There are hundreds of millions of smartphones sold every year by about a thousand companies, but the vast majority of the profits from those sales go to just one of those companies: Apple. According to Canaccord Genuity managing director Mike Walkley, Apple recorded 92% of the total operating income from the eight largest smartphone makers in the world in the first quarter.
Roughly 1,000 companies make smartphones. Just one reaps nearly all the profits. Apple Inc. recorded 92% of the total operating income from the world’s eight top smartphone makers in the first quarter, up from 65% a year earlier, estimates Canaccord Genuity managing director Mike Walkley. Samsung Electronics Co. took 15%, Canaccord says. Apple and Samsung account for more than 100% of industry profits because other makers broke even or lost money, in Canaccord’s calculations. Events last week highlighted the lopsided financial picture. Apple is asking suppliers to make a record number of new iPhone models. Meanwhile, Samsung forecast disappointing profits, HTC Corp. reported a quarterly loss, and Microsoft Corp. wrote down 80% of the value of the smartphone business it acquired from Nokia Corp. last year. Apple’s share of profits is remarkable given that it sells less than 20% of smartphones, in terms of unit sales. The disparity reflects its ability to command much higher prices for its phones. Its rivals mostly use Google Inc.’s Android operating system, making it harder for them to distinguish their offerings, and prompting many to compete by cutting prices. Moreover, Samsung and HTC have made missteps in recent years.
