Apple makes 57% of all smartphone profits

When it comes to profits, there’s long been only one real winner in the smartphone industry: Apple.

At least that’s what used to be the case, until Samsung joned the party. In Q4 of 2012 Apple and Samsung made 103% in the smartphone industry, with 72% of that going to Apple. How can they make over 100% I hear you asking? Well basically because everyone else made a loss!

And that 72% of profits came from just 22% of unit sales! Nearly three quarters of all profits from just over a fitth of handsets. However things have changed in Q1 of 2013. The percentage has shrunk quite dramatically to a still very resepectable 57%, with Samsung again making up the remainder.

Notice that this time the total does actually equal 100%. LG made approximatly 1% of profits which was wiped out by Motorola’s losses, with the rest just about breaking even.

So why has Apple’s share gone down so much? The main reason seems to be the (relative) underperformance of the iPhone 5. Although still selling well in absolute numbers, it’s making up a smaller share of Apple’s sales than the flagship iPhone usually does, with more people choosing to buy the iPhone 4 and 4s. This in turn has a negative effect on margins as the older models are less profitable. Still, it’s not too bad a problem to have, especially compared to everyone else.

The decline in profit share is also expected to continue next quarter though. The Galaxy S4 should help to increase Samsung’s profits even higher, with HTC no doubt hoping to finally see a lift with the One as well. Meanwhile a new iPhone is probably still 5-6 months away.

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  • Anonymous

    Apple has everything going for it when it comes to profit making. They release one new model a year, they are ‘tooled up’ to make their old models until nobody wants them any more, they are internationally successful… Just as long as they continue to make phones people want, they will make good profit on them. They must have unit cost down about as far as they can possibly go too.

    The thing is, the competition really is hotting up, and Apple haven’t done anything too amazing in the last two years. That plus they haven’t really done enough software-side to keep it looking swish and current. Since the iPhone 4 came out, I decided to go Apple, and I’ve not really looked back until now. They are great solid phones and are extremely reliable, and do mostly what I want, and are the right size. I can say categorically that my next phone will not be an Apple unless they pull something truly amazing out of the bag, which I know they won’t.

    • patch

      what are you wanting that you dont have at the moment ???

      what have the rest done to catch up with apple….

      people have to realise there will be no massive jumps in tech/design anymore for another 5 years to 10 years ….

      Apple make a great product for me its been a great phone which syncs all my tech at home… would the iPhone 4 beat even some new phones out at present ? i carnt same the same for the HTC,Blackberry ,windows… samsung are the only firm to step up to the plate and give us competition.

      • Anonymous

        Well actually, I think the rest have caught up with Apple just fine… Aside from Samsung’s latest top-end offering being a little unimaginative, it still has tech incorporated which Apple haven’t seen fit to bother with.

        The HTC One is a beautifully made, fast, feature-rich phone with things like the IR emitter for consumer electronics and the amazing speakers which set it apart. The Sony Xperia Z has a fair few features which are done nicely, and at the same time exceed the innovation that Apple have achieved in the last year.

        Apple still have not seen fit to include NFC, and have only fairly recently released an LTE capable phone. They release one phone per year, one form factor, and if you don’t like it you have to lump it. Don’t forget that it’s a ‘premium’ product, and that there’s potentially a lot of profit to be made in this area. While Apple did at one time appear to be streets ahead, I do not think that is the case any longer, and will become less so as time goes by.

        Apple need to make a big jump to stay ahead. These incremental releases will not cut it, if they wish to retain their market share and profit margin.

        • Patch

          So a poor Samsung phone which has nothing leaping out and a HDTV phone that looks and feels like a iPhone is what you say is the bug leap apple has left behind ????? As for NFC until it is widely used its not going to put in… Speakers are excellent on all phones but as I don’t walk around with them playing … Samsung put high processors in that are not fully used and make phones for a cheap /flood approach … HTC have learned to make a phone high quility that people want

          • Anonymous

            I’m not really sure I understand what you’re arguing about. Apple’s biggest criticisms when the iPhone 4S and 5 came out was that nothing innovative (that somebody else hadn’t done already, and often better) had been added. I tend to agree with them, and I am an Apple user myself. They need to give us something that warrants the excessively high price tag. Don’t forget that you’re talking in the realms of £800 for the top-of-the-line models offline. Surely your extra £250 should buy something special?

            At the end of the day, a fast processor is worth nothing if no app can use it, but it’s Apple’s job to ensure that their design allows the developers to make the most of it, and has the right balance between power, form-factor, features and other considerations like battery life.

            I think my primary point is that Apple make a lot of profit from each phone, because their market position allows them to. When they lose their position; their prestige; their raison d’être, they will be less able to command the hefty price tags for their products. I see this being a real threat in the coming years unless they pull out something special.

            If every other phone can do what an Apple phone can do, what is the point of paying over the odds for an Apple product?