Do you know who else has Apple's profit margins? Hint: it's not Samsung
Huawei earns as much as Apple from its high-end phones, and its latest flagships like the Mate 10 Pro command Apple, Samsung or Pixel-level prices, too.
Samsung, on the other hand, is much more generous with the distribution discounts it gives to retailers, as this is the only number that differs by a lot in the graph here. In fact, a major Indian phone distributor complained recently that
Apple has cut margins on the iPhone X from 6.5% to 4.5% for large retailers like us, and if a customer pays by card, which is usually the case, the margin reduces to almost 1.5-2%... Apple gives the least margins… How on earth do they expect the retailer to work for them for free - our overheads are anywhere around 10%.
Mate 10 Pro is good, expensive, and Huawei's profit margin on it is as much as Apple's
Coupled with the Apple-style vertical integration (like homebrew Kirin chipsets), and disciplined selling and administrative costs, Huawei has proved to be a high-end phone maker to keep an eye on as it is emerging as the powerful underdog, and its latest handsets like the Mate 10 Pro only came to confirm this notion. They are good, expensive, and the US is the only market where Huawei hasn't gained a firm foothold just yet, but will apparently keep on pushing. "The U.S. is a very important market to us," said Huawei's spokesperson back in September. "As long as we have good products, it is only a matter of time before the U.S. market opens up." Analysts like Counterpoint’s Richardson seem to agree, too:
Three years ago, Huawei was just in the middle range and it wasn’t really any different from other players. Now, the quality of products has improved tremendously. If the current trajectory continues, it may very well be close to Apple and Samsung in terms of product quality with the next 12 to 18 months.
source: WIP (PDF report), ET & Forbes
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