“Samsung’s June quarter earnings release contained a steep y/y decline in its Internet and Mobile (IM) division operating profit of 37%, while IM revenue declined by 8%. Apple and Samsung are considered the dominant players in smartphones due to their vertical integration,” Mark Hibben writes for Seeking Alpha.But the difference in profitability between the companies demonstrates that not all vertical integrations are created equal.”

“It appears that Samsung’s Galaxy S6 and S6 Edge not only delivered an ineffectual blow against Apple, to some degree, the blow ricocheted, damaging Samsung’s mobile device profitability,” Hibben writes. “In assessing Apple’s competitive position going forward, the advantage conferred by iOS is often overlooked. Apple critics continue to maintain that Android (or Windows Phone) is ‘just as good’ as iOS. If that were really true, surely Samsung would be in a much better position than it is.”

The differences in approach to vertical integration in the two companies indicates that Samsung will never overcome Apple’s advantage in mobile device profitability. — Mark Hibben

“If we accept that Apple’s control of iOS provides it a competitive advantage, then this says something very important about Apple’s long-term prospects in mobile devices. This is because the situation with respect to Android is unlikely to change,” Hibben writes. “The current Android device makers are unlikely to successfully develop and deploy their own operating systems or even switch to an alternative. Android device makers have made Windows Phone devices, but these hardly constitute a viable alternative to Android in terms of sales volume. The device makers are pretty much stuck with Android for the foreseeable future. This means that no manufacturer in the Android ecosystem has a path forward to overcome the iOS advantage.”

Read more in the full article here.

MacDailyNews Take: The chickens are a-roostin’!

Apple’s iPhone owns 92% of smartphone industry’s profits – July 13, 2015

Apple iPhone shipments show impressive growth as Samsung falls – July 30, 2015
Samsung offers downbeat outlook for year ahead of new Apple iPhones – July 30, 2015
Apple’s indomitable iPhone 6/Plus sales unfazed by Samsung’s anemic Galaxy S6/Edge – June 2, 2015
iPhone 6, killer: Beleaguered Samsung’s Galaxy S6 sales are a total disaster – May 22, 2015
Beleaguered Samsung reports 30 percent decline in operating profit – April 28, 2015
Samsung Galaxy S6 phones suffer weaker than expected sales in South Korea homeland – April 22, 2015
15 percent of Samsung Electronics execs quit amid profit slump – April 2, 2015
Significant Android to iPhone switching weakens market for Samsung Galaxy S6 – March 24, 2015
Apple iPhone takes smartphone market share from Android around the world – March 4, 2015
Poor man’s iPhone: Android on the decline – February 26, 2015
Study: iPhone users are smarter and richer than those who settle for Android phones – January 22, 2015
Why Android users can’t have the nicest things – January 5, 2015
iPhone users earn significantly more than those who settle for Android phones – October 8, 2014
Yet more proof that Android is for poor people – June 27, 2014
More proof that Android is for poor people – May 13, 2014
Android users poorer, shorter, unhealthier, less educated, far less charitable than Apple iPhone users – November 13, 2013

[Thanks to MacDailyNews Reader “Bill” for the heads up.]