19 Mar

Apple’s iPhone keeps raking in the majority of smartphone profits

WRITTEN BY Puneet Sikka

Apple continues to take the majority profit share in the smartphone market

Apple (AAPL) continues to collect the lion’s share of the smartphone’s industry’s profit. According to Asymco, out of the $215 billion net operating profits earned in the last six years, Apple has raked up about 62% of the industry’s operating profits. According to the same report, Samsung (SSNLF) had a profit share of 26%, Nokia’s (NOK) share was less than 10%, HTC’s share was 2.8%, and BlackBerry’s (BBRY) share was 1.9%. This report re-confirms our belief that Apple’s innovation has helped the company gain an edge over its competitors in terms of what matters most for a company—profit.

Apple’s iPhone keeps raking in the majority of smartphone profits

Competitors are nowhere near Apple in terms of profitability

Although Google’s (GOOG) Android is the most popular smartphone operating system, the above chart suggests that there’s no comparison to Apple’s domination when it comes to profitability. According to IDC, Android share in the global smartphone operating system market in terms of shipments increased from 69.0% in 2012 to 78.6% in 2013. Android dominates this market in terms of shipments, but it pales in comparison to Apple in terms of profitability.

Apple’s innovation helps it sell the iPhone at a high price

The above report on profitability comes as no surprise. Apple has always concentrated on innovation, which enables the company to sell the iPhone at a much higher price than competitors. For example, in the U.S., Apple has tied in with telecom operators such as Verizon (VZ) and AT&T (T), which sell the iPhone at a highly subsidized price to customers in lieu of two-year contracts. However, Apple gets the full price for the iPhone from telecom providers that it sells to, which is upwards of $500. This isn’t only true of developed markets, but also emerging markets. For example, in China, Apple continued to sell contract-free iPhones at prices upwards of $500, and the company never compromised on reducing its price in order to increase its unit sales.

In the next part of this series, we’ll discuss Apple’s stance in China’s smartphone market.

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