you can get passed some back as your paycheck.

If you think Apple charges too much, then buy a used device from a 3rd party, and not (directly) give Apple any of your money.

 

[RickInHouston]

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).

Yeah, like wouldn't you feel better about your purchase if you bought something that most people have and only represents 8% of the profit center? Just a thought.

 

[throAU]

This argument about the 16GB model remains absurd. Apple also sells 8GB, 64GB and 128GB models that some people fail to notice. If the 16GB wasn't in demand it wouldn't sell.

Exactly. And for many people, 16 GB is plenty. Not everybody buys an iPhone to load full of apps and/or media. Plenty of business users use it as an email reader, GPS and a few particular apps. I've got a 64 GB model but i've got 40GB plus free...

 

[groovyd]

MrKramer said ‘customers’, not shareholders. One might also be the other but there is a significant difference.

LOL

 

[MrShoehorn]

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.

Yes, it does seem cult like, if you try to argue that Apple is so profitable over other leading marketshare companies they'll tell you the samething and say you are just wasting your money. I think they fail to see that the better android devices out are pretty much the same price as iPhones.

I buy as much Apple stock as I can, bought a bunch years ago when it was very low and again when it split. Already made $20ish per share on that.

 

[macs4nw]

92% is an insanely out of proportion percentage. That leaves a paltry 8% for all others combined. This is pretty much called 'having the last laugh'..... All is well Steve.....

 

[Michael Scrip]

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.

You're right... Samsung would make more money if they only had a handful of models. But that's not what Samsung is about.

Samsung is a full-line OEM. They have models from $50 to $800 and everywhere in between. That's their deal. No matter what your budget... Samsung has a phone for you.

It's kinda like HP offering laptops from $200 to $2000. Lots of price-points to target... and various models within those price points. Again... no matter what your budget... they have something for you.

Most companies are like that... they offer a full range of products at many price-points.

However... Apple is, and has always been, firmly seated in the premium market.

It would be nearly impossible for companies like Samsung or HP to ditch their full-line offerings and focus solely on the premium market. The word "disaster" comes to mind if they ever tried.

Companies like Samsung and HP don't make a lot of money from their cheaper products... but they would make ZERO dollars if they didn't have them at all.

So yeah... it's easy to tell Samsung that they need to stop selling so many different models.... but it's a whole other thing for them to actually do it.

 

[furi0usbee]

Well, we keep on buying them with 16GB of storage... so they'll keep on making them. I'm not one of those "Steve would never" guys, but I don't know if it's just me, but in the last 4-5 years, I see Apple really raking in the money, but the hardware to me seems very subpar compared to what Samsung is doing (phones). I'm not talking about design, nor how iOS and the hardware work together. I get that, they are great. I'm talking about the aforementioned 16GB, I'm talking about skimping on their computers lately. I've been a MacBook Pro users since early 2007. My current computer is a rMBP 15" from 2012, the original retina. I'm just not excited anymore. This computer has everything I need. Outside from a new touchpad, which I rarely use (I take my mouse/pad everywhere), and a new keyboard on the 12" Mac, I mean what are they doing now? My 2.3Ghz i7 with 8GB RAM does everything I need it to do. I've always been excited about Apple's computers. I'm just not excited anymore.

They have taken away all the cool things about the MacBook over the years (12 inch MB). No more lit Apple Logo, no more MagSafe, they took away the pulsating sleep light a long time ago. All the things that gave the computer character, it's gone. I feel the new MacBooks are just Chromebooks with no souls.

I'm depressed with Apple as a computer company lately.

 

[Quu]

I wish with all this money they would improve their services. Apple Music, iCloud etc

To be a true services company they need to offer more things on other devices too because we don't only use Apple products. Why can't I use iMessage on Windows? Why can't I use iCloud on Android?. I have a desktop system that isn't a Mac but I use a Mac laptop. Google offers their services on everything even though they are pushing Android they support iOS.

Maybe it's just not in Apple's DNA to build products for other companies devices but we only need to look at iTunes, Quicktime, iCloud for Windows, Apple Music for Android to see that isn't the case, they just don't go far enough though. They get their toe in the water and call it a day.

 

[0007776]

If you think Apple charges too much, then buy a used device from a 3rd party, and not (directly) give Apple any of your money.

Thats what I've typically done because as a student the do charge too much for me to be able to afford new ones.

 

[MH01]

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

Quality over quantity

 

[MH01]

That's easy. If you want some back, pay more (for some AAPL stock as well as iOS devices), and you get passed some back as dividends. A little harder is to get a job working at Apple. Then you can get passed some back as your paycheck.

If you think Apple charges too much, then buy a used device from a 3rd party, and not (directly) give Apple any of your money.

For a student, I believe buying used is the only viable option.

Working in a retail store, and getting paid is not getting a reduction is the RRP of the iPhone. Your actually better of getting a job somewhere else that pays more.

 

[Flytrap21]

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.

The article mentioned that there are as many as 1000 handset manufactures... Some of those Android models are arguably even better than what Apple has to offer... You do not have to buy an iPhone if you do not think that it is worth your money. I offer this advice as a person that has valued the usability, quality, fit and finish of every iPhone that I have purchased, and will probably continue to purchase... I am just saying... if the premium price is a bit too rich for you, there are plenty of credible alternatives you could consider.

 

[Flytrap21]

"...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.

The article should have explained the following better:

Apple: 92%
Samsung: 15%
Others: -7%
============
Total: 100%​

The reason for this is because even the companies that made a loss generated positive revenue - so you cannot pretend that their revenue was zero just because they did it at a loss. Given that profit is a function of revenue (less costs, obviously), it is inevitable that the maths will generate a ratios that equal 100% in total, but exceed 100% if you do not list the negative losses - which this article has failed to make explicit.

 

[Elvergun]

Well, we keep on buying them with 16GB of storage... so they'll keep on making them. I'm not one of those "Steve would never" guys, but I don't know if it's just me, but in the last 4-5 years, I see Apple really raking in the money, but the hardware to me seems very subpar compared to what Samsung is doing (phones). I'm not talking about design, nor how iOS and the hardware work together. I get that, they are great. I'm talking about the aforementioned 16GB, I'm talking about skimping on their computers lately. I've been a MacBook Pro users since early 2007. My current computer is a rMBP 15" from 2012, the original retina. I'm just not excited anymore. This computer has everything I need. Outside from a new touchpad, which I rarely use (I take my mouse/pad everywhere), and a new keyboard on the 12" Mac, I mean what are they doing now? My 2.3Ghz i7 with 8GB RAM does everything I need it to do. I've always been excited about Apple's computers. I'm just not excited anymore.

They have taken away all the cool things about the MacBook over the years (12 inch MB). No more lit Apple Logo, no more MagSafe, they took away the pulsating sleep light a long time ago. All the things that gave the computer character, it's gone. I feel the new MacBooks are just Chromebooks with no souls.

I'm depressed with Apple as a computer company lately.

Then when your current computer finally dies, get yourself a Chromebook and you'll be a happy camper.


I hope you will be excited with that model...and I hope it lasts as long as your MBP.

 

[gnasher729]

Thus, on every single measure I can think of, the iPhone should cost less than an otherwise equivalent iPad. And not just a bit less, but significantly less. If iPad prices are the "correct" baseline, then the latest iPhone should start at ~$450.

Here's the problem with your calculation: Small things with the same or higher functionality are more expensive to build than big things. That's why laptops are more expensive than PCs. That's why the MacBook 12" is more expensive than more powerful but bigger MacBooks.

 

[oneMadRssn]

Here's the problem with your calculation: Small things with the same or higher functionality are more expensive to build than big things. That's why laptops are more expensive than PCs. That's why the MacBook 12" is more expensive than more powerful but bigger MacBooks.

Both iPads and iPhones are "small things". They share nearby identical components, all very small and low-power.

 

[gnasher729]

The article should have explained the following better:

Apple: 92%
Samsung: 15%
Others: -7%
============
Total: 100%​

The reason for this is because even the companies that made a loss generated positive revenue - so you cannot pretend that their revenue was zero just because they did it at a loss. Given that profit is a function of revenue (less costs, obviously), it is inevitable that the maths will generate a ratios that equal 100% in total, but exceed 100% if you do not list the negative losses - which this article has failed to make explicit.

It also gives you a proper understanding of the market, which we would want (with the exception of all kinds of fanboys who want bragging rights). You could of course remove the companies that lose money and say "Apple: 86%, Samsung: 14%, Others: 0%". Adds up nicely to 100%. But it wouldn't reflect the reality that there are companies in the market who lose money. For example, Samsung is under threat at the lower end of the market. But if its competitors in that area are actually losing money, then these competitors may have to raise their prices, and if they can't, leave the market, since they can't lose money forever. So there is a huge difference between "0%" and "-7%".

Both iPads and iPhones are "small things". They share nearby identical components, all very small and low-power.

Here I sit at my desk, looking at my iPad and my iPhone, and that iPad is massive compared to the iPhone! If you convince people that they are both "very small" then we can expect Samsung to release a 10 inch phone!

 

[Edgar Spayce]

Competition is irrelevant. This entire scenario is a result of Steve Jobs influence. He began the Apple mantra of selling shiny underpowered devices to the tech ignorant. Apple has been about getting away with the cheapest and most underpowered specs at the highest price possible since the iMac hit the market.

Before this iPhone "surprise" news Apple were dropping cheap underpowered video cards and chipsets into their highest priced Macs, skimping on RAM in everything, removing ports and flexibility and spinning that as a good thing, taking out what used to be pack-in accessories and selling up to the consumer instead ...

This isn't new. This is Apple being Apple. They make money because the Apple market is now filled with superficial users who just want the shiniest toy on the block.

I don't agree. You're are merely talking about these last years, since Jobs has left.

When the first Powerbook, iMac, Macbook, iPod, iPhones, iPad were release EVERY ITERATION has many, relevant hardware or software innovation, had solid, stable and powerful specs, and where well designed and built for their context.

The iPhone 1 was a perfect product for what it is, Apple Watch is an ugly useless ****, the leap from the iPad to the iPad 2 was HUGE, now there are 3 ipad minis and 2 ipad air that are EXACTLY the same, my 5 year old Macbook Air was huge leap in size, weight, SSD, had a integrated mobile Geforce and is still working, my new Macbook Retina is laggy as ****, as lots of bugs, as a crappy graphic card, and nothing new or innovative but the irrelevant force touch etc...

This really has to do with the new Apple.

 

[Edgar Spayce]

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.

There's premium, and there's scam and crookery.

A Louis Vuitton bag cost less proportionally to it's quality and design than an iPhone 6 which is an electronic commodity.

This is unacceptable, if the iPhone 6 has decent, acceptable specs ie. 32GB entry, 2GB ram, at least 12mp cam (this is not much, but this is the decent market entry options, not even the high end) then the price would be more justifiable, except it's absolute ****.

 

[Analog Kid]

There's premium, and there's scam and crookery.

Scam and crookery have pretty clear definitions-- if you can back that with actual examples of Apple being dishonest then you might have a legal case to pursue.

More likely, though, you are just overvaluing your own opinion.

 

[Keane16]

When the first Powerbook, iMac, Macbook, iPod, iPhones, iPad were release EVERY ITERATION has many, relevant hardware or software innovation, had solid, stable and powerful specs, and where well designed and built for their context.The iPhone 1 was a perfect product for what it is, Apple Watch is an ugly useless ****, the leap from the iPad to the iPad 2 was HUGE, now there are 3 ipad minis and 2 ipad air that are EXACTLY the same, my 5 year old Macbook Air was huge leap in size, weight, SSD, had a integrated mobile Geforce and is still working, my new Macbook Retina is laggy as ****, as lots of bugs, as a crappy graphic card, and nothing new or innovative but the irrelevant force touch etc...This really has to do with the new Apple.

Wow. Rose tinted glasses at their best.I like Apple - they are not perfect, but for my needs the best by a long shot compared to their competitors. I've used their products for a long, long time. But only about 2007 did I ditch Windows completely at home - because for me that was when OS X had matured to a point where that was possible. A few of your other points...-

- "Stability": OS X when released and the first few releases after that were AWFUL. Dreadful OSes, nice ideas. But buggy as hell. In fact the first few were easily the most buggy release products I've ever used from Apple.
- The first iPhone was good, very damn good. Perfect for it’s time? Nope. It had shortfalls compared to the Symbian and Palm devices I had at the time - no App Store and no 3G were the big 2.
- You talk about advances with every iteration back in the day... That's because it was a nascent technology. Everyone, even PC makers were innovating and adding with every new product back then. Who in the PC market has truly innovated in a way that has captured the market in the last 5 years? Answer is easy - nobody. This isn't an Apple problem. It's a product problem. Laptops from 3 or 4 years ago are nearly the same as today's machines aside from more power and efficiency. That's why we see things like Glass, Hololens etc. There is not much new to add to desktops and laptops - yet it’s Apple with the Retina MacBook and Mac Pro that has pushed things forward more than anyone else.
- The original Air was just as bad and underpowered as the new MacBook. Go read reviews. Here’s part of Anadtech’s conclusion “As a standard notebook, the MacBook Air falls short in the most obvious of ways. It's hardly expandable, it has no integrated optical drive and it's got a fairly small, low performing hard drive.” http://www.anandtech.com/show/2445.
- Force Touch is irrelevant to you. But I like it. I can’t wait until it’s used throughout OS X and iOS. It’s perfect for the power users who want a shortcut, but regular users can still do things the current way.
- If you think the 2 iPad Airs are the same you really should stop commenting on tech - probably the number one requested feature on this forum for the next iPhone is 2GB Ram, only one of the 2 iPad Airs has that.

It always makes me laugh when people hail Apple of yesteryear and dismiss today’s version. Either they’re trolling, forgetful or didn’t use the products back then.

Apple were good, not perfect back in the later part of Steve’s reign. And Apple are good, but not perfect now. Apple were not a good company for a period around the turn of the millennium.

If Apple today were so bad, buggy and underpowered why would people buy it? They would be the only company in the world selling bad products at high margins in volume, year after year. That just doesn’t happen.

 

[firewood]

This is unacceptable, ...

If a product is unacceptable, then people won't buy it. Therefore millions of people disagree with you, and consider it at least slightly more acceptable than keeping their cash in their pocket. Even 2nd and 3rd hand iPhones, sold by ordinary Joe's and Jane's, where none of the sale price goes to Apple, command a high resale value.