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Apple Captures Record 91 Percent of Global Smartphone Profits: Research (cnbc.com)

Posted by msmash on from the dominance dept.

Apple has captured a record share of profits in the global smartphone industry in the third quarter, according to new research, despite grappling with falling iPhone sales. From a report on CNBC:Third-quarter smartphone operating profit reached $9 billion globally of which Apple took 91 percent of the share, Strategy Analytics said in a note on Tuesday. This amounts to $8.19 billion for the U.S. technology giant. Apple has the highest profit margins in the smartphone industry thanks to a loyal brand following and the ability to price its iPhones at a premium. And the figures come even after Apple reported three straight quarters of iPhone sales declines. Sat a long way behind Apple is China's Huawei which managed to grab 2.4 percent of global operating profit share in the smartphone market, accounting for $200 million, according to Strategy Analytics. Chinese start-up brands Vivo and OPPO are in third and fourth place, both capturing 2.2 percent of global smartphone profit each.

21 of 196 comments (clear)

  1. Sigh. by ledow · · Score: 5, Insightful

    You DO NOT want the company you are buying things from to make record profits.

    It means that they are taking a higher percentage of your money than any of their competitors.

    You might want the company to have the greatest sales figures (not true of Apple), or the greatest proportional re-investment (not true of Apple), or the greatest customer base even (not true of Apple).

    But, like walking through Las Vegas... all that show and money to blow on things comes from one source... people like you paying over the odds for their products.

    1. Re:Sigh. by kuzb · · Score: 2, Insightful

      Wait .. Apple actually fixes their products? I was under the impression that they released broken products and had their customers pay to fix them.

      --
      BeauHD. Worst editor since kdawson.
    2. Re:Sigh. by vux984 · · Score: 4, Informative

      If 2 companies are splitting the profits taken in a market 50/50 and one does a recall that wipes out their profit for a quarter, then the other company is making the same amount of money... but now has "100%" of the profit.

      This news is just a reflection of Samsung taking a giant loss on the Note7.

    3. Re:Sigh. by Oswald+McWeany · · Score: 5, Funny

      Apple products are never broken, they're just held incorrectly.

      --
      "That's the way to do it" - Punch
    4. Re:Sigh. by vux984 · · Score: 4, Informative

      "Canaccord Genuity analyst Michael Walkley said in a research report Sunday that Apple captured 75% of smartphone industry profits in the second quarter. But that's down from 84% in Q1 and 91% in Q2 2015, he said.

      Apple's share of smartphone profits fell because of Samsung's improving profitability driven by streamlining its product lines along with strong demand for the Galaxy S7, Walkley said. Samsung's strong results are expected to continue in the third quarter ahead of the September launch of Apple's iPhone 7, he said."

      "Samsung's share of smartphone industry profits improved to 31% in Q2, up from 22% in the first quarter and 19% in Q2 2015."

      http://www.investors.com/news/...

      Apple's profit share of the smartphone market was in steady decline, and Samsung and others were in ascension. The ONLY reason Apple is back up to 90%+ in Q3 is that Samsung's profit share evaporated in Q3 due to the recall expense. It's that simple.

      "Sorry, yes."

    5. Re:Sigh. by kuzb · · Score: 2

      No, they were just designed to break easily under normal use. Totally fair!

      --
      BeauHD. Worst editor since kdawson.
    6. Re:Sigh. by kuzb · · Score: 2

      ...and thank christ for that. Do you know how many times I've almost died due to that extremely dangerous headphones jack?

      --
      BeauHD. Worst editor since kdawson.
  2. Does that include the App Store profits? by chispito · · Score: 2

    If that does not include their App Store profits, then it's even more significant.

    --
    The Daddy casts sleep on the Baby. The Baby resists!
  3. Value for money by sjbe · · Score: 5, Insightful

    You DO NOT want the company you are buying things from to make record profits.

    As long as I'm getting what I consider good value for money I don't care at all if they are making a big profit. The only way Apple or any company makes a big profit is if people like what they are getting for the price. If it wasn't worth the price then they would be forced to charge less. Apple products are a completely discretionary purchase.

    It means that they are taking a higher percentage of your money than any of their competitors.

    Which is irrelevant if I am getting a higher value for my money as well. Obviously a lot of people think Apple gives better value for the money than the alternatives. You don't have to agree with them for yourself but that doesn't mean they are wrong.

    But, like walking through Las Vegas... all that show and money to blow on things comes from one source... people like you paying over the odds for their products.

    Clearly people don't find that to be a problem. Yes Vegas wasn't built on winners but people keep coming so obviously they feel they are getting good value for what they spend. If it's not your thing then do something else and I assure you nobody will care or think less of you for it.

    1. Re:Value for money by chipschap · · Score: 3, Informative

      >The only way Apple or any company makes a big profit is if people like what they are getting for the price.

      What a naive way of thinking. Either that or Apple uses predatory tactics to trap people and trick them into using their products.

      Monopolies or near monopolies can easily be predatory, but that requires very limited consumer choice. I can't see how smartphones fall in that category.

      In my view Apple charges a lot for what they deliver. But I don't have to buy Apple and I don't. Others feel Apple is a value, whether based on quality, functionality, or simply perceived prestige. They buy Apple. That's how the market works.

      I suppose there is some lock-in, in that if you've spent a fair amount on Apple apps, you can't switch and take them to Android, whereas on Android, you can take your apps to a different brand of phone or tablet. But that doesn't seem like a predatory practice on Apple's part.

      Face it: Apple is expensive but many people are willing to pay Apple's prices. Apple makes a lot of money that way. What's the problem?

  4. Yeah, well look at Apple's INSANE markup. by Noishkel · · Score: 3, Informative

    Digital Trends work worked out a while back that Apple makes about $288 in profit for each iPhone sold. The average Android device... well it varies very widely. But According to 'Pocketnow' it works out to only about $25 of actual profit per device.

    Honestly... Apple is really REALLY screwing it's customer base by selling them last years hardware in every new phone and just pocketing the profits. And for some reason people STILL flock to them.

    1. Re:Yeah, well look at Apple's INSANE markup. by RightSaidFred99 · · Score: 4, Insightful

      Look, I hate Apple. I hope they go out of business, sell their headquarters, and the land where it stood is razed and salted.

      That said, the "last year's hardware" comment is a bit silly. I can be a hater and still be rational enough to say they make good hardware. Their hardware is cutting edge when released and their CPUs top shelf. Being in denial helps no one.

    2. Re:Yeah, well look at Apple's INSANE markup. by lusid1 · · Score: 2

      I'm as disappointed as everyone else in the new macbook pro, but I also recognize that its a great machine that been incorrectly positioned. If they had positioned it as "The best Macbook Air we've ever made" it would be enjoying completely different sentiment in the press. We'd all still be wondering WTF am I going to get a new pro level laptop, but it would be easier to move on if they admitted outright that they were abandoning the pro market.

  5. Not all customers are equal by sjbe · · Score: 5, Insightful

    91% of the profits share, would be fine, if they also had 91% of the market share, sadly they have ~40% of the market share.

    Why is that sad? Not all customers are equally profitable. Companies that presume otherwise usually find themselves in a bankruptcy court rather quickly.

    So either their product is more expensive than their competitors, or they have massive efficiencies that their competitors don't... (or some combination).

    Apple phones ARE relatively expensive. This has never been a debate. Obviously most people that buy them find them to be good value for the money. The fact that they charge more than some others is irrelevant. If a company cannot sell something for enough money to make a profit then it is an indisputable fact that people don't value what they are selling.

    And yes Apple does realize some cost efficiencies from their size which few others in their market can match.

    1. Re:Not all customers are equal by mccalli · · Score: 2

      Being picky, it is in debate that they're 'relatively' expensive. Compared to the other flagships they tend to be around the same or cheaper. They don't do cheap phones and so the cost can be high in absolute terms. But in relative ones? Similar to every other flagship.

    2. Re:Not all customers are equal by TheFakeTimCook · · Score: 2

      Apple phones ARE relatively expensive. This has never been a debate. Obviously most people that buy them find them to be good value for the money. The fact that they charge more than some others is irrelevant.

      Excuse me. You DO realize, of course, that the infamous Exploding Samsung GN7 actually costed MORE than an UNLOCKED iPhone 7 PLUS (for the equivalent storage).

      Yet NOBODY EVER WHINES ABOUT SAMSUNG'S HIGH PRICES!!! Why?

  6. An important note missing about that 91% figure... by NarcolepticPenguin · · Score: 5, Informative

    From the article: Apple's closest rival Samsung does not feature in the Strategy Analytics report.

  7. Re:An important note missing about that 91% figure by edjs · · Score: 2

    Probably because the Note 7 recall erased their profits and put them in a loss for the quarter. Including the loss is what pushed the mathematically correct but misleading headline that Apple earned over 100% of the profits we saw earlier.

  8. Economic theory [Re:Sigh.] by Geoffrey.landis · · Score: 4, Insightful

    You DO NOT want the company you are buying things from to make record profits.

    Standard economic theory says that they will make record profits if and only if their customers believe that they are providing a superior product. So, yes, actually you do want to buy from a company making record profits: this is a sign that their customers like them; and, in this case, iPhones have been around long enough that it is a sign that their customers are repeat customers.

    --
    http://www.geoffreylandis.com
    1. Re:Economic theory [Re:Sigh.] by ledow · · Score: 2

      Churches make record amounts of profit.
      De Beers makes record amounts of profit.
      Microsoft made records amounts of profit before they were sued for anti-monopoly practices.
      Perfume manufacturers make record amounts of profit.
      I'm sure Dr Dre makes record amounts of profit from his Beats.

      It doesn't follow that they offer a superior product to their competitors. What it tells you is they are deliberately over-priced and under-delivered. And what you've bought into is snake-oil.

      In terms of VALUE for money, you've deliberately picked the worst, in effect. For show, for credentials, for a designer brand, but not for a superior product.

      Millions of people give the church money enough for them to have multiple numbered Swiss bank accounts to hold it all in, to own an entire city, and to own vast portions of the ancient buildings in most of Europe. Their "customers" being happy with that doesn't mean it's the sensible thing, or that they are the best, or that they even provide a better product.

      Similarly, it doesn't mean that De Beers diamonds are "better" than synthetic. In fact, probably much worse, if you have any kind of moral conscience.

      Profit is a perfect indicator of how much you are OVERPAYING for what you've bought, that's all. Whether people want that or not is a nonsense to do with trends, image and designer brands. Demand influencing price is entirely different to the consumer getting a fair deal.

  9. Re:Cure cancer or spinal injury by ghoul · · Score: 2

    Far more than 20 billion is being spent on Cancer research. Its not a issue of money. Its just a difficult problem to solve. And by the way Cancer is not one disease. its a symptom of a disease like fever and many differnt things can cause cancer so cancer probably will never have one cure. You will need a cure each for all the thousands of things that can cause cancer

    --
    **Life is too short to be serious**