Apple, Samsung Snag 99% of Mobile Phone Profits
May 4, 2012 11:53 AM
comment(s) - last by
Apple commands 73%, Samsung captures 26%
It's no secret that Samsung and Apple are dominating the smartphone market. According to
IDC's figures for Q1 2012
, Samsung had a 29.1 percent share of the worldwide smartphone market while Apple was not far behind with 24.2 percent.
With Samsung and Apple together commanding over 50 percent of the smartphone market, you would expect for them to take home a healthy portion of profits as well. While this is true, according to Asymco, the disparity between the profits reaped by Samsung and Apple compared with the also-rans in this sector is astonishing.
According to Asymco, the pair accounts for 99 percent of worldwide mobile phone operating profit. Samsung is using its nearly 30 percent share of the smartphone market to obtain 26 percent of the profits.
However, the biggest winner is Apple, which is pulling in an estimated 73 percent of the profits from the mobile market. Apple's performance shouldn't come as a surprise to many considering that the
company pulled in $11.6 billion in profits
during the first quarter (fiscal Q2).
HTC barely made a blip with just 1 percent of operating profits. LG,
, and Sony have all posted losses with regards to their respective mobile phone divisions, so they don't even factor into this equation.
Samsung Galaxy S III
"Seen this way, the story isn’t so much that Apple 'took the profits from the incumbents'", stated Horace Dediu of Asymco. "Rather, it’s that Apple created a vast new pool of profits. And one need not look far to find out where they came from: operators. These profits were mostly carrier premiums for the iPhone 4S."
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5/4/2012 10:29:43 PM
Efficiency and volume purchasing are two things that many people here are missing.
Apple produces one new model of phone a year.
as opposed to the dozens of models that Samsung makes. Apple also buys parts for the same phones in greater bulk than any hardware manufacturer on the planet. All of these things drive down their wholesales costs and drive up profit margins substantially. At the same time it reduces unsold inventory. Nearly everything they sell does so at full price, while the other company with numerous models will inevitably have unsold stock due to one model being much more popular than the other.
As you pointed out, Apple's production facilities at Foxconn are no worse than any others, and are actually better in some cases. There are numerous accounts from workers of much worse treatment and lower wages at the plants of other companies.
is the main takeaway here. Blaming things like labor, especially when labor costs make up such a
amount of the total cost of
hardware, is completely missing out on the big picture. In this context it is a point only in aid of being inflammatory.
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