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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The harsh realities of business.
5/5/2012 3:50:22 PM
This chart is really showing the fruit of the decisions of companies. The first thing you will note is that the 2 worst companies for phones dominate the profits.
You have the iPhone, locked down, nazi like control, nearly all the profit pooring into a company that gives its consumers only a single small choice once a year.
Second you have samsung, known for producing crappy software and subpar design, backed by Korean subsidization and corruption that keep it in good shape.
HTC was one of my favorite and still is. Yet they can barely survive. All the choice is going out of the market and it is getting sad. Have you seen any new phones ina while that ship with a physical keyboard? Nope. What is a phone now? Nothing more than a display, 2 jacks, 3 buttons. So you would think with such a pathetic assortment of features that people would want to differentiate. But no, because there is no profit in the phones and most do not control the parts going into them there is no money to be made, obviously the cheapest way to make a phone is to put as little on it as possible which is the apple philosophy (most customers dont even know what they are buying so dont put anything on it) My step son bought an ipod and it did not even come with a charger, (really?).
The real story no one is talking about here is that screwing the customer over the best you can is the best way to become number 1.
Now lets talk about the failures of other companies. Anyone with half a brain knows there is only one reason samsung is canabalizing the android market, it is because they make, nand, displays (AMOLED being the big ticket here) and CPUs. In essence they are almost completely vertically integrated. So they can always tip certain key items they have in their favor by putting it ONLY in their phones first. This is possible because they hold almost monopoly like control over damn near everything in Korea.
The big loser here is LG who makes some of the best displays in the world but has failed to save great new display technology for themself as a selling point. Instead they sell it off to others who turn the profit.
lesson learned, be smart if you make something save it for yourself. 2 China will be crushing all of these guys in due time with the same business model as samsung, once you make all the parts, you start denying other people access to them and only selling them on your own products at the very start. Even in the end when you make enough to sell to everyone you get the item cheapest so no one can make as much profit as you.
Personally the japanese companies cannot sustain themself. They need massive consolidation, and probably need to merge into a single brand, and possibly join up with nokia or motorola to tip US or EU subsidies and tarrifs in their favor.
RE: The harsh realities of business.
5/6/2012 12:07:34 AM
So much bias.
The iPhone is like that simply because Steve Jobs learned the hard way. Have you ever used a Motorola ROKR E1? I have. It's a horrible phone for the following reasons:
- carriers have full control over its firmware, thus its Bluetooth spec only allowed for pairing with headsets but not data transfers;
- as a cellphone it works, however sluggish it is; most phones at the time weren't any better. As an iPod it's slower than the real thing;
- no native 3.5mm headphone/headset port means carrying a 2.5mm-to-3.5mm adapter that is easily misplaced and lost;
- max 1000 songs restriction without a third-party hack.
Moto proudly advertised the E1 as a cellphone with iTunes-like capability. The truth is it sucked. Apple had no control over it, and it ended up going into the smartphone market itself.
Samsung might still be bedfellows with the South Korean government, but everything else is downright untrue.
RE: The harsh realities of business.
5/7/2012 12:25:51 PM
The ROKR E1's song limit was actually 100 songs, not 1000. You were likely to hit that limit too, since it had 512MB of storage, and most MP3s people wanted to load were under 5MB. It really was a disaster in virtually every category.
"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer
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