Apple's The Clear Winner When It Comes To Smartphone Profitability

If you ever needed evidence that the iPhone is an overpriced smartphone, it’s safe to say that we now finally have it. On paper, in black and white.

According to a recently published Canaccord Genuity report, on which Apple Insider reported yesterday, Apple has made 94 per cent of global smartphone profits during the third quarter of the year, even though it had sold 14.5 per cent of all smartphones sold in the quarter.

How is that possible, you might ask? Well, because Apple’s devices are expensive, and the company’s operating margins (how much money the company makes on each iPhone) are at 37 per cent.

To put things into perspective, Samsung achieved 24.5 per cent of global sales during the same period, yet took just an 11 per cent share of profits. Its operating margins are at 10 per cent.

You also might have noticed how Samsung and Apple combined make up more than a 100 per cent of the market share, which definitely can’t make sense, but it actually does. Sony, HTC and other smartphone makers actually posted a negative operating income.

Such high figures, especially knowing that Apple has made 85 per cent global smartphone profits this time last year, have prompted some analysts to say that Apple has nowhere to go but down.

Apple CEO Tim Cook disagrees, recently saying that the demand for the iPhone exceeded supply.

“We believe that iPhone will grow in Q1, and we base that on what we’re seeing from a switcher point of view,” he said. “We recorded the highest rate on record for Android switchers last quarter at 30 percent. We also look at the number of people that have upgraded, that were in the install base prior to iPhone 6 and 6 Plus, and that number is in the low 30 percentages, so we feel like we have a very open field in front of us.”

Author: Sead Fadilpašic
View the original article here.
Published under license from ITProPortal.com