Apple and Samsung accounted for 103% of smartphone profits last year
For the fourth quarter alone, Apple's profits represented a whopping 72% of the industry's profits. BlackBerry and Motorola each had a -1% share for the last three month period of the year. Michael Walkley of Canaccord Genuity, the research house behind the math work, sees nothing changing the fact that Apple and Samsung together will continue to account for most of, if not all of, the profits in the industry on a quarterly and yearly basis for the near future.
It should be noted that the stats used in the study are profits before tax and interest payments are made. Known as Operating Income or EBIT, the figure is often used for cleaner comparisons between different companies as it eliminates tax payments which can vary year to year and from company to company.
29. jsdechavez (Posts: 702; Member since: 20 Jul 2012)
Apple wins big in the US because the carriers bring the cost down. This will change drastically as the US carriers start to stop subsidizing the cost of handsets. We'll see soon enough if these American people are willing to pay $600-$800 for iPhones.
18. Mxyzptlk (limited) (Posts: 3510; Member since: 21 Apr 2012)
Apple makes good products. That's why they sell so well.
22. hepresearch (unregistered)
This is the PERCEPTION that Apple makes good products... and I'm not saying that they don't. Basically, everything is automatically worth the sum of its parts and labor, in the eyes of the manufacturer/distributor. In order to break even, they must sell it for at least this cost. In order to make a profit, they must sell it for more than the sum of its parts and labor, and this requires the buyer to see that added value in the product. The fact that Apple has huge profit margins, well above and beyond the cost of parts and labor for the product (known to be over 50%), AND still manages to sell like crazy to many many customers (roughly 36% US market share for iPhone, in December 2012, among all current smartphone owners), both loyal returning ones and new ones (roughly one out of every two smartphones sold in the US in 2012 was an iPhone), simply means that many people CAN INDEED SEE the added value that Apple advertises, well above and beyond the sum of the products parts and labor value... and that they are generally willing to, and generally capable of, paying for the entire asking price in one way or another. Talking to most of these folks reveals that they don't lose too much sleep over knowing that they paid into huge profit margins because they clearly FEEL that they got the value, or perhaps even more than the value, that they paid in. The product was priced at or below the perceived value to the customer, even though that price was also well above the actual cost to the manufacturer and distributor, whether subsidized by a carrier or not.
Whether anyone likes it or not, Mxyzptlk is absolutely right about the perception end of things. You can debate the reality of it (or lack thereof) with him all day, but he will still be right about the general perception being very very common among US buyers, and only becoming more common as the months and years go by... perhaps until something new comes along that changes everything all over again, but that is just another great debate yet to be had.
Either way, one who can master the molding of the perceptions of the majority of the people about a product is one who can make, or break, entire markets... this is the 'inconvenient truth' at the heart of Mxyzptlk's commentary... and Apple has become just such a 'master'.
34. networkdood (Posts: 6267; Member since: 31 Mar 2010)
so, in summary, APPLE is the master at deception.
36. hepresearch (unregistered)
3. Caralho (Posts: 119; Member since: 18 Jun 2012)
Apple alone accounted for 69%??? Somebody is fluffing the numbers...
19. Mxyzptlk (limited) (Posts: 3510; Member since: 21 Apr 2012)
The Nile isn't just a river in Egypt.
20. quakan (Posts: 1177; Member since: 02 Mar 2011)
Apple has high profit margins, it's no secret.
10. Whateverman (Posts: 3195; Member since: 17 May 2009)
IDK man. We can say what we will about Apple, but they are successful because they make a good product. I can't see myself ever owning an iPhone, but there are people who feel they could never own anything else. For them, it doesn't matter what how advanced anything else is, what has better specs, better features, what's cheaper, or whatever.
Apple does a great job at packaging and promoting the entire experience and until Motorola, HTC, Nokia and LG understands that, they will never make any money. Samsung saw it, duplicated it, and now they're catching up. I really am rooting for them but I fear these other OEM's are just doomed to keep repeating history.
13. idroidequis (Posts: 103; Member since: 23 Jan 2013)
Not to mention they have a very loyal fanbase. Just like many BB users they will keep using BB until they die. Specs arent everything. Just like at the gaming industry. The Playstation 2 had the worse graphics between the three sustems yet they were the best selling and most popular between nintendo, sony, and microsoft. And look at the PS3 now it has the best specs between the three major systems and its in last place. Yet their are still die hards for both sony nintendo and microsoft.
7. Aeires (unregistered)
Sounds like fuzzy logic to me.
6. dex-4 (Posts: 22; Member since: 09 Dec 2010)
That doesn't add up.
103%, You can only go up to 100%.
Sounds like they are throwing out bs numbers for the investors.
8. Ninetysix (Posts: 1574; Member since: 08 Oct 2012)
"That's because Nokia's losses gave it a negative 2 percent of industry profits, while Motorola and Sony Ericsson both accounted for minus 1 percent."
15. sbmhome (Posts: 11; Member since: 19 Mar 2012)
Not sure where you went to school, but I've never heard of negative profits. Either you have them or not.
If you don't then your profits are zero and you have losses.
23. iushnt (Posts: 628; Member since: 06 Feb 2013)
Not sure where you went to school..Negative profit means loses..Apple's and Samsung's profit in the industry also accounts at the cost of Nokia's and Sony's loss(negative profit)..that is why their accumulated profit went upto 103% of the industry's profit..Those 3% are contributed by Nokia, Sony to the profit making giants..
by your comment it sounds as if no company goes through LOSS..they either be in BREAK EVEN or PROFIT
25. sbmhome (Posts: 11; Member since: 19 Mar 2012)
Are you kidding me? Can you read?
Nokia and Sony have no profits, that means their profits are zero, not -2, -1 or -3.
A company can have a loss, break even or profit. Negative profit is an oxymoron, it really means LOSS.
A loss is 0 profit. 0% + 100% is still 100!
A loss for on company cannot contribute to the profit of another company in the form of a negative number.
If your logic is correct then Rovio is taking in 1,577,766% of the app development profit since a small amount of app developers make a profit.
Show me mathematically how profit can exceed 100%...because it can't
26. iushnt (Posts: 628; Member since: 06 Feb 2013)
may be you are not from the finance and stats field..I'll explain to you..
It is possible for a profit margin to be negative for some companies. For example, if the company loses $.25 on a sale of a $1 item, this equates to a negative profit margin of 25 percent for the company. This occurs when the company spends more money to sell the products than what it brings in from the sale. When costs increase and the company does not increase its prices or it does not sell enough units, this can occur.
You can google about negative profit for clear concept if you are unfamiliar with this field..Loss is not 0% profit..0% profit is break even..A loss always indicates negative profits if you see in P/L account then those figures are kept in brackets or with '-' mark..When we take the whole industry to the account then due to the loss making companies in the industry, the accumulation of profits of other pro
27. iushnt (Posts: 628; Member since: 06 Feb 2013)
When we take the whole industry to the account then due to the loss making companies in the industry, the accumulation of profits of other profit making companies exceeds 100%. Or you should understand that if 1 or more company grabs more than 100% of profit of the industry then there are other companies who are in loss too..
28. iushnt (Posts: 628; Member since: 06 Feb 2013)
Its not that loss of a company contributed the profit for another company..it means that profit making companies have a huge share from the industry..Due to Nokia and Sony's negative profits, the industry's profit got reduced..Thus, now the combination of apple and samsung profit exceeded the industry's total profit by 3%..The industry's profit become low due to the negative profit of other companies..As a result the extra percentage here is contributed by the negative profite % of Nokia and sony...This means the percentage not the cash..If you find difficult to understand then don't work your brain hard in this..
31. sbmhome (Posts: 11; Member since: 19 Mar 2012)
I understand what you are saying, it's the accountants way of keeping track of everything.
Its it not really hard to understand.
Most people that are non financial (like myself) don't get
That kind of math because we see 100% as all profit and any company not in that 100%, is losing money.
32. sbmhome (Posts: 11; Member since: 19 Mar 2012)
But thanks for the explanation and my bad for the you can't read...lol.
9. papss (unregistered)
We have some dense readers that can't do math apparently
11. blablabla (unregistered)
You guys have no economical knowledge whatsoever. You are embarrassing. Just registered to tell you that. Unlike, remove, bye
12. Caralho (Posts: 119; Member since: 18 Jun 2012)
The truth is, the numbers do
not make sense.
14. hepresearch (unregistered)
The numbers do not make sense to any of us because we all seem to share this pre-conceived notion that Android is the only one making a real killing in the sales space. The truth is this: follow the profits... they always point to the [real] winner(s).
16. roscuthiii (Posts: 1789; Member since: 18 Jul 2010)
No wonder the economy is screwed when people use (and defend) fuzzy math like this. Love to see this as a pie chart.
17. hepresearch (unregistered)
What they did does add up in a system that takes NEGATIVE numbers into account, which is done in many other statistical analysis applications, but that is not the system that is commonly applied in business statistics. I will give you that... you are absolutely correct that this is the WRONG application for which to be using a non-absolute statistical array. No wonder folks are confused here. I understand what they are trying to do and say, but then again I have worked with not just negative numbers in non-absolute systems, but also with imaginary statistical arrays in complex analysis, so for me this still makes sense. As this is presented here, though, it is officially in error. When profits are being discussed, negative numbers are a failure to properly define the data, and this represents a failure to characterize business results appropriately. This ought not to be an acceptable characterization of this data in a business setting.
That said, the total error is relatively small (about 3%), and so the biggest percentages, those referring to the profits of Apple and Samsung, are close to what they should have been cast as.
24. sbmhome (Posts: 11; Member since: 19 Mar 2012)
Lol, you are acting like no one here knows what negative numbers are. Negative numbers are a extremely simple concept and has its applications, this is not one of them period.
21. networkdood (Posts: 6267; Member since: 31 Mar 2010)
And this affects me how? if you purchase an item because its company makes a profit, then you may want to rethink it.
35. networkdood (Posts: 6267; Member since: 31 Mar 2010)
In this situation, 103% cannot really exist - it all depends on how you play with the numbers.