92% of smartphone industry profits end up in Apple's bank account

92% of smartphone industry profits end up in Apple's bank account
While Apple might not have the largest market share globally among smartphone manufacturers (that honor belongs to Samsung), the company does capture the vast majority of operating income in the industry. According to Canaccord Genuity, during the first quarter of the year, Apple received 92% of the operating income earned by the top eight smartphone makers globally. That was up from the 65% of operating income earned by Apple a year ago.

Samsung was next with a 15% share of operating profits. You might question how Apple and Samsung combined can equal more than 100% of the operating profits achieved by the eight leading smartphone producers. The answer is simple. Some manufacturers reported losses and some broke even.

Many smartphone manufacturers are continuing to have problems. HTC recently reported a net loss of $256 million for the second quarter, and last week Microsoft took a huge one-time $7.6 billion hit against earnings. The software giant decided to write down goodwill it had picked up on its balance sheet following the acquisition of Nokia Devices and Services.

Even though Apple is responsible for less than 20% of smartphone sales globally, it is able to maintain higher prices for the iPhone compared to Android handsets. According to Neil Mawston, executive director at market researcher Strategy Analytics, there are over 1000 smartphone manufacturers. Some, like Xiaomi, are willing to sell their Android powered handsets with little to no profits, making money on apps, accessories, or through the purchase of other additional items.

The average price of an iPhone sold last year was $624 globally, compared with $185 for the average Android phone. For the fiscal quarter that ended March 28th, Apple's average selling price for an iPhone rose $60 to $659, with sales up 43% year-over-year. 

source: WSJ

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93 Comments

1. theguy2345

Posts: 1216; Member since: Jun 24, 2014

As much as we all hate them, including myself they have a great business model. Instead of selling tech, they sell fashion. And it's always in style.

3. sgodsell

Posts: 7383; Member since: Mar 16, 2013

They don't sell the latest tech. Apple sells older tech that has been on the market for a while. Then their marketing and sales people preach it as new tech. That is why they make so much money. The 8 mp camera they use in the iPhone has been out for years and years. The iPhone 6 screen is a HD display that has been on the market for years (Maybe not the exact same resolution, but there is much higher and better displays now).

6. theguy2345

Posts: 1216; Member since: Jun 24, 2014

I know, why do you think I said they sell fashion instead of tech? I mean, 90% of Mac users live at Starbucks to show it off. Same on social media. I don't show off my new tech; I use it. That's what it is for.

27. Ruturaj

Posts: 1484; Member since: Oct 16, 2014

Not actually, macbook are much better products compared to iphones, value for money, they last a lot longer, build quality is good and so does the feel. If you try to get similar laptop to 15 inch macbook pro with discrete graphics, it will cost more than $2000, will not have that good build quality and battery life, will not last that long. And you can find same macbook cheaper (for around $2100) on ebay. I have macbook air, was $750 in best buy, you get another laptop with similar configuration for around 500, but you don't get 12 hours battery life, breaks in 2 years, and is heavy (I ride bike, so weight matters to me). Macbook 13 in my opinion are costly ones.

69. dancheung77

Posts: 202; Member since: Jan 28, 2015

I do love my MBP15, bought in 2011 and still running smooth, maybe once a while the spinning beach ball pops out but everything is solid. I do love the fact that I can switch between OSX and windows with bootcamp and that's something only Mac can. Oh yeah and MBA, worth every penny.

79. neela_akaash

Posts: 1239; Member since: Aug 05, 2014

I think everyone knows that already. They are always fooling people by selling cheap devices with premium tag to fill their own pocket.

73. engineer-1701d unregistered

macbooks cost way to much for the litte tech u get my toshiba laptop is 7 years old battery does not work any more but plugged into my big screen in bedroom for tv shows and internet still working great and cost nothing close to apples roommate's macbook cost him 1600 lasted 2 years and had to get it fixed 4 times now he got a new one because old one kept crashing, macbooks are heavy as hell i have to motorcycles and 2 cars and dont give a crap about weight but i bet my 7 year old laptop can do more than your macbook pro, get a car dude no more weight problems

82. Ninetysix

Posts: 2964; Member since: Oct 08, 2012

Your 7 year old laptop can't.

100. techloverNYC

Posts: 601; Member since: Nov 20, 2012

True to everything you said. For college I bought a macbook pro around 2011 ( cost around $1000 with student deal) and even after 4 years the computer is stilling running pretty smooth and functional for daily use. My roommate who had a HP laptop for freshman year (around $600) broke in 2 years. In his Junior year he had to buy another laptop, dnt know why but Hp again for around $600. In total buying the 2 laptops costed him $1200. I told him, he should have just gotten the Macbook in freshman year. I even installed window 7 to my MBP. Everyone around me in college was also using Apple laptop. Apple products are a little bit expensive but worth it.

89. illbeonthebeach

Posts: 31; Member since: Jul 06, 2015

that's funny, I step into any coffee shop and everyone has the same macbook. Including me but I'm usually on the go and not staying to show off

28. NICEBOY_1373

Posts: 21; Member since: Mar 28, 2013

You have no idea what an apple product is, dude.

49. Ruturaj

Posts: 1484; Member since: Oct 16, 2014

Niceboy, do you have an idea what apple products are?

60. androtaku

Posts: 246; Member since: Dec 12, 2013

its about user satisfaction without a sadistic urge to make everybody agrees

74. engineer-1701d unregistered

i do its a giant paper weight

52. androtaku

Posts: 246; Member since: Dec 12, 2013

lol,android fans still banging on "just a HD screen" argument they don't noticed their never ending wants for best tech has a parasitic effect of their beloved android phone maker. These android parasites essentially bankrupt those company with never ending unnecessary request

12. Af1rPA

Posts: 712; Member since: Jun 12, 2014

Let's be completely honest, the iphone6 is not the best looking phone. Apple users are in denial. The back cover is plan and boring. There's nothing fashionable about.

14. vincelongman

Posts: 5696; Member since: Feb 10, 2013

Its more about the brand recognition, than the design

17. faptastic

Posts: 65; Member since: Aug 19, 2014

What people seem to forget is that apple is extremely rigorous in cutting costs. Most of the software they make is based on existing open source software, like how they use webkit just like chrome for safari. Sure apple did some changes to webkit but most of the development lies with other parties like Google, and before that Nokia and the bunch that made khtml that spawned it all. osx and iOS are the same, limited effort required to keep things going. iOS has barely any features of its own besides an app store and the OS itself is extremely simple, yet again a way to cut costs. That they sell it by claiming its easy to use, is just a bonus. Though anyone having used a Windows Phone knows that iOS is simple but definitely lacks any flow or intelligence in its UI design, making it both slightly more complex than WP and less powerful in the process. Anyway, apple devices are full of cost cutting measures. Cheap screens, old tech, limited software development. It would not surprise me if iOS has a dual core CPU because its simply too much effort/expensive to build iOS for quad cores and proper multi tasking. It's also shocking how many security holes iOS has and how long it takes apple to fix them. Remember, all those jailbreaks are only possibly by abusing unpatched security issues. All to keep costs as low as possible. IPhones don't have good batteries, or good screens, the camera is ok but the blind comparison here showed it has a long way to go to match the top Lumia 930. There's a huge list of hardware features you get on a 150usd Lumia you won't get on a 700usd iPhone, like haac mics, ois, sunlight filters, super sensitive touch. And using an iPhone you will also notice less reception than with other devices, another area apple seems to cut costs. An iphone6 has no reception in my area. Most Lumias do,

25. Techielover

Posts: 105; Member since: Feb 20, 2015

The part about the dual core is just plain wrong.The A8 and the A's before it are custom made design and architecture.That alone says apple put alot of R&D in them.

31. roscuthiii

Posts: 2383; Member since: Jul 18, 2010

Customized, based off ARM design/architecture. ARM does all the heavy lifting. ARM does all the R&D. What Apple does is more like the work of an art restorer. They clean things up, do some touch-ups, and polishing. But, they are not the artist. Basically, they are really good at "color by numbers" children's books.

46. Techielover

Posts: 105; Member since: Feb 20, 2015

They liense the instruction set but the design was made by them.

75. engineer-1701d unregistered

just like the lg and samsung screens that apples using and the sony camera, everyone else does the hard work and apple just comes in late to the game pays low price to use others tech and make bigger profit, all suppliers should double there prices to piss off apple and they will put the iphone price to 1500 lol

33. Ruturaj

Posts: 1484; Member since: Oct 16, 2014

@Techielover Apple cpus are based on arm, they are more like modified version of those, not designed from ground.

36. Napalm_3nema

Posts: 2236; Member since: Jun 14, 2013

They use WebKit because they developed it, dimwit. Apple Open Sources some of their developments, from time to time, and WebKit just happens to be one of them.

76. engineer-1701d unregistered

they did not develop it they don changed the name and used kjs because it was easier for html building

55. androtaku

Posts: 246; Member since: Dec 12, 2013

because there are company who happily sell them the parts because there are company who happily help them on making of the parts because there are company who happily let them use their tech for free because apple cost cutting measures doesn't give any quality problems to users because we don't need the best everything to enjoy the best of everything its level playing field for all,apple can use the free tech,everybody else also can,its open for all,stop being butthurt

61. nodes

Posts: 1160; Member since: Mar 06, 2014

iOS IS easy to use. and talking about UI design? man, iOS is by far the most consistent UI design system-wide and even 3rd party app. Android (Nexus/Vanilla Android) is yet to catch up regarding UI design, even Google themself are not consistent designing it. Cheap screen, old tech, dual-core CPU? seriously man? so by your logic, mediaTek's octa core is better than Apple's dual-core? you need to Google on that dual-core CPU thing more.

30. Ruturaj

Posts: 1484; Member since: Oct 16, 2014

It more like reputation, as Honda sells cars from economy class (fit) to high class (accord) while Mercedes starts from higher class and bigger price tag. People would rather go for featureless (basic) model of Mercedes than buying Honda because they think many people have Honda and just the name doesn't mean high class car. Same is for other android phone manufactures, people with cheap phones always complaint about there phones (even it does well for the price) that it's slow and it freezes. While you won't heard it from people who use apple (because they only make flagship). It makes a reputation of brand in your mind. Also many wants to try different when they have enough money for smartphone, they have tried android when they were broke now they can buy Apple.

38. Ahovking

Posts: 711; Member since: Feb 03, 2015

I am an Apple User.. every apple user i know agrees iphone6 is not the best looking phone... yet online i've seen even some android users licking its design..

77. engineer-1701d unregistered

because the design is samsungs and alittle htc up in it

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