Apple’s iPhone gobbles lion’s share of mobile phone profits, slavish copier Samsung a distant second

“Apple and Samsung accounted for 95 percent of the industry’s profits in the fourth quarter — with Apple generating 80 percent [of that] by itself — as the rest of the players struggle for the scraps,” Roger Cheng reports for CNET. “Canaccord Genuity analyst Mike Walkley said yesterday that their percentage could rise even higher in the first quarter.”

“Besides Apple and Samsung, no other major handset manufacturer recorded a significant profit,” Cheng reports. “Some actually posted losses for the period. And ultimately, it was really Apple that accounted for most of the profits, with its unique level of success.”

Cheng reports, “Walkley said the iPhone outsold every other smartphone in AT&T and Sprint Nextel’s lineups combined, and it was on par with every other Android smartphone combined sold by Verizon Wireless. The iPhone’s superior ability to turn a profit is illustrated by Apple’s market share. Despite only nabbing 45 percent of total handset sales* in the fourth quarter, it controlled 80 percent of the profits.”

MacDailyNews Note: He must mean “45 percent of total smartphone sales.”

“Samsung is a distant second, but it can still boast of healthy profit,” Cheng reports. “Despite its claims of a premium phone, Samsung doesn’t command the kind of premium that Apple can get away with. The company instead leans on its own manufacturing capabilities and massive reach to ensure a profit.”

Cheng reports, “If things don’t change, a few of the companies won’t be around in a few years. These are businesses that are in it to make money, and if profits can’t be had, the industry will see either consolidation or companies waving a white flag.”

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Read more in the full article here.

MacDailyNews Take: The effort CNET and Cheng make to inflate Samsung to Apple’s level is ludicrous. We’ve cut and chopped and added to make it read somewhat closer to actual reality. To see it in all of it’s “glory,” read the entire article, headlined “Why Apple, Samsung’s phones sit atop piles of cash.” It’s laughable.

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

Related articles:
iOS devices bring Apple $576.30 each, Google gets only $3.50 per Android device – April 3, 2012
Google’s Android has generated just $550 million since 2008, but billions from Apple iPhone, figures suggest – March 30, 2012
With 8.7% market share, Apple reaps 75% of mobile phone profits – February 3, 2012

13 Comments

  1. Are those Samsung profits just of their cellphone division or the whole company? I’m skeptical of how much profit their phones actually make. Most of their phones are dumbphones and they’ve got a lot of expenses in making smartphones (custom Android software, paying lawyers in all the lawsuits, etc.).

    1. But Why??? Apparently, with the three models they currently make and sell, they simply can’t make them fast enough — they sell them all, and each one of Apple’s iPhones sells better than all competing models combined (and that includes a 3-year old 3GS — THREE year old cellphone, outselling brand new models!!).

      I can’t see how could Apple possibly do any better, other than ramping up production even further.

  2. Lumping Apple and Samsung together is (borrowing a recent bit from Jon Stewart) like saying, “last night Lebron James and I combined for a total of 36 points.” Samsung’s profits from its slavishly copied hardware running a stolen OS are microscopic compared to Apple. CNET is just a bunch of tools.

  3. It is laughable. What Samsung did was slavishly copy Apple in every step of the way. Right down to the accessories. That’s how they are able to stay on top and ahead of their Android manufacturer counterparts. CNET Journalist…oops I mean fake journalist can’t even see the truth in that.

  4. Eric T. M. Schmidt must be livid: “But we put our best Phds on Android and look what a mess our licensees have made of our OS we gave them.”

    “I know…we will get into the tablet business ourselves and make our own Android GoTab to show the other guys we license how to do it.”

    Well, a year from now, I’ll bet Apple still controls a similar 80% of the tablet profits. Goodbye Eric!

  5. The article was pretty accurate. It stated that together, they had 95% of the profits, which is correct. But he also pointed out that Apple had 80% by itself.

    I don’t see what MDN gets its panties all tight about so often. Do they have reading comprehension problems?

  6. Having read the linked article, my take on it is that while Apple is doing really well and Samsung is doing OK, all the other handset manufacturers are struggling to sustain a worthwhile business out of selling phone handsets.

    If those other manufacturers remain unable to make a profit from their handset business, they will be unable to stay in that market.

    The article mentions how developing new handsets is expensive and that only a few handset designs go on to be successful, so in many cases manufacturers are wasting their money on developing stuff that won’t make them money.

    That last point is the one that I think is highly significant in the tablet market too, except that the cost of developing a tablet and it’s ecosystem are massively higher than developing a smart phone. Tablets are being launched by companies that have previously made their money from computers or smart phones. Those are both businesses where they are not making money like they used to and therefore there is a sense of desperation which is making them think that their salvation might be to release a great tablet. The reality is that those companies that are already financially challenged will most likely be wasting their precious cash reserves by going down that route and they will be hastening the decline of their company.

    Apple have made a great deal of money out of smartphones ( and tablets too ). Samsung have decided to be fast followers and are also making a tidy sum of money by following Apple as closely as possible, but the other manufacturers are neither innovating, nor copying Apple fast enough and they are withering away.

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