Apple iPhone owns over 90% of smartphone profits, so why do others even bother fighting over Apple’s scraps?

“Apple vacuums up more than 90 percent of the profits in the business, and Samsung takes most of what’s left,” Ashlee Vance reports for Bloomberg. “That leaves crumbs for the half-dozen other big smartphone manufacturers, plus a sea of upstarts.”

“Following years of bumbling, Hewlett-Packard, Nokia, and other onetime powers have given up on them. Microsoft, which bought Nokia’s phone unit for $9.5 billion last year, wrote off $7.5 billion of it in July,” Vance reports. “For stubborn smartphone brands like LG, Sony, HTC, and Lenovo, things keep looking tougher. They’re like Sisyphus pushing his boulder up the hill, only the boulder grows a little bigger with each passing day.”

“‘Samsung is not really making money in smartphones,’ says Roger Kay, head of consultant Endpoint Technologies Associates. ‘The good news for them is that they’re big enough and diverse enough to make some mistakes and still be able to play,'” Vance reports. “Other large companies, including China’s Lenovo, have a tougher time rationalizing their phone businesses.”

Apple's new iPhone 6s and iPhone 6s Plus
Apple’s new 4.7-inch iPhone 6s and 5.5-inch iPhone 6s Plus

 
“For most smartphone makers, there’s little reason for optimism, says Kirt McMaster, chief executive officer and co-founder of Cyanogen, a software company that sells a souped-up version of Android. If the smartphone market has its share of thrown elbows now, pretty soon it’ll get a lot rougher, according to McMaster,” Vance reports. “‘Handsets are commoditized,’ he says. ‘They’ve gone from being technological devices to fast-moving consumer products. It’s like Coke and Pepsi now. That’s the war these companies are fighting. It’s not a sexy business anymore.'”

MacDailyNews Take: Unless you’re Apple.

Read more in the full article here.

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

Chinese hackers infiltrated LoopPay, whose tech is central to ‘Samsung Pay’ – October 7, 2015
Beleaguered Samsung’s future depends more on components than on copying Apple – October 7, 2015
Beleaguered Samsung finding it tough to compete Apple’s revolutionary iPhone – October 6, 2015
Apple’s iPhone juggernaut continues with record-breaking sales while Android peddlers fight over scraps – September 28, 2015
Judge Lucy Koh orders Samsung to pay Apple $548 million for patent infringement – September 22, 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
IDC data shows two thirds of Android’s 81% smartphone share are cheap junk phones – November 13, 2013
CIRP: Apple iPhone users are younger, richer, and better educated than those who settle for Samsung knockoff phones – August 19, 2013

22 Comments

    1. At some point it just seems like BB is purposely driving its own share prices down on purpose–just begging for some merciful buyer/vulture to come along and devour their remains and put them out their misery..

      1. I think they are just trying to make as much money as they can before their sales hit zero.

        They are doing this by selling to businesses who somehow have become dependent on the Blackberry system. For individuals it is easy to switch, but businesses can get themselves mired in one companies tech.

        So an Android device might appeal to trapped Blackberry customers looking for a way to move to Android without losing compatibility with Blackberries management tools.

    2. I don’t know about BB in particular, but I can see this as a viable strategy for some companies. You can’t incorporate iOS into your product. The alternative is Android. If you want to make ultra-rugged phones for firefighters, or submersibles for frogmen, or maybe package trackers attached to large shipping containers, then for that niche business you use Android. I agree with everyone else that it is almost impossible to compete with Apple for the main business.

  1. I predicted a year ago here that I think Samsung will quit making phones by the end of 2017. Their latest results just serve to reinforce this. As for the rest the author is right why are HTC and the others bothering?

    I come to Sicily for the last 5 years and up till now I’ve never seen a local with an iPhone. This year, despite the poverty, nearly half have dumped Samsung for iPhones.

    All this does not augur well for the Android platform. That and Adblocking are going to hit Google sooner than later.

  2. Since when do companies simply give up on a possibly lucrative market? Confident CEOs always believe they will have a product that makes consumers leave the major player for their special product. It’s damn sure obvious how Wall Street believes Apple’s iPhone will fall to a less expensive, full-featured Android smartphone from some upstart company.

    I tend to agree with your assessment of stupidly fighting over scraps but yet they keep doing it. You’d figure they’d at least leave the high-end smartphones to Apple because Apple isn’t going after the small fish. But there’s always someone thinking Apple is eventually going to make a mistake with the iPhone and that upstart company will be ready to take them down. It’s a long-shot but all champions face new contenders looking for a shot of being number one. I don’t see Samsung giving up their Galaxy S models because they think they’ll get lucky and beat Apple at some point using smartphones with higher specs.

    I thought companies would have given up on tablets a long time ago but they never did. Look at Amazon with their $50 tablet. They figure some strategy has to work against Apple or maybe Amazon isn’t after Apple but all the other Android tablets. You know Amazon can’t be profiting from that but Amazon investors seem to be only interested in market share and putting the other guy out of business.

    1. The difference between Amazon and all other companies is that Amazon doesn’t need to make a profit. It can sell tablets at a subsidised price in the hope of making up the income elsewhere. Other companies don’t have that option.

    2. The attraction of Apple is as it’s always been – the ecosystem, minimal fragmentation and horizontal/vertical control of a device turns out is a strength, not a weakness. Especially how hardware and software can better work together as a result, as well as implement new technologies and innovation.

      Samsung tried to do this with Tizen but only got shot down in flames by the market for the attempt. The reception of Google as being essential anti-consumer and treating the consumer as product is the final nail in the coffin for many. Well at least the smart ones. The cheapskate, skinflint, delusional dummy doofuses are taking more time to come around.

    3. Inertia and vested interests. Compare old steam engines vs new diesel electric locomotives. Inertia keeps both going after they get up to speed. The old steam locomotive requires coal or wood (Apple’s competitors) and the diesel electric sips organic diesel. Most of the old, heavy, steam locomotives are scrapped or in museums. Some still run but take up lots of scarce resources. The competitors keep on pushing the old, heavy locomotives because of capital investments, while pretending to compete against the super-efficient diesel electrics. Let Apple stay on track and get the competitors sidelined as quickly as possible.

  3. In the commodity market margins are low and volume is high. Samsung was on a good thing when their volumes were great. The biggest problems is that there is always someone else like Huewei (sp?) to take their share away. Managing the channel would help so that the volume of shipped not sold is low. Most companies are too lazy to do that.
    So Apple will continue to take the profit because they have a high value product, good margins and manage the channel well. If someone can replicate that or come up with a new device that will replace the smartphone then Apple will be in trouble.

  4. The proper concern is not how well Apple is doing. It is “Do the other companies make money on phones?” and “How profitable might other opportunities be, using the resources they dedicate to phones?” If they are going down their best possible path and actually making money at it, there is no point in being envious of Apples mojo.

    They would do well to try to innovate, rather than just make knock-offs of Apples ideas, IMHO. They might actually stumble onto a great idea, worth a lot of money at some point.

    1. Companies don’t stumble into a well thought out product with a deep ecosystem by accident.
      Okay, the bigger screens with smartphone was an exception. But something like that was only a temporary advantage, no mater how much some in the media was cheering them on.

  5. You could also argue that Microsoft own over 90% of the desktop/laptop Market. Apple owns 7.22%, why does Apple bother to stay in that market.

    Windows 10 overtook the entire OSX install base in under 10 weeks…. Just sayin

    1. The latest Garner market share guesstimates for USA sales of the Mac are nearly twice what you quoted. World market share is slightly less than what you quoted.

      But the article is NOT talking about market share. It’s talking about PROFITS. Macs have always been profitable, except when Apple screws its own pooch (1996!). THAT is why Apple bothers to stay in the desktop/laptop market.

          1. I can’t verify that’s correct. But I wouldn’t call it paranoia. Even with all the surveillance settings turned ‘off’, it has been verified that Window 10 is still sending off stuff about users to Microsoft. That’s not acceptable. It’s also entirely inevitable that such unconstitutional surveillance schemes will be discovered, uncovered and made public.

            Here is a video of Director of National Intelligence James Clapper lying to Congress that the NSA does not collect any type of data at all on millions of Americans. It’s worth watching all the way through to capture the nuances. But Clapper lies twice. Once is at 3:30 in the video and again from 6:03 to the end. It sucks to not trust one’s own government.

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