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Apple Takes 104 Percent of All Smartphone Profits Following Galaxy Note 7 Recall (macrumors.com)
Apple accounted for over 100 percent of smartphone industry profits in the third quarter of this year, according to estimates published by BMO Capital Markets on Thursday. From a report on MacRumors: Analyst Tim Long, quoted in the Investor's Business Daily, said Apple's staggering 103.6 percent profit share in Q3 2016 came largely as a result of significant losses posted by rival vendors including LG and HTC, and despite Apple continuing to shift fewer handsets year on year. Based on units alone, Samsung accounted for 21.7 percent of all smartphones sold, with Apple coming in second with a 13.2 percent share. In terms of profits however, Samsung came a distant second to Apple, capturing only a 0.9 percent share.
I am 150% sure that they can't have more than 100% of the profit share. Thank you to math teachers everywhere for at least trying, but some can not be reached!
The notion that a company captures more than 100% of an industry's profits due to an interim loss at its competitors only makes sense in the wasteland of internet clickbaits.
This scenario isn't really a new thing, for several years now Apple and Samsung have taken all the profits and yes been over 100% combined. Very few companies have been profitable with Android phones.
What I can't understand is why there hasn't yet been a massive consolidation of Android phone makers or a large number of them giving up on it.
How can the same companies pump millions in year after year and stay at it?
I know Microsoft used to pay companies to make their phones, is Google doing something similar with their search engine profits? Holding up dozens of commercial failures to flood the market with their OS?
How are they doing this so long without profit?
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I believe the business strategy is called "DFU" (Don't Fuck Up).. All you have to do is release slightly OK products that don't kill your customers and wait for your competitors' greed, ineptitude, and arrogance to do them in....
Thank goodness Samsung isn't a US corporation, otherwise my tax money would be bailing them out.
I just read the story on Fortune and still can't understand how a share in profits can exceed 100%. Any financial wizards care to explain for us mortals? Hopefully in terms that indicate you are cognizant of how misleading and utterly stupid it is from the perspective of a logical user of the English language.
Simple -
Total profit made by all smartphone companies combined: $100
Profit made by Apple: $103.60
Profit made by Samsung: $0.90
Profit made by LG: -$1.00*
Profit made by HTC: -$3.50*
* Actual numbers made up on the spot.
I think they mean that it's 103% of the _last_ fake number they came up with.
What they mean, I think, is: compared to before the Note 7 incident, Apple made 104% of that previous estimation.
Slashdot, fix the reply notifications... You won't get away with it...
Lets drag whoever produced those numbers out into the parking lot and have them shot.
most smartphone manufacturers barely break even or operate at a loss. add the losses to apple's share of the profits and you get over 100%
until a little while ago only apple and samsung took home something like 95% or 99% of all profits. samsung's loss pushes apple over 100% in profits
all those cheap android phones sold all over the world that make up for 85% of all phones sold don't really make any money
Profits and losses are the same type of thing with financials. Its all reported on the P and L.
most smartphone manufacturers barely break even or operate at a loss. add the losses to apple's share of the profits and you get over 100%
until a little while ago only apple and samsung took home something like 95% or 99% of all profits. samsung's loss pushes apple over 100% in profits
all those cheap android phones sold all over the world that make up for 85% of all phones sold don't really make any money
I think Android counts for more than 85% of smartphone sales now, more like 99%. Which just goes to show what a price-gouger Apple is.
In the free world the media isn't government run; the government is media run.
Let's say you, Ron Jeremy, and Lena Dunham are in a room comparing dick sizes. Your dick is 4 inches. Ron's dick is 8 inches. Lena's dick is -6 inches (because it's actually a vagina). Total dick size is 6 inches. Ron Jeremy has 133% of the dick in the room.
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There's no additional study necessary. Apple customers are willing to spend what Apple is charging, and there's not enough serious competition to force Apple to lower the prices. That's how free markets work.
Just because Apple customers place a higher value on some features than you do doesn't mean they are suffering from Stockholm syndrome.
No, it goes to show that a lot of companies are operating on razor thin margins or lose money pursuing this business in an attempt to gain customers.
Here's a business tip: if you lose money on every phone sold, you can't make it up in volume.
It's not sustainable. Everyone wants a cheap phone, but you know why so many Android phones never get updates? Because it costs too much. The company has already lost money selling you the phone--you think they're going to support it, too?
Apple, and to a lesser extent Samsung, have the money from the profits to drive the parts of the business that don't seem like they're part of the sale price. You get support at Apple stores, for instance. R&D--whether you think Apple's priorities are good or not is irrelevant, they spend that money on R&D for materials, software, etc. All that is factored into the cost of the iPhone (in addition to the profit margin).
World-wide, Apple accounts for something like 13% of sales, Android accounts for nearly 100% of the rest. But that 87% is split among a lot of manufacturers fighting for the same slice of pie, and Samsung is the top of the heap there, being basically the only one that consistently makes a profit on its phone division.
With the kind of losing strategy that is being pursued by most manufacturers, Apple could make a lot less profit per phone and STILL walk away with nearly 100% of the profits this year.
That's clever.
Slashdot, fix the reply notifications... You won't get away with it...
LMAO
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
apple's profits were bigger than the market's profits because everyone else, put together, had net losses.
I think Android counts for more than 85% of smartphone sales now, more like 99%. Which just goes to show what a price-gouger Apple is.
Apple does what any business would like to do: Sell a product to maximize profits. If they thought they could get more profit by selling iPhones for $1,000 apiece, they would. They're selling a premium item, not a necessity. There's plenty of cheap phones out there if you don't want to pay a premium.
Taking guns away from the 99% gives the 1% 100% of the power.
If you believe that, you will never get an MBA!
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Wish I hadn't already replied to this thread so I could mod you up!
most smartphone manufacturers barely break even or operate at a loss. add the losses to apple's share of the profits and you get over 100%
until a little while ago only apple and samsung took home something like 95% or 99% of all profits. samsung's loss pushes apple over 100% in profits
all those cheap android phones sold all over the world that make up for 85% of all phones sold don't really make any money
I think Android counts for more than 85% of smartphone sales now, more like 99%. Which just goes to show what a price-gouger Apple is.
In other words, when they added up all of the P&L from all of the phone manufacturers Apple's share was 104% of the industry total.
For example, Samsung makes $1 in profits, Company Y has a loss of $5, and Apple makes $104. The industry total would be $100.
- Apple would have made 104% of the overall industry P&L.
- Samsung would have made 1% of the overall industry P&L.
- Company Y would have made -5% of the overall industry P&L.
It's a way to trend which company in a sector is making most of the profits and can be a way to develop an investment strategy.
Cell Phones is a $425 Billion dollar industry. Even making tiny profits can make it worth it.
https://www.statista.com/topic...
I think Android counts for more than 85% of smartphone sales now, more like 99%. Which just goes to show what a price-gouger Apple is.
You may want to rethink those percentages.
Also, selling a high-priced item at a profit does not mean you're price gouging. Most of their competition has adopted a business plan that involves operating at a loss in an effort to gain market share that will provide a foundation for future profits, but which has so far resulted in several of them putting themselves out of business. Apple has opted to sell their products at a profit. Samsung does the same, which was why earlier reports stated that Samsung + Apple got "over 100%" of the profits, but because of Samsung's recent recalls putting them into the red, it left Apple to claim "over 100%" of the profits for themselves.
Now, if Apple had a monopoly on smartphones and took advantage of their control over the supply to jack the prices way up, that would be price gouging. But since you seem to think that 99% of smartphones are Androids, it's pretty clear you don't think Apple has a monopoly, so what leverage do you think they have? This isn't like the price of fuel going up right before a hurricane hits, with people having no choice but to pay the price. If people don't like Apple's prices, they'll simply buy a competitor's product.
Instead, what you're calling "price gouging" is actually an example of how pricing works with luxury items. Veblen goods tends to behave differently than the stuff you're used to seeing, so the pricing effects can be a bit odd. Which is a long way of saying that high-priced doesn't necessarily mean price gouging. It just means that someone apparently thinks the market can bear that price.
Here's a business tip: if you lose money on every phone sold, you can't make it up in volume.
Well yeah, with cell phones. But when it's taxi rides (Uber) or IRC channels (Slack) or mass-blasted texts (Twitter) you can eventually make profit even when you lose money on each transaction. At least that's what the gurus in Silly Con Valley insist!
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
A negative profit is still a profit.
Erm...
Yes, vote with their wallets by choosing properly priced Android phones.
Sure, a small number of idiots happily overpay, and a smaller number of bigger idiots happily make people overpaying into some sort of virtue, but that doesn't change the fact that apple is a bit player in the overall smart phone market.
I wouldn't call the second-largest Smartphone marketshare holder, having around 13% of the worldwide smartphone market (and nearly 40% of the U.S. Smartphone market) a "bit player".
Now if we're talking about Windows Phone...
I think Android counts for more than 85% of smartphone sales now, more like 99%. Which just goes to show what a price-gouger Apple is.
Apple does what any business would like to do: Sell a product to maximize profits. If they thought they could get more profit by selling iPhones for $1,000 apiece, they would. They're selling a premium item, not a necessity. There's plenty of cheap phones out there if you don't want to pay a premium.
And considering the fact that the Galaxy Note 7 costs MORE than a similar-memory-size iPhone 7 PLUS, it tells you a few things:
1. Apple and Samsung are competitively-priced
2. Since Samsung actually MANUFACTURES some of the most costly components in the product THEMSELVES (Display, SoC, Memory, Final Assembly(?)), and yet STILL charges MORE than Apple, either Apple isn't so "greedy" afterall; or Samsung is MORE GREEDY THAN APPLE (and yet, for some reason, no "Samsung Haters").
3. Maybe the gross profits on these high-priced phones aren't so big afterall...
Also, selling a high-priced item at a profit does not mean you're price gouging.
It does on Communist Slashdot!
I just bought my first smartphone, an "old" Samsung S6, and I love it. I bought it to fly my Mavic Pro if DJI ever ships it to me, and best of all, it's NOT AN APPLE PRODUCT!
They trot this shit out every once in a while.
They count losses as negative profits, then claim Apple made > 100% of all profits.
It's bad math for dumb people.
Profits are positive, by definition. Anyone saying anything else is trying to cheat somebody. Probably you.
You just do the necessary math. They have teams of accountants trained from birth to fool the investors about what's going on in a company. Having them make it look like profits are over 100% is something they do at lunch between the soup and the appetizer. Besides, everyone is required to give 110% at work.
I actually had a friend who's GPA was over 4.0. It wasn't because A+ was counted higher either. It was because he transferred school districts with a different grading systems and number of units, and the new school applied a formula to do the conversion. Grade scores earned divided by class units taken or something like that.
And most of them voted for Android.
My iPhone 7, and am loving it. I miss the headphone jack and the lack of firestarting ability - not at all.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
That's because it is possible to loose money on each item and make it up in volume. However this is only possible the variable costs of your product or service are less than your price (if variable costs are higher than price, then you are truely screwed). On the other hand if your variable costs are lower, then it's about amortizing your fixed costs across more units until your total cost drops below your price. E.g I have a factory that costs me $100 a month to operate (and can make 1000 widgets). It costs $.75 in supplies to make each widget. I sell my widget for $1. If I sell 100 widgets a month I loose $.75 on each widget (total sales is $100, total cost is $175). However if i sell 1000 widgets a month, then I make $.15 a widget ($1000 in sales, $850 in costs). This isn't unusual for companies in high growth mode to over invest in capacity so that they can scale quickly to their break even point.
When the reality distortion field starts affecting basic mathematics, you know you're in real trouble.
This is Slashdot. Unlike accountants, many people here can handle integers, sometimes even real numbers, as opposed to just the naturals.
Profits are positive, by definition.
Not so; profits are revenue minus cost. Sometimes this is negative, in which case it is usually called a loss. However, people would get very angry at you if you told them the profit one year was zero when actually it was a negative number. Suppose a company's profits were 100 in 2014, and -5 in 2015. For all that people will insist the -5 profit was really a 5 loss, when asked what was the 2-year profit of the company none of them are going to say it was 100 rather than 95, and when asked the profit in 2015 none would say zero.
Furthermore, no one bothered making a special word for when each of various definitions of profit turn negative, such as gross profit, earnings before interest, taxes, depreciation, and amortization (EBITDA), earnings before interest and taxes (EBIT), earnings before taxes (EBT), net income.
Don't waste your vote! Vote for whoever you want, unless you live in a swing state it won't matter anyways
Invention, my dear friends, is 93 percent perspiration, 6 percent electricity, 4 percent evaporation and 2 percent butterscotch ripple.
Except for the fact that percentage dos not make sense when negative numbers are involved. What if Lena's dick were -12 inches? Ron Jeremy would have infinity percent? What if it were -13?
To be a Fake Tim Cook, you need to lose your sense of humor.
Also, you can't be such a good writer.
Instead of being a Fake Tim Cook, you could accept the lower position of being a Madison Avenue advertising copywriter. Only $1200 per hour.
Well, it does. Slashdot will repeat most any rediculousky indefensible numbers.
No, a negative profit is a "not profit". Just like a negative bank balance is "not money". And this story is "not sense."
No, it goes to show that a lot of companies are operating on razor thin margins or lose money pursuing this business in an attempt to gain customers.
That doesn't contradict what the OP said. Apple can get away with high margins because people (even many supposed geeks) will continuously bleat about their supposedly high quality software (not even mentioning the software UX), even when it is clearly inferior to the other offerings in the same price range. The iPhone 1 is a classic example of this... a very shitty phone that did a couple of interesting (by no means unique, innovative or superlative) things, wasn't even 3G but still required an expensive data plan, couldn't even send picture texts (which was the ONLY way to send pics to a lot of smartphone users in those days), and had locked down app marketplace until competition from the G1 forced them to open it, but they could still tack on a couple hundred dollar premium and become a worldwide sensation because... why?
Because we're Apple and fuck you, that's why.
Other companies have to operate on razor thin or (after particularly unwise decisions) negative margins to compete, not because they're morons (well, not usually), but because they don't have the ridiculously over-the-top, undeserved reputation that Apple has. They can't demand an Apple tax; Apple can. And the Apple tax is pure profit, pure margin padding.
Stop pretending this is some kind of savvy or smart thing they've done. The vast majority of wise technical decisions that form the foundation of the Apple empire are remnants from ~30 years ago when they had an actual premium product that IBM couldn't compete with. This gave them a few million loyal fanboys who remembered the good old days even after Apple became a joke in the 1990s, and they ultimately gave Steve Jobs his second chance at greatness. Almost all of the rest is marketing, and the marketing gives them leverage to demand a margin like no other company on earth.
Apple can get away with high margins because people (even many supposed geeks) will continuously bleat about their supposedly high quality software
beat about their supposedly high-quality hardware*
bleat*, goddamnit
It doesn't, even if no other company made any profit, or if any made a loss then that loss doesn't in any way transfer to Apple's profits.
At best Apple can achieve 100% of smartphone profits for a period if everyone else makes a loss or breaks even, but even that isn't true. Regardless of whether Samsung et. al. have had a bad quarter, there are still a whole lot of players that make small profits - i.e. many of the Chinese firms, so the idea that Apple hit even 100% is complete drivel.
But in fact, it gets worse, because the summary even says Samsung gained 0.9% of the profits for the quarter, therefore that alone brings Apple's share down to at least 99.1%. Samsung can have failings and still make a profit in part because losses are usually tax deductible so are pulled off before the final figure for profit.
Profit is a well defined term, it's the amount of money you have left over after you've paid taxes, bills, costs, and so on and so forth. What your competitors gain in terms of profit has absolutely no reference to what you gain in terms of profit, they're separate figures for separate companies.
I suspect there's some kind of messed up clickbait logic behind the number that gives some kind of figure where Apple gets 104% of something, but whatever that something is it's not profit, nor any figure anyone having any kind of useful discussion ever uses.
I think Android counts for more than 85% of smartphone sales now, more like 99%.
You think wrong. Latest is 87.5%.
Personally, most to the people I see in my city have iPhones. But there are more poor countries and poor people in the world than rich.
http://qz.com/826672/android-g...
Someone was certainly bleating. You.
I'm not the one who insists on talking about Apple constantly. Why is this shit on the front page? This is one of those cultural things you can't help but be informed about, because everyone else will not shut up about it. If it was just a somewhat interesting, somewhat overrated, overpriced "premium" product that certain people bought and enjoyed that would be fine and I wouldn't have anything to say about it, but no, the propaganda machine must be maintained and everyone else must at minimum acknowledge that "at least they have good hardware!" so that you can feel good about your purchase.
This is completely on-topic of me. Q: Why does Apple now have 104% of all smartphone profits? A: Because through a combination of factors, they've convinced people that they produce a premium product and so can charge a premium price, despite often having underwhelming specs for that price. Plus some other stuff generally related to their undeserved status as market-maker.
In 2007 Apple released the first phone with:
a) capacitive touchscreen as the primary or sole means of input
b) animation based interaction
c) high speed web rendering
There was no other product with that triple. That triple is now the standard. Obviously since they were the only one that was unique and since it has become more or less the standard it was quite innovative.
I think you should watch the introductory video to get an idea of how much Job's ideas contrasted with the competition at the time: https://www.youtube.com/watch?...
And many idiots, such as yourself, will pretend the iPhone doesn;t shit all over Android when it comes to usability, features, and stability.
The G1, N800 and many, many other contemporary higher end smartphones completely destroyed the iPhone 1. There's no contest whatsoever there. That was my main thesis there.
Look, we get it. Your nerd dick is big. Go to your bedroom and jack off to RMS like a good little sheep.
Or maybe I just understand that "Android" isn't a singular phone? Nor "iPhone" for that matter. Jesus fucking Christ. Claiming that one destroys the other across the board in those three areas instantly disqualifies you from intelligent conversation, 'geeky' or otherwise.
bullshit, Lena is packing +6.5"
Snowden and Manning are heroes.
It's bad math for dumb people. Profits are positive, by definition.
Sorry if you find the maths and financial concepts too hard, but it actually makes way more sense to calculate the percentages this way. Otherwise you're excluding the market impact of all the companies who make a loss. How can you sensibly compare figures from quarter to quarter and from year to year if you're excluding a different set of companies each time depending on who makes a loss? There's a boundary between simplifying concepts so that more people can understand them and oversimplifying to the point of being wrong; you've crossed it. If anyone is trotting out "bad math for dumb people," it's you.
To be a Fake Tim Cook, you need to lose your sense of humor.
Also, you can't be such a good writer.
Instead of being a Fake Tim Cook, you could accept the lower position of being a Madison Avenue advertising copywriter. Only $1200 per hour.
I think there was actually a compliment under all that, right? If so, thanks!
I tried my best to channel Jony Ive. Did I get the superlatives-choices right?
Yes, it's a compliment.