Android’s unit share growth has not hurt Apple’s profit share

“Here’s what the facts are telling us. First, Android’s growth has not hurt Apple’s profit share. Instead, Android gobbled up all of the profits from the other smart phone manufacturers,” John Kirk writes for TechPinions. “Second, Samsung subsequently gobbled up all of the profits from the other Android manufacturers. Samsung now makes as much profit share as the entire mobile industry did five years ago.”

“Third, the iPhone has not only survived the growth of Android’s market share, it has thrived, growing its profit share from 21% in 2008, to 50% in 2010, to 57% at the start of 2011, 73% at the start of 2012, and 72% at the end of 2012,” Kirk writes. “And since the pool of profits has grown dramatically over the past five years, Apple’s profits have too.”

Kirk writes, “What will it take to get Apple’s critics to acknowledge that Apple’s iPhone strategy is actually a raging success rather than the raging failure they constantly portray it to be? Does Apple need to take in 100% of the profits in perpetuity for them to be convinced? The problem with our obsession with market share is that it rests on two faulty foundations. First, it assumes that every product sold within a category is always just as valuable as another. Second, it assumes that every customer who buys a product is of equal value. These two premises are laughably wrong.”

Read more in the full article – recommended – here.


    1. Ok, math wasn’t your strong point in school.

      If you sell 10 hotdogs with a profit of $.10 each, you earn a $1.00 profit.

      If your friend sells 2 sausage heros with a $1.25 profit on each, your friend earned $2.50 profit.

      So, who served more meals and who went home with $2.50 profit? Life holds truths that analysts don’t want you to see.

      1. Okay, so logistics isn’t your strong point in school or anywhere else.

        In your poor analogy, Apple the hot dog vendor lost $0.20 potential profit because somebody else showed up. Except in the real world, Apple isn’t just losing a few potential sales . Android is steadily chipping away market share. Whenever Google learns to monetize that share remains to be seen, but in the meanwhile, this is the real reason why investors aren’t pushing Apple stock price up to MDN’s lofty projections.

        … and to make matters worse, still more competitors are entering the fray. if Cook & Co want to keep their profits growing in the future, they’ll need to start defending market share.

    2. You might want to look up the definition of logistics.

      In any case, the headline is clearly referring to the fact that both operating systems are improving by different metrics. If unit share were all important, then Apple’s profit share would be going down not up.

      Could Apple’s profit share be higher if Android didn’t exist? Of course it could. Using JT’s example, we can be pretty much assured that many of those 10 hot dog eaters would never buy a sausage hero.

      The unknown, of course is exactly how many want a hero.

  1. Android is like that homeless tramp rummaging around the trash can looking for nuggets to eat. No doubt it’s free but what is missing is the quality and polish that iOS possesses in spades. If you’re cheap and have nothing to do all day except root your device, then Android is the device of choice for you – it speaks to the cheapness and nerdiness of the user.

    If you choose iOS over Android, you’re choosing taste, polish, ease of use and a rich application ecosystem that is tastefully made and crafted with quality in mind. Apple hardware is superior to any hardware that runs Android, including the awful plasticated Samsung.

    Profit share coupled with market share trumps market share alone any day of the week. Equating market share with a free product is looking at it from a rat’s point of it – rats are more numerous than humans but that only proves that they’re scum and they breed like, well, Android.

  2. Most of us shareholders understand that Apple is making the most profits in the smartphone industry and will probably continue doing so. The main problem is that Wall Street is not interested in Apple’s profits. Global market share is what really matters and Apple’s share price depends on that measure. Since Apple can’t possibly compete in a global market share race, Apple’s share price will continue to fall. That’s just facing reality for Apple shareholders. Wall Street is interested in pure growth and market leaders. Fundamentals, profits and cash have become basically meaningless measures for share price value.

    On Wall Street, only companies with the highest amount of sales wins because that’s what generates the fastest market share growth. Why else would Samsung suddenly be considered the top smartphone company? That’s due to YOY smartphone market share gains. Apple is now only seen as an aging company falling behind the newcomer.

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