Apple Pocketed 92% of Total Smartphone Industry Profit In Q4 2016

Must Read

Are You A Gaming Geek: ‘Five Commandments’ Before You Buy Video Games Online !

Does your day start with joysticks instead of coffee mugs? Or as a kid your best friends were the...

The Growth of OTT: Blip in the Radar Or a Real Threat to Traditional TV?

People are attached to their smartphones way more than they're to any other gadget. In fact, the average person...

Top Softwares for Business in 2021 That Every Startup Entrepreneur Must Use

In the conditions of the global pandemic and economic crisis, small and medium-sized businesses face different problems and do...

Once the former visionary CEO of Apple Inc. (NASDAQ:AAPL) said that brands must focus on educating customers about products and sales will be skyrocketing by its own. Undoubtedly, it’s the same belief that has helped Apple to pocket 92% of total smartphone industry profit in Q4 2016, leaving its arch rival Samsung much behind who sold an almost equal number of smartphones in the same duration.

According to a recently released research note by Canaccord Genuity analyst Michael Walkley, Apple has dominated the high-end smartphone product with distinctive margin. iPhone has emerged as the most popular and profitable expensive smartphone by far as it helped Apple to garner 92% of total smartphone industry profit, in terms of hardware.

Though Apple took five years to reclaim the numero uno position in the smartphone market by shipping maximum units of iPhone in Q4 2016, Apple has been taking the lion’s share of the smartphone industry profit for the last few years. This one simple stat can highlight the brand impact of Apple: In Q3 2016 Apple sold just 45.5 million units of iPhone but took 91% of total smartphone industry operating profit.

Advertisements

In Q4 2016, both, Apple and Samsung sold a nearly equal number of smartphones. In fact, Samsung sold more mobile phones, in total, 77.5 million smartphones and 12.5 million mobile phones. Despite, iPhone users found the expensive iPhone worth each penny and paid way more for Apple devices than Samsung.

The average selling price of iPhone (ASP) in the latest quarter was US$695 – almost 4X than the ASP of Samsung smartphone that clocked $185.

Below is what Canaccord has got to say as a takeaway:

Given the Galaxy Note 7 issues and strong demand for iPhone 7 Plus models, we believe Apple will extend its leading market share of the premium-tier smartphone market installed base during 2017.

We believe these trends enabled the iPhone installed base to exceed 570M exiting 2016, driving record December quarter services revenue.

Advertisements

We also believe the impressive installed base should drive strong iPhone replacement sales and earnings, as well as cash flow generation to fund strong long-term capital returns.

While we anticipate a stronger upgrade cycle in 2018 with the 10-year anniversary iPhone 8, our surveys indicate solid iPhone 7 demand that should bridge the gap until a new form factor iPhone is likely released in September.

Brands Must Learn From Apple

The above stat can be seen as a case study for all those brands who believe in volume business and claim to be selling their devices for razor thin margin. Despite being widely criticised for its exaggerating pricing strategy, Apple has given a cold shoulder to criticism and has maintained its profit margin on each iPhone. According to IHS technologies, Apple has to bear $236 to manufacture an iPhone 6s and nearly $225 for iPhone 7. Both the devices, however, were launched with the price tag which was the 3X cost of manufacturing.

Despite growing competition and lowering ASP (Average Selling Price) of a smartphone in the market, Apple refused to compromise with its profit margins. Call it over confidence of Tim Cook & Team or a strong belief in their product quality; the strategy has been paying off, so far!

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest News

Book Uber Cabs Via WhatsApp Now: Service In More Cities Soon

After grocery and payments, it's time for Uber cabs on Whatsapp! The digital era has brought us endless advantages...

In-Depth: Dprime

Will ‘TikTok By Microsoft’ Be A Winner?

For the last two years, TikTok has been in the public eye for all sorts of reasons. First, it was the exploded and unparalleled...

Facebook Subscription Model: Looking Beyond Ad Dollars?

Seldom do job listings create a stir this gripping. However, when the job listing in question is a stealth post from Twitter, with a...

Will The Online Food Delivery Market in India End Up Becoming A Two-Horse Race?

It's pretty much evident that the food delivery space in India is all set to get riled up soon enough as one of the...

More Articles Like This