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Apple Is Focused on Profitability, Not Market Share

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Apple claims the majority of smartphone profits

In 2016, US-based (SPY) Apple (AAPL) accounted for over 83% of operating profits in the smartphone space. A report from Strategy Analytics stated that Apple’s share in operating profits was $44.9 billion, compared to the overall figure of $53.7 billion for the smartphone market.

Korea’s (EWY) Samsung (SSNLF) was the next big player, with $8.3 billion in operating profit in 2016. Samsung sold more smartphones than Apple in 2016, but Apple overtook Samsung in smartphone shipments during 4Q16, mostly due to Samsung’s recall of its Galaxy Note 7 model. The two technology giants accounted for almost 100% of the smartphone segment’s operating profits in 2016.

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Chinese manufacturers fight for remaining profits

Huawei, China’s largest smartphone manufacturer, reportedly posted an operating profit of $929 million. While Huawei accounts for 10% of global smartphone shipments, it accounts for only 1.6% of global operating profits. Oppo accounts for 1.5% of global profits, followed by Vivo at 1.3%, suggesting that the top three Chinese smartphone manufacturers have just 5% of total operating profits.

While Chinese companies in the smartphone space have focused on lower costs to drive their revenues, Apple has focused primarily on the premium segment, and it’s taken the lion’s share in terms of profitability.

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