The smartphone market is a vastly competitive place to do business, and while Android may be reigning victorious when it comes to market share, that doesn’t necessarily equate to profit for device manufacturers. A new report, which has emerged over the weekend by Canaccord Genuity, approximates that while Apple may only hold 20% of the total market share, it was actually responsible for banking 92% of the entire smartphone market’s profits during the first quarter of 2015.
Being responsible for 92% of the profit made within the smartphone market from only 20% of the market sale is an impressive enough statistic, but here’s what is more fascinating – that number has risen from 65% for the same period a year earlier.
The Wall Street Journal believes that those impressive rising numbers are down to Apple’s ability to “command much higher prices for its phones.” In short, for one reason or another, Apple is able to convince consumers to part with more cash for its devices than competitors are.
As expected, Samsung was named as the company behind Apple taking the next highest slice of the smartphone profits with an approximate 15%. And before you say it, yes, the math behind that does a look a little odd. Canaccord puts that down to the fact that “other makers broke even or even lost money.” There may be a vast amount of fiduciary gain to be had from consumers in the smartphone market, but it doesn’t necessarily mean that all players within the game can turn a profit on its mobile business. It’s actually extremely difficult to get your head around the reported numbers when you consider how many different device manufacturers are actually competing for business. Once again, WSJ applies some perspective to the market:
Roughly 1,000 companies make smartphones. Just one reaps nearly all the profits.
That’s an unbelievably powerful and sobering thought. It’s actually amazing how quickly one particular company (or product) can create a huge shift in the market. Back in 2007 when Apple initially entered the smartphone market, Canaccord estimated that Nokia accounted for approximately 66% of the market’s profits thanks to its premium hardware. Fast forward five years to 2012 and that profit split was roughly even between Apple and Samsung, yet it seems that the Cupertino giant has really taken the push forward in its ability to capture the truly high-end side of the market with the iPhone.
With reports flying around that Apple is planning to shift 90 million units of the iPhone 6s this year alone, it seems that today’s reported number will get another bump by next year.
(Source: WSJ)
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